Tobacco giants Philip Morris and JTI operate in Russia via FSB-linked distributor, Proekt investigation finds

Cover image: Igor Kesaev and Sergei Katsiev.

The company Megapolis is Russia’s sole distributor of cigarettes from the Western corporations Philip Morris International (PMI) and Japan Tobacco International (JTI). According to an investigation by the independent outlet Proekt, Megapolis is also linked to Russia’s Federal Security Service (FSB) —- in particular to its former head, Nikolai Patrushev. The profits made by the owners of Megapolis are reportedly used to fund the lifestyles of current and former FSB employees. Nearly three years after Russia unleashed a full-scale invasion of its neighbor, the company also appears to be profiting from the tobacco market in Ukraine.

Moscow’s February 2022 invasion of Ukraine led to a mass exodus of Western firms from Russia. However, PMI and JTI continue to dominate the country’s tobacco market, producing the majority of cigarettes consumed by Russians. The distribution of their products is handled by Megapolis, a company owned by billionaires Igor Kesaev and Sergei Katsiev. The two also play a major role in Russia’s alcohol market, owning the retail chains Krasnoe & Beloe (lit. “Red and White”) and Bristol.

In 2013, PMI and JTI each acquired a 20% stake in Megapolis. However, in June 2024, the company was added to Russia’s list of economically significant organizations. Due to wartime laws, Western corporations are now stripped of voting rights and cannot receive dividends from Megapolis.

The primary connection between the billionaires and the Patrushev family is Vladimir Anisimov, chairman of the board of the Degtyaryov Plant — a major Russian defense manufacturer — and vice president for security at the Mercury Group. Kesaev and Katsiev gained control of the Degtyaryov Plant in 2005, and Mercury has been under Kesaev’s control since the early 1990s. It is through Mercury he began importing Western cigarettes into Russia.

In the late Soviet period, Anisimov served in the KGB in Karelia, where he was initially a driver and later an aide to Nikolai Patrushev — who in 1999 succeeded Vladimir Putin as the head of the FSB and remained in the post until 2008. After Patrushev moved to Moscow, Anisimov was appointed as his deputy, heading the FSB’s internal security service.

Anisimov and Kesaev have been linked since at least 2003, when both were honored with a prestigious award — the Order of St. Sergius of Radonezh — for their involvement in building a church in the village of Podomo, located in Russia’s northern Arkhangelsk Region. The project was initiated by none other than Nikolai Patrushev, then head of the FSB. By 2009, Patrushev had become head of Russia’s Security Council, and Anisimov was listed as a member of the leadership team in Kesaev’s companies.Kesaev, along with his business partner Katsiev, has been a key financier of extrabudgetary expenses for FSB personnel. As far back as 2003, the Monolit Foundation was created to streamline this support. The foundation’s vice president, Yuri Khalturin, was a former officer in the 3rd Directorate of FSB Military Counterintelligence and also part of Patrushev’s church-building initiative.

Since 2006, Monolit and Kesaev have jointly owned the Mikhail Frunze Sanatorium in Sochi — a popular retreat for FSB employees. Viktor Patrushev, Nikolai Patrushev’s brother, served on the sanatorium’s board of directors.

In 2007, Kesaev acquired 22 land plots — previously the site of an FSB-run departmental kindergarten — in the prestigious Rublyovka district west of Moscow. These plots were privatized by FSB employees, with Kesaev reportedly paying $50 million as part of the deal. This sum effectively provided an average of $2.5 million for each FSB general, paid out under the guise of regular transactions, while the recipients received a discount over the market rate for the land. Today, Kesaev’s personal estate is located on this territory.

Kesaev is also connected to the family of Deputy Prime Minister Dmitry Patrushev — Nikolai Patrushev’s son. In 2014, the offices of the World Fashion TV channel moved into Kesaev’s Mercury Tower in the Moscow City skyscraper district. The channel's director and co-owner was Marina Artemyeva, Dmitry Patrushev’s de facto wife.

In exchange for financial contributions, the FSB has repeatedly aided Kesaev and Katsiev by using force to eliminate the entrepreneurs’ competitors. For instance, in 2018, FSB agents raided Krasnoe & Beloe. The chain’s then-owner had initially resisted merging with Kesaev and Katsiev’s Bristol, but he eventually gave in under pressure from the state security organ.

Megapolis continues to handle the distribution of tobacco products alongside other goods, including Red Bull energy drinks, Lavazza coffee, and Reckitt Benckiser items such as Durex and Contex condoms.

In 2013, Kesaev and Katsiev entered the Ukrainian market under the Megapolis-Ukraine brand. Within three years, they controlled nearly 99% of the country’s tobacco market. In 2015, the Ukrainian branch of Megapolis was transferred to companies linked to British nationals Richard Fenhalls and Richard Taylor-Duxbury. Sources cited by Proekt claim that both men are acting as fronts for Kesaev and Katsiev.