ECONOMY
Russia’s Super-Rich: Why the Forbes Billionaire List May Be off
February 13, 2024
Tatiana Rybakova
Journalist and writer
Journalist Tatiana Rybakova details how the list of Russia’s richest businesspeople has changed over the years and discusses with experts how the war in Ukraine is shaking things up, looking at factors like Western sanctions, a growing state and the militarization of the economy.
The cover of the book The Oligarchs by David Hoffman. It was published in Russian by the publisher Corpus. Source: VK
When the Russian Forbes first published its ranking of Russian billionaires, some of them expressed dissatisfaction – back in those days they did not want their wealth to be illuminated. This was understandable: the ranking was released in 2004, and at the top of the list was Mikhail Khodorkovsky, who by that time had already been arrested in the Yukos case. Shortly before the raid on Yukos, Putin had announced the “equal distance of the oligarchs from power,” and no one wanted to be as “equally distanced” as the man at the top of the ranking.
Very soon everything changed: realizing that there would be no mass “dekulakization,” the business elites accepted the new rules of the game and began to jealously compete over their place in the ranking. A meme of that time became the expression of scandalous developer Sergei Polonsky: in March 2008, at a party in Nice, he said, “those who don’t have a billion can go to hell.” Billions of dollars, of course. Just six months later everything changed – the global financial crisis struck.
How the list of Russia’s super-rich has changed
The Forbes ranking was read with interest – especially with the beginning of the crisis – even by people who were far from big business. For example, one could observe how Mikhail Prokhorov, who had been forced to sell assets to his former friend and business partner Vladimir Potanin, soared in the 2009 ranking, having found himself “in the money” when the crisis hit. It looked like a well-deserved reward for a deceived partner.
It was interesting to watch how the winners of the loans-for-shares auctions of the 1990s were at first joined and later began to be crowded out by the new rich, including developers and retailers. However, in the late 2010s the ranking stopped changing – it became stable and boring. As journalists joked: “the corpses are fresh, the faces the same.”
Forbes shook things up in 2018 with a new list of influential people in Russia, which reflected not absolute, official wealth, but rather the degree of influence people wielded. It was then that the list changed significantly: the top of the list became populated by President Putin’s entourage and United Russia party officials.
This analysis was confirmed by a study conducted by sociologists Svetlana Mareeva and Yekaterina Slobodenyuk of the Higher School of Economics (HSE), “The Super Rich in Russia: Group Composition and Dynamics.” It is based on the Forbes rankings for 2004-21. “The stability of the group is ensured by the essentially unchanged characteristics of its members the absence of qualitative changes in its composition and profile in the 2000-2020s, in contrast to the 1990s, when the amount of shake-up within the group was much higher and changes in its profile were noticeable,” Mareeva and Slobodenyuk conclude.
From dynamism to ossification
“Most of the large fortunes were made in the 90s, and the leading companies did not change because the structure of the Russian economy has remained constant – it is mainly commodities: energy, metals, etc.,” explains Andrei Nechaev, an economist and former economy minister. However, he notes, in the 2000s relatively new oligarchs appeared – those who were once part of Putin’s St Petersburg entourage, including Gennady Timchenko, the Rotenberg brothers Arkady and Boris, and the brothers Mikhail and Yuri Kovalchuk.
Very soon everything changed: realizing that there would be no mass “dekulakization,” the business elites accepted the new rules of the game and began to jealously compete over their place in the ranking. A meme of that time became the expression of scandalous developer Sergei Polonsky: in March 2008, at a party in Nice, he said, “those who don’t have a billion can go to hell.” Billions of dollars, of course. Just six months later everything changed – the global financial crisis struck.
How the list of Russia’s super-rich has changed
The Forbes ranking was read with interest – especially with the beginning of the crisis – even by people who were far from big business. For example, one could observe how Mikhail Prokhorov, who had been forced to sell assets to his former friend and business partner Vladimir Potanin, soared in the 2009 ranking, having found himself “in the money” when the crisis hit. It looked like a well-deserved reward for a deceived partner.
