The meat magnate who pushed Putin's agenda in Germany
By Tassilo Hummel, Polina Nikolskaya, Mari Saito, Maria Tsvetkova and Anton Zverev
RHEDA-WIEDENBRUECK, Germany, May 31 (Reuters) - For nearly two decades, German meat magnate Clemens Toennies was a friend to Russia.
He spoke warmly of Vladimir Putin and said he gave the Russian president a cured knuckle of pork whenever they met. The logo of Russia's state gas company Gazprom was emblazoned on the shirts of players at the soccer club Toennies chaired. And when others warned that Russia was becoming a global menace, Toennies backed the Kremlin.
In Germany, Toennies' story is far from unique.
For decades, Russia cultivated relations with politically connected German industrialists. Successive German leaders, starting with Cold War-era Chancellor Willy Brandt, promoted economic cooperation with Moscow in an effort to secure peace and prosperity. Germany became Russia's most important Western partner and the biggest importer of its gas. Berlin's trust in this policy, known as "Ostpolitik," endured even as Russia took a darker turn under Putin.
Now interviews with more than 40 people who had direct knowledge of Toennies' activities or Gazprom's efforts to win allies in Germany, as well as a review of hundreds of documents, give insight into how Russia turned this bond to its advantage, and how Toennies drew commercial benefit.
At the centre of Gazprom's influence campaign was Schalke 04, the soccer club Toennies chaired at the time and which Gazprom began sponsoring in 2006. Executives at Gazprom's Berlin office collected names of politicians and businesspeople to invite to Schalke's VIP box at home matches. And in 2017, amid growing disquiet over Russia's grip on European gas supplies, pitchside advertising began promoting the Nord Stream 2 gas pipeline from Russia to Germany, which had yet to receive German final regulatory approval.
Toennies, meanwhile, trod the route of many other German firms and expanded his business into Russia. Prior to Russia's invasion of Ukraine, German companies exported goods worth almost $30 billion a year, far more than any other European nation.
Toennies' relationship with Putin and other top Russian officials ensured red carpet treatment for firms he controlled, according to two of his business associates. Those firms received over a hundred million euros in loans from Russian state-owned banks, and grants from the Russian state: One five-year loan from state-owned Sberbank was secured against a single pig, documents show. Reuters couldn't determine the value of the loan.
Today, more than a year into the war in Ukraine, many in Germany are questioning the wisdom of maintaining such close ties to Moscow as evidence of Russian aggression mounted. After the Feb. 24, 2022 invasion, Berlin announced a sea change in its foreign and defence policy. Russian gas imports have dropped dramatically and Germany is supplying tanks and other weapons systems to Ukraine.
For his part, Toennies has said his relationship with the Russian president is now over. He sold the Russian ventures. And in his hometown in western Germany, his meat-packing factory now employs dozens of Ukrainians who have fled the war.
Toennies told Reuters in a statement his company's engagement with Russia was no different to that of many big German firms, including Miele, Volkswagen and Deutsche Telekom. All have now severed or significantly scaled back ties with Russia.
Toennies said that in the early 2000s there was a political and economic impetus to help Russia grow its economy.
"It's worth remembering that in 2006, Moscow hosted the G8 summit" and in 2011, then Chancellor Angela Merkel said Nord Stream showed Germany's "commitment to a secure and strong partnership," he said. "At the time, our investments in Russia were the right decision, economically and politically. However, with today's knowledge and the ruthless, inhuman war of aggression by the Russians on Ukraine, these activities must clearly be evaluated differently."
Merkel has defended her past stance towards Russia. After Moscow illegally annexed Crimea in 2014 and pro-Russian separatists launched attacks in eastern Ukraine, Germany tried to find a peaceful way forward "precisely to prevent such a war," she told an interviewer late last year. A spokeswoman for Merkel's office declined to comment for this article.
Toennies also said he was neither Putin's friend nor ally and any cheap loans or support for his business from the Russian state were normal practice to encourage investment. There was no special treatment, he said.
The Kremlin referred a comment request to Gazprom, which did not address questions about lobbying or its relationship with Toennies. The firm said in a statement that by sponsoring Schalke 04 it sought to raise its brand profile and it succeeded in this goal. Public opinion research showed Germans considered Gazprom to be "an economically successful and reliable international company which ensures a reliable supply of gas," it said.
Schalke cut short its sponsorship deal with Gazprom four days after Russia invaded Ukraine. It said in a statement that "from today's perspective, it is clear that Gazprom, particularly in its role as a Russian state-owned corporation, did not fit in with the values of the club as a partner overall." Schalke reported a total loss of 19.4 million euros for 2022, a year it called "extremely challenging" due to the loss of Gazprom's sponsorship and the pandemic. Though the club has cut back its budget considerably in recent years, Schalke said it still faces 141.5 million euros in financial liabilities.
