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Defending the Kremlin and British Business Ties with Russia
Sarah Hurst talks to the British businessman Roger Munnings about his business interests with Russian companies and his vocal support for Vladimir Putin.
The Kremlin’s less than covert support for Brexit in 2016, and 2018 Novichok nerve agent attack on Salisbury, might have been reasons to think twice about expanding ties with Russia, but one British man has been promoting this cause relentlessly for years.
Formerly of KPMG, Roger Munnings CBE is not only chairman of the board of the Russo-British Chamber of Commerce but is also on the boards of directors of some of Russia’s biggest companies: Lukoil, Sistema and Nornickel. In 2018, he was presented with a ‘Director of the Year’ award in Moscow.
In his many interviews and public appearances, Munnings is always unflappably polite, steering the conversation smoothly away from politics and back to business whenever possible.
In mid-February 2014, just days before Russia annexed Crimea, Munnings spoke in a debate at the Oxford Union on the motion “this house believes Putin has been good for Russia”. He argued that the Russian President had been good for Russia based on increased GDP and living standards after the chaos of the 1990s.
“I’d always wondered about his motivations, because from my observation his motivation was always for the benefit of the Russian people and for Russia, so I asked his head of administration in his first term in office, was it the case that Putin was properly motivated?” Munnings said in the debate. “He said yes, it absolutely was the case. He’s made lots of mistakes, he’s got some weaknesses, he’s got some flaws, but yes, his motivation has always been for the good of Russia, for Russian people.”
Former British ambassador to Russia Sir Roderic Lyne argued against the motion, saying: “Roger Munnings is a very old friend, he took me to Twickenham once, I hope he’ll take me again, so I’m not going to be rude to him… But, and however, if you spend time living in Russia… you cannot live there without knowing what everyone else knows in Russia.” He told a joke about a dissident being followed by the KGB who put up a blank sign. The KGB asks him what the sign means and the dissident replies, “Everybody knows what’s wrong with this country, so there’s no need to write it down.”
Sir Roderic pointed out that Putin had control of elections and that the Russian economy had grown mainly thanks to a sharp rise in the oil price, adding that there was a vast capital outflow from the country, as well as a massive brain drain. “Has all this wealth benefited the people? No. You talked about the number of people in poverty. There are 16 million people in poverty in Russia. More to the point, the Gini coefficient, the gap between the top and bottom, is one of the widest in the world, and it is widening, and it has widened under Mr. Putin.”
The motion was defeated by 204 votes to 93.
Explaining Ukraine
On 6 May 2014 Munnings gave evidence to the House of Commons Treasury Committee on the cost and effectiveness of the EU’s sanctions on Russia. He described the EU’s response to Russia’s actions in Crimea and Donbas as “slow and uninformed”.
The EU had not appreciated Russia’s position that Ukraine was part of its sphere of influence, he went on. “For me, there just does not seem to have been enough dialogue between Russia and the EU and the US on how to solve the core problem. The core problem is how you assist Ukraine to be governable and to govern itself,” he said. Ukrainians had ousted their pro-Russian president, Viktor Yanukovych, in a revolution, and had been very clear that they wanted to govern themselves without Russia. The EU flags they waved during the months of protests were a symbol that they wanted to get closer to the West and away from Russia’s “sphere of influence”.
In July 2015, a few months after opposition leader Boris Nemtsov was shot dead in front of the Kremlin, Munnings spoke at a social sciences symposium at Oxford University’s Exeter College. Again he advised his audience to try to understand Russia’s point of view on Ukraine: “What I do think is important is that when you think about Russia you understand that Russians are quite different from us. They’re not completely different, they look pretty much the same, but the frameworks of their attitudes and their behaviours were formed in a period of a different type of government, a different type of economy, and so they simply think differently,” he said. “Because if you sit on their side of the fence and think that, at least you stand a chance of making a bridge in terms of a transaction or a solution to Ukraine.”
By November 2016, just after the election of Trump, and while Russian warplanes were bombing Syria’s Aleppo indiscriminately, Munnings was telling Russian broadcaster RT that sanctions had in fact been a good thing for Russia, echoing Putin’s assertions. “My own personal view is that we’ll look back in five years’ time in a period when sanctions applied and low oil prices really helped Russia focus on diversifying its economy with import substitution, greater exports, modernising its economy,” he said. “So although politically sanctions are quite an issue, economically I think the worst period for Russia with current sanctions is past, and I think they may well turn out in the long term to be a positive factor in Russia’s economic progress.”
Brexit Fallout
Munnings gave another interview to RT in December 2017 on the programme Going Underground. Its presenter, Afshin Rattansi, opened with the words, “You’re watching a Going Underground special at the Russian-British Business Forum 2017 at the Queen Elizabeth II conference centre in the heart of Westminster, as Britain desperately tries to forge trade deals around the world as the cost of Brexit apparently reaches £100 billion.”
Russia had been suspected of interference in the June 2016 Brexit referendum through ties with Leave campaign financier Arron Banks, who had meetings with Russian embassy officials during the campaign to discuss gold and diamond mining deals.
Rattansi asked Munnings if sanctions had ironically created opportunities to do business with Russia. “Well, when sanctions were first introduced I thought this is not the way to deal with this issue because it hinders the development of a Russian middle class if you like,” Munnings replied. “But actually what’s happened is that I think, rather like a large family that’s criticised from outside, you put sanctions around it and everybody within Russia pulls together, so diversification’s increasing, modernisation’s increasing, the infrastructure is being built more quickly than it might otherwise have been.”
