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Sanctions, spies, and oligarchs: Putin’s pet bank and its meeting with Jared Kushner

Kushner met with VEB bank chief Sergei Gorkov
AP Photo/Pablo Martinez Monsivais
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By Max de Haldevang
Published Last updated This article is more than 2 years old.

Jared Kushner, US president Donald Trump’s son-in-law, is to be the latest White House official grilled over the Trump campaign’s ties to Russia, the New York Times reports (paywall). In December Kushner met with Russian ambassador Sergei Kislyak alongside fired former national security adviser Mike Flynn, and soon sent a deputy to see Kislyak again. Then, at Kislyak’s request, Kushner met Sergey Gorkov, the head of Vnesheconombank (VEB)—a meeting that wasn’t previously reported, according to the Times. The Senate’s intelligence committee wants to ask Kushner about those meetings.

VEB is a state financial firm long entrusted with carrying out Russian president Vladimir Putin’s “special projects,” and has been weighed down by US and European sanctions since 2014. It also has significant ties to Russia’s security services. Gorkov studied at the training school for the FSB, the Russian spy agency, while his predecessor, Vladimir Dmitriev, worked in a Soviet foreign embassy at a time when the distinction between diplomats and spies was often blurred. In 2016, a New York court sentenced VEB official Evgeny Buryakov to 30 months in jail after he pled guilty to spying for the Russian government under the guise of working for the bank.

Putin’s pet bank

VEB was founded by Lenin as the Russian Commercial Bank in 1922. Putin transformed it in 2007 into a development bank, pumping it with funds that would be used for financial-crisis-era bailouts that private-sector banks wouldn’t touch and for pet projects like the extraordinarily wasteful $50 billion Sochi Olympics in 2014. VEB became seen as a “quasi-ministry” as Putin reportedly took personal charge of big decisions, and from 2005 to 2015 both its debts and its holdings skyrocketed.

VEB was used to aid the Kremlin’s favored oligarchs; extending, for example, $4.5 billion to aluminum mogul Oleg Deripaska to help save his beleaguered company in 2009 (an analysis in a leaked US State department cable at the time suggested the loan would never have to be repaid). What’s more, it became a foreign-policy tool of sorts, reportedly handing out $8 billion in secretive loans to get Russian oligarchs to snatch up plants in eastern Ukraine.

Struggling with sanctions

With Russia’s economy in recession and the bank reportedly owing $20 billion in foreign debt, VEB reached crisis mode in 2015. Hit by US and EU sanctions the year before over Russia’s invasion of Ukraine, it lost its access to foreign markets, stopped lending, and started a fire sale of its assets. Gorkov replaced Dmitriev in 2016 as its boss.

But despite the heavy weight of sanctions on VEB, a White House spokeswoman told the Times that Kushner and Gorkov didn’t discuss the matter during their 30-minute chat. “It really wasn’t much of a conversation,” she said. The Times reports that the amount of communication Kushner had with ambassador Kislyak caught other administration members “off guard,” since he reportedly hadn’t mentioned it when the White House was trying to work out what to do with Mike Flynn. Flynn was forced to resign (paywall) in February for having falsely told US vice president Mike Pence that he hadn’t discussed sanctions with Kislyak.

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