October 7, 2022

Experts say Russian oligarchs seek to bolster their reputations with philanthropy

12 min read


They’ve sponsored fellowships at Ivy League schools, have educational centers named after them, and sit on the boards of leading cultural institutions in the United States and Western Europe. They’re celebrated philanthropists and patrons of the arts.

But there’s something else these donors share that other well-heeled benefactors do not: Deep financial ties to Russia.

While there is nothing new about the reputation laundering of the oligarch class, it is facing renewed scrutiny in the wake of Vladimir Putin’s unprovoked invasion of Ukraine. The recent renaming of the “Russian Lounge” at Washington’s John F. Kennedy Center for the Performing Arts underscores the sensitivity surrounding such relationships.

Vladimir Potanin acquired his “philanthropic leadership” at the Kennedy Center — where his name is inscribed on the polished marble walls along with General Motors, Boeing and Capital One — with a $5 million donation in 2011.

Potanin — Russia’s wealthiest businessman who plays hockey with Putin and has so far dodged Western sanctions — made his fortune devising a system for Russian business leaders to loan money to the cash-strapped administration of then-president Boris Yeltsin in the mid-’90s. When Russia could not repay the loans, the businessmen were allowed to buy key state assets for pennies on the dollar. At the time, Potanin and his business partner bought 38% of the mining and metal company Norilsk for $170.1 million, a stake that would be worth nearly $20 billion 15 years later.

This Colorado steel mill 'built the American west,' but its ownership has ties to Russia
Around the time of the Kennedy Center donation, he said that he hoped it would “present an image of contemporary Russia to the American audience, stepping beyond the clich├ęs about our country.”

But contributions like this appear to serve another purpose.

It is “the classic example of essentially trying to buy a better reputation … to distract from the fact that you’re still very much tied to an authoritarian regime,” said Jordan Gans-Morse, professor of corruption in the post-Soviet era at Northwestern University.

An old American playbook

Potanin, who was identified by the US Treasury Department in 2018 as one of nearly a hundred influential Russian billionaires with close ties to the Kremlin, isn’t the first or only oligarch to use his wealth to attempt to sway the opinion of Western elite. In fact, it’s a page straight out of an old American playbook.

Nineteenth century robber barons famously splashed their names across orchestra halls and museums to shed their reputations as ethically dubious industrialists who amassed enormous wealth on the backs of America’s most vulnerable. It worked: When most Americans hear the name Andrew Carnegie, they probably think of Carnegie Hall or Carnegie Mellon and not one of the deadliest labor confrontations in American history, which occurred at one of his steel plants in 1892.

A more recent example is the way the Sackler family behind Purdue Pharma reportedly donated tens of millions of dollars in what critics say was an effort to obscure the deadly legacy of its blockbuster drug OxyContin. Prestigious Western cultural institutions, such as the Metropolitan Museum of Art in New York and the Louvre in Paris, have had to reckon with donations from the Sackler family in the aftermath of the opioid crisis. The National Portrait Gallery in London turned down a $1.3 million donation from the family in 2019 and others have also pledged not to take Sackler money in the future.
A sign welcomes visitors to the Sackler Wing at the Metropolitan Museum of Art in New York in 2019.

In much the same way, Putin’s inner circle — many of whom are oligarchs who have profited off corruption and made their wealth in illicit ways — use philanthropy in the West to launder their reputations and gain access to American and European high society, according to experts.

Dartmouth sociology professor Brooke Harrington said oligarchs of any nationality typically target three kinds of institutions with their donations — cultural, political, and educational.

While most universities are required to disclose gifts and contracts with foreign actors exceeding $250,000 a year under federal law, a 2020 report by the Department of Education found widespread noncompliance. Yale, the report states, “underreported its foreign gifts and contracts by $375 million.” Harvard, in turn, “appears to possess inadequate institutional controls over its foreign donations and contracts,” the report found. Yale acknowledged the issue at the time saying the university failed to submit reports between 2014 and 2017, but had since corrected this. Harvard said it had identified “a wider range of contracts” and updated its reports accordingly.

Seven Russian billionaires donated hundreds of millions of dollars to American universities, charities, museums and foundations just since 2009, according to an analysis from the Anti-Corruption Data Collective and CNN reporting.

Some experts say cultural and educational institutions can do more to prevent the reputation laundering of their donors.

Respected institutions have a responsibility not to glorify those who built their wealth through illicit trade, said Louise Shelley, a public policy professor at George Mason University.

Now, some cultural centers and universities are grappling with what to do with oligarchs’ donations.

“If they can co-opt the thought leaders, as well as the political leaders, as well the cultural leaders — it becomes much harder to stop whatever it is that Putin wants to do,” Harrington, the Dartmouth professor, said.

Viktor Vekselberg’s partnership with MIT: “It is just absolutely wild”

A decade ago, Putin wanted to stop the brain-drain of scientists and engineers to the West and cultivate home-grown tech at a $3 billion Moscow-based innovation center.

At the time, Washington and Moscow were attempting a closer relationship and the prestigious Massachusetts Institute of Technology provided the perfect combination of knowledge, credibility and reputation for the Russian project.

