Russian minister detained over alleged $2 million bribe

AP News
Posted: Nov 15, 2016 1:21 PM
Russian minister detained over alleged $2 million bribe

MOSCOW (AP) — A senior Russian Cabinet minister has fallen very suddenly from grace, accused of bribery and abuse of office but seen by many observers to be the victim of a Kremlin power play to ensure that President Vladimir Putin remains the ultimate arbiter in Russia.

Economic Development Minister Alexei Ulyukayev was detained late Monday, immediately after he allegedly took a $2 million bribe in a sting set up by the FSB domestic security agency, the Investigative Committee said in a statement Tuesday.

On Tuesday, Putin fired Ulyukayev without waiting for the court to determine whether he's guilty, citing a "loss of trust," according to the Kremlin.

Ulyukayev's arrest has been widely seen as part of Putin's ongoing effort to preserve the balance between rival factions in the upper echelons of power in Russia.

The Russian investigators said Ulyukayev accepted the money for having given the green light to state-controlled Rosneft to take part in bidding for another oil company.

Critics, however, questioned why the payment was made a month after Rosneft completed the deal, why it was paid in cash and why the experienced Ulyukayev would be foolish enough to extort money from the super-powerful Rosneft.

Ulyukayev, the highest-ranking Russian official to have been arrested since 1993, was formally charged with extorting a bribe from Rosneft and threatening "to use his powers to put obstacles in the way of the company's activities." He was questioned for hours Tuesday before being taken to court, where the judge put him under house arrest for two months.

Putin had been informed of the FSB operation in its planning stage, his spokesman said, insisting the investigation into Ulyukayev should not affect the Rosneft deal.

"What happened is beyond my understanding," Prime Minister Dmitry Medvedev said at a meeting with lawmakers, adding that no government figure has immunity from prosecution.

Ulyukayev, who was appointed a deputy finance minister in 2000 and has held his current post since 2013, is a liberal who has spoken out against increasing government presence in the Russian economy.

He had originally opposed Rosneft's bidding for the other company, Bashneft, saying it was wrong for a state-owned company to take part in a privatization drive. Putin had defended the deal, saying because Rosneft has minority foreign investors, the sale wasn't simply a transfer of assets from one part of the state to another.

Mikhail Zygar, a prominent journalist and author of a best-selling book on Putin's inner circle, says Putin for years has used the tactic of balancing the influence of liberals in the government with that of the more conservative intelligence and security officers.

"There was a feeling in the wider circle lately that the liberals had got a boost and got a louder voice — here you get a message that it is too early to celebrate," Zygar told The Associated Press. "It seems to be a story entirely in the president's character. ... When he thinks one group gets too weak, he needs to weaken the other side."

Grigory Yavlinsky, leader of the liberal Yabloko party, described Ulyukayev's arrest as a scare tactic to keep officials in check.

"The arrest of such a loyal and major official like Ulyukayev is a strong act of intimidation," he said in a Facebook post. "Everyone should know: anything can happen to you at any moment, that's the main message."

Despite investigators' assurances that Ulyukayev was caught in the act, the circumstances of the case prompted many to scoff at the charges. Bribery is common in Russia but it is unthinkable for a government minister to accept a bribe in cash. Corruption experts also say $2 million is the bribe range of a deputy mayor, not a cabinet minister, who would demand much more.

Ulyukayev's lawyer, Timofei Gridnev, said the minister rejected the charges as a "provocation."

The economic development ministry's approval was necessary to allow Rosneft to bid in the tender for Bashneft but it was just one of several government approvals required to hold the tender and sell the company to Rosneft. The sale to Rosneft was finally agreed upon on Oct. 10 when Medvedev sealed the deal — a month before Ulyukayev received the alleged bribe.

What's more, Rosneft chief Igor Sechin, a key associate of Putin for more than two decades, is believed to wield almost unlimited influence. Industry insiders find laughable the thought that anyone would be cheeky enough to extort money from Rosneft.

Alexander Shokhin, head of a major business lobbying group, said he was convinced Ulyukayev is innocent and said he may have been framed.

"You have to be mad to threaten Rosneft," Shokhin said.

Vladimir Milov, a former deputy energy minister turned opposition activist, said in an opinion piece on the respected RBC news website that Rosneft could be behind the Ulyukayev case.

Milov said Rosneft could be looking to buy more assets in similar "privatization deals."

Russian state-owned Rossiya 24 ran Ulyukayev's detention as the top story headlined "Fight on corruption," featuring comment from lawmakers who lauded the investigation as a major breakthrough in the long-anticipated clampdown on official graft.

But unlike some other officials in high-profile corruption cases, Ulyukayev wasn't wearing handcuffs at the court hearing and state television networks didn't run footage of him accepting the alleged bribe.


Vladimir Isachenkov in Moscow contributed to this report.