AN ALLIANCE IS FORGED
Toennies was born in 1956 into a family of small-town butchers in Rheda-Wiedenbrueck, western Germany. Starting in the 1970s, his older brother Bernd grew the business into a major meat processing concern. When Bernd died, Clemens took over the family firm.
In 2001 Toennies assumed another of his older brother's roles – chairman of soccer club Schalke 04. A historic blue-collar side, it had a large and devoted following and regularly finished in the top five of Germany's premier soccer league. But the club had debts and needed a deep-pocketed sponsor.
Gazprom, meanwhile, was looking for a German soccer team to promote its brand. A former Gazprom executive told Reuters the gas giant drew inspiration from Russian oligarch Roman Abramovich's purchase of English club Chelsea in 2003. Gazprom wanted to improve its image in Europe and increase profits by selling gas directly to the region's industry and households. The objective, said the former executive, was to "create the image of a respectable Russian who takes care of your heating."
It was part of a wider Gazprom charm offensive in Western countries that Putin's then press secretary, Alexei Gromov, helped direct from the Kremlin, two sources close to Gazprom said. Gromov, who is now deputy head of the presidential administration, did not respond to a request for comment sent to him via the Kremlin.
Former German chancellor Gerhard Schroeder helped introduce Toennies to Gazprom executives, according to three people who were close to Gazprom and three people close to Schalke. Schroeder had become chairman of the shareholders' committee at the Gazprom-led Nord Stream pipeline consortium a year after leaving office in 2005. Schroeder did not respond to a request for comment. Toennies, in his statement, said German politicians and representatives of a German business lobby group helped him initiate contact with Gazprom. The statement did not name these people.
Sponsorship terms were agreed, and Gazprom joined the legion of wealthy corporations promoting their brands through European soccer. The deal was worth around 20 million euros a year, according to three people familiar with the arrangement, making it one of German soccer's larger sponsorships. It was sealed in Putin's presence in the five-star Hotel Taschenbergpalais in Dresden, the east German city where the Russian president used to work as a KGB spy. Toennies presented Putin with a Schalke shirt with Gazprom's logo on the front.
Two years later, Burkhard Woelki, communications chief of Gazprom's German unit, Gazprom Germania, created a slide presentation. It showed how the sponsorship had successfully shifted German public opinion of Putin. In 2007, 11% of those surveyed had positive associations for the Russian president. A year later, that had gone up to 14%. Perceptions of Schroeder, the most prominent German in Gazprom's orbit, had also shifted. His positive rating went from 35% to 52%. Gazprom expected to "become better known" and "strengthen dialogue between Russia and Germany" through the partnership, the slides said. Reuters couldn't determine if Woelki, who didn't comment for this article, ever delivered the presentation to an audience.
Staff at Gazprom Germania pulled together the names of influential figures to invite to the VIP box for matches, according to five people who worked at the unit or dealt with Gazprom at Schalke. Reuters couldn't determine these names. One of the sources said the aim was to "offer a frame via hospitality for talks with decision makers."
The VIP areas regularly brought together Gazprom officials and public figures. In 2011, for example, then German President Christian Wulff and Frank-Walter Steinmeier, a future foreign minister and president, watched Schalke play Duisburg. Also in the stadium's VIP area were Toennies and Gazprom staff. Representatives for Steinmeier and Wulff said they attended at the invitation of the German Football Association.
In July 2014 – a few months after Russia illegally annexed Crimea – Schalke played a friendly match in Mecklenburg-Vorpommern, the German region where the proposed Nord Stream 2 pipeline would make landfall. Gazprom official Woelki was there, and Mecklenburg's interior minister Lorenz Caffier was guest of honour at the match. A former Gazprom Germania employee said the objective was to promote the pipeline project. In response to Reuters questions, Caffier said the match raised money for a local anti-hooliganism campaign, and therefore he supported it. He said he was not aware that Gazprom saw the match as a lobbying opportunity and could not comment.
Sigmar Gabriel, previously German economy and foreign minister, appeared in the Schalke 04 VIP box for a match against Borussia Dortmund in 2018. Gabriel also briefly worked as an advisor to Toennies' meat processing business. In the box with Gabriel were former chancellor Schroeder and Matthias Warnig, an ex-Stasi official who has been friendly with Putin for decades. As boss of the Nord Stream consortium, Warnig has been subject to U.S. sanctions since February 2022 for "knowingly facilitating deceptive or structured transactions" related to the project. Germany halted Nord Stream 2 early last year as Russia prepared to invade Ukraine. Gabriel, Schroeder and Warnig did not respond to requests for comment. Warnig, in an email last year to the mayor of the German town where he has a home, said Russia's invasion was an error. He did not directly address the sanctions.
