Russian billionaire Yuri Milner’s early backing of Facebook, Twitter had Kremlin ties
Leaked documents known as the Paradise Papers show how some of the world’s wealthy elite use tax havens to shelter their money. Among those included in the reports are Queen Elizabeth II, U2 singer Bono and U.S. Commerce Secretary Wilbur Ross. (Nov.
Russian billionaire Yuri Milner gained fame and wealth as an early backer of Facebook Inc., Twitter Inc. and other Silicon Valley start-ups.
Called “Russia’s most influential tech investor” by Forbes, Milner’s wealth has enabled him to partner with Facebook Chairman Mark Zuckerberg in scientific philanthropy, form a spacecraft initiative with famed physicist Stephen Hawking, and buy one of the most expensive homes in the U.S.
But now the technology investments that brought him riches have come under heightened scrutiny amid inquiries into possible Russian meddling in last year’s presidential election.
Leaked documents known as the Paradise Papers showed that Milner’s Facebook investment, arranged by his investment firm DST Global, received financing from a subsidiary of the Kremlin-controlled energy giant Gazprom.
They also showed that Milner’s Twitter investment had backing from VTB, a Russian state-controlled bank among the entities placed under U.S. sanctions since 2014 for Russia’s annexation of Crimea and its incursions in eastern Ukraine.
The revelations were reported by the International Consortium of Investigative Journalists, which along with 95 media partners explored the leaked Paradise Papers files obtained by the German newspaper Suddeutsche Zeitung.
No one is suggesting that Milner or his firms were involved in any wrongdoing. But revelations of the Russian government’s ties to his tech-world investments come as U.S. lawmakers are investigating how Russian operatives were able to use Facebook, Twitter and other internet platforms in hopes of influencing last year’s election. Congressional committees held hearings on the matter last week.
“Today, with all the intense conversation taking place regarding Russia, as part of due diligence people naturally want to look carefully where the money is coming from,” said Thomas Cooke, a professor at Georgetown University’s McDonough School of Business.
Milner issued a public statement saying it was a “fairy tale” to suggest “we were working on Russia’s behalf to turn social media against U.S. democracy.”
“When I settled with my family in Silicon Valley, I found a community that didn’t care where you came from, only who you were and what you had to offer,” Milner said. “Since the 2016 election, however, there has been a change in the air. Just to be Russian, suddenly, is to be under suspicion.
“And by the way, accepting funding from a Russian bank does not automatically make you a Kremlin agent,” Milner said. “In reality, DST Global’s investments in Silicon Valley were motivated by pure business logic.”
Milner’s firm divested its holdings in Facebook and Twitter several years ago after each of those companies had their initial public stock offerings.
“As a passive investor DST ... had no voting rights or board seat,” a Facebook spokeswoman told The Times on Monday. “The investment was made eight years ago and DST Global has since sold all their holdings in Facebook — their stake ended five years ago when we went public.”
A Twitter spokesperson confirmed that DST Global led a round of investments in 2011 and divested from the social media company in 2014. “As a matter of policy, Twitter conducted reviews of all pre-IPO investors,” the spokesperson said.
After selling those stakes, Milner’s DST Global continued to invest several billion dollars in many other U.S. and foreign internet-related firms that became tech-world stalwarts, including Airbnb, Spotify and Alibaba.
Milner also invested $850,000 of his personal money last year in a real-estate investing firm called Cadre that is partially owned by the family of Jared Kushner, President Trump’s son-in-law and senior advisor, Bloomberg reported.
“This investment, like any other, was made on a purely commercial basis,” Milner said. “It no more implies a personal relationship with Mr. Kushner than buying some shares in Wal-Mart gets you invited to Thanksgiving with [founder] Sam Walton’s family.”
DST Global noted in a statement that it was a passive investor in Facebook and Twitter and “there is nothing unusual” about an international investment firm accepting cash from sovereign states such as Russia.
That’s true, said Michael Maduell, president of Sovereign Wealth Fund Institute, a research group that studies sovereign funds.
“Every major country is doing it,” he said. “You have the Saudis with their public investment fund investing in Uber, you have the China Investment Corp. and the Malaysian sovereign wealth fund.”
In the case of Milner’s investments, “a lot of these deals happened before the Russian sanctions,” Maduell said. “Russia was also getting a lot of investment before this stuff. The script flipped after Crimea. That’s when sanctions came up.”
Milner, who turns 56 on Saturday, grew up in Moscow. He earned a degree in physics from Moscow State University in 1985 but later abandoned physics, studied business at the University of Pennsylvania’s Wharton School and worked at the World Bank for three years.
He returned to Russia and later took control of Mail.ru, a major Russian internet company. With his firm’s initial investment in Facebook in 2009, he set his sights on the U.S. technology industry.
As his technology bets paid off, Milner’s wealth soared. Forbes estimates his net worth at $3.5 billion.
In 2011, Milner bought a 25,500-square-foot French chateau-style estate in Los Altos Hills in Silicon Valley for $100 million, among the highest prices ever paid for a single-family home in the United States.
The wealth Milner has amassed has allowed him to promote his passion for science, devoting a chunk of his fortune to futuristic pursuits.
Milner, Zuckerberg and others in 2013 started the Breakthrough Prize, which rewards top scientists with lucrative prizes.
Two years ago, Milner and his wife co-founded the Breakthrough Initiatives, a series of programs focused on space exploration. Those initiatives include Breakthrough Listen, a $100-million program focused on finding life beyond Earth, and Breakthrough Message, a $1-million competition to create a message that could represent Earth to an alien civilization.
Last year, Milner and Hawking announced a $100-million research program, called Breakthrough Starshot, aimed at developing a proof-of-concept for a tiny spacecraft propelled by a light beam that could travel to the Alpha Centauri star system. Zuckerberg also is on the program’s board.
Several billionaires have sunk their fortunes into the space industry, most notably SpaceX’s Elon Musk, Blue Origin’s Jeff Bezos and Richard Branson, who has a trio of space companies. But Milner’s efforts are different.
While Musk, Bezos and Branson are focused on building business models and customer bases for their commercial space plans, Milner is focused more on moonshots, said Bill Ostrove, aerospace and defense analyst for Forecast International.
“These breakthrough missions are sort of a different beast,” he said. “They don’t really seem to be focused on building a long-term business.”
Times staff writer Samantha Masunaga contributed to this story.
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