Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Then Russia's Prime Minister Vladimir Putin meets with supporters in Moscow in this Dec. 1, 2011 file photo. (POOL/REUTERS)
Then Russia's Prime Minister Vladimir Putin meets with supporters in Moscow in this Dec. 1, 2011 file photo. (POOL/REUTERS)

How a medical project helped build Putin’s mammoth estate Add to ...

Copies of agreements seen by Reuters indicate that Shamalov and Gorelov each hired a Swiss trust company called Interis to acquire stakes in Greathill on their behalf - 50 percent each. Interis and Shamalov declined to comment.

A spokesman for Siemens said the German manufacturer was unaware of Shamalov having any involvement in Greathill.

“The company Greathill was a business partner of Siemens Healthcare until 2010. Siemens has no information to the effect that a Siemens employee was invested either in Greathill or Petromed,” the spokesman said.

Evidence that Greathill sold Siemens products to Petromed at large mark-ups appears in customs records reviewed by Reuters.

They show that between September 2007 and August 2008, Greathill acquired at least four Siemens Somatom Sensation 64 CT scanners. Greathill then sold the machines to Petromed for 1.9 million euros to 2 million euros each, which customs documents recorded as the equivalent of $2.7 million to $3 million at the prevailing exchange rates.

The prices are nearly double the typical price charged by suppliers for CT scanners in the same technological class, including those made by Siemens, according to a 2010 investigation by the Kremlin into sales of medical equipment.

Several people involved in the sale of medical gear in Germany told Reuters that hospitals in Germany and elsewhere could buy the same Siemens scanners in 2007-2008 for between 1 million and 1.2 million euros, depending on the extras included.

Customs records also show that Greathill sold Petromed a Siemens Avanto MRI scanner for more than 3 million euros, which the records say was the equivalent of 130 million roubles. Greathill sold Petromed another seven of the machines, all for more than 2.6 million euros each. German experts said the typical price of such equipment was 1.2 million to 1.7 million euros apiece.

“One hundred and thirty million roubles is a clearly inflated price,” said Alexei Popov, a Russian surgeon who has researched the pricing of medical scanners. “The approximate price for this is up to 80 million to 85 million roubles - that’s with all the bells and whistles.”

Petromed made no comment on the deals. Its general director, Enver Useinov, said he had only been in his post a year and knew nothing of Greathill. “I can’t say anything,” he said. “I don’t know.”

In a written response to Reuters, Gorelov said Petromed had secured equipment at competitive prices, and that those supplies and prices were approved by government experts.


Not far from the Black Sea coast of southern Russia stands an imposing property, built in neo-classical style with formal gardens. The sprawling estate, near the resort of Gelendzhik, looks fit for a tsar and includes a theater and helicopter landing pad. This is the property popularly known as “Putin’s palace.”

How did money from Putin’s project to buy scanners for Russian hospitals end up in a property that has nothing to do with medical care?

There were three key steps. First, Petromed paid money to Greathill. Then, Greathill sent at least $56 million to the Swiss bank accounts of a Belize company. Finally, the Belize company sent funds to a firm registered in Washington, DC.

That firm, Medea Investment, received at least $48 million for supplying building materials for the “Putin palace” property. According to Kolesnikov, Medea’s owner was an Italian architect, Lanfranco Cirillo, who designed the building. (For details on how Reuters traced the money trail: )


Through his spokesman, Putin has denied having any connection to the Black Sea property. Far from enjoying a luxurious mansion, he has limited wealth, according to an official report of his assets.

In December 2011, an official statement of his income showed that he had earned 17.73 million roubles ($539,000) in four years - an average of $135,000 a year. He owned only one home, a modest apartment, according to the statement.

That same year, following Medvedev’s orders to punish people responsible for overpricing medical scanners, Russia’s prosecutor general said 68 criminal cases had been launched in 45 regions of the country.

In the Volga River city of Ulyanovsk, for example, the regional health minister, two businessmen and a senior doctor were prosecuted in a case concerning the purchase of a Siemens Emotion 6 scanner in 2008. The minister was sentenced to 8.5 years in prison. The businessmen got seven years. The doctor received a suspended sentence of three years.

The price paid for the scanner was 44 million roubles (equal to $1.7 million at the time). The court’s ruling, signed by the judge, described this price as “deliberately inflated.”

Even so, it was a bargain compared to what the president’s associates charged.

According to customs records, Greathill reaped 61 percent more - 71 million roubles - for selling Petromed the very same model.

Single page

Follow us on Twitter: @globeandmail

In the know

Most popular video »


More from The Globe and Mail

Most Popular Stories