Important Stories: “He opened the doors of many offices on Lubyanka”
What businesses did a trusted person of the first deputy director of FSB, Sergei Korolev, Valery Bitaev, participate in, and why did he gain a reputation as one of the most famous “fixers” in Russia
DATE: MAR 27 2023
AUTHOR: EDITORIAL
Important Stories translation: “He opened the doors of many offices on the Lubyanka”
The first deputy director of the FSB, General of the Army Sergei Korolev, and members of his family are not seen in large-scale commerce. But they could afford executive cars worth tens of millions of rubles, real estate worth a hundred million, and even flights on business jets worth a couple of million rubles per hour.
Korolev's colleagues said that his interests in business could be represented by an old acquaintance, a former regional official Valery Bitaev. People who crossed paths with Bitaev recall that he often referred to the name of the general when resolving commercial issues and played the role of an intermediary between the "siloviki" and entrepreneurs.
Market participants call such intermediaries "fixers" or "deciders" - people who connect those who have money with those who have power, take on the functions of lobbyists, negotiators, and guarantors that tacit agreements concluded between a person with money and a man with power, will be respected.
"Important stories" tried to figure out what connects the FSB general with Bitaev, what businesses he was involved in, and why he has recently become one of the most famous "fixers" in Russia.
General surrounded
The first deputy director of the FSB, Korolev, is one of the most promising personnel in Lubyanka. Sources of "Important stories" in the service call him a possible candidate for the position of director of the FSB. Korolev's career was formed thanks to an old acquaintance of Vladimir Putin, former Russian Prime Minister Viktor Zubkov. Colleagues of the general told Important Stories that Korolev's father was friends with Zubkov, they hunted together and often talked. And before his death, Korolev's father asked Zubkov to look after his son. He promised and kept the promise.
When Putin came to power, and Zubkov began to move up the career ladder, Korolev followed suit. He managed to work in the tax service together with Zubkov's former son-in-law, Anatoly Serdyukov. And during the period when Serdyukov was Minister of Defense, Korolev worked as his adviser. Before Korolev became the first deputy director of the FSB in February 2021, he successively headed two key departments at Lubyanka - since 2012, the Directorate of Internal Security (USB), and since 2016, the Economic Security Service (SEB) of the FSB. His promotion was not stopped by any connection with the St. Petersburg criminal authorities, nor by helping the leader of a large gangster group.
Korolev has been in the civil service for over 20 years. His declarations have never been published. But the level of official income of the first deputy director of the FSB, judging by his predecessor Sergei Smirnov, is unlikely to be much more than 11 million rubles a year (the income of the first deputy director for 2019 is the last time the FSB released declarations of its leadership).
Nevertheless, as Important Stories found out, General Korolev and his relatives owned premium cars with a total value of about 30 million rubles, and the general’s son, Boris, at the age of 23, flew business jets around Russia: in 2019 a client of Jet Air Group, the structure of AFK Sistema, billionaire Yevgeny Yevtushenkov. The general's son used Jet Air when traveling between Moscow, Yekaterinburg, Astrakhan, Sochi, and Simferopol. Flights by Jet Air were not cheap, for example, in the same 2019, they cost members of the Moscow government 2.1 million rubles per hour.
THE FLEET OF THE GENERAL'S FAMILY AND THE SON'S REAL ESTATE FOR A HUNDRED MILLION RUBLES
PHOTO: PREMIER AVIA GROUP
Important stories sources said that high-ranking officials at the level of the first deputy director of the FSB usually did not participate directly in the business, but relied on proxies. This approach was also characteristic of General Korolev.
General's friend
Korolev's acquaintances and colleagues told Important Stories that Valery Bitaev, a former military man, hero of the Angolan civil war, and later a businessman and regional official, was considered his trusted person in business. Market participants know Bitaev as one of the most famous specialists in relations with the "siloviki", namely the FSB. His family has a four-story mansion of 987 square meters on the 2nd line of Moscow Serebryany Bor on a plot of land of about a third of a hectare.