The Skolkovo Foundation — lead by one of Putin’s close allies Viktor Vekselberg — entered into a partnership with MIT in 2011 to build the Skolkovo Institute of Science and Technology, or “Skoltech,” outside of Moscow.

Keith Stevenson, Skoltech’s provost, told CNN in an interview that the main premise of the relationship was to develop “academic excellence and research that could be contributing to the growth of the economy around the world.”

Vekselberg, like many other oligarchs, made his money during the privatization of Russia’s natural resources, specifically oil and metals, after the collapse of the Soviet Union.

The collaboration with Skolkovo provided MIT with over $300 million, half of which was earmarked to develop Skoltech’s curriculum and the other half to use “for its own development,” according to Boston’s WGBH News.
Kremlin-connected children grew up in the very countries whose societies their parents claim to reject
At the start, Russia was “an ally,” MIT professor and former President of the Skolkovo Institute Edward Crawley told WGBH News, and said the relationship was similar to one the university would have with any other foreign institution.

However, Vekselberg and Skolkovo quickly caught the attention of federal investigators.

A few months after the Russian invasion of Crimea in 2014, Boston’s local FBI office published an unusual warning:

“The [Skolkovo] foundation may be a means for the Russian government to access our nation’s sensitive or classified research development facilities and dual-use technologies with military and commercial application,” the assistant special agent in charge wrote.

“This type of activity does not go on at Skoltech,” said Stevenson, claiming the FBI was “talking to people that had really no true understanding of who was initiating the project.”

MIT, too, was quick to dismiss the concerns and even renewed Vekselberg’s appointment to its Board of Trustees in 2015.

Viktor Vekselberg attends a meeting at the G20 Summit in 2013 in St. Petersburg, Russia.

Vekselberg made at least four donations to the university between 2015 and 2017, according to the Anti-Corruption Data Collective, and had a scholarship named after him.

In a statement to CNN, MIT confirmed Vekselberg has not donated to the university since 2017.

Involving Vekselberg to build the “innovation ecosystem” at Skoltech was “perfectly logical,” Stevenson said. “He’s a very well-experienced, internationally-known businessman.”

Stevenson added he could not comment on Vekselberg’s relationship with the Kremlin but said that, at Skoltech, his involvement “has been completely on a professional level to help build innovation.”

Vekselberg did not respond to CNN’s request for comment.

Casey Michel, an expert on kleptocracies and illicit finance and author of a book on foreign investments in the US, sees it differently.

“It is just absolutely wild how one of the most notorious oligarchs to emerge from Russia was able to obtain a seat on the actual board of one of the most prestigious universities in the United States of America,” Michel said.

MIT scrubbed its website of Vekselberg’s name and removed him from its board only after he was sanctioned by the US in 2018 for benefitting from Putin’s regime. The US Treasury Department said he played “a key role in advancing Russia’s malign activities” — including the occupation of Crimea, supplying weapons to the Assad regime, attempting to subvert Western democracies and malicious cyber activities.

It did not, however, end its partnership with Skolkovo.

Even a federal investigation into the financial relationship between MIT and Skolkovo didn’t stop the leading research center from renewing its collaboration with the Russians in 2019. That was just months after MIT’s Media Lab was forced to publicly apologize for its American dirty donor Jeffrey Epstein, who was accused of running an underage sex trafficking ring before he committed suicide in August 2019.

In April 2019, MIT announced an enhanced vetting process for accepting donations. In a statement to CNN earlier this month, MIT said its review process “examines risks related to national security, protection of intellectual property, compliance with federal laws, data security and access, and other relevant issues while seeking to support the free and open pursuit of knowledge.”

Two months ago, after the invasion of Ukraine, MIT finally severed ties with the Russian foundation saying “this step is a rejection of the actions of the Russian government in Ukraine. We take it with deep regret because of our great respect for the Russian people and our profound appreciation for the contributions of the many extraordinary Russian colleagues we have worked with.”
MIT President L. Rafael Reif said the termination of the relationship with Skoltech “comes with considerable sadness, but the actions of the Russian government made our choice clear… This does not diminish our pride in the work we did to develop Skoltech and in the first-rate research that has flowed from the relationship.”

Harrington, the Dartmouth professor, said that when considering donations, institutions must remember who they are supposed to serve.

“It’s the obligation of these institutions to ask themselves: does it serve the public good?” Harrington said. “Do they exist to do reputation laundering and facilitate the agenda of what is obviously now an enemy state?”

What’s more, Michel argues that universities, especially elite institutions like MIT, have extensive resources in-house to determine where big donors’ money comes from.

“They have to understand themselves as having those resources to be able to actually examine and understand what the implications of these donations, these open doors of access, may be,” Michel said.

“It is incumbent upon them,” he added, “to understand the source of this wealth.”

A Soviet-born billionaire was knighted, but his donations still raise eyebrows

Perhaps the most prodigious example of Russian reputation laundering is that of Len Blavatnik. The Ukrainian-born billionaire made his money during the privatization of state-owned commodities like aluminum and oil following the collapse of the Soviet Union.

