A new trove of documents called the Paradise Papers confirm Yuri Milner’s connections to the Russian government-controlled companies for the first time. Milner’s firm DST Global acquired a stake in Facebook and Twitter with funding from Kremlin-owned firms VTB Bank and Gazprom, these documents reveal.
However, in a new statement, Milner said that any indication that DST Global was working on behalf of the Russian government to gain influence over social media is a “fairy tale.”
“And if this had all been an influence operation, we would surely have sought some control over the companies,” Milner wrote in an open letter. “Yet when we negotiated the Facebook and Twitter deals we asked for no board seats, and assigned all our votes to their founders, figuring they knew best how to run their companies. At the time, this structure was unusual, but it is core to DST Gobal’s philosophy.”
DST Global sold its stake in both companies several years ago. Both Facebook and Twitter emphasized that the firm is a well-known tech investor, with money in companies like Spotify, Zynga and others. Facebook said DST was a passive investor with no voting rights or a board seat.
The trove of documents provided no indication that DST Global helped these Kremlin-linked firms gain influence over Facebook or Twitter.
But these new details are being revealed as both companies face federal investigations into how the respective platforms were used to interfere in the 2016 presidential elections in the U.S.
Milner went on to lament the state of affairs after the 2016 presidential election and how the public questions anyone with Russian ties or roots.
“But it is also worth thinking about the broader effect of this kind of worldview,” he wrote. “There are over three million self-identifying Russians living in America. Thousands work in Silicon Valley, including the founders of some of the most iconic American technology companies. Because many Russians have historically been drawn to science and technology, to be suspicious of anyone with connections to both Russia and tech firms is to cast a very broad net.”
Here’s the full letter from Milner:
Social media, the 2016 election and being Russian
An open letter from technology investor Yuri Milner
For me, America has always lived up to its promise. Back in Russia in the late eighties, struggling to pay the rent despite working two jobs, I imagined this country as a land of opportunity. And that’s exactly what I found when I came here. The biggest difficulty I’ve faced as a Russian has been missing borscht.
When I came for an interview at Wharton Business School in 1990, the director of admissions had every reason to turn me away. I didn’t have the qualifications. I certainly didn’t have 29,000 dollars a year in tuition and expenses. And until that year, no Soviet student had ever been granted a place at a US business school. But he took a chance on me, and 27 years later I was honored to give the commencement speech there. And a few years ago, 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.
Since the 2016 election, however, there has been a change in the air. Just to be Russian, suddenly, is to be under suspicion.
In recent weeks, questions have been raised about me and DST Global, the investment firm that I founded, in connection with Russian attempts to influence the US election. Because of our investments in Facebook and Twitter, and early investment in our fund by a state-owned Russian bank, our integrity has been publicly doubted. The implication is that – being Russian – my motive for these investments was not to make a financial return, but to gain influence over social media. I have even been grilled as to how many times I met with Mark Zuckerberg, and what we discussed – as if every exposure to Russianness put him at risk of infection.
Another transaction that has attracted attention is my personal investment in Cadre, a company associated with Jared Kushner. But the stake in question was very small – a fraction of 1% of the total funds raised. This investment, like any other, was made on a purely commercial basis. It no more implies a personal relationship with Mr. Kushner than buying some shares in Walmart gets you invited to Thanksgiving with the Walton family.
Because these suggestions are so far-fetched, it’s hard to take them seriously. But the events surrounding last year’s election are a serious matter indeed, and having grown up behind the Iron Curtain, I have a particular appreciation for democratic institutions. That is why I am making my response public with this letter.