The mansion is securely hidden behind a brick fence that is taller than a human being. A wide entrance to the territory is equipped with a speed bump and six bollards - retractable poles, which can usually be found at office centers, prestigious hotels, luxury residential complexes, or sensitive facilities. Bitaev’s neighbors are the owner of AFK Sistema, billionaire Vladimir Yevtushenkov with his son, the wife of the secretary of the Russian Security Council, the former director of the FSB, Nikolai Patrushev, and a relative of his former first deputy in the FSB, the former head of the border service, Vladimir Pronichev.
The status of the Bitaev family is also evidenced by the fact that his daughter, Zalina, became a judge of the Moscow Arbitration Court after just four years of work in the court apparatus, while most of her colleagues, before putting on the mantle, worked as court clerks for an average of more than 9 years ( for 65 % of judges, the main or even the only previous work experience is court staff).
DAUGHTER OF BITAEV AND THE CASE OF FALSIFICATION OF COURT DOCUMENTS
Sources in the FSB and former partners of Bitaev told Important Stories that Bitaev had been friends with Korolev for many years and, thanks to this, was a frequent visitor to the Lubyanka, easily opening the doors to many offices. Bitaev and Korolev met between 2007 and 2012 when Korolev worked as an adviser to Defense Minister Anatoly Serdyukov, and Bitaev also dealt with logistics issues and intersected with the ministry.
Subsequently, according to sources, Korolev helped Bitaev become an adviser in the company of billionaire Alisher Usmanov Metalloinvest: on this occasion, the general personally turned to Usmanov. So Bitaev began working for the billionaire as a kind of specialist in relations with the state, especially with the Lubyanka. And he really ended up where it was necessary to resolve issues with the security forces and guarantee unhindered business.
Security Guarantor
Case 1
Bitaev was not a big businessman. Until 2014, he headed the representative office of the Volgograd region in Moscow and was an official with the rank of deputy chairman of the regional government with a modest official income of just over 2 million rubles a year. But in 2017, he unexpectedly turned out to be the owner of a large stake in a company whose billion-ruble business was directly dependent on the FSB.
Adopted in 2016, the laws of Yarovaya on the system of operational-search activities (SORM) obliged mobile operators to store gigantic volumes of telephone conversations, correspondence, and other customer communications. Operators had to spend hundreds of billions on new equipment. The operators paid, but the FSB had to accept the equipment and coordinate the nuances.
Billionaire Usmanov and his top executives brought IT entrepreneur Anton Cherepennikov, who had previously made a good name managing Usmanov's eSports investments, into the new market. The billionaire gave money - up to $100 million, with which Cherpennikov bought almost all the companies working in the field of SORM.
PHOTO: WIKIMEDIA COMMONS
Bitaev received 23% in the parent company Citadel, which by the end of 2018 had become the largest supplier of SORM equipment for operators. In 2018-2021, the net profit of Citadel exceeded 22 billion rubles, so that the 23% stake accounted for more than 5 billion. According to Bitaev's acquaintances, his role was to ensure normal interaction with the FSB.
The presence of Bitaev was not limited to one: the Citadel also had a direct connection with the Korolev family. In 2018, having earned its first billions, the company acquired 51% of Bastion, an IT startup by the general’s son, Boris Korolev. The company was registered just three months before the deal and, as Cherepennikov said, "seven students from the Bauman Moscow State Technical University" worked there, in whom he saw "young blood." How much Citadel paid for the start-up of the son of an FSB general was not disclosed. But not a lot, judging by the fact that Korolev Jr. began using business jets the following year.
Case 2
It was not only Usmanov who needed to negotiate with Lubyanka. Other entrepreneurs also needed it and were not opposed to giving a large share in the business to a member of the Bitaev family. Especially if you find yourself in a critical situation. So in 2018, the former heads of the drug control system (FSKN), who managed to engage in grain trade and its transportation, faced big problems.