It was interesting to watch how the winners of the loans-for-shares auctions of the 1990s were at first joined and later began to be crowded out by the new rich, including developers and retailers. However, in the late 2010s the ranking stopped changing – it became stable and boring. As journalists joked: “the corpses are fresh, the faces the same.”
Forbes shook things up in 2018 with a new list of influential people in Russia, which reflected not absolute, official wealth, but rather the degree of influence people wielded. It was then that the list changed significantly: the top of the list became populated by President Putin’s entourage and United Russia party officials.
This analysis was confirmed by a study conducted by sociologists Svetlana Mareeva and Yekaterina Slobodenyuk of the Higher School of Economics (HSE), “The Super Rich in Russia: Group Composition and Dynamics.” It is based on the Forbes rankings for 2004-21. “The stability of the group is ensured by the essentially unchanged characteristics of its members the absence of qualitative changes in its composition and profile in the 2000-2020s, in contrast to the 1990s, when the amount of shake-up within the group was much higher and changes in its profile were noticeable,” Mareeva and Slobodenyuk conclude.
From dynamism to ossification
“Most of the large fortunes were made in the 90s, and the leading companies did not change because the structure of the Russian economy has remained constant – it is mainly commodities: energy, metals, etc.,” explains Andrei Nechaev, an economist and former economy minister. However, he notes, in the 2000s relatively new oligarchs appeared – those who were once part of Putin’s St Petersburg entourage, including Gennady Timchenko, the Rotenberg brothers Arkady and Boris, and the brothers Mikhail and Yuri Kovalchuk.
“The economy’s dependence on commodities, along with the bet on a corporatist state, is mostly why the list of Russia’s super-rich has been so stable.”
Dmitri Zimin (1933-2021) founded VimpelCom and became Russia's most prominent philanthropist, establishing the Dynasty and Zimin foundations. Source: Wiki Commons
Nevertheless, the ranking still did some justice to the tech revolution.
“There has been a large increase in the number of people connected with IT over the years of observation,” notes economist Andrei Yakovlev, a Harvard Davis Center associate and Hanse-Wissenschaftskolleg researcher. At first, it was people from the telecom sector, the most famous of whom was VimpelCom founder Dmitri Zimin. Later, from local information businesses: Arkady Volozh with his Yandex search engine and Pavel Durov with his VK social network.
Still, as Yakovlev notes, there are some questions about the methodology for both how the Forbes list is put together and how the research is done. For example, Khodorkovsky still made the 2004 ranking. Meanwhile, since Forbes often included businessmen who no longer lived in Russia, it is unclear whether the share of the IT sector among the super-rich was inflated by the presence of Pavel Durov, the founder of VK (which was taken away from him by the siloviki) and Telegram, who long ago moved to Dubai.
However, in the 2000s, the turnover was higher, admits Yakovlev. “I think this was influenced, firstly, by the crisis of 2008 and, secondly, by the purge in the ranks of people from this group that Putin inherited from the Yeltsin period,” he says.
The starting point was 2004 with the Yukos case. “At that point, Mikhail Khodorkovsky and his Yukos group lost their assets, and recently Sergei Petrov, owner of Rolf (the largest chain of car dealerships was bought on the cheap by a competitor after Petrov condemned Russia’s invasion of Ukraine) dropped out of the list,” notes Nechaev.
Moreover, in the 2000s, against the backdrop of economic growth, there were more opportunities to enter new niches without infringing on anyone, Yakovlev says. “In 2012, the economy began to slow down, and since then economic dynamism has decreased. The opportunities for new businesses to enter the market without infringing on existing players have narrowed. And not only due to the deterioration of the economic backdrop, but also because of the ossification of the Russian business landscape as a whole: the main markets were already divided between those who enjoyed the trust of the authorities, while all ‘outsiders’ were filtered out,” he says.
Succession
In the Mareeva and Slobodenyuk study, the super-rich group is unchanged not only in terms of sectors and companies – the individuals do not change either.
“There has been a large increase in the number of people connected with IT over the years of observation,” notes economist Andrei Yakovlev, a Harvard Davis Center associate and Hanse-Wissenschaftskolleg researcher. At first, it was people from the telecom sector, the most famous of whom was VimpelCom founder Dmitri Zimin. Later, from local information businesses: Arkady Volozh with his Yandex search engine and Pavel Durov with his VK social network.