In March 2019, Schalke played English club Manchester City in a UEFA Champions League match. A person who was in a VIP box at the game in Manchester said he saw five or six Gazprom executives and Matteo Renzi, the former Italian Prime Minister who later that year helped form a new governing coalition. At the time, Gazprom accounted for around 40% of Italy's gas imports. A representative for Renzi said he was there as a guest of Manchester City's president and has no relationship with the management and ownership of Schalke, nor with Gazprom.
In his statement, Toennies said it was always the sole responsibility of Gazprom to decide who to invite to its VIP box, and the people in charge at Schalke were not involved. "We are not aware of possible lists of politicians," the statement said.
After Russia annexed Crimea in March 2014, the European Union imposed travel bans and asset freezes on dozens of Russian officials. The United States too imposed sanctions and urged Berlin to halt cooperation on Nord Stream 2. But Toennies stood by Putin, telling Germany's Bild newspaper: "We have a good relationship." In an interview with German broadcaster ntv in 2017, Toennies said boycotting Russia helped no one. "We need the bridges that we have to Russia," he said.
When many other CEOs stayed away from Putin's annual showcase for foreign investors, the St Petersburg International Economic Forum, Toennies attended in 2017. He also joined a German business delegation that met Putin in the Russian city of Sochi in 2019.
Even as Washington and other allies were raising the alarm over Berlin's over-reliance on Russian gas, Toennies and other German industrialists doubled down. In May 2015, Toennies told an energy forum organised by Gazprom that natural gas was "clean, efficient and versatile."
By 2018, Gazprom switched the focus of its Schalke sponsorship to promoting Nord Stream 2. Pitch-side advertising carried the pipeline consortium's name instead of Gazprom. Warnig, leader of the Nord Stream 2 consortium, took a seat on the Schalke board soon after and Nord Stream executives began drawing up their own lists of guests for the VIP box, according to a source at the club and another who worked for Gazprom.
Toennies meanwhile played a crucial role in heading off moves by some fans of Schalke, a not-for-profit association which is owned by its 165,000 members, to loosen its ties with Gazprom.
Roman Kolbe, one of the editors of fan magazine Schalke Unser, described two occasions when he had face-to-face disagreements with club bosses over its ties to Russia: once when Toennies wanted to fly the team to the 2014 Winter Olympics in Sochi, and a second time after Russia annexed Crimea and Kolbe questioned the wisdom of the Gazprom sponsorship deal. Toennies, via club executives, defended the relationship, Kolbe said. A club executive told Kolbe that Gazprom paid more than any other potential sponsor would.
Toennies said in his statement that perspectives have changed today, but that in 2014 and beyond, no leading German politician, or European soccer's governing body, questioned cooperation with Gazprom and it was fully accepted as a gas supplier to Germany. "From the club's point of view there was no reason not to hold on to the sponsor at the time." There was also no sign of disquiet among the club's other sponsors, said people who worked at Schalke.
In 2008, two years after Gazprom became Schalke's sponsor, Toennies announced that his privately held companies with minority partners, would launch pig-rearing ventures in Russia. He chose Belgorod, near the Ukraine border, part of Russia's most fertile "Black Earth" region, where gently rolling hills are dotted with industrial farming complexes and silos.
Later, in a 2013 interview with a German agriculture publication called Wochenblatt fuer Landwirtschaft und Landleben, Toennies recalled: "I promised Putin that I would also get involved in Russia."
Local officials were enthusiastic. Belgorod's governor, Yevgeny Savchenko, travelled to Toennies' German headquarters in Rheda-Wiedenbrueck, a complex surrounded by a high concrete wall where the stench of livestock and meat production hangs in the air. A Savchenko ally was named general director of one of the biggest new ventures in Russia, and Belgorod city put up 88 lots of municipal property, with a value of at least $ 1.3 million, as collateral to underwrite loans.
Over the following decade, the ventures grew and expanded into the neighbouring Voronezh region, where the Toennies-controlled business was given approval to lease large tracts of land. At a 2012 meeting with Voronezh governor Alexei Gordeyev, Putin's German-born former agriculture minister, Toennies thanked him from his "whole heart" for his cooperation, according to an account of the meeting published by Russia's ruling party.
