The Man Without a Face: The Unlikely Rise of Vladimir Putin (32 page)

On July 2, 2003, Platon Lebedev, the chairman of the board of Yukos’s parent company, Group Menatep, was arrested. Several weeks later, Yukos’s head of security, a former KGB officer, was behind bars. Khodorkovsky himself was told by those in the know and those who could simply follow the obvious logic of events that he, too, would be arrested soon. Someone even wrote up a prescription for Khodorkovsky of things to do to avoid arrest; the document, commissioned by one of his public-relations people, was never seen by Khodorkovsky because another of his publicity men ripped it up in outrage. In any case, it was obvious what Khodorkovsky should do: leave the country. His partner and coauthor with him of
Man with a Ruble
,
Leonid Nevzlin, did just that: he moved to Israel. Khodorkovsky went to the United States briefly but returned—and went on tour.

There was a talk Khodorkovsky had been giving for a bit over a year at this point. I had heard it once when he addressed a group of young writers, assembled at his request. The point of the speech was that Russia should join the modern world: stop running its companies like medieval fiefdoms at best and prisons at worst; transform its economy into one based on the export of knowledge and expertise rather than oil and gas; value its smart, educated people—like us writers—and pay them well. Khodorkovsky was not a great public speaker: he tended to be stiff, and his voice was soft and incongruously high for a man of his height, his looks, and his wealth. But he had the force of conviction and the weight of his reputation on his side; people generally wanted to know what he wanted to say to them.

So instead of leaving the country or genuflecting before Putin—for this was precisely the advice the ripped-up paper had contained—Khodorkovsky decided to create his own lecture circuit. He hired Marina Litvinovich, Putin’s former image-maker, to coach him on public speaking. She told him he had a way of belaboring an idea even after the audience had come over to his side, and this caused him to lose his tempo. Khodorkovsky, a few assistants, and eight bodyguards commenced several months of living out of a chartered jet. He went around the country speaking to students, workers, even military recruits on one occasion (though that engagement seems to have been an organizers’ error). Litvinovich sat in the front row with a letter-size piece of paper with the word “Tempo” written on it; whenever Russia’s richest man perseverated, she held up the sign for him to see.

Over the weekend of October 18, 2003, the Khodorkovsky team was in Saratov, a city on the Volga River. It snowed and, unusual for that time of year, the snow stayed on the ground. For some reason no one quite understood or at least no one articulated, the entire group went outside and wandered in the vast white expanse. They then
returned to their hotel, Khodorkovsky abruptly bade everyone good night and disappeared, and the rest of the group got quickly and morbidly drunk. The next morning Khodorkovsky told Litvinovich to return to Moscow: she had not seen her three-year-old son in weeks, and Khodorkovsky could manage the next destination without her.

The phone calls came in the dark predawn hours of October 25: Khodorkovsky had been arrested at the Novosibirsk airport at eight in the morning, five in Moscow.
So that’s why he sent me home,
thought Litvinovich. Anton Drel, Khodorkovsky’s personal lawyer, got a cryptic message through a third party: “Mr. Khodorkovsky requested that you be informed that he has been arrested. He said you would know what to do.”
Typical Khodorkovsky,
thought Drel, who had no idea what to do. In the late morning, he received another phone call: “This is Mikhail Khodorkovsky. Would it be convenient for you to come to the prosecutor general’s office now?” he asked with trademark formality; he had already been transported to Moscow. Several hours later, Khodorkovsky was indicted on six charges, including fraud and tax evasion.

EIGHTEEN MONTHS LATER, Khodorkovsky would be found guilty not on six but on seven counts and sentenced to nine years in a prison colony. Long before that sentence was up, he would be indicted on a new set of charges and then sentenced again, this time to fourteen years behind bars. Lebedev, the former chairman of his board, would stand trial alongside Khodorkovsky both times. Other Yukos affiliates, including the former head of security, lawyers, and a variety of managers not only at Yukos but at several subsidiaries, would face other charges and similarly harsh sentences; dozens of others would flee the country. Eventually, even Amnesty International, openly reluctant at first to take on the case of a billionaire, would declare Khodorkovsky and Lebedev prisoners of conscience. No one—not
even his jailers, it seemed—would doubt, after a certain point, that he was unfairly imprisoned, but even eight years after his arrest no one would be quite certain what exactly Khodorkovsky had done that had cost him his freedom and his fortune.

