The Oligarchs (92 page)
Authors: David Hoffman
66
Alexei Ulyukaev, interview by author, October 31, 1997; Ulyukaev's essay on Moscow published October 13, 1997 in
Expert
magazine; and an unpublished, undated paper by Ulyukaev, “The Moscow Mayor's Appetite,” p. 38. The prospectus was for the city's $500 million 1997 Eurobond.
Alexei Ulyukaev, interview by author, October 31, 1997; Ulyukaev's essay on Moscow published October 13, 1997 in
Expert
magazine; and an unpublished, undated paper by Ulyukaev, “The Moscow Mayor's Appetite,” p. 38. The prospectus was for the city's $500 million 1997 Eurobond.
67
Luzhkov press conference, March 10, 1995.
THE CLUB ON SPARROW HILLLuzhkov press conference, March 10, 1995.
1
The location was renamed Lenin Hills in 1935 but is still known by many as Sparrow Hills.
The location was renamed Lenin Hills in 1935 but is still known by many as Sparrow Hills.
2
Vasily Shakhnovsky, interview by author, November 26, 1999; December 18, 2000.
Vasily Shakhnovsky, interview by author, November 26, 1999; December 18, 2000.
3
Shakhnovsky, interview by author, and Leonid Nevzlin, interview by author, March 16, 2000; Mikhail Khodorkovsky, interview by author, June 19, 2000; Vladimir Vinogradov, interview by author, June 28, 2000; Alexander Smolensky, interview by author, August 30, 1999.
Shakhnovsky, interview by author, and Leonid Nevzlin, interview by author, March 16, 2000; Mikhail Khodorkovsky, interview by author, June 19, 2000; Vladimir Vinogradov, interview by author, June 28, 2000; Alexander Smolensky, interview by author, August 30, 1999.
4
Anonymous source, notes of conversation with participant in the club meetings.
Anonymous source, notes of conversation with participant in the club meetings.
5
Report of the Department for Public Relations of AO Logovaz,
undated, but prepared for a meeting in summer 1994.
Report of the Department for Public Relations of AO Logovaz,
undated, but prepared for a meeting in summer 1994.
6
He told me he did not stay there long. Boris Berezovsky, interview by author, December 20, 1996.
He told me he did not stay there long. Boris Berezovsky, interview by author, December 20, 1996.
7
This gang warfare is described by Paul Klebnikov in
Godfather of the Kremlin: Boris Berezovsky and the Looting of Russia
(New York: Harcourt, 2000). However, much about this conflict remains unknown. It is not clear to what extent Berezovsky was a victim or a cause of the gang violence. It later became evident, during the Russian war in Chechnya, that Berezovsky enjoyed excellent connections with the Chechens.
This gang warfare is described by Paul Klebnikov in
Godfather of the Kremlin: Boris Berezovsky and the Looting of Russia
(New York: Harcourt, 2000). However, much about this conflict remains unknown. It is not clear to what extent Berezovsky was a victim or a cause of the gang violence. It later became evident, during the Russian war in Chechnya, that Berezovsky enjoyed excellent connections with the Chechens.
8
Berezovsky, interview by author, February 28, 2001.
Berezovsky, interview by author, February 28, 2001.
9
Leonid Boguslavsky, interview by author, May 16, 2000.
Leonid Boguslavsky, interview by author, May 16, 2000.
10
Ellen Mickiewicz,
Changing Channels: Television and the Struggle for Power in Russia
(Oxford: Oxford University Press, 1997), p. 238.
Ellen Mickiewicz,
Changing Channels: Television and the Struggle for Power in Russia
(Oxford: Oxford University Press, 1997), p. 238.
11
Igor Malashenko, interview by author, July 25, 2000.
Igor Malashenko, interview by author, July 25, 2000.
