Russia’s VK could be about to get a new CEO

Vladimir Putin’s inauguration — the official start of his new presidential term — is set for May 7. Talk is swirling that a possible government reshuffle could soon follow. It is not just ministries that are preparing for a leadership change, state-run companies are as well. One of the most widely discussed changes in the tech sector is the possible resignation of Vladimir Kiriyenko — son of Sergei Kiriyenko, the deputy head of the presidential administration and Kremlin’s point man on domestic policy — from his role as CEO of VK Group. His rumored replacement? Another political nepo-baby: Stepan Kovalchuk, the grandson of Mikhail Kovalchuk and great nephew of Yury Kovalchuk, one of Putin’s closest confidantes.

• The resignation of Vladimir Kiriyenko from VK has been actively discussed inside the company in recent months, four sources close to the group and Kiriyenko told The Bell. If he does step down, it is likely to happen after Putin’s inauguration, when the full government resigns (a constitutional obligation), one source said. One of the reasons for his departure could be strained relations between Kiriyenko and Stepan Kovalchuk, currently a top exec in the company. Kovalchuk’s family are major shareholders and the 29-year-old represents their interests inside the firm.
• Kiriyenko could return to state-run Rostelecom, where he served as vice president for five years before joining VK. Alternatively, he could move directly into the government, possibly as a deputy minister with a view to becoming digital development minister in the long-term.
• Stepan Kovalchuk’s grandfather, Mikhail Kovalchuk, is president of the Kurchatov Institute. Mikhail’s brother, Yury Kovalchuk, is the co-owner of Rossiya Bank and one of Putin’s closest friends. He is also a major player in controlling the country’s TV networks and has been tasked by the Kremlin with extending that influence into the online space. His companies bought into VK in 2021 and after that deal, Vladimir Kiriyenko — whose father Sergei is considered close to the Kovalchuks — was appointed CEO. 
• Stepan Kovalchuk has worked at VK since the late 2010s, but his career at the company really took off after his family bought a stake. He was appointed senior vice president for media strategy and service development, then became head of a unit that included both the VKontakte and Odnoklassniki social media sites, as well as the politically sensitive news aggregation service (previously owned by Yandex), and VK’s video platform, which in the Kremlin’s eyes should eventually replace YouTube in Russia.
• Relations between the two young execs have not been smooth. One source told The Bell that the pair may even have clashed publicly inside the businesses. Kovalchuk, they said, wants more freedom, but his projects have to date been loss-making.
• In 2022, VK was among the top 10 loss-making companies in Russia, losing 32.6 billion rubles ($350 million). Last year its net loss shrunk, as did its debt. The company has had a number of internal problems in the past — and such issues are likely to become more evident from now on, The Bell’s sources say. However, the Kremlin understands VK’s financial results and its inability to turn a profit, viewing it sympathetically — one source described the Kremlin’s perspective as: “our team is facing problems and it’s hard for them.”
• At the moment, part of Sergei Kiriyenko’s remit in the Kremlin is overseeing domestic tech policy. Whether he will retain this post after Putin’s inauguration is unclear. Meduza reported that the Kremlin is discussing moving him on.

Why the world should care

The situation inside VK is a vivid illustration of how Russian nepotism works, with the management of one of the largest and most important companies in the country being shifted between the offspring of influential elites.