In fall 2010, the Russian billionaire investor Yuri Milner took the stage for a Q&A at a technology conference in San Francisco. Milner, whose holdings have included major stakes in Facebook and Twitter, is known for expounding on everything from the future of social media to the frontiers of space travel. But when someone asked a question that had swirled around his Silicon Valley ascent — who were his investors? — he did not answer, turning repeatedly to the moderator with a look of incomprehension.
Now, leaked documents examined by The New York Times offer a partial answer: Behind Milner’s investments in Facebook and Twitter were hundreds of millions of dollars from the Kremlin.
Obscured by a maze of offshore shell companies, the Twitter investment was backed by VTB, a Russian state-controlled bank often used for politically strategic deals.
And a big investor in Milner’s Facebook deal received financing from Gazprom Investholding, another government-controlled financial institution, according to the documents. They include a cache of records from the Bermuda law firm Appleby that were obtained by the German newspaper Suddeutsche Zeitung and reviewed by The Times in collaboration with the International Consortium of Investigative Journalists.
Ultimately, Milner’s companies came to own more than 8 percent of Facebook and 5 percent of Twitter, helping earn him a place on various lists of the world’s most powerful business people. His companies sold those holdings several years ago, but he retains investments in several other large technology companies and continues to make new deals. Among Milner’s current investments is a real estate venture founded and partly owned by Jared Kushner, President Donald Trump’s son-in-law and White House adviser.
Facebook, Twitter and other social media sites have become a major focus of federal investigations into Kremlin interference in the 2016 election. Federal prosecutors and congressional investigators are examining how Russians linked to the Kremlin turned the sites into garden hoses of bogus news stories and divisive political ads, and whether they coordinated with the Trump campaign.
No one has suggested that Milner or his companies had any connection to the propaganda operation. For his part, Milner said in a pair of recent interviews that the Russian government money was no different from the financing he had received from his many other investors around the world.
There is nothing illegal about foreign state-owned institutions investing in U.S. companies. VTB and Gazprom said the transactions were both sound investments, not motivated by political considerations.
Milner, 55, studied theoretical physics at Moscow State University before moving to the United States, where he attended the Wharton School at the University of Pennsylvania in the early 1990s and then worked for the World Bank in Washington.
He returned to Russia, and eventually teamed with Alisher Usmanov — an Uzbek-Russian oligarch close to the Russian prime minister, Dmitry Medvedev — and a former Goldman Sachs executive to build a significant stake in Mail.ru, a Russian internet company that now trades on the London Stock Exchange.
In May 2009, Facebook announced an investment of about $200 million by Milner’s company, Digital Sky Technologies, and said the company planned to spend at least $100 million buying additional stock. Eventually, Milner’s new venture capital firm, DST Global, also amassed a significant stake in Facebook.
The documents reviewed by The Times reveal that DST brought something else as well: a connection — through a succession of shell companies — to the Kremlin.
For the Facebook deal, it was Gazprom, the state-controlled natural-gas giant, that became the bridge. The company, a vital component of the Putin government, has employed its financial subsidiary, Gazprom Investholding, to reclaim assets privatized during the 1990s.
Both VTB and Gazprom Investholding’s parent, Gazprom, are under U.S. sanctions stemming from Russia’s support of separatists in eastern Ukraine in 2014.
Over several years, Gazprom Investholding and a subsidiary made hundreds of millions of dollars in loans to a company called Kanton Services, according to records from the Panama Papers, the trove of leaked documents from the law firm Mossack Fonseca. Kanton, in turn, owned one of the DST investment vehicles used to buy shares of Facebook. While it is unclear precisely when Kanton first received its stake in the DST entity, Kanton received $197 million of the Gazprom Investholding loans three months before Facebook announced its first deal with Milner, the records show.
The Facebook deal was a case study in the way Russia’s oligarchs have mixed public and private roles for their own, and their government’s, benefit: Even as he was investing in Facebook, Usmanov was general director of Gazprom Investholding.
In fact, Usmanov had often intertwined his government position with his personal deals, according to a report by the global investigations and security firm Kroll. Kroll described those arrangements as “synergies.”
The Kroll report — a “reputation audit” — had been commissioned by Usmanov as he set out to burnish his image a year before his deal with Milner to invest in Facebook. Kroll investigators, relying on public records and interviews, detailed a long and colorful history: time in prison in Uzbekistan (he was later exonerated) and past associations with alleged Russian organized crime figures, according to a draft copy of the report reviewed by The Times.
The investigators also recounted a dizzying number of deals — involving mining, media and technology companies, often with the assistance of the Kremlin and Medvedev. Kroll investigators found that, for some investments, Usmanov turned to Kanton, the company that would be a part of Milner’s Facebook investment.
A Facebook spokeswoman, Vanessa Chan, declined to answer specific questions about the deal with DST, calling it a “passive investor” and noting that the company had invested and cashed out several years ago.
Milner’s roughly $380 million investment in Twitter was directly backed by another instrument of Kremlin power: Russia’s second-largest bank, VTB.
Sixty-one percent of the bank is owned by the Russian government. VTB’s president, Andrey L. Kostin, is a former Soviet diplomat; Matthias Warnig, on the bank’s supervisory council, is a former East German spy who served in Dresden while President Vladimir Putin was stationed there with the KGB.
VTB has operations across the world, including in the United States. In recent years, it has been involved in a number of politically sensitive deals, including a loan that financed the Russian government’s murky privatization of 19.5 percent of the oil giant Rosneft.
Milner’s Twitter deal is a complex web of share transfers and offshore financial entities. But its details may offer clues that there was a strategic motive behind VTB’s involvement.
In July 2011, VTB invested at least $191 million in exchange for shares of an Isle of Man company called DST Investments 3, corporate records show. That offshore vehicle was used to buy roughly half of DST Global’s stake in Twitter that month. DST Investments 3 also issued shares to Kanton, the company linked to Usmanov that was at the center of the Facebook deal.
The Twitter deal had a notable feature: VTB put virtually all of the cash into DST Investments 3, filings show. Kanton contributed almost none.
On May 7, 2014 – six months after Twitter’s initial public offering, when insiders were first permitted to sell their shares — VTB transferred the bulk of its stake in DST Investments 3 to Kanton. DST also cashed out its Twitter investment.
Twitter declined to answer a series of questions about VTB, but said that as a matter of policy it had done reviews of all pre-IPO investors.
Milner has also been active beyond Silicon Valley. He is a founder of the Breakthrough Prize, a series of lucrative scientific awards. And in July 2015, he was one of several high-profile investors in Cadre, a New York-based real estate technology company founded by Kushner and his brother, Joshua. (Other investors and partners include Goldman Sachs, George Soros and Peter Thiel’s Founders Fund.)
Kushner and Cadre declined to comment.