The idea that we were working on Russia’s behalf to turn social media against US democracy is a fairy tale, for many reasons. One, the timescale: our initial investment in Facebook was in May 2009 – a time when U.S.-Russian relations were very different, just after Hillary Clinton visited Moscow to press the “reset” button; and we divested from both Facebook and Twitter in 2013-2014, well before the US election. Two, the method: these deals gave neither DST Global nor its investors any influence or control over the activity of the companies we invested in. Three, the context: the Russian bank (which invested back in 2011) comprised less than 5% of our funds, and was just one of a number of state-owned institutional investors from around the world. And by the way, accepting funding from a Russian bank does not automatically make you a Kremlin agent.
In reality, DST Global’s investments in Silicon Valley were motivated by pure business logic, based on a decade of experience in Internet technology. In the 2000s I had helped to grow Mail.ru into one of the largest Internet companies in Europe. Later on, together with partners from Finland, Ireland, India and Singapore, we built DST Global. In 2009, after an exhaustive analysis of many social media networks worldwide, we determined that Facebook was an attractive investment opportunity - which proved to be correct.
To anyone who knows the Internet technology industry, the notion that all this work was driven by political considerations is just not credible. Tech investing has its follies; but it’s not such a simple game that consistent above-market returns can be generated at will, as a cover for some nebulous long-term goal.
And if this had all been an influence operation, we would surely have sought some control over the companies. Yet when we negotiated the Facebook and Twitter deals we asked for no board seats, and assigned all our votes to their founders, figuring they knew best how to run their companies. At the time, this structure was unusual, but it is core to DST Gobal’s philosophy. After Facebook and Twitter, we went on to make more than 30 other investments in companies including Airbnb, Spotify and Alibaba, each based on many months of data-gathering, number-crunching and due diligence. That’s a lot of trouble to take for an alibi.
DST Global had fully divested our positions in Facebook by 2013 and Twitter by 2014, following their IPOs. Again, winding up our investments in these companies so early would seem a suboptimal way to utilize them in an election that was still years in the future.
We were also accused of not disclosing the Russian bank as one of DST Global’s limited partners to our portfolio companies – as if it was some sort of state secret. But our critics fail to appreciate that it is normal practice in venture capital funds not to disclose limited partners. And this is the practice we have followed not only in the case of Facebook and Twitter but in over thirty other investments we have made.
To sum up: the theory that we made these investments to influence social media makes no logical sense, in terms of either motivations, actions, or results. Only a worldview that sees my nationality as inherently suspicious could find such a fairy-tale compelling. It is unpleasant to experience guilt by association, and frankly scary for my children to face suspicion in school on the grounds that their parents are Russian.
But it is also worth thinking about the broader effect of this kind of worldview. There are over three million self-identifying Russians living in America. Thousands work in Silicon Valley, including the founders of some of the most iconic American technology companies. Because many Russians have historically been drawn to science and technology, to be suspicious of anyone with connections to both Russia and tech firms is to cast a very broad net. When I think of Russians in America, I think of people like Vladimir Zworykin, who developed the technology behind the television; Igor Sikorsky, who pioneered the helicopter; George Gamov, one of the key minds behind Big Bang theory; and brilliant contemporary scientists like the theoretical physicists Alexei Kitaev, Andrei Linde and Alexander Polyakov, or the biochemist Alexander Varshavsky.
The latter four are all winners of the Breakthrough Prize, the world’s biggest science award, which I co-founded in 2013. My passion for science also led me to invest in space missions like Starshot, the first serious attempt to design an interstellar probe. We expect Starshot to take around 20 years to build, and another 20 years to reach the nearest star. Now that is the kind of long-term plan I am interested in. Like any research program, it could fail. But it is a lot more likely to succeed than attempting to control the course of complex political events, nearly a decade in advance, through passive investments in tech platforms.
The essence of the scientific search for truth is not just inventing a theory, but subjecting it to systematic doubt. It is not enough to connect a few data points and declare a causal explanation. You have to question your assumptions and biases. This approach is alien to conspiracy theorists: the only explanation they are skeptical of is the simplest one – in this case, that investments can be made on business merits only. Even by a Russian.
This article originally appeared on Recode.net.