What the Panama Papers Mean for Russia

The Panama Papers is a set of 11.5 million leaked documents revealing vast corruption among the world’s political elite. It’s a big “uh-oh” for Panamanian offshore law firm Mossack Fonseca and the thousands of its previously secret clients revealed by the International Consortium of Investigative Journalists. Corruption in Russia may not be news, but the ways the Panama Papers are bringing it to light is full of surprises.

But first, the basics.

Who’s in trouble?

• First, Sergei Roldugin. Don’t recognize his name from politics? That’s because he’s too busy being a famous cellist and godfather of Putin’s daughter. And with these corruption allegations, he’s certainly living up to his “Godfather” status. But he may have to face the music if he in fact orchestrated these offshore dealings.
• There’s also Yuri Kovalchuk, head of Bank Rossiya, known as Russia’s “crony bank” – making Kovalchuk the “personal banker” for many senior government officials.
• Then there are the women associated with the president – from his daughter Katerina to a lady who posed in a “We Love You” pinup calendar for Putin. These ladies have had upscale apartments transferred to them. Coincidence? Maybe, maybe not.
• Mikhail Lesin, who founded the propaganda TV channel Russia Today before falling out of favor and being discovered dead in Washington, DC last year.
• And that’s just the humans. State-run financial giants linked to Roldugin’s offshore company are implicated in the corruption, including Bank Rossiya, Vneshtorgbank’s Cyprus subsidiary, and Troika Dialog (an investment company owned by Sberbank).

One person who’s not in trouble: President Vladimir Vladimirovich Putin. But his best buddies as well as companies close to the Kremlin have millions in their pockets, all gained from deals that are unlikely to have gotten the nod without the patronage of the man in the big chair.

What’s Russia’s response?

1. Find a scapegoat: specifically, the US Government and American billionaire philanthropist George Soros. They are the culprits stirring up the scandal, according to WikiLeaks. Once you unmask a smear campaign for what it is, no one believes it anymore, right?

2. Talk about Putinophobia. According to Spokesman Dmitri Peskov:

"Although Putin does not figure factually, and although other countries and other leaders are referred to, and so on, for us, it is of course obvious that the main target of these leaks was and remains our president, especially in the context of future parliamentary elections, and in the context of the long-term prospects."

And he has a point. Concentrating the whole scandal around President Putin assumes that the other folks involved didn’t have any say in putting a few million extra bucks in their coffers.

3. Protest, weakly. As for what the people have to say, it’s basically the opposite of what happened in Iceland (where thousands of protests demanded the resignation of their prime minister, and got it). Instead, four activists holding placards calling for Putin’s impeachment stood outside the State Duma, and were quickly removed by police.

So, what’s the takeaway?

Some people are going to believe the allegations, and have less faith in the folks up top – just like in Iceland, Argentina, Ukraine, Pakistan, the UK, and other implicated world leaders – not to mention the great nation of FIFA or a host of celebrities. Those people will be disillusioned that huge sums are tucked away in tax havens while many Russians can’t afford cheese.

Others will starkly deny the data presented in the Panama Papers – all of it. Those named in Russia will likely do what Mossack Fonseca did, and claim that the documents were fabricated, or only represent a small fraction of activity.

But it’s the response that matters, rather than figuring out what’s true and what’s false. The Panama Papers show up the stark divides in the Russian economy, and it’s not just the accused who have to face the shock waves of those allegations – whether or not they’re actually spending Russia’s money on international tax havens. Beyond that, people reeling from the ruble’s plummet will have to think about what power means in a society where some folks can – in theory – stash billions in offshore accounts, while most Russians are struggling to make ends meet.