This article was originally published on KYC360.com.
Earlier this year, an exposé on prime minister Dmitry Medvedev took Russia by storm. Don’t call him Dimon was the work of the Anti-Corruption Foundation, the brainchild of opposition politician Alexei Navalny. The foundation, whose mission is to expose corruption at the highest levels of Russia’s political system, is the reason Navalny—a presidential hopeful—has been called “the man president Vladimir Putin fears most”.
Published both on YouTube and as an interactive report, the investigation triggered two country-wide anti-corruption protests on 26 March and 12 June 2017, and rallies in support of Navalny on 8 July. A notably high proportion of attendees were teenagers and young adults—the generation that has grown up almost exclusively under the leadership of president Putin.
Nikita Kulachenkov is one of the Anti-Corruption Foundation’s three principal investigators. In March 2017 he and his colleagues alleged that Medvedev, who has called for tough punishment against corruption, is himself one of the most crooked officials in Russia. Their evidence suggests that Medvedev has used corrupt money to acquire mansions, yachts, vineyards, and mountain resorts in both Russia and abroad, with an estimated value of over US $ 1 billion. The estates, the Foundation found, are managed by the prime minister’s relatives and former classmates, through the guise of apparently innocuous non-profit organisations and charities.
Kulachenkov left Russia in autumn 2014 after being targeted for allegedly stealing a poster valued at about $3.00, according to the street artist who created it. The case against him, said Kulachenkov, was such a priority for Russia’s intelligence agencies that it soon became the subject of correspondence between the country’s prosecutor general, his deputy, and the head of the Investigative Committee (Russia’s equivalent of the FBI). Kulachenkov has since been granted asylum in Lithuania.
In this exclusive interview with KYC360, Kulachenkov reveals the logistics of creating Don’t call him Dimon and just what it took to unravel what Navalny has called a “grandiose, tangled snarl of figureheads and dummy corporations.”
Take us through your investigative process.
We used a number of sources to help us in our investigation, including information from hacked e-mails leaked two years ago. In 2014, a group of hackers called Anonymous International or Shaltai Boltai (Humpty Dumpty) published the e-mails and online correspondence of high-profile Russian officials in the presidential administration to prove that [these officials] were falsifying criminal cases against opposition activists. Medvedev was not their only victim. Some of these hackers have been caught and are on trial in Russia; some of those arrested from the Federal Security Service (the FSB), so it seems that the e-mails were leaked by a government insider. This should have been treated like the next Watergate, but nobody cares in Russia.
In Medvedev’s e-mails, we noticed some [receipts for] the delivery of t-shirts and sneakers in the name and address of some unknown person [called Vladimir Dyachenko] … this is precisely the type of clue one must pay attention to.
Why was this clue so important?
I cannot say that the whole investigation started from sneakers and t-shirts, but it helped us develop some part of what we found – about 50%. This was a hook that we brought to the forefront, because it is funny and ingenious. You have the e-mails of the ex-president of Russia. You assume that these e-mails are not fake and you see that he orders lots of sneakers and t-shirts in the same size for some other person. Why does he do this? We started to investigate who this person was and discovered that the person holds positions in several legal entities. We then investigated these legal entities and found that they were connected to [the Dar Foundation] – a so-called charity connected to Medvedev’s wife [Svetlana Medvedeva]. We got the whole picture within two months. The project took five or six months in total: we started in September and the documentary was released in March; however, the core of the information was developed in the autumn of 2016.
Could you tell me a bit about your team?
I cannot get into any details about the team, but there are a few people. Some of them – namely me and Georgy Alburov – work publicly. There is one other non-public team member. Alburov is based in Moscow. The three of us form the core of the investigation team, but there are other people who help us with production, programming, filming, editing, graphics, and so on.
Georgy has a background in IT; I used to be a forensic accountant with ten years of experience in fraud and money laundering. The other person who is heavily involved has a background in finance. But when you conduct investigations using the Internet, it is more about your analytical skills. You do not necessarily need to have a background in finance or police work.
How are you able to filter out dead end clues and remain focused on information that actually leads you somewhere?
I would say that, in total, we have investigated 10 cases; five of them have been completed, because we can prove that a certain person is the owner of a certain property that he or she cannot afford with an official salary, which is a red flag of corruption. Out of these five, we have only published two.
You will have lots of dead clues if you are an investigator, especially if you are not an official authority. We are just a non-governmental organisation and we cannot interrogate anyone or request classified data or data that is protected by privacy laws. We can only use public sources like everybody else. There are different jurisdictions. In some, it is rather simple to obtain information on property ownership. For example, in Britain, it takes just a few seconds to get information on a company’s shareholders. In the British Virgin Islands, for example, you cannot get this type of information unless it is stolen or leaked or something like the Panama Papers happens again. In half of our cases, we can only guess that a particular property is owned by a particular government official, but cannot prove our claim with enough evidence to publish it.
In your investigation of Medvedev’s assets, did you find any crimes that went outside Russia? Do you think that foreign banks were unaware that they were processing the proceeds of corruption, or was the money carefully laundered?
The proceeds that were transferred outside of Russia are found in Italy, where the entities related to Medvedev’s empire had bought a vineyard. This was our exclusive find.
