Reuters: $1 Billion Government Project Funded 'Putin's Palace'

Reuters: $1 Billion Government Project Funded 'Putin's Palace'

A lavish Italianate estate on the Black Sea, popularly known as “Putin’s Palace” and previously suspected to have been built using illicit funding, was built with money from a major healthcare project on the taxpayers’ dime, according to a report by Reuters.

Reuters details a scheme in which Russian President Vladimir Putin used two of his allies to make profits from a public health project that went into building the estate. Putin’s allies, Nikolai Shamalov and Dmitry Gorelov, used companies based in the UK to buy the necessary medical equipment for a massive $1 billion public health project announced in 2005, later selling the equipment to the government at inflated prices. The profits, Reuters alleges, went into “Putin’s Palace.”

The group channeled the money through Swiss bank accounts, and later through Liechtenstein, before using it to buy construction materials for the estate.

Spokesmen did not respond to Reuters’ request for comment, and in the past, the Kremlin has denied that President Putin uses the estate. “Putin has never had any relation to this building,” a spokesman for then-Prime Minister Putin said in 2010.

But the discovery of a money trail to Putin’s Palace proves accusations that have been made for years that the estate was built with illicit funding, as the Russian Wikileaks site has published photos of the estate. In 2010, when Putin was prime minister under President Dmitry Medvedev, Russian businessman Sergei Kolesnikov wrote a letter to Medvedev detailing the corruption that had funded the estate. Kolesnikov said in the letter that “the funds were mostly raised through a combination of corruption, bribery and theft,” and he confirmed that the palace was indeed for Putin’s personal use. The letter also detailed the palace’s amenities, including “an indoor cinema, a summer amphitheatre, a casino, swimming pools, a gym and a clock tower.”

Putin is currently facing criticism for triggering sanctions from the European Union and the United States that could damage Russia’s economy. Putin has dismissed those sanctions as not causing any “critical” damage, however, and has begun to establish deeper economic ties to China that could bolster the Russian economy should it no longer be able to count on markets in Europe for its natural resources. In addition to a gas deal, during President Putin’s visit to the nation this week, the Chinese government agreed to a bank deal with Russia that removes the dollar from their negotiations.