Pandora Papers: Putin’s Image Maker Role in Billion-Dollar Movie Deal Hidden Abroad


By Margot Gibbs, Kathryn Kranhold and Jelena Cosic

With the approach of the 2014 Winter Olympics in Sochi, Konstantin Ernst, the soft-haired intellectual who reigns as Vladimir Putin’s main image creator, has taken on the challenge of his life: to produce ceremonies of opening and closing spectacular enough to captivate the world – and strengthen the reputation of Russia’s increasingly besieged president.

Oscar-nominated film producer Ernst, then 53, had been the boss of Russia’s main television channel, Channel One, for as long as Putin was president, and he had been instrumental in creating the image of Putin as the savior of Russia. State.

But a wave of bad news had eroded Putin’s internal support: the pro-European protests in Kiev were about to topple his ally in Ukraine; a decade of oil-fueled growth had given way to economic stagnation; and a protest movement, led by dissident Alexei Navalny, was gathering in the streets of Moscow.

Ernst reversed the script.

In a dazzling parade of floating mountains, lakes and cupolas, avant-garde heroes and more than 3,000 performers, Ernst’s Olympic spectacle brings the troubled reality of Russia to the Russia of the imagination. d’Ernst: powerful, creative, forward-looking, triumphant. The world applauded.

Ernst would later say that the production was a labor of love and that his salary for it was only a ruble.

“It would be silly to assume that professing love should come at a price,” he said.

But the International Consortium of Investigative Journalists found that on the day of the opening ceremony, a company had been incorporated in the British Virgin Islands, which would pave the way for Ernst’s covert 23% stake in a deal. of state-funded privatization worth $ 1 billion.

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Files leaked to the ICIJ and shared with 150 media partners show that nine months after the Olympic torch went out, Ernst became a secret partner in a deal to buy 39 aging but valuable Soviet-era cinemas and properties. surrounding areas of the city of Moscow. The deal was funded by VTB Bank, a public institution that has been called Putin’s “piggy bank”.

The properties were sold at the minimum price set by an auction run by the Moscow government. A legal challenge has alleged that the auction was designed to effectively exclude everything but the partnership in which Ernst, behind layers of shell companies, had a stake.

The leaked files also show that Ernst was the beneficiary of a $ 16.2 million loan – from a Cypriot bank partly owned by VTB – used to fund his stake in the deal. Records show the bank explicitly asked offshore lawyers to keep documents detailing Ernst’s connection to the loan in British Virgin Islands government records, where the shell companies hiding the deal were incorporated.

Additionally, records document how Ernst was joined in the partnership by a Russian media personality linked to some of Putin’s closest and most powerful allies, including Ernst’s bosses at Channel One.

In an email to the ICIJ, Ernst said he had never hidden his involvement in the real estate project and denied any suggestion that his involvement in the project was compensation for his work on the Olympic ceremonies. He refused to answer questions from the ICIJ on the grounds that the ICIJ was “not an independent investigative company but an organization mandated by the US secret service”.

The results are part of the Pandora Papers, a mine of more than 11.9 million cases from 14 law firms and offshore service providers. The documents raise the curtain on a financial system that allows the world’s 0.1% to hide their wealth from tax inspectors, regulators and the public. The ICIJ obtained the documents and shared them with journalists from 117 countries.

The documents revealing Ernst’s secret deal come from Trident Trust, one of the world’s largest offshore service providers, with offices in the British Virgin Islands (BVI), Mauritius, Singapore and other secret jurisdictions, including the US state of South Dakota.


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