Senior minister caught ‘in the act’ of accepting $2 million bribe in sting sanctioned by Putin

detained Alexei Ulyukayev on charges of taking a US$2 million bribe to approve a major privatization sale — the highest level official to be jailed in President Vladimir Putin’s 16-year rule.

Ulyukayev, 60, was detained on Monday “in the act” of receiving the cash, said Svetlana Petrenko, a spokeswoman for Russia’s Investigative Committee. He was later charged with demanding the money from Rosneft PJSC to allow its purchase last month of the government’s 50 percent stake in regional oil producer PJSC, the agency said in a statement. The Rosneft deal complied with the law and isn’t a subject of the probe, according to Petrenko.

The arrest of the liberal economist, which was announced at 2:30 a.m. in Moscow, shocked the government and elite.

The Rosneft bid, championed by its boss Igor Sechin, had provoked a high-level conflict within the government. Prime Minister Dmitry Medvedev and other top including Ulyukayev opposed it until Putin swung in favor of the deal. Putin praised Ulyukayev two years ago as “one of our best specialists in the field of economics.”

“Ulyukayev had been associated with liberal economic reforms since the 1990s and a lot of people in the elite didn’t like him,” Olga Kryshtanovskaya, an expert on the Kremlin’s inner circle at the Russian Academy of Sciences, said Tuesday. “This suggests that there could be some political motive.”

Mikhail Klimentyev/Sputnik
Klimentyev/Sputnik In this Jan. 26, 2016 pool photo, Russian President Vladimir Putin, left, listens to Alexei Ulyukayev in the Kremlin.

Putin was aware of the case “from the start of the investigative operations,” the president’s spokesman, Dmitry Peskov, told reporters. “These are very serious accusations, and only a court can pass a verdict,” he said.

If convicted, Ulyukayev could face up to 15 years in prison. It wasn’t immediately clear if he had a lawyer. He was expected to be arraigned in Moscow’s Basmanny Court later Tuesday, a spokeswoman said. An Economy Ministry spokeswoman couldn’t be reached for comment Tuesday.

The speaker of the lower house of parliament, Vyacheslav Volodin, said the arrest showed that “everyone is equal before the law,” Interfax . State television led its news bulletins on the minister’s detention, above the banner “The Fight Against Corruption.”

“This is the first time they have slapped handcuffs on a minister,” said Kirill Kabanov, who heads the National Anti-Corruption Committee, an independent research group in Moscow. “This case could draw in other people, possibly even higher-ranking ones,” he added.

AP Photo/Ivan Sekretarev
AP Photo/Ivan Sekretarev Russian Economic Development minister Alexei Ulyukayev, center, is escorted to a court room in Moscow, Russia, Tuesday, Nov. 15, 2016.

Ulyukayev is by far the most prominent figure to be in a recent wave of highly publicized cases against governors, deputy ministers and lesser officials for alleged corruption, fraud and extortion, some of which have been described by analysts as politically motivated or the result of infighting. Putin named Ulyukayev, at the time a first deputy governor of the Bank of Russia, economy minister in June 2013.

The Investigative Committee said its probe began after Rosneft reported that Ulyukayev had threatened to “create obstacles in the future for the company” if the bribe was not paid. Investigators wiretapped Ulyukayev’s phone for months, Interfax reported, citing an unidentified law-enforcement official. The minister was detained after a sting Monday in which a Rosneft representative delivered the bribe, the news service said.

The head of the main business lobbying group, the Russian Union of Industrialists and Entrepreneurs, Alexander Shokhin, questioned the investigators’ case, saying that Ulyukayev had merely rubber-stamped the deal.

“No one, neither experts nor officials, expressed any doubts that the price for Bashneft, 329 billion rubles, was a one,” Shokhin was cited as saying by the Gazeta.ru news site. “So to take a bribe for a valuation is a strange accusation.”

The government sold Bashneft at a modest premium to the market on Oct. 12 in the largest privatization deal so far this year. Rosneft doesn’t see any threat to the company or the Bashneft acquisition because of the criminal case, spokesman Mikhail Leontyev said by phone on Tuesday.

State-controlled VTB Bank PJSC, which handled the sale, said that law enforcement authorities have “absolutely no” complaints about its participation in the privatization. Ulyukayev’s detention “was news to us, as it was to everybody,” it said on its website.

About Elena Mazneva and Henry Meyer, Bloomberg News