Russian tycoons received billions of dollars in dividends as their companies resumed or boosted payouts amid easing economic uncertainty over the Kremlin’s war in Ukraine.

At least a dozen business people gained more than 1 trillion rubles ($11.3 billion) for 2023 and in the first quarter of this year, according to data on dividends compiled by Bloomberg from publicly disclosed information. Many have close links to President Vladimir Putin and include some who’ve been sanctioned over the war that’s now in its third year.

Vagit Alekperov, key shareholder and former president of oil giant Lukoil PJSC, topped the list with about 186 billion rubles in dividends. He is sanctioned by the UK and Australia, but has so far avoided US and European Union penalties. 

Billionaires Alexey Mordashov, of Severstal PJSC, and Vladimir Lisin, of Novolipetsk Steel PJSC, were next with 148 billion and 121 billion rubles respectively of dividend income. Mordashov is under US, UK and EU sanctions, while Lisin isn’t under any major restrictions. 

The list also includes Putin’s billionaire ally Gennady Timchenko and Tatyana Litvinenko, who received a stake in PhosAgro PJSC before her husband Vladimir was sanctioned by the US in 2023. Vladimir Litvinenko is rector of St. Petersburg Mining University where Putin received a doctoral degree in 1997 and was the president’s campaign manager in the city during three elections.

The US and its allies imposed sweeping sanctions on Russia in response to the February 2022 invasion, prompting many companies to pause dividend payouts on the back of uncertainty over a potential economic collapse. Those fears haven’t been borne out as Russia’s economy gradually adjusted to the new conditions and exporters found alternative markets.  

After contracting in the year that followed the start of the war, Russia’s economy rebounded sharply as the government spent massively to expand the defense industry, shield domestic businesses from the impact of sanctions, and provide social support for families.  

Gross domestic product grew 5.4% in the first quarter compared to the same period last year. Many commodities exporters have resumed payment of dividends after reshaping their businesses and re-routing sales toward markets in China, India and other Global South nations that haven’t implemented sanctions over the war in Ukraine. 

Many state-controlled corporations like Gazprom Neft PJSC and Russia’s largest bank Sberbank PJSC never stopped making dividend payments as they racked up record profits during the war. Sberbank’s shareholders last month approved a record 752 billion rubles in dividends for 2023.

Still, Russia’s economy may face significant problems in the second half of the year and in 2025 that may prompt the government to raise taxes, according to Chris Weafer, chief executive officer of Macro-Advisory Ltd. For many business owners, “it is a case of better to take the money out now rather than risk losing it in taxes next year,” he said.

Companies face mounting difficulties over payments that may lead to shortages of industrial components and consumer goods, he said. 

That comes after the US stepped up threats of secondary sanctions on banks in countries that Russia regards as “friendly.” US sanctions on the Moscow Exchange last month forced it to halt trading in dollars and euros.

The Finance Ministry last month raised its estimate of the 2024 budget deficit to 2.12 trillion rubles, or 1.1% of GDP, from 1.595 trillion rubles. With inflation running at more than double the 4% target, the Bank of Russia may raise the key interest rate as much as 200 basis points later this month from 16% now.

One more problem facing Russian tycoons is where to invest their dividends after sanctions compelled many to turn toward the domestic market.

In May, private investors invested 116.3 billion rubles on the Moscow Exchange, a monthly record so far in 2024.

Investment in Russian industries jumped 14.5% year-on-year in the first quarter to a record of almost 6 trillion rubles, central bank data showed. Still, domestic opportunities are limited. 

“There is simply far too much uncertainty for tycoons to make major investments at this time,” particurlarly when they can get high interest rates from Russian banks on ruble deposits, Weafer said. “For most, the prudent course of action is to wait.”