By John Helmer, Moscow

The US State Department has been torturing Russian oligarchs into making admissions by seating them in the special chair devised by the Spanish Inquisition in September 1970.

The disclosure this week of a new batch of the so-called Wikileaks cables reveals, for the first time, what Washington has been telling its Moscow ambassador to extract, and from whom. The target has been the top-secret area identified by Admiral Dennis Blair, when he was Director of National Intelligence: “the growing nexus in Russian and Eurasian states among government, organized crime, intelligence services, and big business figures. An increasing risk from Russian organized crime is that criminals and criminally linked oligarchs will enhance the ability of state or state-allied actors to undermine competition in gas, oil, aluminum, and precious metals markets.”

For the time being, the independent Russian press has revealed almost nothing at all from these cables. Novaya Gazeta, the London Evening Standard and The Independent, all owned by press freedom paragon Alexander Lebedev, have also been noticeable by their non-publication.

It is now evident that of all the Russian oligarchs, Oleg Deripaska – one of “Russia’s infamous oligarchs”, according to a 2007 cable from the US Embassy in Bucharest; “predatory”, according to a 2006 cable from the US embassy in Dushanbe — has drawn the most attention. Altogether, 78 cables have been released in which US diplomats and State Department employees mention him between 2005 and February 15, 2010 — the last date of a cable in the collection.

The US Consul in Hong Kong reported on January 10, 2010, as Deripaska was in the last stages of listing United Company Rusal on the Hong Kong Stock Exchange (HKEx) that the share sale was “all risk, no reward for HKEx?” The document goes on: “Rusal’s questionable corporate governance, precarious debt profile, and its CEO’s alleged ties to organized crime delayed HKEx approval for more than a year.”

Alcoa, the US aluminium company, was the source of disclosures that during 2006, before Deripaska got Kremlin agreement to take over Victor Vekselberg’s SUAL, a smaller rival, Deripaska had tried to sell Rusal to the American company. The cable reporting this is dated November 30, 2006, and is marked confidential: “Conversations with senior representatives of ALCOA indicate that SUAL was not Deripaska’s first or only choice for this merger (which is one possible reason why it has taken more than five years for the two parties to come together). Deripaska approached ALCOA in the first half of this year, but the talks broke down when the asset valuation gap could not be closed to Deripaska’s satisfaction. The announcement of the RUSAL/SUAL merger has shelved, probably indefinitely, a number of pending ALCOA plans with RUSAL in Russia, given the unlikelihood of FAS approvals going forward.”

A trip by Deripaska to the US in 2009 to allow him to lobby General Motors for the sale and purchase of its Opel division to a Russian consortium is reported in a cable of November 5, 2009 — after GM had rejected the Russian purchase bid — as “press fodder for conspiracy theories on whether that trip and the GM decision were interconnected.” Ambassador John Beyrle ordered the Russian government (GOR) to be misled on what had happened: “if asked by our GOR interlocutors, we will stress that the GM decision was made strictly on economic/financial grounds and that the USG did not influence that decision-making process.”

Deripaska himself has publicly accused US officials of trying to extract sensitive information out of him. So far he appears to have refused to speak to State Department officials directly; instead, his lobbyists in Washington have conveyed messages from him to Secretary of State, Hilary Clinton, and advisors to the White House on the staffs of the President and Vice President. What, if anything, Deripaska has told the Federal Bureau of Investigation, the Central Intelligence Agency, and politicians like Senator John McCain, whom Deripaska has reportedly hosted in private, remain undisclosed to date.

Deripaska has ordered his subordinates at Rusal to counter-attack with torture recommendations of their own. Sergei Chestnoy, a former Russian Foreign Ministry official now working for Rusal’s department of international relations, was asked by a US Embassy official, Matthias Mitman, to comment on Rusal’s attacks on investigative reporting of Rusal business. According to a cable dated February 3, 2010, the day before Mitman had spoken about this to Chestnoy at Rusal headquarters.

