Prime Minister Mikhail Mishustin has been cleared of corruption charges after his former employer UFG Private Equity revealed he had made $35mn while working for the fund as a senior executive between 2008 and 2010.
Anti-corruption blogger and opposition activist Alexei Navalny investigated Mishustin following his appointment as prime minister in January and claims that the new prime minister has assets worth $45mn, mostly held under his wife’s name. While the money itself is not proof of corruption, the implication was that Mishustin was profiting from his position as head of the Russian federal tax service, where he worked for the last decade since leaving investment banking.
Moreover, Navalny found that Mishustin controls his money and assets with a variety of non-transparent holdings and proxies.
But the initial capital Mishustin earned at UFG is sufficient to explain the prime minister’s wealth and an increase to $45mn over a decade represents a very modest return on investment. Following the global financial crash in 2008 the Russian stock market performed well in the following three years until recession struck and as bne IntelliNews reported in its review of Russian stock market rallies, 2009, 2016 and 2019 were all vintage years for equities, returning 129%, 52% and 45% respectively.
“As a partner, [Mishustin] was included in the ownership structure, with a 25% share in funds, which had already [been] created, and he also became a founder in new funds with a 25% share,” UFG managing partner Polina Gerasimenko explained in a letter to RBC outlining Mishustin’s time at the fund as cited by RBC.
Mishustin was entitled to an equal split of UFG’s earnings — 2% of assets under management and another 20% of any annual returns, which exceeded performance targets of 5-8% — while he was a senior partner at the fund. When Mishustin joined UFG, the group already had $2bn under management, Gerasimenko said.
UFG paid $33.5mn to a Mishustin family trust to buy back part of this stake between 2010-2015, the letter says. The final portion of Mishustin’s shares was sold last year for an undisclosed sum. In addition, Mishustin also took home a salary of $2.5mn in 2009.
Navalny previously calculated that Mishustin’s family held assets worth RUB2.8bn ($45mn), noting that Mishustin’s wife earned $12mn while he was at the tax service despite having no apparent business interests.
Gerasimenko said those earnings came from the UFG shares in the Mishustin family trust, which was held in his wife’s name between 2010-2013, reports the Moscow Times.