News analysis

Why Putin isn't hurt by Panama revelations

Lack of backlash in Russia largely due to existing Western campaign to discredit him

While other European governments continue to grapple with the aftermath of embarrassing revelations of alleged tax avoidance contained in the leaked "Panama Papers", Russian President Vladimir Putin has dismissed accusations that some of his officials were engaged in stashing inexplicably large amounts of cash in shell companies and offshore tax havens as nothing more than a US-generated plot.

"Officials and state agencies in the United States are behind all this," Mr Putin said, explaining that the allegations were "manufactured" in order to "spread distrust of the ruling authorities and the bodies of power" in Russia.

Both current Russian officials and their Soviet predecessors had routinely dismissed unfavourable reports about their country as emanating from the hostile West. Still, all the evidence suggests that, this time, ordinary Russian citizens tend to believe their government's version of events; Mr Putin is likely to emerge from the Panama Papers scandal with his reputation intact.

Notwithstanding frequent complaints of excessive government controls over the media, the Panama Papers story was extensively reported in Russia. Predictably, state-owned TV stations showed a marked preference for reporting on allegations of financial misdemeanours against other leaders. But opposition newspaper Novaya Gazeta in Moscow ran extensive columns about the Panama affairs of Russian officials, with Mr Roman Anin, the paper's young but rising journalistic star, providing a blow-by-blow account of his investigations.

At first sight, the allegations against people close to Mr Putin seemed damning. Dominating most of the offshore dealings, according to the leaked papers, is Bank Rossiya, long identified by Western intelligence officials as the "family bank" of the Russian government.

Mr Arkady Rotenberg, a Russian oligarch and Mr Putin's childhood judo partner, also features as the alleged beneficiary of at least two anonymous companies that made huge payments into a variety of other obscure financial networks.

A recent torrent of media reports about Mr Putin's financial dealings and Russian corruption seems to have provided the Russian leader with protection against leaks such as those in the Panama Papers. PHOTO: AGENCE FRANCE-PRESSE

But the biggest surprise was the appearance on the Panama Papers of Mr Sergey Roldugin, a classical musician and another long-time Putin friend, who is alleged to be either the owner or a beneficiary of around US$2 billion (S$2.7 billion) worth of funds. As the Novaya Gazeta paper ironically put it, Mr Roldugin "can be considered not only a virtuoso musician" but also as someone who "scores gold" in investments.

Mr Putin's attempt to defend Mr Roldugin as a "patriot" who uses his money to buy musical instruments for needy local orchestras backfired, generating hundreds of jokes on Russian social network websites. Still, there was no public outrage, no demands for criminal investigations and no Russian political observer predicting that the allegations may harm the Putin regime.

One explanation for this curious silence is the fact that most Russians take it for granted that their top officials have money parked in overseas bank accounts; after all, capital flight has been one of Russia's chief economic problems since the collapse of the Soviet Union a quarter of a century ago.

Russians also tend to look at this activity not as a morally reprehensible tax evasion, but as an understandable measure of protection against a state which frequently either seizes or destroys private property. "In Russia, owning offshore companies is, in the first place, a means of protecting and concealing your property," wrote Ms Mariya Zhelenova, a Russian journalist, in an editorial which quickly became a hit among analysts in Moscow. Russians don't like their oligarchs, but they instinctively understand why they do what they do, she implies.

Yet probably the biggest reason why Mr Putin was able to shake off allegations about his inner circle is, paradoxically, the fact that the Russian leader has already been subjected to months of accusations about his and his friends' financial dealings. And there is little doubt that these were orchestrated by some Western governments.

In February this year, senior US Treasury officials agreed to be interviewed for a TV documentary produced by the BBC, Britain's state-funded broadcaster, looking at Mr Putin's alleged real estate properties in the West. And since then, a torrent of other media reports about Russian corruption appeared, many containing material which could have only originated from an intelligence agency.

For Western governments, the purpose of such revelations is to puncture Mr Putin's carefully nurtured image of selfless dedication to his nation's interests, by suggesting that behind his nationalist pretences stands a money-hungry elite eager to enrich itself.

But all the indications are that, far from working as intended, the Western-sponsored campaign has merely provided the Russian leader with protection against leaks such as those originating from the Panama Papers.

"Your humble servant is not there," Mr Putin triumphantly told Russian journalists last week in a reference to the Panama leaks. "There is nothing to talk about," he added with a smile.

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A version of this article appeared in the print edition of The Straits Times on April 14, 2016, with the headline Why Putin isn't hurt by Panama revelations. Subscribe