Putin And Medvedev: Most Powerful Insider Traders?

Putin And Medvedev: Most Powerful Insider Traders?

As a former Head of securities trading department of Gazprombank (a banking arm of Russian state-controlled gas monopoly Gazprom) I am confident that Vladimir Putin, Dmitry Medvedev and Alexei Miller (head of Gazprom) were involved in insider trading and thus may potentially be indicted on relevant criminal charges related to pre-conceived use of their official positions, as a group, with the purpose of gaining personal financial benefit.
As the evidence available may demonstrate, on 07.07.2004 the Treasury of Gazprombank (my department was a part of the Treasury) purchased a block of shares of Russian oil company YUKOS (that was later, in fact, nationalized by the Russian state without a due compensation to shareholders). The bank had NO trading limits for this equity at that time. Moreover, when new trading limits were discussed earlier in 2005 prior to be submitted for approval by appropriate management committee of the bank, the Risk management department was strongly opposed to trading in this equity since the company ( YUKOS ) was already under heavy pressure from the state and was considered as highly risky and volatile asset. The arguments were quite obvious and reasonable so no one had even ventured to express any opposition. Thus, YUKOS was not even included in the list of equities submitted by the Treasury for relevant approval for trading.
So, how the Treasury managed to purchase the block of shares of that company without any duly established trading limits? Who had initiated that purchase? Everything happened quite promptly, without any prior discussion at the trading floor, without a relevant planning of the most appropriate timing, without any cunning trading technique to check the market conditions that experienced professionals might had employed. Deputy Chairman of the bank, who was put in charge to supervise the Treasury, entered the trading floor and directly instructed traders of the bank (without several bank officers of different layers of hierarchy being involved) to purchase a certain amount of shares at market price. All relevant documents and approvals for the purchase were typed and signed after the transaction (still without trading limits duly established).
The most intriguing aspect of that purchase was the following. While that deputy chairman of the bank was still waiting in the trading room for the traders to report on the transaction being finally executed he clearly demonstrated his criticism and even concerns for the profitability of that purchase since it was a common knowledge that the market for YUKOS shares was very weak then. The market perception on the stock was negative. Once the traders reported the average purchase price of the block the deputy chairman left the trading room as if he needed to make a subsequent phone call with a report to his superior/s. It was rather strange that someone "from the above" hadn't taken into account the opinion of the deputy chairman not to mention the opinion of the Treasury (both were similarly negative).
In 2005 I submitted my reports to the Central Bank of Russia, Russian Financial Markets Federal Commission (FSFR) and General Prosecutor with my allegations related to illegal and dubious, in my view, financial transactions executed by the Treasury for the bank's own trading position. I was confident that there were many cases of insider trading and market manipulation. Quite often transactions were executed on terms that were not in the bank's best interests with a clear advantage provided to a few counterparties. It was clear that a group of culprits, whoever they were, just used strong purchasing power and sometimes huge trading positions of the bank for their own benefit. Russian regulators and law enforcement bodies refrained from a thorough inquiry. The Central bank, FSFR and prosecutors produced almost similar replies shifting the task to launch a relevant inquiry upon each other and quoted that that matters were not in their area of their authority and concern!
In autumn of 2005, while I was already in London, I came across (in the internet) the Testimony of Mr. Tim Osborne, a member of the Board of directors of Group Menatep (that owned YUKOS and was under attack from the Russian state) before the US Senate Foreign relations Committee called "Democracy on the retreat in Russia" and dated February 17, 2005. In that Testimony Mr. Osborne stated the following: ""¦we asked the former Prime Minister of Canada, Jean Chretien, to act as an intermediary in opening discussions with the Russian government. Prime Minister Chretien met with President Putin in the Kremlin on July 5th of last year. Also present at the meeting was Alexei Miller, president of Gazprom. Over lunch, the President agreed that his government would review in good faith any proposals by YUKOS to resolve the tax and other legal issues then outstanding."
I should remind you that the current Russian President Dmitry Medvedev was holding two important positions at that time: Head of President Putin" Administration and chief representative of the state on the Board of directors of Gazprom. Taking into account both positions he was surely aware of the visit of Mr. Chretien and issues discussed with him in Kremlin.
Thus, it is crystal clear to me that the deputy chairman of Gazprombank was instructed by top management of Gazprom to purchase the block of shares of YUKOS two days after the visit to Kremlin and subsequent meeting based on the insider information from Putin, Medvedev and Miller. Apparently, the deputy chairman was not aware of the reasoning behind the purchase. Equally, as far as I remember, mass media hadn't reported this visit neither prior to the purchase nor after. The issues discussed at the meeting were not in public domain.
As I can see it, Putin and Miller had persuaded Mr. Chretien that the Russian state had no intention to pursue expropriation of YUKOS and expected that foreign investors (and maybe Group Menatep and foreign minority shareholders of YUKOS) would start purchasing the equity soon after those false assurances. That hadn't happened, the market continued to decline and the block of shares was transferred from the trading position of the Treasure to longer-term "investment" position of the bank.
Top Russian officials are not market professionals. But, as it is a common knowledge in Russia, top officials in Russia often use their access to market sensitive information in their interests acting through market participants and mass media. Law on insider trading was adopted in Russia only in 2007. According to the law a culprit can't be indicted with any wrongdoing that had occurred prior to that Law came into force. But regardless of that, the Russian law has envisaged criminal charges for officials in case of an abuse of power. This legal concept is still valid, at least on paper but rarely used in practice. According to Russian law, criminal charges are even more severe in case there was a group of culprits and the amounts and volumes in question were significant.
This is just one example of law being totally neglected and abused in Russia. Putin and his team have established an absolutely totalitarian regime with totally corrupted establishment acting side by side with obedient law enforcement and subservient judicial system. Why on earth anyone might have expected Putin to step down? He literally OWNS Russia. To own such a country with such huge wealth resources (especially gas and oil reserves) and with absence of rule of law is a paradise for any criminal-minded and unscrupulous politician. We may add absence of any real opposition to this list as well as nuclear arsenal and huge army, uncontrolled police and intelligence.
In my view, such an I'll-minded tyrant as Putin would eventually deliver irretrievable damage not only to Russia but to the world's peace as well. His ambitions would never cease to be aggressive. The West won't placate him. He would eventually and inevitably stir up and instigate severe hostilities (don't forget he is "a former" KGB officer) unless there is some legal tool that could be employed to shaken considerably his position and public reputation.