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Fancy Sausages and a $2 Million Bribe: A Trial Uncovers Kremlin Infighting

Posted December 15, 2017 10:56 a.m. EST

MOSCOW — Alexei V. Ulyukayev, a former economy minister in Russia who had clashed with a close ally of President Vladimir Putin, was convicted Friday of soliciting a $2 million bribe, in a case that pulled back the curtain on Kremlin infighting.

Ulyukayev and his supporters insisted the evidence against him was concocted to eliminate a critic of growing state dominance in the oil industry. But the judge, Larisa Semenova, rejected the arguments that the former minister had been framed and sided with prosectors, who called it an open-and-shut case of corruption.

Semenova sentenced Ulyukayev, who had been locked in a struggle with Igor I. Sechin, director of the state oil company Rosneft, over how to revive the swooning Russian economy, to eight years in a penal colony and a fine of 130 million rubles, or $2.2 million.

The punishment was less than the 10-year sentence and 500-million ruble fine sought by prosecutors. Ulyukayev’s lawyers said they would appeal.

Russia’s smoothly executed military operations in Ukraine and Syria, and allegations of election meddling in the United States, have lent Putin an air of mystery and monolithic power, but the case against Ulyukayev shed light on the jockeying for position among members of the president’s inner circle.

Ulyukayev had been a prominent member of a liberal wing in the Russian government, and he was accused of seeking a huge bribe from Sechin in exchange for acquiescing to a major oil deal he had initially opposed.

Sechin, a former military intelligence officer and longtime associate of Putin, has argued for Russia to return to a state-dominated economy, particularly in the oil industry. Ulyukayev, a protégé of Yegor Gaidar, the architect of post-Soviet privatizations, is an advocate of free-market economics.

Sechin accused Ulyukayev of seeking the bribe in exchange for dropping objections to the state oil company’s acquisition of a recently nationalized midsize oil producer, Bashneft.

The sale was billed as a privatization, but Ulyukayev contended that privatization was impossible if the buyer was a state company.

Sechin said the former minister had solicited the bribe in October 2016, but only with a gesture: During a game of pool, he said, Ulyukayev held up two fingers, signaling that his price was $2 million.

A few weeks after the pool game, at the oil company headquarters, secret listening devices and a concealed video camera recorded Sechin offering Ulyukayev a gift basket that contained artisanal sausages made from wild game and a hefty brown bag. Ulyukayev said he believed the bag held bottles of wine; in fact, it contained $2 million in blocks of $100 bills, weighing about 45 pounds.

Although the court ruled in his favor, Sechin did not emerge unscathed. Over Sechin’s objections, the hearings were held in open session, which exposed details of the sting operation and the dealings of the Kremlin elite, like the common practice of giving lavish gifts.

At his annual year-end news conference Thursday, Putin chastised Sechin for ignoring a summons to testify at court. “Sechin should have come to court,” Putin said. “What is the problem anyway?”

Putin did offer a mild defense of Sechin, saying that no law had been broken when he refused to testify, despite critics who argued otherwise.

Igor M. Bunin, president of the Center for Political Technologies, said in a telephone interview that Ulyukayev’s undoing was that he had fallen from favor with Putin, in part for delivering bad economic news.

“It’s one thing to support the liberal course, another to fail to create a good personal relationship with Putin,” Bunin said. Earlier in his career, for example, Ulyukayev, then deputy governor of the central bank, had been passed over for a promotion to bank governor after pushing back against Kremlin pressure to spur economic growth by lowering interest rates, saying such a move risked sparking inflation.

In his closing statement earlier this month, Ulyukayev protested his innocence and said the court proceedings had evoked the era of show trials in Russia under Josef Stalin. “The evidence shows that I’ve been targeted in a monstrous provocation,” he said. Speaking of Sechin’s refusal to testify, Ulyukayev said the oil executive had vanished and “only the smell of sulfur in the air was left,” a reference to the “The Master and Margarita,” the riotous Russian novel by Mikhail Bulgakov about the devil appearing in Stalin’s Moscow.

Anybody could fall victim to a fabricated criminal case, Ulyukayev said. “Now this is very easy: A bag, a basket, a poorly filmed video, three clicks and it is ready,” he said.