Much like his main function in the KGB, Putin is a collector of compromising information and keeper of secrets. Though his tough guy image claims otherwise, Putin wasn't a hard-nosed KGB thug. He was a case officer, and his skill was "rabota s lyud'mi" (working with people).
In the chaos that reigned after the fall of the USSR, Putin saw the rise of the oligarchs and rapacious governors as catastrophic and destructive to the State - they were dismantling it for their own gain. To Putin, these men and women were like enemy agents operating on your territory. How did he deal with them? He recruited them. He understood the principle of John Masterman's "Double-Cross System": don't destroy your enemies; harness them, control them, manipulate them, and use them for your own goals.
While Putin worked in St. Petersburg, he amassed a vast wealth of information on who was doing what, with whom, and to whom and was very successful in using that knowledge to further his and his friends' causes. When he came to Moscow in 1996, he was brought in precisely to keep tabs on who was getting what from the vast assets of the Kremlin. Information about misdeeds or information about crimes that may have been committed is the most powerful tool one could have.