“The political climate, given the kinds of statements coming from Theresa May and Liam Fox and others, let alone on Labour’s bench, Emily Thornberry, mean that they appear to be considering Russia something akin to apartheid. Is it ethical to even do business with Russia, given, as far as the government here seems to be saying, the human rights abuses on a colossal scale only by Russia that are present in the world?” Rattansi asked in a voice dripping with sarcasm.
Munnings said that the British government wanted to do legitimate business with Russia and that multinationals wanted to behave ethically. Rattansi pointed out that British MPs were accusing Russia of all kinds of things, from interference in the Brexit and Catalonia independence campaigns to putting Trump in the White House. “What can we believe these days? I mean, there are accusations all over the place, we need proof for all of these things, do all governments do this? I just don’t know,” Munnings replied.
Second Career
Munnings was keen to explain his motivations in answers to questions that I sent him by email. He said that he was based in Moscow with KPMG from 1996 until 2009, when he retired from the accountancy firm at the age of 58. “In 2010, just when I had just about tired of everyday gardening, I had a call from the deputy chairman of Sistema asking me if I would go to Moscow to meet Vladimir Yevtushenkov who wanted to ask me if I would consider joining the Sistema board,” Munnings wrote. “I did so and prepared in the usual way, working out what I had to offer in terms of competencies and experience and what I wanted to know from him. It was a short meeting. I started to explain what I might bring. [Yevtushenkov] said ‘Roger we have done our homework. Will you do it?’”
Munnings says he observed a Sistema board meeting and agreed to join the company after being convinced it was being run well. “That is basically how my second career as an independent director started. I have subsequently been asked to join the Boards of SUEK, Lukoil and, most recently, Nornickel… I left the Board of SUEK because, having been seeking a UK listing when I was asked to join, they subsequently decided not to.”
In his spare time Munnings is also on the board of the Kino Klassika Foundation which promotes Russian-language cinema, a property management company called 3 Lansdown Crescent Ltd, and — since February this year — the Royal Welsh College of Music and Drama.
“My remuneration at each [of the Russian companies] is roughly equivalent to board remuneration for the same responsibilities in similar-sized companies in the UK and US and checked against norms by independent consultants,” Munnings told me. “Government to government relations between the UK and Russia deteriorated significantly during the last decade. I will not comment on events as it is critical to remain apolitical when seeking to foster legal trade and investment between the two countries and also because establishing what is fact and what is not is extraordinarily difficult,” he added in response to a question about how he felt about Russia’s downing of MH17 with 298 people on board, poisoning of Alexander Litvinenko and attack on the Skripals.
Nor did Munnings comment on a question about the arrest of Sistema boss Yevtushenkov in September 2014, when he was held under house arrest for three months, charged with money laundering and forced to give up Sistema’s 72 percent share of the Bashneft oil company. Bashneft was nationalised, Sistema was compensated with over $1 billion and the charges against Yevtushenkov were dropped.
Meeting Putin
Munnings says that he has met Putin twice, in March 2019 with a small group of British businessmen and in June the same year at the St. Petersburg International Economic Forum with a larger group. He describes Putin as “business-like, friendly without being overly so, straightforward and keen to help.” The meeting in March took place a few weeks after senior executives from the Baring Vostok investment group were arrested, including its American CEO, Michael Calvey, who was sent to jail to await trial on fraud charges and later moved to house arrest. Calvey was one of the last remaining prominent US investors in Russia.
“I asked the president about the case as follows – ‘Mr President, may I ask you about the Baring Vostok case?’” Munnings told me. “He nods and focuses. I continue, ‘I do not know if any criminal act has been committed. I do know both of the senior people involved, however, and have done for nearly 20 years. They are well known internationally and respected internationally and in Russia. They are known as friends of Russia. Their arrest and imprisonment is causing a problem for the Russian investment climate because the cause of their arrest is seen as a commercial dispute and in most jurisdictions around the world, a commercial dispute would be treated as a matter of civil law and not criminal law’.”
“The president then commented, ‘Thank you for your comments. You were right to preface them with the statement that you do not know if any criminal act has been committed. I do not either. All I will say, at this stage, is that where there is a purely commercial dispute, I find it extraordinary that people are behind bars.’ I commented that many Russian businessmen found themselves in the same position around the country and asked him if the law would change. He said that was a matter for the lawmakers.” Russia’s State Duma notoriously rubber-stamps any law Putin decides to bring in and its ranks include many retired celebrities, from former ice hockey goalkeeper Vladislav Tretiak to the first woman in space, Valentina Tereshkova.
Other businessmen present at the meeting included Glencore CEO Ivan Glasenberg, who has received the Order of Friendship from Putin; JCB CEO Graeme Macdonald; Ian Taylor, chairman of energy trading group Vitol; and Bob Dudley, who fled Russia in 2008 when as head of TNK-BP he came under threat from Russian authorities but joined the board of Rosneft in 2013.
“The relationship between Russia and the United Kingdom is a very deeply historic one, and restoring it and nurturing it can only bring great benefits, I believe, to both sides,” Dudley told Putin, according to an FT article at the time titled “The UK executives helping Putin burnish Russia’s image.”
Despite constant state raids on successful businesses over the past two decades, Munnings continues to praise the Russian Government: “What we now see more and more is a government of outstanding young technocrats working for the benefit of the improvement of the country and young businessmen interested in operating their businesses to the highest standards worldwide,” he wrote to me.
Munnings also declined to comment on Putin’s plans for a nationwide vote on changes to the constitution that would allow him to remain in power until 2036.
This article was developed with the support of Journalismfund.eu (www.journalismfund.eu).
