Second, DST had been founded in 2005, just three years before the 2008 world financial crisis laid waste to many Russian fortunes. Yet by 2009, Milner and Finger were going on a shopping spree that included some $500 million to buy 5 percent of Facebook as well as a chunk of the American online gaming company Zynga. Where did they get all of that money? Milner and Finger had started DST with their own funds, and the returns on their early investments, though very successful, were just a fraction of those sums, pocket change compared with the money they were throwing around by 2010. (At the time, a banker close to DST, who wished to remain anonymous because he was not authorized to speak on the record, told me that the returns on DST’s other investments “haven’t been sufficient to cover the Facebook and Zynga deals.”)The funds, it turned out, came largely from Alisher Usmanov, an Uzbek-born billionaire who made his fortune in the mines of Central
" >Asia. Usmanov, who owns a stake in the English football club Arsenal, was then-president Dmitri Medvedev’s patron; Usmanov had advised Medvedev when he served as head of Gazprom, and had been one of the first oligarchs to support Medvedev’s succession. A recent exposé by the opposition leader, Alexey Navalny, said that Usmanov bought luxury villas for Medvedev. (Usmanov sued Navalny for defamation in a Moscow court, and won.) Usmanov also had a fearsome reputation. He was known alternatively as “the hard man of Russia
” and a “devourer of websites
.” His biography includes a jail sentence
from the 1980s for fraud and embezzlement, though a Soviet court later overturned the conviction, as well as a lawsuit in the United States
, later dismissed, in which DeBeers claimed
that Usmanov was part of a scheme that cheated it of $800 million in profits.More importantly for the Kremlin, however, Usmanov had a long track record of buying properties—including paintings, publishing houses, and gas fields—on behalf of Kremlin interests. This time, Usmanov bought a 35-percent stake in DST, and was, by all accounts, Milner’s cash cow. “Usmanov’s stake is completely passive,” the banker told me in 2010. “He provides all the cash.”
DST made some legitimately lucrative investments for Usmanov. He reportedly made $1 billion on the $200 million he invested in Facebook. The Russian companies that DST invested his money in also did quite well, but that was only half the point. The other half was to give the Kremlin a way to control these new and very influential companies, to make sure there was a receptive person there when the Kremlin called with a demand.
“What is DST? DST is the main government internet company,” said one Russian tech executive, who wished to remain anonymous for fear of government reprisals, when I put this question to him in 2010. He was not the only one. In the tech community, another Russian executive told me at the time, “Usmanov”—and, by extension, DST—“is interpreted as a person who, on the Kremlin’s instructions, buys up various Russian [internet] properties.” Interviews with other prominent players in the booming Russian tech sector—local executives as well as Western investors—revealed that this was the near-unanimous understanding of DST’s role in the Russian tech marketplace; people’s equally unanimous reluctance to go on the record showed the sincerity of their belief. According to these insiders, DST’s links to the Kremlin, though close, were less than transparent. “It’s just not clear who, exactly, they represent and so not everybody wants to have them as an investor,” said one American investor I interviewed in 2010.