Nets' Oligarch Owner Leaves His Political Party, Rejoins Board of a Russian State Corp

Mr. Prokhorov and his political prospects remain unclear, which means the Kremlin can focus on using Mikhail Prokhorov's other talents, like diplomacy or business-savvy or New York residency.
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The Brooklyn Nets' season is finished, but so far their Russian oligarch owner is only shaking up rosters with big moves back home in Russia.

Mikhail Prokhorov announced he's stepping down as head of the political action committee of the "Party of Civic Platform" while returning to the board of directors of Rusnano, a joint-stock company created and operated by the Russian government.

Commenting on Brooklyn's $196-millon-dollar squad's loss to to Miami, Mr. Prokhorov promised that "Next season, we pick up right where we left off." In April, Forbes Russia reported that Mikhail Prokhorov is no longer in top-ten of Russia's richest men after losing 2.1 billion dollars in 2013, which brings his official grand total down to $10.9 billion.

It's all good though, Brooklyn.

On Wednesday, Mikhail Prokhorov stepped down from the Civic Platform party he formed in 2012. Though his sister Irina Prokhorova replaced him as party leader in 2013, Prokhorov's exit from Civic Platform -- and possible departure from politics altogether -- is a signal that the Kremlin is up to something. In recent years, Mikhail Prokhorov has demonstrated a remarkable ability to pop up on Russia's political landscape at moments of convenience for the Kremlin and Vladimir Putin.

Mr. Prokhorov emerged as Russia's "liberal hope" in the 2012 presidential elections, in which he received nearly 8 percent of the vote and which landed Mr. Putin a third term in office. In late 2012, the Civic Platform party was established supposedly to address the growing public dissatisfaction over the State Duma. With big-time spending and media fanfare, the Civic Platform party has enlisted less than a thousand members and gained a whopping 13 seats in regional parliaments (out of 3,787!) and zero seats in the State Duma.

Now Mr. Prokhorov is out and his political prospects remain unclear, which means the Kremlin can focus on using Mikhail Prokhorov's other talents, like diplomacy or business-savvy or New York residency.

On Monday, Mr. Prokhorov rejoined the board of directors of Rusnano, a state-owned enterprise that invests in nanotech start-ups around the world. Headed by Anatoly Chubais -- Russia's leading capitalist strategist and the architect of the ninties privatization efforts which landed him the moniker of the Most Hated Man in Russia -- Rusnano is known for both aggressive investments in nanotech companies and some of the highest kick-backs in Russia.

Mr. Chubais is now a member of JPMorgan Chase's Advisory Council and also sits on the global advisory board for the Council on Foreign Relations. Since mid-2010, Rusnano has invested $1.3 billion+ in at least 18 U.S. high-tech projects; so Mikhail Prokhorov's return to their board of directors means that the Russian government would like to put his time in the U.S. to better use than simply running a mediocre basketball team. Rusnano is also looking to recruit investors with the goal of making as much as 40 percent of the company private.

While Prokhorov is back in, Viktor Vekselberg and Sergey Chemezov have left Rusnano's board of directors. Why? The U.S. sanctions over Ukraine so far have been ineffective and meaningless, but they did create some bad PR for both Vekselberg and Chemezov. Neither oligarch has been officially sanctioned -- and likely won't be. Mr. Chemezov runs Rostec, another state behemoth whose structure includes arms exporter Rosoboronexport, from whom the U.S. needs to keep buying helicopters for the Afghan army. The Ukraine-born Viktor Vekselberg, possibly the wealthiest man in Russia at the moment, is deeply involved in developing Russia's "Silicon Valley"-type project in Skolkovo, whose co-chair is former Intel CEO Craig Barrett.

Now remember: all these moves are happening while Ukraine's future is seemingly the most important point of contention between Washington and Moscow.

No matter what happens in Ukraine, the work of Skolkovo, Rusnano and Rosoboronexport has become increasingly useful, if not lucrative, for a whole lot of people in the U.S. No amount of arbitrary, quasi-judicial, and redundant economic sanctions against Russia will work. Even before we had the threat of sanctions against the likes of Viktor Vekselberg and Sergey Chemezov, the U.S. tried going after alleged human rights violators with the U.S. Magnitsky Act, which has done a lot of damage to U.S. national interests and wasted a lot of resources from both the U.S. State Department and Russia's Foreign Ministry.

To most Russians, American sanctions against individuals look like a diplomatic assault on the whole country. Instead of undermining Russia's political and economic elites, the White House gives them a political boost -- while losing popularity over its foreign policy choices here in the States. For the U.S., the sanctions against Russia have been a lose-lose, something the Nets know a lot about. But Mikhail Prokhorov and friends are going to be alright.

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