Still, as Yakovlev notes, there are some questions about the methodology for both how the Forbes list is put together and how the research is done. For example, Khodorkovsky still made the 2004 ranking. Meanwhile, since Forbes often included businessmen who no longer lived in Russia, it is unclear whether the share of the IT sector among the super-rich was inflated by the presence of Pavel Durov, the founder of VK (which was taken away from him by the siloviki) and Telegram, who long ago moved to Dubai.
However, in the 2000s, the turnover was higher, admits Yakovlev. “I think this was influenced, firstly, by the crisis of 2008 and, secondly, by the purge in the ranks of people from this group that Putin inherited from the Yeltsin period,” he says.
The starting point was 2004 with the Yukos case. “At that point, Mikhail Khodorkovsky and his Yukos group lost their assets, and recently Sergei Petrov, owner of Rolf (the largest chain of car dealerships was bought on the cheap by a competitor after Petrov condemned Russia’s invasion of Ukraine) dropped out of the list,” notes Nechaev.
Moreover, in the 2000s, against the backdrop of economic growth, there were more opportunities to enter new niches without infringing on anyone, Yakovlev says. “In 2012, the economy began to slow down, and since then economic dynamism has decreased. The opportunities for new businesses to enter the market without infringing on existing players have narrowed. And not only due to the deterioration of the economic backdrop, but also because of the ossification of the Russian business landscape as a whole: the main markets were already divided between those who enjoyed the trust of the authorities, while all ‘outsiders’ were filtered out,” he says.
Succession
In the Mareeva and Slobodenyuk study, the super-rich group is unchanged not only in terms of sectors and companies – the individuals do not change either.
“With generally minor changes, all the same people who were included in the Forbes 2004 list are still there today: only the photographs change as they age.”
Among the few exceptions is the aforementioned Dmitri Zimin, who sold his business – and even there, judging by vague hints from Zimin himself, the sale was underpinned by concerns that he could not hang on to the business anyway.
In the 90s, when the largest Russian fortunes were made, their owners were relatively young. Now, these people are getting old; however, there are practically no examples of businesses being transferred either to a collective body like a board of directors or to the owners’ own children.
Still, it cannot be said that the children are deprived: as a rule, they also end up either in the business or in good positions elsewhere. But for now the main assets are firmly in the hands of their fathers.
There is an additional factor here, characteristic of Russia and developing countries generally, Yakovlev notes: this is the special role of the company founder and his personal connections. “It was these founding fathers who built personal relationships with people in power. And if they leave, they cannot pass these connections on to their children,” he says. Just the departure of the founding fathers may give other players an incentive to start carving up their businesses. The siloviki, he explains, have both the willingness and the ability to remake a market to benefit themselves.
This already happened, to some extent, in the 2010s. Yakovlev recalls the story of the Magomedov brothers, who were from a group affiliated with Dmitri Medvedev. They were “swallowed up” precisely because they were not from the “right” group, he says.
However, Nechaev believes that relations with the authorities, if they exist, do not really depend on formal positions. “Even if these people give their positions to their heirs, they will not stop controlling their companies or lose their connections,” he says.
In the 90s, when the largest Russian fortunes were made, their owners were relatively young. Now, these people are getting old; however, there are practically no examples of businesses being transferred either to a collective body like a board of directors or to the owners’ own children.
Still, it cannot be said that the children are deprived: as a rule, they also end up either in the business or in good positions elsewhere. But for now the main assets are firmly in the hands of their fathers.
There is an additional factor here, characteristic of Russia and developing countries generally, Yakovlev notes: this is the special role of the company founder and his personal connections. “It was these founding fathers who built personal relationships with people in power. And if they leave, they cannot pass these connections on to their children,” he says. Just the departure of the founding fathers may give other players an incentive to start carving up their businesses. The siloviki, he explains, have both the willingness and the ability to remake a market to benefit themselves.
This already happened, to some extent, in the 2010s. Yakovlev recalls the story of the Magomedov brothers, who were from a group affiliated with Dmitri Medvedev. They were “swallowed up” precisely because they were not from the “right” group, he says.