“In December, hackers conducted denial of service attacks on the Vedomosti website and interfered with some journalists’ cell phones. Press reports alleged that the attacks were connected to an October article in Vedomosti on Rusal’s financial losses and attempts to “hide” profits. Vedomosti Editor Elizaveta Osetinskaya claimed Rusal lawyers threatened legal action against the paper for revealing “commercial secrets.” Also in December, authorities detained three armed men outside the home of Australian journalist John Helmer a week after the Australian government had warned him that it had confidential information he was in danger. Helmer claimed that he was targeted because of his aggressive reporting on Rusal CEO Deripaska and said that Russian police told him the men arrested claimed to work for a private security company acting on behalf of Rusal. A Rusal representative told the press that Helmer’s claims were unfounded, and Rusal’s Chestnoy told us “what Helmer needs is a psychiatrist.””

Deripaska is also referred to in cables from the US Ambassador in Tajikistan as involved in plotting against what US and Tajik government officials appeared to agree was their common interest. In a 2006 cable from the US Embassy in Dushanbe, reporting on a meeting between the US Ambassador Richard Hoagland and Suhrob Sharipov, an advisor to President Imomali Rahmonov, the Tajik official reportedly said: “President Rahmonov had been incensed, suspecting Deripaska had reached a secret understanding with Uzbekistan to limit Tajikistan’s ability to truly benefit economically from its own hydropower potential. Sharipov hinted broadly that former Minister of Energy Nurmahmadov had prospered privately from RusAl “inducements.””

There is more speculation about “inducements” in a March 2006 cable from US Ambassador Hoagland, reporting on a hotel and real estate partnership between Deripaska and the Rahmonov family, which cut across the interests of the Aga Khan’s Serena Hotel chain, which had asked for US embassy help: “The (Basic Element-RusAl-Russian Hotels) Oleg Deripaska-financed Hyatt Regency, about to break ground for construction, is widely believed to be a first-family Oriyon Bank co-project with Deripaska. Some speculate that the Rahmonov family interests do not want the internationally recognized Serena chain to compete with what in a sense will be the first-family five-star hotel. The intriguing, as-yet-unanswered question is how Rahmonov-Deripaska got [Dushanbe city mayor] Obaidulloyev to cede the Hyatt building site in a major city park – nothing happens in Dushanbe without Obaidulloyev’s personal stamp of approval.”

No other Russian oligarch comes close in terms of the number of State Department document hits. Vladimir Potanin, the control shareholder of Norilsk Nickel, is mentioned in just 12 documents. Potanin gave a private interview to Ambassador John Beyrle on October 6, 2008. He didn’t mince words about who ran Russia, what was wrong with the American approach, and what he expected to happen to Deripaska.

“Potanin responded forcefully that talk of shared interests and shared goals might mean something to the small part of the populace involved in those issues but it carried little weight with the vast majority of Russians. Relations were bad and were getting worse. Anti-Russian sentiment in the U.S. was rising; and anti-American sentiment in Russia was also rising. Potanin said Russians, in particular young Russians, simply did not understand America’s U.S. policy and were turned off by America’s anti-Russian rhetoric and its double standard on Kosovo and South Ossetia.”

“Potanin said bluntly that, diplomatic niceties aside, Putin was still the real power in Russia and the new President had to interact with him directly for relations to improve….[According to Potanin] it was very difficult right now to refinance loans. He predicted this would lead to a shake out not only in the financial sector but also among the “oligarchs,” some of whom, such as Basic Element’s Oleg Deripaska, might lose that status in the coming correction. (Note: Potanin is locked in a battle with Deripaska over control of Norilsk Nickel. However, other financial contacts have also told us Deripaska is heavily leveraged and could be in trouble.”

Potanin’s readiness to speak to the American ambassador may have had something to do with how talkative his former partner and new rival, Mikhail Prokhorov, had been with Beyrle a few weeks before. Prokhorov scores a mention in 34 cables. On August 5, 2008, he gave a private interview to Beyrle in which he played up to the US his own ambitions, and spoke against Putin. This appears here.

