The challenges of mapping Russian corporate actors

Russian corporate structures can be incredibly complex, making it difficult to present a clear picture to readers. Visualisations can help – as can identifying the main story that the visualisations need to tell. This approach can be usefully extended to other actors, like private military companies (PMCs).

Welcome back! I hope you managed to take a few days off this summer.

In recent months, I have spent a great deal of time exploring Russian corporate structures for clients. These can be incredibly confusing, as anyone who has spent any time looking at them can testify.

Russian companies are, in general, more likely than their Western counterparts to employ complex structures, with multiple shell and holding companies. Information about ownership is often not publicly disclosed, even for major Russian firms, meaning it has to be scraped together from media reporting, interviews, and various forms of official disclosures. Offshore holding companies with even more limited disclosure requirements may be involved. Related companies can have very similar names that are conflated in the public domain. The same entities may own shares directly in a company, but also exercise control through other entities that are subordinate to it. And, of course, the whole picture may change over time. The logic and contradictions of the Russian business world can be a delight to explore!

Sometimes complicated corporate structures can have a political explanation, such as concealing elite wealth, but just as often it is a response to Russian economic realities — an effort to minimise tax obligations, for example, or to reduce the risks of asset seizure (think: not having all your eggs in one basket). The result, however, is that even legal and relatively simple businesses can end up looking like money laundering operations.

One of the challenges that this creates is that it makes it hard to tell a clear story that explains how different entities and actors relate to one another. Even when these problems of information availability are overcome, it can be difficult to convey findings in a way that is accessible.

Visualisations can help. Below is a stylised and anonymised example from a recent project, which had many of these elements. Note that even this requires simplification, because many of the entities listed also had their own shell structures.

Purely textual presentation of this information would require a great deal of space and be difficult to follow. A visualisation, however, is much easier to understand, allowing the supporting text to focus on highlighting key points. This approach works when dealing with smaller actors or limited scenarios, where being comprehensive might be possible, necessary, or both.

Problems, however, arise when dealing with larger corporations or a wide array of actors. Take just one example, Rostec: This consists of a dozen or more holding companies and more than 700 enterprises in both the military and the civilian sector. And that only includes those that are known — the true picture is likely even more complicated. Visualising all the available information is likely to produce confusion rather than clarity, and to obscure the story you want to tell.

To resolve this problem, it can help to think about the story the visualisation is intended to tell. In the case below (again anonymised), the intended message was that notionally independent actors are connected to one another and were involved at different levels in a case of corporate raiding (reiderstvo). And what really mattered to the story — which was obscured by the inclusion of all institutions — was the personal relationships between actors.

What was initially a highly complex and unstructured map of people and institutions became a much clearer picture when a basic structure was applied and organisations were either removed or relegated to a secondary role.

My client work spans domestic politics, foreign policy, and the economy. So what is the relevance of this for the focus of this newsletter, i.e. security? Well, the same approach can be usefully applied to a topic like PMCs. For example, in the case of the African Corps, it is arguably the institutional story — and its relationship to the Ministry of Defence — that matters more than the people. Individuals, such as Deputy Defence Minister Yunus-bek Yevkurov, play a role, but they are subordinate to the structures. In this case, a graphic like the first one might work best. On the other hand, the story of Yevgeniy Prigozhin is obscured by institutional actors: He operated a complex network of shell companies designed to muddy the waters. The true picture is only revealed by considering personal relations, such as when an individual from one Prigozhin entity suddenly appears in a new, notionally unconnected one. In this case, organisational analysis needs to be subordinated to relationship mapping and social network analysis — and an illustration like the second will help tell a much better story.

I think this is something that a great many academic texts would benefit from considering. Topics can often be incredibly complex, with a proliferation of actors making it hard to follow the story. Making use of select visualisations would help convey key takeaways and ease the cognitive burden on readers – particularly those who might be new to a topic.