Learning from Russia: The Super-Rich Are Not Immune to Law and Can Go to Prison

Jakarta, CNBC Indonesia - Possessing hundreds of trillions of rupiah apparently is not enough to fight state power. In Russia, President Vladimir Putin once sent security forces to arrest the richest person in his own country in an effort to subdue the oligarch group that for years held power behind the scenes of politics and the economy.

The event occurred in the early 2000s, when Putin had only been president for a few years. At that time, oligarchs, or super-rich businessmen, controlled the country’s strategic assets and had great influence over the government.

They emerged after the collapse of the Soviet Union in 1991. Back then, the Russian government carried out massive privatisation of state-owned companies. Many strategic assets, from oil, gas, metals to banking, moved into private hands at relatively cheap prices.

From that process, the Russian oligarch group was born. They were not just billionaires, but also possessed extraordinarily large political influence. During the era of President Boris Yeltsin, a number of oligarchs were even known to have direct access to the centre of power and helped influence various important state decisions.

When Putin rose to become president in 2000, he viewed this condition as a threat to Russia’s stability. According to research titled “State Capacity and Regime Resilience in Putin’s Russia” (2007), one of Putin’s main agendas was to restore state authority, which was considered weakened after a decade of being dominated by the oligarchs.

“Vladimir Putin’s state-building project, which includes the ‘war against the oligarchs’, the curbing of regional power, the co-optation or marginalisation of civil society and political opposition, and the establishment of a ‘vertical power structure’, was not based on strengthening the state but was more related to regime consolidation,” the research stated.

The Kremlin then sent a firm message to the big businessmen. They could keep their wealth and businesses, but were not allowed to use their economic power to influence national politics.

That message was gradually realised through various actions. Some oligarchs who opposed the Kremlin lost their influence. Media owners Vladimir Gusinsky and Boris Berezovsky, for example, faced political and legal pressure until they eventually left Russia.

However, the most famous case happened to Mikhail Khodorkovsky.

Citing The Guardian, in the early 2000s, Mikhail Khodorkovsky was the richest person in Russia. Through the oil company Yukos, he built one of the largest energy empires in the country, with wealth that once reached around US$15 billion according to Forbes.

But unlike most other oligarchs who chose to maintain good relations with the Kremlin, Khodorkovsky actively supported opposition parties and criticised the government. This attitude was considered to violate the unwritten rule applied by President Vladimir Putin to the oligarchs: they could do business, but not help determine the country’s political direction.

The conflict culminated in Khodorkovsky’s arrest on 25 October 2003 when his private jet stopped in Siberia. He was later imprisoned on charges of fraud and tax evasion, while Yukos went bankrupt and its assets shifted to state-controlled companies. The event became a symbol of the end of the 1990s-era oligarch dominance while strengthening Putin’s control over Russian politics and the economy.