“Prokhorov was particularly skeptical about the GOR’s plans for Rosnanotech, the state corporation that received $5 billion to serve as a venture capital fund for Russian nano companies. Prokhorov said that the GOR “doesn’t get it,” and that their goals for Rosnanotech are “patriotic, not realistic.” He thinks it would be necessary for Russia to capture 5-10 percent of the world market in nanotech to be competitive, and that this would cost USD 30 billion, six times what the GOR has invested. He also noted that he had “heard rumors” that Rosnanotech Director General Leonid Melamed, who just returned from an official visit to the U.S., will soon be replaced. ¶4. (SBU) Prokhorov reported that in 3-4 months he will talk to Prime Minister Putin to ask about his high tech development strategy. If the Prime Minister does not have one, Prokhorov will “create his own.” ” There is no sign that the State Department investigated Prokhorov ahead of his purchase of the New Jersey Nets basketball franchise and investment in Brooklyn, new York, real estate, in 2010.

Steelmaker Vladimir Lisin is almost ignored by the State Department, despite being named by Boris Jordan, a US investment banker, – in a May 15, 2008, cable — as the richest and cleverest of the Russian oligarchs.

Alexei Mordashov, owner of Severstal and Lisin’s rival in the Russian steel sector, is on record in the State Department archive six times. Of all the oligarchs to have occupied the US Embassy’s comfy armchair, Mordashov appears to have had the cosiest relationship. But then, he may have reasoned — if Ambassador Beyrle was falling over himself to be nicer to him than the investment or share markets in the US, why not? In September 2008, for example, as Mordashov and his Severstal group headed to the brink of bankruptcy, principally because of a blowout of debt incurred by Mordashov’s investments in the US, here’s what Beyrle had to say: “The Ambassador congratulated Mordashov on the success of Severstal and its investments in the U.S. Under Mordashov, it had become a model Russian company.”

In an earlier private meeting with a deputy under secretary of state, Mordashov had done the cosying up, claiming that in February of 2008; “growth in Asia and the BRICS will help sustain the United States”. Mordashov is also on record talking politics with the US officials regarding Georgia, Saudi Arabia, and the Ukraine. .

In July of 2008, the State Department men watched their Russian television sets and followed the Russian press, when Mechel owner Igor Zyuzin was publicly criticized by Prime Minister Vladimir Putin. But they never made contact – at least according to the leaks – with either Zyuzin himself or Mechel.

Rashnikov attracted attention in Washington because of his steel export business in Iran. So on January 30, 2009, the US Embassy in Baku, Azerbaijan, reported in a cable, classified secret, that it had made contact with a business agent for Rashnikov’s Magnitogorsk Metallurgical Combine (MMK) in Teheran. The source is reported this way: “Baku Iran Watcher met in Baku with the Teheran-based Middle East Agent for Magnitogorsk Iron and Steel Works (MMK), Russia’s largest steel producer. The Agent (strictly protect), an Azerbaijani national, has been MMK’s Iran Agent since 2000. He has an Iranian residency permit, and operates through an Iranian front company that he established and registered in Teheran. In addition to detailed knowledge of MMK’s exports and business relationships in the region, the Agent also possesses broad expertise on the overall state of Iran’s steel sector and related information.”

The disclosures don’t reveal anything that Rashnikov himself had not already announced about his interest in Iran. In February of 2008, almost a year before the US document was despatched, Rashnikov had disclosed that he had visited Iran a few days earlier, touring four plants, and was briefed at the time by local steel directors on investment possibilities. The companies were Esfahan Steel, Mobarakeh Steel, Khouzestan Steel, and Gol-e-Gohar Iron Ore Mining Company. Rashnikov himself had no comment on the discussions.

A source close to MMK told this correspondent at the time: “Iran is one of the largest foreign sales market for MMK, with more than 1million tonnes in sales for 2007. The market is highly prospective; familiar for the company; and it is, of course, interested in strengthening of its positions and expansion. But it is too early yet to speak about any particular projects there.”

The US source later explained, according to the cable, that MMK recently concluded that, while apparently legal in theory, in practice the Iranian government would not allow any significant foreign ownership share in the mill. At least in steel, “privatization is for Iranians only,” he concluded.” No attempt appears to have been made by the Americans to speak to Rashnikov or MMK.

