U.S. cables lift mask on Putin's "corrupt autocracy"

Russia's Prime Minister Vladimir Putin chairs a meeting of the Government Presidium in Moscow December 1, 2010.

MOSCOW (Reuters) - Vladimir Putin rules Russia by allowing a venal elite of corrupt officials and crooked spies to siphon off cash from the world's biggest energy producer, according to a picture painted by leaked U.S. diplomatic cables.

The stars of the U.S. Foreign Service cast "alpha-dog" Putin as Russia's paramount leader, presiding over a system where greed and oil money decide everything. Laws mean nothing.

U.S. diplomats speculate about Putin's personal wealth and repeat Moscow rumors that the former KGB spy has assets abroad and links to Russia's lucrative oil export trade.

Putin has denied amassing a vast fortune while president and has dismissed speculation about his personal wealth as snot smeared over paper.

His spokesman Thursday told Reuters the "simply ridiculous" claims in the U.S. diplomatic cables were based on unverified rumor.

"These are simply rumors, with neither facts nor arguments. Simply nothing," Putin spokesman Dmitry Peskov said by telephone. "But if we suppose that these are genuine telegrams, then one could only wonder that diplomats write such rubbish."

The U.S. cables present Russia as a "corrupt autocracy" where money has replaced Communism as the driving ideology for the elite since the 1991 fall of the Soviet Union.

"People are paying bribes all the way to the top," U.S. Ambassador to Russia John Beyrle paraphrased an unidentified source as saying in February 2010, in one of the cables published on the website WikiLeaks.

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The source, whose name was obscured in the documents, described a system in which the security services, police and local politicians collected bribes in a well organized protection racket that reached the top levels of the Kremlin.

"They need money to get to the top, but once they are there, their positions become quite lucrative money making opportunities," Beyrle's cable said.

KREMLIN CORRUPTION?

Western executives say the biggest barriers for business in Russia are alarming levels of official corruption, mounds of red tape and the arbitrary rule of law.

Corruption, which plagued tsars and communist general secretaries for centuries, blossomed as the Soviet Union collapsed and is now a way of life for many Russians, from small bribes paid to traffic police to multi-million dollar kickbacks for officials who hold sway over the $1.2 trillion economy.

But never before have U.S. assessments of Russia's giant system of kick-backs been made so public at such a sensitive time, just when President Barack Obama is battling to repair better ties with the Kremlin.

U.S. Ambassador Beyrle, in a cable to Washington from November 2008, repeated rumors that Putin was linked with Swiss based trader Gunvor. here here

"The company is rumoured to be one of Putin's sources of undisclosed wealth," Beyrle wrote, citing oil traders. In another cable of the same period, he said Putin was rumoured to be an owner of Gunvor, though he gave no hard facts to back up the claim.

When asked about this statement, Putin spokesman Peskov said: "This is a completely stupid claim without any support. These rumors have been aired repeatedly but they have been repeatedly denied. It is rather ridiculous."

A Gunvor spokesman said: "It is just repeating old rumors. They are over two years old and the questions of things like who owns Gunvor are now a matter of public record."

The company has previously said its two main shareholders were its founders, Gennady Techno and Torbjorn Tornqvist, and that a small stake belongs to an employee trust.

Techno has repeatedly denied media speculation he was a close friend of Putin.

It was not possible to verify if the documents were genuine.

The U.S. Embassy in Moscow declined comment, but Beyrle wrote in his blog that part of a diplomat's job for centuries has been to report home on what he hears from a broad spectrum of contacts "and sometimes add his own conclusions."

In his Russian-language blog, Beyrle wrote that "our relations with our allies and partners around the world, which we have succeeded in strengthening seriously in the last two years, have weathered this moderate test with dignity."

"As for me and my colleagues at the embassy, we will as before do everything we can to help the governments and people of the United States and Russia know and understand each other better." beyrle.livejournal.com/

Undersecretary of State William Burns -- a former ambassador to Moscow who is quoted in some of the leaked cables -- has said the disclosures were a "despicable breach of trust" that would hurt U.S. diplomacy.

(Additional reporting by Steve Gutterman and Dmitry Zhdannikov; editing by Philippa Fletcher)