quote:

For Russia’s elite, passing on family wealth has become more complex than ever.

With the war in Ukraine stretching into a third year and the rich getting accustomed to the idea that Russian citizens are no longer welcome in the West, the tried-and-true playbook for transferring fortunes has been effectively vanquished. Even Cyprus and Switzerland — some of the favourite spots of old — have introduced bans on providing management services to family trusts with Russian nationals as trustors or beneficiaries.

The fate of this vast wealth has major implications for Vladimir Putin and Russia as it remains largely cut off from much of the rest of the world.

While some of the rich still seek ways to keep family funds in the West, others look to relocate them in so-called friendly countries like the United Arab Emirates or end up transferring them to Russia — particularly if their holdings are concentrated there. Most of the billionaires who were sanctioned have opted to move assets home.

The country, for its part, has offered incentives for years for the wealthy to bring their money back and has created structures that it says will shield private assets. But concerns over state seizures remain, especially because they’ve increased recently. A critic of Russian President Vladimir Putin warned there would be more coming.

Two Russian billionaires who spoke on condition of anonymity for fear of retribution said now they can only do business in Russia and avoid thinking about potential asset seizures. Another sanctioned tycoon who moved assets back home said he hasn’t figured out how to handle his succession yet but that he and his family have resorted to building a new life in Russia.

“People act based on their current capabilities and limits,” said Alexey Stankevich, a strategic consultant for ultra-high net-worth Russians who advises several family offices. “The degree of unpredictability has grown exponentially.”

The fate of this vast wealth has major implications for Russia as it remains largely cut off from much of the rest of the world. The 26 Russians on the Bloomberg Billionaires Index have about $US350 billion ($532 billion) combined. Their average age is 63, meaning how and where they choose to pass down their fortunes in the coming decades will reverberate in the economy and across business sectors. Some of the billionaires — like fertiliser mogul Andrey Guryev and oil tycoon Vagit Alekperov — possibly have big chunks of their fortunes in cash, kept in undisclosed locations.

It is unclear how the country’s mega-rich plan to pass on their wealth, and there is no general trend, according to Daria Nevskaya, a Dubai-based lawyer who serves wealthy Russians. Sanctions following the invasion of Ukraine have sped up the process in certain cases, like for telecom-to-property mogul Vladimir Evtushenkov, who transferred assets to his son to shield his holding company after he was penalised in 2022.

“Each case is unique and depends on where people plan to live in the future and where their core assets are located,” Nevskaya said.

Russian wealth is unlike any other among the biggest economies. The succession wave that has just begun is the first since before the Bolsheviks seized power more than a century ago, ushering in Vladimir Lenin and virtually eradicating private ownership. Modern wealth emerged only after the fall of the Soviet Union, when local businessmen took advantage of the state selling assets in the 1990s to build the country’s giants of today. They soon began to find ways to send their fortunes abroad, trusting the rule of law in foreign countries would enable them to better defend their rights in case of litigation.

Russia, which doesn’t have inheritance taxes for its residents, has long tried to encourage the rich to bring their money back home. The latest push began in 2018, when the nation created special administrative areas where repatriated money could qualify for tax benefits. Then in 2020, the government renegotiated double taxation treaties with some countries including Cyprus, effectively raising the cost of keeping assets there.

Authorities later introduced private foundations that make it easy to transfer fortunes to the next generation by automatically distributing their assets or profits to the heirs. Since the legislation went into effect in early 2022, about 30 such funds have been set up, with the latest one just this month.

Roman Margulis, managing partner at ASB Consulting Group, which helps individuals establish such foundations in Russia, said the Moscow-based firm gets between 10 and 15 enquiries each month and that the numbers have multiplied over the past two years. The fear of sanctions and of getting assets frozen abroad is adding to the appeal, he added.

Yet only a couple of the people interested ended up establishing foundations, Margulis said. Because they are so new, many enquirers prefer to wait and see how well they do and how safe they are before committing. Moreover, heirs who aren’t Russian tax residents still have to pay a 30 per cent inheritance levy, making the structures less appealing when people living abroad are involved.

It’s not all about laws and jurisdictions, though. Russia stands out because the country’s business environment depends on informal agreements and guarantees that have developed under Putin, who recently extended his quarter-century rule with a fifth term as Russia’s president. While he has said he wasn’t planning any de-privatisation or nationalisation, having a good relationship with the authorities is key to avoid asset seizures.

