In February 2017, the Kremlin quietly appointed a new head of the Caucasus region branch of Russia’s Federal Protective Service (FSO), the main job of which is to guard President Vladimir Putin, but which until recently ran a secret and highly profitable construction empire.
In April last year this empire collapsed after Russian billionaire Dmitry Mikhalchenko, who had close ties to senior FSO officials and ran the Baltstroy construction company that actually did most of the work, was arrested for trying to smuggle $1mn worth of vintage cognac into the country. The case caused a major scandal. The deputy head of Russia’s Customs Service had to resign and Mikhalchenko was also charged with skimming millions of dollars off the top of renovation work on one of Putin’s country houses.
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