Roman Abramovich’s steel assets in the US go unmentioned in the cables, but he still scores a mention in 28 documents. These are mostly without significance, except for tidbits such as a plan Abramovich is reported to have in May 2007 to start his own airline flying between Chukotka and Alaska. In another cable, subtitled “From Oy Vei to OK” and dated December 2009 , Abramovich is identified as one of several prominent Russian Jews helping to reduce anti-semitism in the country. A few weeks before that, the US Ambassador in Tanzania had reported back to headquarters that “well-known Russian billionaire Roman Abramovich’s recent visit to climb Mt. Kilimanjaro highlights a trend toward increased Russian tourism in Tanzania, which the GOT actively promotes.”

If Russians believe Gennady Timchenko is one of the most powerful oligarchs in the country, the Americans appear to have missed it – and him. No contact with Timchenko or his oil trading firm, Gunvor, is reported in the cable release. Three mentions of Timchenko are passing ones. The only one of significance repeats press gossip about him in a cable that is highly critical of Transneft, the pipeline company, and its chief executive Nikolai Tokarev.

This is how Beyrle puts down Tokarev, whom he met on January 27, 2009. The text is classified confidential: “According to various press reports, Tokarev, whose official bio is blank from 1973 to 1999, is a close friend of PM Putin. He was reportedly Putin’s boss in the KGB in East Germany in the 1980s. He reportedly has a similar link to Gennady Timchenko, owner of secretive oil trading company Gunvor (ref B), whose firm controls much of the pipeline trade out of Russia. He was flanked in the meeting by his Deputy, Mikhail Barkov, and his International Affairs Advisor, Oleg Pillipets, both security service alumni. ——- COMMENT ——- ¶11. (C) Transneft is a prime example of Russia’s failed economic model of state-owned national champions.”

As for Gunvor, Ambassador Beyrle has been struggling to acknowledge that the little his secret informant code-named XXXX knew about Gunvor was more than the US Embassy and its resources knew.

Suleiman Kerimov, whose business interests in Russia and abroad are extensive, is mentioned only once in the archive. He is named by the chief agent in Russia for Delta Airlines, Alexander Terasov.

The cable, dated September 2007 and classified confidential, reports:
“The press has speculated that a Duma Deputy with an unsavory reputation, Suleiman Kerimov, controls TCH. Terasov said TCH is also powerful, with cronies in the Ministry of Transportation and Rosaviatsia, the civil aviation authority that controls all domestic government civair assets, such as airports and machinery. Aeroflot even owns a small share of the company, 3.5 percent. Terasov noted that TCH has used strong-arm tactics as part of its business practices.” There is apparently nothing on Kerimov from Switzerland where he has managed much of his financial affairs.

By contrast with the untalkative and less than approachable oligarchs, Alexei Venediktov, chief reporter at Ekho Moskvy, is a favourite source, direct and indirect, in 53 cables. In one private conversation with Beyrle, dated September 2008, Venediktov claimed that “Ekho’s survival [depended on] the intervention of Presidential Administration Deputy Head Aleksey Gromov and White House Press Secretary Dmitry Peshkov, with former RAO UES Chubais also weighing in with Putin.”

On December 9, 2008, in Washington, the State Department’s assistant secretary of state, David Kramer, summoned Russia’s Ambassador to the US, Sergei Kislyak, to express official concern about treatment of one Russian journalist and a reporter from the Rupert Murdoch property, the Wall Street Journal. According to this cable, marked confidential, Kramer “told Kislyak he is concerned about other problems including a visit by Russian authorities to an RFE/RL affiliate’s office; the beating of a journalist in Khimki; threats against journalist Yuliya Latynina; and intimidation of an American Wall Street Journal correspondent. Kramer said while he hopes these events were aberrations, he is concerned they were part of a larger trend reflecting a possible desire of the government to crack down on civil society in the face of economic difficulties. Kislyak said there is a crime problem in Russia, so not all attacks are connected with politics. In addition, he added, some people claim political persecution when they are guilty of violating laws. He would have to look into the specific details of the cases raised, Kislyak told Kramer.”

Earlier the same year, when Kislyak had met with William Burns, then US Ambassador in Moscow, to hear a complaint that the Russian Foreign Ministry was refusing to give a visa to visit Russia to the State Department’s head of human rights, the US cable on the meeting records: “Kislyak parried with a demand for more information on the U.S. refusal to issue Oleg Deripaska a visa.”

by John Helmer - Tuesday, September 6th, 2011