U.S. Imposes Sanctions on Russian Restaurateur With Ties to Putin

U.S. Imposes Sanctions on Russian Restaurateur With Ties to Putin

Yevgeny Prigozhin is accused of possessing links to private military force that fought in Ukraine, Syria

ENLARGE

The U.S. Treasury Department officially sanctioned Yevgeny Prigozhin, seen in August, for contributing to the conflict in Ukraine through extensive business dealings with the Russian Ministry of Defense and provision of support to top Russian officials. Photo: Metzel Mikhail/TASS/ZUMA Press
By  Thomas Grove and  Paul Sonne

Dec. 20, 2016 7:54 p.m. ET

WASHINGTON—The U.S. has imposed sanctions on a Russian restaurateur and caterer with connections to President Vladimir Putin who has been accused of funding Russian online “troll farms” and possessing links to a private Russian paramilitary group that fought in Ukraine and Syria.

The U.S. Treasury Department officially sanctioned Yevgeny Prigozhin on Tuesday for contributing to the conflict in Ukraine through extensive business dealings with the Russian Ministry of Defense and provision of support to top Russian officials.

“A company with significant ties to him holds a contract to build a military base near the Russian Federation border with Ukraine,” the Treasury Department said. “Russia has been building additional military bases near the Ukrainian border and has used these bases as staging points for deploying soldiers in Ukraine.”

The action against Mr. Prigozhin, which blocks him from entering the U.S. and prevents Americans or American entities from having any transactions with him, came alongside new U.S. Treasury designations for a number of other Russian individuals with connections to a bank U.S. officials have said has ties to Mr. Putin’s inner circle. The Treasury also sanctioned a number of entities involved in business and construction in Crimea, the Black Sea peninsula Russia seized from neighboring Ukraine in early 2014.

The U.S. Treasury’s decision to sanction Mr. Prigozhin came 2½ months after Russian opposition figure and anticorruption campaigner Alexei Navalny published an expose of the Russian caterer on his website, accusing him of funding so-called troll factories in St. Petersburg that post pro-Putin comments in news-site comment sections, blogs and other online media in Russia.

Russian news outlets including Novaya Gazeta and Moi Rayon have reported on Mr. Prigozhin’s alleged connections to the Internet Research Agency, a St. Petersburg-based outfit known more commonly as the “troll factory,” which manufactures pro-Putin posts and comments. In 2014, e-mails leaked to BuzzFeed News and later more broadly online by the Russian hacking collective Anonymous International showed the “troll factory” approving payments from an accountant for Mr. Prigozhin’s catering firm.

Through his successful restaurant business in his native St. Petersburg, Mr. Prigozhin came in contact with a new Russian elite emerging under Mr. Putin, who also hails from the city. Mr. Navalny said Mr. Prigozhin went on to amass Russian state contracts by providing catering services to Russian schools and military installations and later utilities and other services for Russian military garrison towns.

A lawyer for Mr. Prigozhin, Sergei Bobrovsky, hung up after being contacted by The Wall Street Journal and didn’t respond to questions via text message regarding his client’s inclusion on the U.S. sanctions list.

Mr. Prigozhin didn’t respond publicly to Mr. Navalny’s allegations.

Russian Deputy Foreign Minister Sergei Ryabkov told Russian state news service Tass that Russia would respond to the new U.S. sanctions.

“We reserve the right to choose a time, place and format of response in the form that suits us,” Mr. Ryabkov said, appearing to mimic what President Barack Obama said last week about a pending U.S. response to alleged Russian hacking during the 2016 presidential election.

Mr. Prigozhin’s involvement with defense matters goes beyond providing the Russian military with food, according to Russian media reports and people familiar with the Russian military.

Russian defense analyst Ivan Konovalov and an official close to the Russian Defense Ministry said Mr. Prigozhin was involved in one of Russia’s few attempts to create a private military company, which operated in Ukraine and later in Syria.

The amounts of money that the group, which became known as Wagner, were paid were much higher than what other private security companies receive, leading to speculation of Kremlin support, an official close to the Russian Defense Ministry said.

Mr. Konovalov said Mr. Prigozhin helped create the idea for and funded the private military company.

The official close to the Russian Defense Ministry and Mr. Konavalov said the base was in the village of Molkino in the Krasnodar region near the border with Ukraine. The official said the group, which disbanded in late 2015, had a large number of T-90s as well as howitzers and grenade launchers.

The group was withdrawn from Syria after sustaining significant casualties from a mortar blast in October, the official said.

This year, Mr. Prigozhin sued Russian internet-search provider Yandex and other search providers to have several articles about him online removed from search results about him. He later dropped the suits, the St. Petersburg court said.

Write to Thomas Grove at thomas.grove@wsj.com and Paul Sonne at paul.sonne@wsj.com

 

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