Once Upon a Time in Russia (8 page)

BOOK: Once Upon a Time in Russia

Another moment passed in silence—and then the two police officers turned and walked out of the room. It wasn't until their footsteps had receded that Litvinenko felt his chest relax and noticed the rivulets of sweat running down the back of his neck. FSB, Moscow Police, Oligarchs, Politicians: in a moment like the one that had just transpired, none of the labels really mattered. What mattered was that a gun, even partially drawn, always trumped a gun in a holster.

Berezovsky whistled low, and then came up out of his seat. He beckoned Litvinenko over—and then embraced him in a warm hug.

Then he reached for the phone on his desk.

“To accuse me of this tragedy, it is unthinkable.”

He looked at Litvinenko as he dialed the Kremlin.

“You have shown me something today I will not forget.”

Litvinenko's fingers shook as he resecured his gun.

Before tonight, he had a job. Now he had a krysha.


January 1996,

Logovaz Club

considered herself an extremely practical woman. It was perhaps the main reason she had become an accountant in the first place; there was something wonderfully reassuring about numbers corralled into equations, and systems that functioned along logical and mathematical frameworks. That didn't mean she had an aversion to creative thinking; being an accountant in modern Russia necessitated a certain amount of
. But nothing in her half decade as one of Roman Abramovich's most trusted number crunchers could have prepared her for the utterly surreal moment that was now unfolding in front of her.

Which was probably why she quickly decided to approach the situation in a very narrow,
way: a one-hundred-five-pound woman in a pantsuit, long blond hair tied up in a bun, hauling a forty-three pound suitcase up a flight of stairs.

Just getting the damn thing from the armored car parked out front, through the back security entrance of the Logovaz Club, had taken the help of two of the bodyguards her employers had sent
with her from Abramovich's offices. Unfortunately, the Logovaz's own security team hadn't been keen on letting her men escort her into the building. So here she was now, on her own, dragging what felt like a ship's anchor wrapped in polyester, step by torturous step. The Logovaz security men now standing by, gawking at her, had offered to help—one of them had even made a grab for the suitcase—but Marina had slapped his hand away. She didn't know these men, and the last thing she was going to do was let someone else handle the package she had been sent to deliver.

She did her best to tune out the men watching her, as she focused on her efforts, the muscles in her forearms and thighs straining against the expensive material of her suit. She had taken only a few steps before her progress was suddenly interrupted by a young man with slicked-back hair and a tailored blue jacket rushing down from the top of the steps and skidding to a stop in front of her.

“Excuse me, miss. Can I help you?” he asked, his voice nearly cracking.

Marina didn't know the young man by sight, but she was pretty sure his name was Ivan. She had been told that one of Berezovsky's assistants would meet her at the door—and yet, even so, she wasn't about to hand off the heavy suitcase to this kid whom she'd never met before.

“I have a package that I need to pass on to Mr. Berezovsky,” she said, “And as you can see, it's rather large. So it's going to take me some time.”

Ivan held out a thin, pale hand.

“You can leave it with me.”

Marina shook her head, her bun bouncing with the motion.

“No. I have to transfer this package myself. I have to pass this on personally, namely to Mr. Berezovsky.”

Ivan didn't seem pleased at all—but Marina didn't really care. She was an accountant, this man was an assistant—and the contents of the suitcase were well beyond both their responsibility levels. Marina knew this for certain, because she had packed the damn thing herself.
And that, alone, had been an experience she was certain she would never forget.

There was a frozen, awkward moment, while Ivan tried to figure out what to do and continued to block her progress up the stairs. Finally he shrugged and guided her forward toward the lobby of the club. At least one of the nearby security men snickered at the sight of the slight young woman towing a heavy suitcase—while the impotent assistant simply led the way—but Marina ignored him. She knew they were all bit players in this farce, witnesses who saw nothing that their employers didn't want them to see, who heard nothing but what they were told to hear.

