* Sanctioned businessman is Putin's childhood judo partner
* Arkady Rotenberg says friendship incidental to success
* U.S. Treasury cites vast wealth accumulated under Putin
* State contracts, "Putin's pet projects" fuel firms' growth
By Jason Bush
MOSCOW, April 30 Fortune has smiled on judo
coach Arkady Rotenberg, bringing his businesses Google-like
growth and a key role in staging the Winter Olympics. It has now
brought down on him the wrath of the United States government.
Rotenberg says his success has nothing to do with personal
favours from his childhood sparring partner, Vladimir Putin, and
has denounced this week's Ukraine-linked sanctions on his
companies as an affront to the spirit of free enterprise.
Following personal U.S. visa bans and asset freezes imposed
on Rotenberg and his younger brother Boris last month, the new
measures against pipeline construction firm Stroygazmontazh
(SGM) and banks SMP and Investcapitalbank have, if nothing else,
thrust the media-shy sportsman into the spotlight.
SGM, 51-percent owned by Arkady Rotenberg, 62, saw revenues
grow by a factor of nearly 50 after its creation in 2008 from
several units sold by Gazprom. In four years, working for the
state-run energy giant and others, it had laid 11,600 km (7,200
miles) of pipeline - enough to reach all the way from his and
Putin's native St. Petersburg to the Pacific. And back.
SMP, in which he and his brother each have a 38-percent
stake, has also done well. With assets of 208 billion roubles
($5.8 billion) and about 100 branches it stands only 35th on a
ranking by Interfax. But with assets growing 52 percent in the
year, it is one of the fastest growing banks in Russia.
In a rare interview in 2012, he told Forbes, which puts his
current wealth at $4 billion, that Putin did him no favours in
securing public contracts: "Vladimir Vladimirovich doesn't
protect me," he said.
But there were other benefits, he added: "If people didn't
give me all this publicity, calling me a 'Friend of Putin', then
my business would be worse. And so it's growing well".
The U.S. Treasury noted: "Both brothers have amassed
enormous amounts of wealth during the years of Putin's rule."
It estimated the Rotenbergs' personal wealth grew by $2.5
billion in just the last two years and that Arkady Rotenberg's
firms had secured $7 billion of contracts for the Winter
Olympics Russia hosted at Sochi in February, part of what the
Treasury called the brothers' "support to Putin's pet projects".
A spokesman for the Rotenbergs and SGM called the sanctions
"illegitimate, because they undermine the very spirit of free
enterprise and business".
Arkady Rotenberg first sparred with Putin in their home
city, then known as Leningrad, in the 1960s. He founded a judo
club there and made Putin honorary president in 1998, two years
before the former KGB agent took over in the Kremlin.
Rotenberg's enterprises have now made him the 27th richest
man in Russia, according to Forbes, which estimates his firms
won $28 billion in state contracts over the past five years.
For Putin's critics, that personal tale of good fortune,
however, is symbolic of "crony capitalism" that they say has
been the hallmark of Putin's 14-year rule. "This is privileged
insider business," said Anders Aslund, a senior fellow at the
Peterson Institute for International Economics in Washington.
SGM says on its Web site that it implements "the most
important strategic projects" of state-controlled Gazprom
. These include the Southern Corridor, a network of
pipelines that will supply gas to Gazprom's flagship South
Stream pipeline to southern Europe.
According to the Ruslana database, and confirmed by SGM, the
group's revenues have been growing by $2-3 billion a year -
reaching $10.7 billion in 2012, up from $235 million in 2008.
Assets grew to $5.3 billion from $370 million over the period.
An SGM spokesman said U.S. sanctions would not have a great
impact as it mainly operates in Russia but that they would hurt
some U.S. firms that supply it with construction equipment.
SMP said that the sanctions had hurt the bank's operations
but were not causing direct losses. It said it was fulfilling
all its obligations to clients and had no liquidity problems.
Another of Arkady Rotenberg's interests, Mostotrest, which
calls itself Russia's biggest builder of transport
infrastructure, has also grown strongly on the back of state
contracts but has avoided the U.S. Treasury sanctions.
It is 38.6-percent owned by a firm controlled by Rotenberg
and his son Igor and saw 2013 revenues rise 24 percent to 117
billion roubles ($3.3 billion) with another three times that
much in outstanding orders. Heavily involved in the Sochi Games
and also building a $3.4-billion motorway from Moscow to St.
Petersburg, 92 percent of its orders are from public entities.
"It is the contractor of choice," said Kevin Whyte, analyst
at VTB Capital in Moscow. "In any country and in any sector you
need good relations with your clients. And in this sector the
state typically accounts for the vast majority of orders."
(Additional reporting by Alexander Winning and Oksana Kobzeva;
Editing by Alastair Macdonald)