Update: Top Russian airborne commander killed in Ukraine in further blow to Putin
A leading Russian battlefield commander has been killed and two Russian security officials have been placed under house arrest as reverses appear set to trigger a purge of intelligence officials.
The setbacks for Russia on Friday were capped by reports Maj Gen Andrei Kolesnikov, commander of the Russian 29th Army, had been killed in action. He is the third general to have died since the invasion, with security officials suggesting that more senior officers were going to the front line to give impetus to stalled attacks.
The development came alongside what could be the start of a purge in the Federal Security Service (FSB), with western security officials suggesting “significant changes” had begun following Russia’s intelligence failures in Ukraine.
Col Gen Sergei Beseda, head of the foreign intelligence branch of the FSB, the Fifth Service, was arrested alongside his deputy, Anatoly Bolyukh, a tweet from Andrey Soldatov, a well-regarded writer on the Russian security services, said.
The pair are understood to have provided key intelligence on Ukraine’s reaction to a Russian invasion and reportedly suggested the assault would be swift and successful.
If they have been detained, western security officials said it means President Vladimir Putin is “seriously concerned” about the flawed intelligence on Ukraine.
“Both men have played a major role in intelligence operations against Ukraine for several years and highly likely played a major role in the planning for the invasion of Ukraine,” a western official said in a press briefing.
“If the claims of arrest are correct, this would indicate that Putin is seriously concerned about the FSB, its role in the military campaign and there could be significant changes at senior levels in the FSB.”
It is claimed that Col Gen Beseda, 68, was arrested for providing flawed intelligence before the invasion and for the misuse of funds allocated to subversive operations.
The FSB’s Fifth Service is the organisation that gave Mr Putin information on the political situation in Ukraine, which may have suggested that the Kyiv government would rapidly collapse and be easily replaced with Russian puppets.
The officer’s unit is part of the Department of Operative Information (DOI) and is referred to officially as the Service of Operational Information and International Relations. It is effectively the FSB’s foreign intelligence branch that usually operates in countries along Russia’s borders.
Western officials say Mr Bolyukh was head of the DOI Directorate.
There are understood to be 20 generals of the same rank commanding divisions and other units in the Ukraine.
Losing 15 per cent of its most senior commanders two weeks into an invasion is highly unusual and is likely to have an impact on morale and well as operational co-ordination.
Western officials also agreed with the estimate that between 5,000 and 6,000 Russian soldiers had been killed since 24 February.
They added that there were now “significant morale issues in the Russian forces”, as combat in austere conditions stretches into its third week.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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