The West has failed in sanctioning Russian companies that directly finance Putin’s war.

An investigation has uncovered evidence of a widespread practice that highlights Russian billionaires recruiting volunteers to participate in the ongoing war against Ukraine. 

IStories, an independent outlet, says businessmen like Oleg Deripaska, Leonid Mikhelson, Gennady Timchenko, Sergey Gordeyev, and Mikhail Gutseryev hire war volunteers as staff workers in their companies and pay official salaries as a method of financial motivation to join the armed forces.

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The volunteers, who in reality don’t work at those companies, upon their formal employment sign up for the Russian army or paramilitary militia and get a second bonus – a contract with the Defense Ministry.

While the government lures men with 200,000 rubles a month (around 2,100 US dollars), private companies of Russian oligarchs such as Rusal, Novatek, PIK, Mospromstroy promise rewards ranging from 300,000 and 800,000 rubles, IStories said.

A flyer advertising the financial conditions of contractual military service in Russia. 

Oleg Deripaska, a Russian oligarch who controls Rusal, one of the world's largest aluminum producers, allegedly employs fighters through its subsidiary Rusal Management.

The phone numbers for recruitment in the volunteer battalion Sokol, which is reportedly part of the 108th Guards Air Assault Regiment, are connected to Rusal Management. Igor "Shershen" Sergienko, a recruiter interviewed by IStories, turned to be a Rusan employee.

Similarly, Novatek, Russia's second-largest natural gas producer owned by Leonid Mikhelson and Gennady Timchenko, recruits fighters via affiliated entities like Saturn-1 PSC. The investigators found evidence of Novatek's partnership with the Muzhestvo Fund, which issues payments to volunteers. IStories found fighters on Novatek’s payroll in the 7th Company of the 200th Motor Rifle Brigade.

Sergey Gordeyev's PIK Group, a major real estate developer in Russia, and Mikhail Gutseryev's Mospromstroy were also implicated in the recruitment of volunteers for war.

An online ad posted by the Moscow city administration for volunteers. 

The local authorities in Moscow, St.Petersburg and other cities across the country, too, are active recruiters and sponsors for the Ukrainian military campaign.

Sadly, the investigators found, these and other war-supporting companies have avoided the US and EU sanctions and even prosper financially. As salaries in the Russian economy are decreasing, the rewards for the participation in the aggression of the neighboring nation are soaring.

Deripaska himself is under Western sanctions. But Rusal, whose managers are now recruiting for the war in Ukraine, was exempted from sanctions after Deripaska reduced his stake in the company below controlling interest. 

In July, European Aluminium, the European aluminum industry association, said in a memorandum that sanctions against Rusal should be avoided because it is “highly integrated into the global economy.”

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Sanctions affected Novatek only partially; the US imposed a ban on financing this company for more than 14 days - which caused difficulties in funding the project Yamal LNG. 

However, in 2022, Novatek increased its liquefied gas supplies to Europe and may soon overtake Gazprom in exports. Mospromstroy, in turn, disguises its sponsorship as private “donations.”

Literally, this is a scheme which the Kremlin uses to coerce businesses – including the friends of President Vladimir Putin – to contribute financially to the war machine.

IStories highlights the need for greater scrutiny and transparency from the US and the EU regarding the economic interests in relations with the Russian Federation.