Mark Zuckerberg and Yuri Milner speak onstage during the 2016 Breakthrough Prize Ceremony on November 8, 2015 in Mountain View, California Steve Jennings/Getty Images for Breakthrough Prize

Leaked papers have revealed that hundreds of millions of dollars in Kremlin cash was behind major investments in Facebook and Twitter. The man at the centre of the money chain is Russian billionaire Yuri Milner.

The Paradise Papers have allowed us to unpack how Russian state money flowed through offshore companies into America's technology giants. These revelations come as Congress conducts an investigation into how social media firms spread Russian propaganda during the 2016 US presidential election campaign.


This is how the money moved.

In 2011, Kremlin-owned VTB Bank funnelled $191 million into investment fund, DST Global, that used the money to buy 11 million shares in Twitter. The shares were sold in May 2014 and, looking at stock prices at the time, it could have sold for more than $240 million in profit. VTB Bank was one of over 40 limited partners of DST Global invested in Twitter.

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The Russian state funds two large investment companies: Gazprom Investholding and VTB Bank. Gazprom Investholding is “used for politically important and strategically important deals for the Kremlin,” according to Ilya Zaslavskiy, a Research Expert at the Free Russia Foundation.

In 2009, Gazprom Investholdings loaned $920 million to Kanton, a company registered in the British Virgin Islands. Two years later, Kanton took a majority stake in DST USA II, an investment firm that is publicly associated with Milner and was used to invest in Facebook. The papers also show that Kanton received $197 million of the Gazprom Investholding loans three months before Facebook announced its first deal with Milner.


Kanton has links to Alisher Usmanov — an Uzbek-Russian oligarch close to the Russian prime minister, Dmitri A. Medvedev. Milner told The Guardian he cannot name the company owner, based on a confidentiality agreement.

According to Milner, Facebook and Twitter were not aware that funding for the investments came from the state-controlled VTB Bank and Gazprom. It is not customary for DST Global to disclose the identity of its lenders. Mark Zuckerberg invited Milner to invest in Facebook, saying, "A number of firms approached us, but DST stood out because of the global perspective they bring". The company now denies it knew where the investment came from.

The Paradise Papers Explained What are the Paradise Papers The Paradise Papers are a leak of 13.4 million documents from two offshore service providers and 19 tax havens' company registries. They detail the tax affairs of the wealthiest individuals and the biggest companies from across the globe. Nearly 100 news organisations, including The Guardian, the International Consortium of Investigative Journalists (ICIJ) and The New York Times, analysed the leaked documents.

Who is in the Paradise Papers? As well as Russian billionaire Yuri Milner, the papers detailed the tax affairs of major corporates such as Nike and Apple. Individuals named in the papers include U2 lead singer Bono, who invested in a small-town Lithuanian shopping centre through a shell company in Malta. The papers also detailed how around £10 million from Queen Elizabeth's fund was held in the Cayman Islands and Bermuda between 2004 and 2005.



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Both Facebook and Twitter emphasised that DST Global is a well-known tech investor that has backed Spotify, Zynga, Airbnb and Snapchat. The firm also invested $125 million in WhatsApp and $160 million in Slack in 2015. In a statement to The New York Times, DST said it was a passive investor in Facebook and Twitter "meaning that it did not seek any board seats or have any influence on these companies’ operations and management." DST also had no voting rights or a seat on the board.


The statement also claims that VTB Bank was the only Russian government institution that invested in any DST Global funds, and all investors in DST Global — "including Mr. Usmanov, VTB Bank, and a number of sovereign wealth funds from all over the world" — are passive investors, suggesting that the Kermlin did not influence who Milner and his company invested in.

Milner’s companies once owned more than eight percent of Facebook and five percent of Twitter, but they sold these shares years ago. He is still known as Russia’s most influential tech investor. The billionaire venture capitalist lives and works in Silicon Valley, and has invested $7 billion in more than 30 online companies. He also once advised the Russian government on technology, through a commission chaired by current prime minister Dmitry Medvedev. Now 55 years old, he graduated with a degree in theoretical physics from Moscow State University in 1985. Five years later he became the first Soviet Union student to gain a place at Wharton Business School in America.

Milner has always had an interest in internet technology. Digital Sky Technologies, of which Milner was CEO, was established in 2005 as a holding company to operate a number of Russian based internet assets. In 2010, Digital Sky Technologies was renamed Mail.ru Group Limited. Then in 2009, Milner met with Mark Zuckerberg and, a few months later, Mail.ru bought a 1.96% stake in Facebook for $200 million. DST Global was established in 2009 as a global investment manager. Since them, DST Global has invested in over 30 internet companies worldwide.

In September 2017, Forbes included Milner in the list of 100 greatest living business minds. He has rubbed shoulders with world renowned scientist Stephen Hawking, with whom he announced a $100m investment for research into a voyage to the Alpha Centauri star system, 4.37 light-years away, with a tiny laser-propelled craft travelling at 20 per cent the speed of light.

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Milner also invested $850,000 into the startup Cadre, which was co-founded by Donald Trump’s son-in-law Jared Kushner. Mr Milner’s investment was a small part of a $50 million fundraising round, which amounts to below 0.2% of Cadre’s shares. Donald Trump has spoken publicly about America's financial relationship with the Russian state. Back in 2008, Donald Trump said: “Russians make up a pretty disproportionate cross-section of a lot of our assets. We see a lot of money pouring in from Russia."

Foreign state-owned institutions can legally invest in American companies. In an open letter, Milner called the suggestion that he was working on behalf of Russia to punctuate social media with misinformation a “fairy tale”.

“Our initial investment in Facebook was in May 2009 – a time when US-Russian relations were very different, just after Hillary Clinton visited Moscow to press the “reset” button; and we divested from both Facebook and Twitter in 2013-2014, well before the US election,” Milner wrote. He went on to explain that the investment from DST Global didn’t give them any influence over the company's decisions. “When we negotiated the Facebook and Twitter deals we asked for no board seats, and assigned all our votes to their founders, figuring they knew best how to run their companies.” DST Global didn’t disclose MTB Bank as one of its partners. Milner said it is “normal practice in venture capital funds not to disclose limited partners”.

He also said that DST Global’s investments in Silicon Valley were motivated by “pure business logic”. “By the way, accepting funding from a Russian bank does not automatically make you a Kremlin agent."