The former deputy director of the Federal Drug Control Service, Mikhail Kiyko, at that time headed the private-state United Grain Company (OZK), the largest trade and logistics operator of agricultural products in Russia. He was appointed thanks to the former head of the Federal Drug Control Service, Viktor Ivanov, and the owner of the Summa group, billionaire Ziyavudin Magomedov (Summa owned half of the OZK, and half remained with the state).
PHOTO: PRESS SERVICE OF THE OZK
At the same time, the former drug police officer got his own family business related to the transportation of grain - Kiyko's wife, Svetlana, and his colleague, the former head of the Federal Drug Control Service for Moscow, Ivan Telenkov, owned the Morpia company, which is closely associated with the Krasnodar "Marine Cargo Terminal" Kavkaz " which was used for transshipment of grain.
GRAIN TERMINAL AND GRAIN COMPANY OF FORMER DRUG COPS
Sources of Important Stories in the FSB reported that in 2018 the drug police faced a critical situation because Kiyko was objectionable to the clan of the Secretary of the Security Council, the former director of the FSB Nikolai Patrushev. And Kiyko's acquaintances had lost their influence by that time. Billionaire Magomedov was arrested in March 2018, and Viktor Ivanov has long been out of business.
The FSB and the tax authorities have begun large-scale inspections for unreasonable tax optimization and VAT refunds for grain exports. In fact, the redistribution of this industry has begun. For a long time, the son of the Secretary of the Security Council, Dmitry Patrushev, who became the Minister of Agriculture, sought to change the leadership of the OZK. As a result, Kiyko lost his position as head of the OZK, and risked losing the family business, and possibly his freedom. An active campaign was launched against him on the Internet: information was spread that he was allegedly summoned for interrogation about embezzlement in the OZK and that he could follow the Magomedovs (Kiyko himself denied this and even through the court established the fact that false information was disseminated on the Internet about his connection with Magomedov).
Against this background, a large share in the business of the former drug police (30% in the Morpia company) was received by Bitaev's wife, Galina. One way or another, in the end, after the dismissal from the OZK, nothing terrible happened to Kiyko. And even the family business he managed to save.
Miscellaneous businesses
Bitaev and his relatives had very diverse businesses: from the supply of frozen fish for the Federal Penitentiary Service (FSIN), to oil refining in the Moscow region. The family members did not specialize in anything in particular, and it seems that their business interests were not connected with businesses as such, but with the difficult situations in which their owners found themselves.
The businesses in which members of the Bitaev family appeared have something in common with the fact that they intersected with the state, odious security officials, or people who used to appear in criminal cases. At different times, the family became partners: the former contractor of Gazprom, Konstantin Gogelia, who was involved in the criminal case of the subordinates of the ex-Minister of Defense Serdyukov, the former defendants in the high-profile criminal case of Three Whales on furniture smuggling, or, for example, Lieutenant Colonel of the Moscow Central Internal Affairs Directorate Artem Kuznetsov, a well-known in the case of the auditor of the Hermitage fund, Sergei Magnitsky (Kuznetsov seized the original documents of the fund, which later allowed the fraudsters to receive billions of rubles in tax refunds. Magnitsky, who revealed this scheme, died in a pre-trial detention center after being beaten and denied medical care).
BUSINESSES OF BITAEV'S RELATIVES: FROM GOVERNMENT AGENCIES TO DEFENDANTS IN CRIMINAL CASES
The Bitaevs and their business partners did not answer questions from Important Stories. General Korolev also did not comment on the situation. An acquaintance of Bitaev said that recently Bitaev is not a wallet, but rather a headache for Korolev, because he too often turned to him with various requests and referred to his name when resolving his issues.
According to the source, over time, in the cases of "fixers," it becomes difficult to understand where the line lies between their personal interests and the interests of high-ranking officials, whom they allegedly represent. According to a source in the FSB, recently Korolev tried not to receive Bitaev in his office.
With a further increase in the already significant role of the state in the economy, the space for private business is shrinking, and people like Bitaev are constantly in demand. After the officials and security forces finally change the market for themselves, this is exactly what a portrait of a typical businessman in Russia can become, - a former participant in the Russian Forbes list shares his opinion.