The growth was funded by extensive borrowing. Belgorod regional government data for 2017 show that for every rouble Toennies and his partners invested in infra-structure projects at their main business in the region, Alekseyevsky Bekon, they borrowed six.
Loan documents reviewed by Reuters indicate that, in some cases, banks eased their lending rules for the Toennies-controlled ventures. Most of this debt was issued by Russian state-owned lenders, Rosselkhozbank and Sberbank. The documents are available on the Spark-Interfax database, which collates official data from the Federal Notary Chamber and Fedresurs, a Russian government database. The database does not give the values of individual loans, nor a figure for the total.
One of the documents showed a five-year loan, of unspecified value, was secured against "a pig." The database shows that the same Russian-made Kamaz truck was listed as around $30,000 collateral in three loans that Sberbank issued to a Toennies-controlled firm. Sberbank declined to comment. Rosselkhozbank, the Russian agriculture ministry and the governments of Belgorod and Voronezh regions did not respond to requests for comment.
In his statement, Toennies denied securing a loan with a single animal or vehicle. He said borrowing was secured against high-value farm equipment and a 50 million euro cash deposit lodged with Sberbank, but didn't provide evidence. On state support in general, the statement said: "At no time was Toennies treated in a special way in Russia, or had advantages that were not generally available to every company in Russia."
THE BREAK COMES
Toennies was invited to mix with Kremlin insiders at the 2014 Sochi Winter Olympics. And he had audiences with Alexei Miller, the Putin associate who heads Gazprom.
Then, in 2020, he stepped down as chairman of the Schalke 04 board. He was accused of racism after saying in a speech to an annual gathering of German tradespeople that if Africans had more power stations, "they would stop making babies when it gets dark." He apologised. He had also been mired in crisis after a COVID outbreak at one of his plants prompted criticism of working practices from a government minister and workers' rights campaigners. The company said many of the accusations were untrue.
In August 2021, it was announced that Toennies and his minority partner had sold their Russian businesses to a Thai firm. The purchase price was approximately 22 billion roubles, or about $300 million, according to a notice from the buyer to the Thai stock exchange. The deal was completed at the end of 2021, Russian company ownership records show, weeks before the full-scale invasion of Ukraine began. Toennies, in the statement to Reuters, said the company decided to sell because original plans for the Russian business were no longer feasible and the offer from the Thai firm was lucrative.
On Feb. 28 last year, four days after the invasion, Schalke 04 cut short its sponsorship deal with Gazprom, and the gas giant's logo was removed from players' shirts.
Toennies sent a Tweet the following day that said: "I am shocked by Putin's war of annihilation in Ukraine and condemn it in the strongest terms. I was wrong about him, like many others. Our business activities in Russia were wound down in 2021. And Schalke has also come to an end with Gazprom. Everything has been done right."
Toennies added in his Tweet: "My thoughts are with all Ukrainians, affected by this senseless war."
Toennies was photographed in March visiting a Polish warehouse where humanitarian aid for Ukraine was being distributed. Among the help he provided: long-lasting canned sausages. In another initiative, he tried to recruit refugees to work at his plant in Rheda-Wiedenbrueck. He uses a lakeside house in the town, locals told Reuters, and a local shooting club lists him as honorary chairman.
In late March, an aid group called Friends of Medyka said that Toennies employees had been handing out flyers in a refugee reception centre in the Polish border town of Przemysl offering wages starting at 11 euros an hour, Germany's minimum wage for the sector at the time. Campaigners for the rights of migrant workers accused the company of exploiting human misery. The company issued a statement on March 31 saying it had been offering jobs to refugees on the border as a humanitarian gesture, but had re-considered and decided to suspend the initiative. "Sorry, perhaps we were too hasty," the company said. Toennies told Reuters the majority of its workers earn above the minimum wage.
Some Ukrainians have taken the meat mogul's help nonetheless. Two Ukrainian women who fled the war told Reuters they have worked this year with several dozen other Ukrainians at the Toennies plant in Rheda-Wiedenbrueck. One of the women said she does shifts standing next to a conveyor belt packing, sorting and weighing meat. She said she earns 12.20 euros an hour and lives in a two-storey house with a group of other workers.
She said she didn't know the boss used to do business in Russia. For her, the most important thing was that Toennies had given her a job in a safe place away from the violence in Ukraine.
"My village has been hit twice. Missiles. They bombed the outskirts of the village. Bombed the forests, too," she said.
Putin had presented himself as a "good person," she reasoned, adding that perhaps Toennies had not seen what was really happening.
"Another person's soul is a mystery, as they say."
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