Khodorkovsky himself and many of his staff believed that he was being punished for speaking out about corruption. In February 2003, Putin had gathered Russia’s wealthiest businessmen for a rare discussion that was open to the media. Khodorkovsky arrived with a PowerPoint presentation that consisted of eight simple slides containing facts that all of those present certainly knew and just as certainly tried to pretend they did not know. Slide six was titled “Corruption Costs the Russian Economy over $30 Billion a Year” and cited four different studies that had arrived at more or less the same figure. Slide eight was titled “The Shaping of a New Generation” and contained a chart comparing three different institutions of higher learning: one that graduated oil-industry managers, one that trained tax inspectors, and one that prepared civil servants. Competition to get into the last college reached almost eleven persons per spot, aspiring tax inspectors had to beat out as many as four competitors, while future oil-industry managers had to fight fewer than two other people—even though official starting salaries in the oil industry were two to three times those in the government sector. These, Khodorkovsky indicated, were just the official figures; high school students were making their career plans counting on income from corruption.

When he was speaking, Khodorkovsky also mentioned the recent merger of the state-owned oil giant Rosneft with a smaller, privately held oil company. “Everyone thinks the deal had, shall we say, a second layer,” said Khodorkovsky, alluding to the glaringly high price Rosneft had paid. “The president of Rosneft is here—perhaps he’d like to comment.” The president of Rosneft did not care to comment, and this looked very much like an embarrassing and public admission of guilt.

The person who responded to Khodorkovsky was Putin himself. He got the same smirk on his face with which, at the press conference a few months earlier, he had suggested that the French journalist be castrated—the facial expression that indicated he was having difficulty containing his anger. “Some companies, including Yukos, have extraordinary reserves. The question is: How did the company get them?” he asked, shifting in his chair to raise his right shoulder in a gesture that made him seem bigger and smiling a thuggish smile that made it plain this was a threat, not a question. “And your company had its own issues with taxes. To give the Yukos leadership its due, it found a way to settle everything and take care of all its problems with the state. But maybe this is the reason there is such competition to get into the tax academy?” In other words, Putin accused Khodorkovsky of having bribed tax inspectors and threatened a takeover of his company.

Then there was the school of thought that the reason for Khodorkovsky’s trouble was politics: he meddled too much. He made donations to political parties, including the Communists. Immediately following Lebedev’s arrest in July, Khodorkovsky asked Prime Minister Kasyanov, with whom he had a distant but genial relationship, to find out what had happened. “It took three or four attempts,” Kasyanov told me. “Putin kept saying that the prosecutor’s office knew what it was doing. But finally he told me that Yukos had been financing political parties, not just the [small liberal parties], which Putin had given him permission to finance, but also the Communists, which he did not allow him to fund.” Eight years later, Nevzlin—the Yukos partner who left the country—maintained that the company’s donations to the Communist Party had “of course” been cleared by the Kremlin. Some people in Khodorkovsky’s circle took to calling the party-financing situation “the double-cross cross,” believing Khodorkovsky had been set up by someone close enough to Putin to tell
Khodorkovsky—falsely—that his funding the Communists had been cleared. All these discussions were taking place in the lead-up to the December 2003 parliamentary election—the one after which
The New York Times
reported that Russia was “inching toward democracy.”

A third group of observers had the simplest of all explanations for Khodorkovsky’s fate. “He did not go to prison for tax evasion or stealing oil, for God’s sake,” Illarionov said to me seven and a half years after the arrest. “He went to prison because he was—and remains—an independent human being. Because he refused to bend. Because he remained a free man. This state punishes people for being independent.”

But in October 2003, when news of the arrest broke, its darkly absurd nature was far from obvious to everyone. William Browder, for one, applauded the arrest. In an op-ed piece published in the English-language daily
The Moscow Times
and distributed to investors, he wrote, “We should … fully support [Putin] in his task of taking back control of the country from the oligarchs.”

