Russian experts are mixed on how the Kremlin should respond to the allegations in the Panama Papers. Some believe that the Kremlin should launch an independent probe, while others say that Russia has no reason to start a new investigation.

Although President Vladimir Putin (pictured right) is not included in the Panama Papers, they do contain the name of his spokesperson Dmitry Peskov (pictured left). Photo: AP

The Panama Papers scandal, which revealed possible fraud and corruption within the highest ranks of Russia’s political leadership – including President Vladimir Putin’s inner circle – has the potential to become another headache for the Kremlin. At the very least, the investigation conducted by the International Consortium of Investigative Journalists (ICIJ) could make Russian officials account for their shadowy offshore holdings.

In other nations, the most reasonable way to respond to the release of the controversial documents would be the launch of an independent investigation. But that doesn’t appear to be happening in Russia. There is little or no likelihood that an independent investigation will take place, especially given the Kremlin’s reluctance even to recognize the validity of the Panama Papers.

According to some experts, there are not even any legal grounds for conducting an investigation into the alleged corruption schemes of high-profile Russian officials. After all, the Panama Papers reveal only the dealings of private individuals, who are not banned from using offshore accounts for personal goals.

At the same time, the unquestioned loyalty of Russian officials to Putin is the major obstacle for Russia to conduct an independent investigation. After the Panama Papers exposure, Russia has failed to address inconvenient questions regarding those involved in the scandal. There is neither pressure nor desire to launch an independent probe. Thus, members of the Russian leadership don’t seem to be ready yet to make their affairs more transparent.

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That’s especially true given that some Kremlin officials assume that the major goal of the Panama documents is to undermine the credibility and legitimacy of Russia’s presidential power as well as hamper Russia’s attempts to reinvigorate dialogue with the West.     

However, one should understand Putin’s logic in the context of his unprecedented approval ratings. For now, his public approval ratings are very high. But what happens if doubts and concerns continue to grow? Any public distrust in the integrity of the President and his model of governance might challenge the Kremlin’s official position and force Russian officials to re-think their approach.

The unlucky Russian 13

According to the Panama revelations, 13 Russian officials or members of their families have foreign offshore accounts of dubious origins. This list of suspects includes Kremlin spokesperson Dmitry Peskov, Economic Development Minister Alexey Ulyukaev, Secretary of the Russian Security Council Nikolai Patrushev and Chechen Senator Suleyman Geremeev. In addition, names of deputy ministers, Russian parliamentary members, governors and other high-profile officials are included within the documents.

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The authors of the investigation clarify that not all presented in the Panama Papers can now be accused of fraud or wrongdoing. Some cases are complicated, with the relatives of those included in the list under suspicion. However, the documents also reveal the dubious background of some officials. For example, these officials may have owned foreign assets or set up offshore firms before the law banning officials from possessing offshore assets.

The story of one of Putin’s closest friends, cellist Sergey Roldugin, is also casting a shadow on the reputation of the President himself. According to the documents, Roldugin is involved in a series of offshore deals and has dubious assets in Russia. As Novaya Gazeta, an opposition newspaper, claims, Putin entrusted to Roldugin his own assets, implying the President is engaged in some form of financial manipulation.

Those mentioned in the investigation claim that they didn’t violate the law, because at the moment of their tenure in government, they didn’t have any assets abroad.  The versions of both sides sound logical, so finding the truth requires more evidence.

However, what makes the arguments of the Kremlin more questionable is the fact that no Russian law enforcement agency has shown any signs of willingness to start its own probe. Remarkably, Peskov himself points out that the documents don’t contain anything new and relevant. He finds the results of the investigation very speculative in their nature.

Why the Kremlin disregards the Panama Papers

A former aide of Russian President Boris Yeltsin, Georgy Satarov, argues that the most reasonable response to the investigation should be the start of a new probe into the complicated offshore schemes of those in power.    

“We have state anti-corruption bodies, which come up with ways of how to respond to such revelations,” he told Russia Direct. “They should do it automatically. There are some international documents, which oblige us to respond to such accusations.”

Likewise, Leonid Gozman, democratic activist and a fellow of the National Endowment for Democracy, believes that it is unreasonable to ignore a respected international investigation and evade a potential probe into the financial dealings of those officials mentioned in the Panama Papers.

“We should have responded like other Western countries, whose representatives were also mentioned in the investigation papers,” he told Russia Direct. “They just announced that they would conduct their own investigations and come to their own conclusions. After all, it is not a serious approach to say that we trust our authorities.”

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However, one of the reasons why the Kremlin doesn’t take seriously the Panama Papers is the attitude of the Russian authorities toward the genre of investigation, especially one conducted by journalists. It is not really popular in Russia. Government officials, who are legally obliged to respond to any media request, can refrain by sending a formal refusal, and the process will stop.

“We are used to disregarding such journalistic investigations. In our country we do our best to curb such probes, but in this case it is difficult to do because it’s global,” said Gozman. “I would prefer to think that our government and parliamentarians are fair, but now we need to examine this.”

If no action is taken to investigate the situation, the archaic nature of the power structure will become evident. The reaction of those in power looks more like responses of private persons, rather than of official representatives of the current leadership, Satarov argues.

“Nothing that the officials have said represents the opinions of the country in general or its people – this is just a view of a narrow clique. This sends us back to the statement of “I am the State,” which is 300 years old,” Satarov says. [“The State? I am the State” is a saying attributed to King Louis XIV, the famous absolute monarch of France during the early 18th century. – Editor’s note].

In contrast, Pavel Salin, the director of the Center for Political Studies at the Financial University under the Russian Government, believes that it is still too early to start an investigation now.

“There are no reasons to worry about the potential investigation [now],” he told Russia Direct. “Legally, private persons are not banned from using offshore accounts, though it’s not really welcomed. All facts presented by the investigation concern only private figures that are acquainted with friends of top state officials, but formally they have a right to run their affairs this way.”

Salin points out that the key objective of the whole investigation and the people who ordered it is to undermine the trust in the Russian authorities at the beginning of the electoral cycle, before the 2016 parliamentary elections. [In September, Russians will go to the polls to cast their votes for deputies of the State Duma. – Editor’s note].

“This wasn’t aimed at undermining the public trust countrywide, but at undermining the positions of the Russian elites,” Salin said. However, he added, it has failed to affect these elites either within Russia or in the West. Such leaks are not new to the Western audience and don’t affect Russia’s image significantly, he suggests.