Photographer: Andrew Harrer

Early Facebook Backer Tied to Russia Bank, Kushner Platform

Updated on
  • Milner invested personal money in Kushner family’s Cadre
  • Earlier VTB funding totaled less than 5% of Milner’s DST

A prominent Silicon Valley investor who was an early backer of Facebook Inc. partnered in two investments with the Russian state-controlled bank VTB Bank PJSC before it was sanctioned, his spokesman confirmed Friday.

Yuri Milner, the Russian-born founder of DST Global, also invested $850,000 of his personal money last year in Cadre, a real-estate investing platform co-founded and partially owned by the family of Jared Kushner, President Donald Trump’s son-in-law and senior adviser. Milner’s spokesman said that VTB played no part in his Cadre investment, which was done solely on the business merits of Cadre.

In 2011, Milner and VTB co-invested in Twitter Inc., when DST Global led a $400 million funding round for the social-media company, which was then valued at $7.6 billion. The firms co-invested the same year in JD.com Inc., a Chinese online mall. DST and VTB sold their stake in Twitter in 2014 before the sanctions came into effect and exited JD.com in 2015. Milner said in a September interview with Forbes that DST disposed of its Facebook stake in 2012-2013.

VTB has been under U.S. sanctions since 2014, imposed after the Kremlin’s role in annexing Crimea. Milner told Forbes that the sanctions "did not restrict DST Global from holding and divesting their position in the JD.com co-investment vehicle," which was still in existence when the sanctions took hold. The sanctions didn’t require him to divest the JD.com investment.

Representatives of Facebook, Twitter and VTB didn’t immediately respond to requests for comment.

Russia Influence

At a time when the U.S. is investigating Russian efforts to meddle in the 2016 presidential election, the investor’s past connection to a now-sanctioned bank may prompt additional questions about whether his native country tried to buy influence elsewhere in the U.S. VTB has been pressuring the U.S. to drop sanctions.

The spokesman said VTB bank funding had totaled less than 5 percent of DST Global’s capital, and DST didn’t take investments from any other Russian government institutions.

Details about the relationship between Milner and VTB surfaced in the wake of a data hack that revealed confidential information from a major Bermuda law firm that handles offshore financial matters for corporations and high net worth individuals. Information from the firm, Appleby, has been leaked to the International Consortium of Investigative Journalists, and reporters are reviewing the millions of pages of documents that reveal strategies used to hide assets and avoid taxes.

Bloomberg hasn’t seen the leaked documents. 

VTB Collaboration

Milner previously discussed his collaboration with VTB in a September interview in Forbes. He said he had never worked for the Russian government other than serving as a member of a Presidential Commission on Innovation from 2009 to 2011 that was formed by Russia’s then-leader Dmitry Medvedev.

Milner, who co-founded the leading Russian-language internet company Mail.ru Group Ltd., rose to prominence in Silicon Valley after buying nearly 3 percent of Facebook in 2009, and held a 5.5 percent stake in the company before its IPO in 2012. DST Global has invested $7 billion in more than 30 internet companies, including tech darlings such as Spotify Ltd., Zynga Inc. and Groupon Inc.

Having built a $4.6 billion fortune, Milner joined with tech heavyweights such as Facebook’s Mark Zuckerberg and Alphabet Inc.’s Sergey Brin to found the Breakthrough Prize, which doles out $3 million prizes to the world’s top scientists at a black-tie event held every year in a NASA facility.

Jared Kushner has said he would divest his interest in Cadre, but as of the last financial disclosure still held an interest. A spokesman for Kushner declined to comment.

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