ON NOVEMBER 13, 2005, Browder was returning to Moscow from London. He had been living in Russia for nine years, and though he spoke no Russian, he felt as much at home in Moscow as anyone could. His money guaranteed a level of comfort familiar to the very wealthy in oil-producing countries: he traveled on a luxurious separate track from the moment he landed in Moscow, where he would be whisked through airport formalities and picked up by his driver, a former police officer who retained his badge, which made him king on the lawless roads of Moscow. But this time Browder found himself stuck in the airport’s VIP lounge: his passport was apparently held up at the border. A couple of hours later, he landed in the detention area of the airport, a blank room with cold plastic chairs and several other detainees, each a prisoner of his own uncertain fate. Fifteen hours after arriving, Browder was put on a flight back to London: his Russian visa had been revoked.

Surely this was a massive misunderstanding. Browder called the cabinet ministers and the Kremlin staffers who had liked his PowerPoint presentations so much. They were vague, evasive, noncommittal. After several phone calls, it began to sink in that his visa issues would not be resolved anytime soon. For all his faith in Putin’s best intentions, one thing Browder knew for certain was that no business should be left unattended in Russia. He began moving his operation to London. The analysts moved; the fund divested itself of $4.5 billion worth of stock in Russian companies, without anyone’s seeming to notice. By the end of the summer of 2006, the Hermitage Fund’s Russian companies were empty shells with a small office in Moscow occasionally visited by the company’s secretary.

She was there, along with a staff member visiting from London, when twenty-five tax police officers descended on the office and turned it upside down. Soon the same number of officers, led by the same colonel who had run the first raid, appeared at the offices of the Hermitage Fund’s law firm, apparently looking for stamps, seals, and certificates for three holding companies through which the Hermitage Fund had managed its investments. When a lawyer objected that they lacked the appropriate search warrants, he was taken to a conference room and beaten there.

Four months later, Browder was notified of multimillion-dollar judgments against his companies issued by a court in St. Petersburg. Put on notice by his visa annulment, frightened by the tax police raids, he was now downright terrified by a sequence of events for which there could no be reasonable explanation. Why would the tax police need registration papers, seals, and stamps for empty shell companies? How could there be judgments against these companies if their representatives had not even known of any lawsuits or court hearings? Browder asked his Moscow lawyers to investigate.

It was not a lawyer but a young accountant who, after more than a year of sleuthing, finally reconstructed an absurd, barely believable, but nonetheless logical sequence of events. The three empty shell companies, Sergei Magnitsky discovered, had been re-registered in the names of other people, all of them convicted felons. Then the companies had been sued by other companies, which produced contracts supposedly showing that the stolen companies owed them money. Three different courts in three different Russian cities held speedy hearings and issued judgments against Browder’s former companies totaling a billion dollars, which just happened to be exactly the amount of profit the three companies had reported in the previous tax year. Then the companies’ new owners filed claims with the tax authority, requesting a refund of all the taxes they had paid: they appeared to qualify for it because, on paper, the companies no longer had a profit. The refunds, totaling $230 million, were processed in a single day in December 2007; they were transferred to the companies’ new owners and disappeared from the Russian banking system.

It appeared Magnitsky had uncovered an embezzlement scheme that involved the tax authority as well as the courts in at least three cities: had the judges not been in on the deal, they would hardly have rubber-stamped judgments with such ease and speed. Nor would the tax authority have processed the refund so fast—or at all, considering that Browder’s lawyers had already filed six different complaints alleging the theft of his companies—had the entire scheme not been orchestrated at or near the top of the agency.

Browder, ever the ideologue, saw an opening. By now he believed that his own banishment from Russia had come from the very top: even if he still did not know the exact reason, he could believe that someone whose toes he had stepped on could have conspired to convince the president or someone very close to him that Browder was an undesirable. But now Browder had a chance to save Russia all over again. “There is no way the president of the country could allow $230 million of the country’s money to be stolen,” he reasoned. “I mean, the tax crime is so cynical. If you made a move about it, people would say it’s just too far-fetched. We expected SWAT teams and helicopters to swoop down from the sky and get all the bad guys.”