However, Nechaev believes that relations with the authorities, if they exist, do not really depend on formal positions. “Even if these people give their positions to their heirs, they will not stop controlling their companies or lose their connections,” he says.
Sergei Petrov, founder of Rolf Group, Russia’s largest car dealer. In December 2023, Rolf was taken over by a presidential decree, the first nationalization of a Russian-owned business. Source: Wiki Commons
War-time redistribution of assets
The HSE study was completed in 2021 – the last year before the war. A lot has changed since then. First of all, sanctions were imposed on the foreign assets of most Russian oligarchs. Some, like Oleg Tinkov, founder of Tinkoff Bank, Sergei Petrov (Rolf) and Arkady Volozh (Yandex), opposed the war and were forced to sell their assets in Russia for next to nothing. Budget flows have also changed: whereas previously the “government order queens” – businessmen close to Putin – mostly did infrastructure projects, now a third of the budget goes toward the war. Will gunrunners now appear on the Forbes list?
“I do not think there will be shifts now in terms of the source of cash flows. Because the money that is now pouring over the military-industrial complex goes only to a small extent to private business, but mainly to state-owned companies or those that are under state control,” Nechaev believes. He adds that whether those whose foreign assets were subject to sanctions will be included in the Forbes 2023-24 list remains to be seen.
“In the 2010s, there was some stabilization of the existing [economic] structure,” according to Yakovlev. “Twenty twenty-two came as a shock, and the Kremlin needed new tools and incentives to maintain the loyalty of the elite. One was the international sanctions, which ‘shoved’ business back to Russia – the story of Fridman and Aven from Alfa Group is indicative here. In addition, compensation for many in the business elite came in the form of the huge revenues they received in 2022-23,” says Yakovlev.
First of all, this concerned export revenues: in 2022 they were $100 billion higher than 2021, he notes. “The Kremlin had money to wage war, to continue social programs and to invest in the economy,” says Yakovlev. Indeed, infrastructure projects and support for small businesses have continued to be financed.
The problem is that these windfall earnings are now disappearing. “Oil prices, despite the situation in the Red Sea, have not increased significantly. At the same time, military spending is rising. But this is a ‘black hole,’ since what is produced through that spending burns in the fields of Ukraine. Social expenditures are rising. No matter how the Ministry of Finance projects future revenues, it is not yet clear where they will come from. Or rather it’s clear that they will take it from business – this will mean raising taxes and other methods,” says Yakovlev.
Business earnings are unlikely to grow at the same rate. Yet, as Yakovlev notes, those closest to the Kremlin want more.
The HSE study was completed in 2021 – the last year before the war. A lot has changed since then. First of all, sanctions were imposed on the foreign assets of most Russian oligarchs. Some, like Oleg Tinkov, founder of Tinkoff Bank, Sergei Petrov (Rolf) and Arkady Volozh (Yandex), opposed the war and were forced to sell their assets in Russia for next to nothing. Budget flows have also changed: whereas previously the “government order queens” – businessmen close to Putin – mostly did infrastructure projects, now a third of the budget goes toward the war. Will gunrunners now appear on the Forbes list?
“I do not think there will be shifts now in terms of the source of cash flows. Because the money that is now pouring over the military-industrial complex goes only to a small extent to private business, but mainly to state-owned companies or those that are under state control,” Nechaev believes. He adds that whether those whose foreign assets were subject to sanctions will be included in the Forbes 2023-24 list remains to be seen.
“In the 2010s, there was some stabilization of the existing [economic] structure,” according to Yakovlev. “Twenty twenty-two came as a shock, and the Kremlin needed new tools and incentives to maintain the loyalty of the elite. One was the international sanctions, which ‘shoved’ business back to Russia – the story of Fridman and Aven from Alfa Group is indicative here. In addition, compensation for many in the business elite came in the form of the huge revenues they received in 2022-23,” says Yakovlev.
First of all, this concerned export revenues: in 2022 they were $100 billion higher than 2021, he notes. “The Kremlin had money to wage war, to continue social programs and to invest in the economy,” says Yakovlev. Indeed, infrastructure projects and support for small businesses have continued to be financed.