Last year, prosecutors filed almost five times more lawsuits to nationalise assets than in 2022, according to research by newspaper Novaya Gazeta Europe and Transparency International Russia. In February, a regional court ordered the transfer to the state of three plants from a group that accounts for about 80 per cent of Russian ferro-alloys output and had been controlled by the family of entrepreneur Yury Antipov and his business partner since the early 1990s.

“The main role of business owners is to protect assets from rivals and the state,” said Stanislav Shekshnia, senior affiliate professor of entrepreneurship and family enterprise at INSEAD near Paris.

“This function cannot be passed on by inheritance as Russian capitalism rests on informal relations. Unfortunately, here tycoons have failed to build organisations that are independent of their founders.”

gradenko_2000 posted:

Wow I can't believe the US 1st Infantry had to fight off a hundred Tigers at Omaha. Guess Monty was too busy lazily brewing tea at the beach to take Caen huh.

gradenko_2000 posted:

Wait so if she's Russian doesn't that mean she SHOULD be banned from eurovision???

Sanlav posted:

The idea that ill gotten gains aren't protected is horrifying to a certain kind of person. If politics can't shield robber barons from violence and taxation, what is civilized society even for!

Cheatum the Evil Midget posted:

Things must be going well

https://twitter.com/ukraine_map/status/1789286705108861303#m

Endman posted:

The very beginnings of the modern European state was when the robber barons started to build castles so they could leverage violence against the population without retaliation, so of course those sorts of people are making GBS threads themselves at the idea that the state might repossess the walls

Isentropy posted:

I wonder if there was some technological innovation that allowed the state to nullify the advantages of these castles though. Anyone got any ideas?

Isentropy posted:

I wonder if there was some technological innovation that allowed the state to nullify the advantages of these castles though. Anyone got any ideas?

ModernMajorGeneral posted:

https://www.theage.com.au/business/banking-and-finance/russia-s-richest-don-t-know-how-to-pass-on-their-billions-20240509-p5i7y8.html

Russia’s richest don’t know how to pass on their billions

Harden your heart, Putin

Isentropy posted:

I wonder if there was some technological innovation that allowed the state to nullify the advantages of these castles though. Anyone got any ideas?

Orange Devil posted:

Communism.

Isentropy posted:

I wonder if there was some technological innovation that allowed the state to nullify the advantages of these castles though. Anyone got any ideas?

Isentropy posted:

I wonder if there was some technological innovation that allowed the state to nullify the advantages of these castles though. Anyone got any ideas?

Sanlav posted:

The idea that ill gotten gains aren't protected is horrifying to a certain kind of person. If politics can't shield robber barons from violence and taxation, what is civilized society even for!

Palladium posted:

they should make a call of duty where everytime it finishes introducing an bad dude operator they get immediately killed from a shell out from nowhere

Sancho Banana posted:

Willpower

Cheatum the Evil Midget posted:

Things must be going well

https://twitter.com/ukraine_map/status/1789286705108861303#m

January 6 Survivor posted:

Imho the most important person in the history of warfare is Joan of Arc, because she is catholic, a monarchist, understood the importance of artillery to take strongholds and most important of all, a woman who dressed like a man.

January 6 Survivor posted:

Imho the most important person in the history of warfare is Joan of Arc, because she is catholic, a monarchist, understood the importance of artillery to take strongholds and most important of all, a woman.

Frosted Flake posted:

tazjin posted:

An important result of Putin's re-inauguration is, of course, that there's new Wide Putin content: https://www.youtube.com/watch?v=PwuV2HxNUgM

Palladium posted:

he's back

Grimnarsson posted:

Was watching some old debate between Stephen Cohen and Michael Mcfaul, and Cohen mentioned that there was an independent European report in 2009 that concluded that Saakachvili started the 2008 Russo-Georgian war. I'd heard and was convinced that that was indeed the case already in 2008, but it's interesting to see how a lot of people just believe it was self-evidently an imperialistic war of aggression by Russia and a sign of things to come with regards to Russian aggression against Ukraine.

https://www.reuters.com/article/idUSTRE58T4MO/

Jel Shaker posted:

i can’t remember where I heard it (mark ames?) who said there’s a story of Saakachvili bumping into an old school friend in a café while he was at the height of his power in Georgia, and felt insulted because his old friend used his diminutive or nickname from school, and after he said goodbye his bodyguards found the old friend in the café toilet and beat him to death


might be completely made up, but I think it’s one of those stories which exemplifies what kind of a person he was