Even so, it was hard for Marina not to feel self-conscious, as they slowly worked their way through the various floors of the Logovaz. She had never been in this place before and felt out of place in the crowded club, especially around the expensive suits of the businessmen and designer cocktail dresses of their guests. Marina couldn't help but wonder if Ivan found the moment as surreal as she did; then again, working for a man like Berezovsky, he had probably seen many things even more bizarre than an accountant pulling a heavy suitcase.

The truth was, moments like these were part of the new way of doing business in Russia, although this instance was an extreme. As a trusted employee of Roman Abramovich for many years now—and in her new position, at the “formation in process” of Sibneft—she had already experienced her share of surreal events.

History would one day judge the goings on of the preceding
weeks. A combination of applied genius, force of will, and the ability to navigate through a corrupt system—all perfectly executed by two men. While they brought very different skill sets, they had managed to create one of the largest oil companies in history almost out of thin air.

They say that in business everything is timing, and in this case, the timing could not have been more perfect; Abramovich, with his idea of combining the two state-owned businesses—the oil refinery in Omsk and the production company in Noyabrsk—had caught Berezovsky at exactly the right moment; falling directly in the midst of his privatization of ORT, in an effort to advance the candidacy of Yeltsin in the upcoming election.

The months that had followed the Caribbean cruise had only inflated Berezovsky's position and the potential of his ORT proposal—as Yeltsin's own status had grown more precarious. The president was facing a real threat in the Communist candidate Gennady Zyuganov—while Yeltsin's health had begun to deteriorate at an even faster pace. There were always rumors of heart issues, even impending surgery. Without ORT and Berezovsky's promise to use the network as a publicity tool, Yeltsin might lose the presidency. And if the Communists took over, it would be a disaster for the business community.

After the cruise, it had been relatively easy for Berezovsky to convince his contacts in the Yeltsin government that for ORT to continue its operations and campaign for Yeltsin, the network would need a massive and sudden infusion of money—especially after the freezing of advertising that Vlad Listyev had enacted right before his untimely death. Like Yeltsin, ORT was in a precarious state.

Privatizing an oil company would essentially give ORT—and Yeltsin's campaign—a bottomless war chest. Once the concept had been accepted, it had just become a matter of putting the pieces in
place. The first step: Abramovich and Berezovsky had needed to convince the Red Directors who ran the state-owned refinery and the production plant to agree to the unification of the company—under new management.

Since Abramovich had previously established relationships with the Red Directors—Viktor Gorodilov in Noyabrsk, and Ivan Litskevich at the refinery in Omsk—from his years in oil trading, he began the process of convincing the two men that he could indeed run the company in a way that would benefit them all. Eventually, Berezovsky had joined in on the efforts, using his status to further push the directors in the right direction.

Gorodilov had acquiesced fairly easily, but Litskevich had resisted; at one point he seemed to be becoming a true roadblock to the endeavor. Concerned, Berezovsky had written a personal letter to the director, asking him to trust Roman Abramovich as he obviously did himself. Thankfully, the letter had been unnecessary, and Berezovsky's status and political capital hadn't been needed to convince the man to change his mind. In the sort of coincidence of timing that seemed to happen more and more often in modern Russia, at some point during the weeks the merger was being discussed, Litskevich had organized a late-night party for himself and an attractive young woman on the banks of the Irtysh River; halfway into the tryst, Litskevich decided to try to impress his date by jumping into the frozen waters in front of them—and almost instantly after hitting the 7-degree water, had a heart attack and drowned. His driver—one of the few witnesses to the event—died in a bar fight shortly afterward.

Thankfully, Litskevich's replacement had been more acquiescent, and soon both Red Directors were ready to play ball. The pieces for privatization were in place.