For foreign banks, these particular transactions might have not looked like money laundering, so I cannot blame anyone in Italy. The money was not suspicious to them, because the company in question was registered to Ilya Eliseev – the head of the board of Russia’s Gasprombank and Medvedev’s former classmate. He is definitely not a poor man and has a significant official salary. As a loan to a Russian non-profit organisation, the money did not have any laundering flags.
But the parties that we can blame are the auditors. The Russian offices of Deloitte & Touche and KPMG audited Gasprombank in 2007 and 2008, respectively, when a major loan for 11 billion roubles (approximately US $460 million) was given to the managing company of [the Dar Foundation, which was] indirectly controlled by then Russian president Medvedev [and of which Eliseev was a board member]. The auditors did not ask why the second largest loan lent by the bank in question was given to a non-profit organisation with no actual activity other than purchasing mansions and yachts. This is really, really unusual. I think that the auditors were told not to ask these type of questions and kept silent.
How do you think conducting a financial-fraud investigation within Russia differs from conducting one outside of Russia?
I cannot imagine that any criminal cases would be trumped up against investigators looking into the corruption of government officials in Britain or the United States today. But this does happen in Russia.
Five out of the 10 key people in the Anti-Corruption Committee are either convicted or wanted. This was in the last five years. We are like a gathering of criminals.
I am no longer in Russia. The other, non-public key person is also no longer in Russia. One person spent a year under house arrest; another person has been a suspect for the past 2-3 years, so he cannot leave Moscow. Aleksey [Navalny] is convicted. Two others were convicted with suspended sentences or community service.
The idea is that if we are convicted, we cannot be elected. The Russian state thinks it looks good for propaganda: “Here is the Anti-Corruption Foundation and half of their staff members are criminals.”
Do you think that there are aspects of this investigation into prime minister Medvedev that are transferable to other investigations?
Definitely. We already have proof of this. The scheme of using non-profit organisations to manage and hide large assets is now being looked into by other investigators who have identified other non-profit organisations presumably related to other government officials. So it seems the Medvedev is not the only one who used this particular method to hide his assets. We put the spotlight on this type of scheme.
We can also see that we have inspired lots of people to make YouTube videos to present the findings of their investigations. Videos garner a significant amount of attention – we soon got 20-25 million views and understood that this was something unusual. We do not just make videos – we also have a website with relevant documents so that people can fact check for themselves. But most people, I think, would prefer to watch videos on YouTube.
I think that we are definitely inspiring investigations, but I see nothing unusual in our methodology. You just have to have some patience, pay attention to details, and have excellent analytical skills. You just sit with the data, look at different sources, and compare information.
Has it become more difficult or easier to conduct such financial crime investigations in Russia as we go deeper into Putin’s presidency? How was the situation under Yeltsin?
Technically-speaking, it is easier to conduct such investigations now than it was 20 years ago, because today you have the Internet, databases, and so on. Russia has a really good property ownership database – the Unified State Property Register (EGRP). It takes just a few minutes to get ownership information on the Internet. It is rather simple. But over the course of the past few years, officials have been trying to hide more and more information. We have seen [instances] then they have tried to [conceal] the names of government officials in these databases. You would ask for information on property ownership and receive just abstract numbers instead of concrete names. I can say that the state is becoming less transparent mainly as a result of our investigations.
In terms of safety, I think that it was less safe to conduct corruption investigations in the 1990s. Today, yes, you could be dragged into a criminal case, but you will likely not be killed. I cannot say that the rule of law is better today, because it is not, but in the 1990s, government officials trying to deal with the “problem” of being investigated would only find one solution: to physically eliminate the investigator. Now, the state puts investigators in prison. Still, though I am safe right now, some of those in Moscow are scared for their lives. Alexei [Navalny] recently even became the target of a chemical attack [orchestrated] by someone whose accomplice was found to be a police officer.
But the more you work in this area, the less you think about your own safety, because you grow tired of being afraid. You cannot continue worrying about something for a long time, otherwise you either stop working entirely or just go crazy. I do not think that Alexei [Navalny] fears for his life.
We have seen several waves of protests in cities across Russia. Do you feel that corruption is an issue that gets people particularly riled up—as opposed to say, bad governance?
Yes, corruption is a topic that anyone can understand to be wrong. Anyone can see the illicit enrichment of state officials across all levels of government or notice that the best cars in a small town are owned by police officers, church officials, and local administrators … I think that this is why there were so many young people on the streets, which was a surprise for us. Seeing inequality and the lack of opportunities for social and professional mobility unless you are the son of the local prosecutor or something like that: this is enough to get young people out into the streets.
The Anti-Corruption Foundation’s consistency and transparency in regards to sources has set an impressive example in Russia, where activists for a range of causes have taken to YouTube to share their findings. The Foundation’s own work, Kulachenkov believes, has emerged as a clear challenger to the existing political order, and has left the government desperate to find all legal means to prevent Navalny from running for elected office, and to hinder the foundation’s ability to raise funds. In an effort to dissuade people from attending rallies, authorities have also been arresting protestors (even detaining unfortunate passers-by), and targeting school and university students. But Kulachenkov remains optimistic. He takes these setbacks as a sign that the foundation is fulfilling its mission, and that Russia may “become a better place far earlier” than he had previously thought possible.