Blavatnik, who holds both British and US citizenship, was awarded knighthood in the UK for his philanthropy and has rubbed elbows with some of Hollywood’s most famous — and infamous — people, including Harvey Weinstein, with whom he used to host a luncheon on his yacht during the Cannes Film Festival.
Len Blavatnik and Harvey Weinstein attend a private dinner in Moscow on June 11, 2015.
Blavatnik has repeatedly denied having connections to the Kremlin and did not respond to CNN’s request for comment on this story. “Mr. Blavatnik has been an American citizen since 1984,” a spokesman for his company, Access Industries, told Mother Jones in 2019. “He has no dealings with the Russian government or its leaders.”
He does, however, have close ties with people who do. Three years ago, Vekselberg — Blavatnik’s college friend and business partner who was sanctioned by the US back in 2018 — told the Financial Times: “All his main money, he made here in Russia, with me.”

Blavatnik and Vekselberg owned major stakes in Russia’s largest aluminum company, Rusal.

“That is the most corrupt industry in one of the most corrupt countries in the world. You can’t disentangle the sources of this wealth from the initial sources of the corruption,” said Michel.

“You cannot have made that money without specific political connections or connections to organized crime or connections to other oligarchic figures,” he added.

As a result, Blavatnik’s donations and ties to oligarchs have raised eyebrows in the past.

When Oxford University accepted more than $100 million from Blavatnik in 2010 to establish the Blavatnik School of Government, critics, in a letter published in the Guardian, insisted the school “stop selling its reputation and prestige to Putin’s associates.”

Since then, Blavatnik has made several other sizable donations, including $25 million to Carnegie Hall in New York — which named a seating section after him; $65 million to London’s Tate Modern — which named a building after him; $35 million to Yale — which named a fellowship after the business tycoon; as well as several multi-million-dollar grants to Stanford University, Columbia University and the University of Pennsylvania.

In 2018, Blavatnik made the largest ever donation to Harvard’s medical school — a whopping $200 million.

Anti-corruption activists warned about Blavatnik’s efforts to export “Russian kleptocratic practices to the West” in a 2019 letter to the board of the Council on Foreign Relations, which named an internship program after Blavatnik following a $12 million donation.

“It is our considered view that Blavatnik uses his ‘philanthropy’ — funds obtained by and with the consent of the Kremlin, at the expense of the state budget and the Russian people — at leading western academic and cultural institutions to advance his access to political circles,” the group of 55 American and European foreign policy experts and anti-corruption activists wrote. “Such ‘philanthropic’ capital enables the infiltration of the US and UK political and economic establishments at the highest levels.”

Federal law prohibits foreign nationals — and thus, most Russians — from donating to US political campaigns. But Blavatnik, with his US citizenship, is a major donor to the Republican party. He has also made some smaller donations to Democrats and was photographed with former President Bill Clinton at a gala at Lincoln Center in 2013.
Len Blavatnik, left, and former US President Bill Clinton speak at a gala at Lincoln Center in New York in 2013.

Blavatnik’s success in improving his reputation as an American and British citizen “is just head and shoulders above all these other oligarchs,” said Michel, who believes the businessman owes part of that success to his nationalities.

His passports would also shield him from sanctions, Michel explained.

“There is no capacity for the US to sanction its own citizens, to seize its own assets and to effectively bar them from ever visiting the United States of America — and the same would go for the United Kingdom as well,” he said.

Institutions grapple with what to do

Following the Russian invasion of Ukraine, western institutions have scrambled to distance themselves from oligarchs and their donations.

The Tate Modern in London severed ties with Vekselberg and another oligarch, Petr Aven, who until recently headed Alfa-Bank in Russia and is sanctioned by the European Union.

Other institutions, such as Harvard University, are taking a softer approach.

Harvard’s Medical School, which opened the Blavatnik Institute after the $200 million donation from the oligarch four years ago, has not said it would return the funds or rename the institute. Rather, it has funded several visiting trainee positions at the school for Ukrainian scientists eager to flee their war-torn country.

Harvard declined to comment.

Yale, which has a grant program named for Blavatnik, said the university would not allow individuals subject to US sanctions to make donations.

Potanin resigned from his role as trustee of the Guggenheim Museum in New York after nearly 20 years. The Council on Foreign Relations also dropped him from their board.

The Kennedy Center’s “Russian Room” reopened in March under the name the “Opera House Circles Lounge.” A spokesperson told CNN that the term limit for the name of the room had expired, but separately referenced the war in Ukraine as a factor in the renaming.

“Due to the tragedy in Ukraine, the Kennedy Center and the [Potanin] Foundation have mutually agreed to no longer use the name Russian Lounge,” the spokesperson said.

Potanin did not respond to CNN’s request for comment.

Still, Potanin’s name remains carved in the marble walls of the Kennedy Center.

“It’s embarrassing,” said Michel. “It’s shameful. It’s a blight on the Kennedy Center itself and its only going to continue aging poorly.”



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