The problem is that these windfall earnings are now disappearing. “Oil prices, despite the situation in the Red Sea, have not increased significantly. At the same time, military spending is rising. But this is a ‘black hole,’ since what is produced through that spending burns in the fields of Ukraine. Social expenditures are rising. No matter how the Ministry of Finance projects future revenues, it is not yet clear where they will come from. Or rather it’s clear that they will take it from business – this will mean raising taxes and other methods,” says Yakovlev.
Business earnings are unlikely to grow at the same rate. Yet, as Yakovlev notes, those closest to the Kremlin want more.
“Evidence of this is the redistribution of even loyal owners’ businesses that began last year.”
Rossiya Bank's largest shareholder is Yuri Kovalchuk, a member of Vladimir Putin's inner circle.
Source: Wiki Commons
Source: Wiki Commons
“Nationalization is underway not only of foreign, but also of Russian companies,” notes Yakovlev.
Yakovlev recalls the story of how Ruskhim group (formerly Russian Hydrogen) – which the Rotenberg brothers, close to Putin, had some hand in creating – initiated the process of consolidating the chemical industry: “There was a letter addressed to Putin from the director of this company, a certain Davydov, in which consolidating the industry was explicitly proposed, since it is of strategic importance. Basically, we are already doing this, but there are some enterprises that seemingly do not really want to consolidate, and the Prosecutor General should check them to see if their privatization was legal.” (See Russia.Post for more analysis of this.)
The current situation, when assets taken from foreigners (and not only from them) are nationalized and not transferred to other owners, could lead to the emergence of an “invisible” super-rich class. “It is unlikely that Forbes will include in its list the hired managers of these companies, even though they have broad powers, including diverting part of the cash flow to where they see fit,” notes Yakovlev.
The problem is the same with state-owned enterprises and companies: their leaders may have enriched themselves from the war, but the Forbes methodology is unlikely to be able to accurately assess their wealth. “It will be more difficult to track, while at the same time new players will appear whom it will be more difficult to qualify,” notes Yakovlev.
With usual rents shrinking, the process of stripping assets from the weaker is set to continue, Yakovlev believes. “I have a feeling that the oligarchs of the first wave, who had a spot in Putin’s circle but never became flesh and blood, will most likely be the next victims,” he says. Whether this will lead to the emergence of new super-rich Russians or whether the redistribution will go in favor of the existing elites is difficult to say. “But I do not believe that the current super-rich list will expand significantly,” says Yakovlev. “Rather, there will be a redistribution within the group and those closer to the Kremlin will survive.”
Yakovlev recalls the story of how Ruskhim group (formerly Russian Hydrogen) – which the Rotenberg brothers, close to Putin, had some hand in creating – initiated the process of consolidating the chemical industry: “There was a letter addressed to Putin from the director of this company, a certain Davydov, in which consolidating the industry was explicitly proposed, since it is of strategic importance. Basically, we are already doing this, but there are some enterprises that seemingly do not really want to consolidate, and the Prosecutor General should check them to see if their privatization was legal.” (See Russia.Post for more analysis of this.)
The current situation, when assets taken from foreigners (and not only from them) are nationalized and not transferred to other owners, could lead to the emergence of an “invisible” super-rich class. “It is unlikely that Forbes will include in its list the hired managers of these companies, even though they have broad powers, including diverting part of the cash flow to where they see fit,” notes Yakovlev.
The problem is the same with state-owned enterprises and companies: their leaders may have enriched themselves from the war, but the Forbes methodology is unlikely to be able to accurately assess their wealth. “It will be more difficult to track, while at the same time new players will appear whom it will be more difficult to qualify,” notes Yakovlev.
With usual rents shrinking, the process of stripping assets from the weaker is set to continue, Yakovlev believes. “I have a feeling that the oligarchs of the first wave, who had a spot in Putin’s circle but never became flesh and blood, will most likely be the next victims,” he says. Whether this will lead to the emergence of new super-rich Russians or whether the redistribution will go in favor of the existing elites is difficult to say. “But I do not believe that the current super-rich list will expand significantly,” says Yakovlev. “Rather, there will be a redistribution within the group and those closer to the Kremlin will survive.”
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