The privatization system had been honed through practice in the
short time since Berezovsky had fought his way to a stake in ORT, beginning in late fall of 1994. Since then, through 1995 and into 1996, the Russian government, desperate for funds to shore up its abysmal financial situation, had embarked on what was commonly known as a “loans for shares” program. Simply put, shares of state owned conglomerates were offered as collateral for “loans” that were in turn auctioned off for cash, usually to privately held banks. When the state defaulted on these loans—which, from the very beginning, it fully intended to do—the bank either became the owner of the shares, or sold them in a prearranged transaction to a new private owner.

These “loans for shares” auctions had already transferred some of the country's largest companies into the hands of a few lucky souls. The largest nickel manufacturer in Russia had been traded for 170 million dollars—and was now a private company that would soon be worth more than one billion dollars. Mikhael Khodorkovsky, a brilliant young physicist who had gone into banking, among other things, had achieved a nearly eighty percent controlling stake in Yukos, one of the country's largest oil companies, for around 350 million dollars—a deal that would soon make him the richest man in Russia and, indeed, one of the richest men in the world. There was no telling what Yukos would eventually be worth.

At first glance, to an accountant such as Marina—a woman who understood the new Russia and what it was faced with—selling off state resources to men with money was a desperate, but not intrinsically corrupt effort. Western buyers had no interest in dealing with Russia; they found the market too dangerous. The government was nearly broke, and without a cash infusion, there was a real chance it would go belly up. Anatoly Chubais, who had spearheaded the privatization program in the first place, believed that the quicker the state sold off companies to private owners, the less likely the
Communists could undo the progress they were making. He firmly believed that each sale was like a nail in communism's coffin. “We must sell it all,” he had said on various occasions—believing that if they sold enough assets, the situation would be irreversible.

And the auctions themselves seemed fair on the surface—but Marina understood this wasn't truly the case. The transition to capitalism had left her country running under a system of patronage, krysha, and graft; it was not going to become an egalitarian market overnight. The auctions that decided the outcomes of the “loans for shares” offers were usually locked up beforehand.

The auction that resulted in the right to manage Sibneft was no different, and it took significant behind-the-scenes maneuvering to make sure that Abramovich and Berezovsky had been the only real bidders for a controlling situation in the newly formed oil company. As the final days approached, there had still been two other interested parties; Berezovsky sent his business partner, Badri Patarkatsishvili, the Georgian, to speak with them, and the situation was all stitched up in short order. Though Abramovich carried two bids in his pocket to the auction—one much higher than he could actually afford—he was able to win right around the initial offering, for 110 million dollars.

The only problem that remained was that Abramovich didn't have anywhere near that kind of money; to that end, he had been able to convince one of his colleagues—an Oligarch by the name of Alexander Smolenski, who ran one of the larger banks in Moscow—to provide credit for the purchase—which was repaid using money from the newly formed Sibneft. In all, Abramovich had put up around seventeen million dollars of his own money—and gained control of one of the largest oil companies in Russia.

A surreal series of events that had led Marina to this even more
surreal moment. She often wondered what future economists would make of the “loans for shares” initiative—would they take into account the context, the sudden transfer from one form of market to another? A setting in which the rule of law was effectively turned on its head, where the government was locked in a desperate battle for survival, where corruption ran rampant in the quest to quickly relocate a massive amount of wealth and resources? In fact, the pairing of Abramovich and Berezovsky—the young, brilliant, creative entrepreneur and the connected power broker with fingers in the Kremlin—was uniquely designed for this context.

Marina's boss had calculated correctly when he had chosen Berezovsky to help him create Sibneft; but, of course, there was a price to be paid—and somehow Marina had found herself in the middle. She was essentially a pencil pusher—who was now pushing a heavy suitcase across the top floor of the Logovaz Club, right up to the entrance to Boris Berezovsky's office.

Once again, Ivan tried to step in front and stop her as she reached the partially open door. The two bodyguards who were stationed outside the door were about to help with his efforts—but Marina didn't give them the chance. She quickly pushed between them, yanking the suitcase after her.

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