12
For the channel, this was supposedly an improvement. Alexander Yakovlev, then chairman of Ostankino, said that when Reklama Holding was formed, the channel's revenues went from 5 billion rubles a month to 35 billion. Jean MacKenzie, “Listyev Killing Linked to TV Shakeup,”
Moscow Times
, March 3, 1995. A lengthy, unsigned story in the magazine
Kommersant Weekly
on March 28, 1995, said that Channel 1 received 16 billion rubles in the first half of 1994. After the creation of Reklama Holding, the amount rose to 104 billion in the second half. Still others said that Reklama Holding was simply centralizing the same process of ripping off Channel 1 that had been carried out by the independent producers.
For the channel, this was supposedly an improvement. Alexander Yakovlev, then chairman of Ostankino, said that when Reklama Holding was formed, the channel's revenues went from 5 billion rubles a month to 35 billion. Jean MacKenzie, “Listyev Killing Linked to TV Shakeup,”
Moscow Times
, March 3, 1995. A lengthy, unsigned story in the magazine
Kommersant Weekly
on March 28, 1995, said that Channel 1 received 16 billion rubles in the first half of 1994. After the creation of Reklama Holding, the amount rose to 104 billion in the second half. Still others said that Reklama Holding was simply centralizing the same process of ripping off Channel 1 that had been carried out by the independent producers.
13
Report of the Department for Public Relations of AO Logovaz.
Report of the Department for Public Relations of AO Logovaz.
14
Stephanie Baker-Said, “TV Advertising Sales, Ad Time Up in 1996,”
Moscow Times
, March 4, 1997, p. 3.
Stephanie Baker-Said, “TV Advertising Sales, Ad Time Up in 1996,”
Moscow Times
, March 4, 1997, p. 3.
15
Berezovsky had both money and politics in mind. He was willing to take early losses in exchange for immediate political influence and big profits later. In our 1996 interview, Berezovsky told me that he invested in media for “influence on the political process. And at the same time, at the first stage, I understood it wasn't going to give profits. I don't want to talk about exact numbers, but I can say that ORT today is for me not a source of profits but a source of
enormous
expenditures.” However, he said it could be “made
very
profitable,” with the right investment. “These investments aren't enough today. But already today it is possible to attract big money.” He summed up both reasons. “One is political:
the protection of my interests. And the second reason: it is business.” He told me in 2001 that he lost control of ORT before ever realizing the big profits, but all of his hopes for political influence were fulfilled. “All the political tasks that I formulated for ORT were fulfilled.”
Berezovsky had both money and politics in mind. He was willing to take early losses in exchange for immediate political influence and big profits later. In our 1996 interview, Berezovsky told me that he invested in media for “influence on the political process. And at the same time, at the first stage, I understood it wasn't going to give profits. I don't want to talk about exact numbers, but I can say that ORT today is for me not a source of profits but a source of
enormous
expenditures.” However, he said it could be “made
very
profitable,” with the right investment. “These investments aren't enough today. But already today it is possible to attract big money.” He summed up both reasons. “One is political:
the protection of my interests. And the second reason: it is business.” He told me in 2001 that he lost control of ORT before ever realizing the big profits, but all of his hopes for political influence were fulfilled. “All the political tasks that I formulated for ORT were fulfilled.”
16
On March 27, 1998, Berezovsky told a group of journalists that Aven introduced him to Yumashev.
On March 27, 1998, Berezovsky told a group of journalists that Aven introduced him to Yumashev.
17
Alexander Korzhakov's recollections are contained in his memoir,
Boris Yeltsin: From Dawn to Sunset
(Moscow: Interbook, 1997). Despite their once close relationship, Yeltsin and Korzhakov displayed great animosity toward each other after Korzhakov's 1996 dismissal. In his memoir, Yeltsin said he had not read Korzhakov's book, but “I am told it contains much untruth and sleaze. I decided not to read it because I couldn't contain my revulsion.” He says Korzhakov was overpromoted and had “concentrated more power into his hands than he could handle.” Yeltsin said Korzhakov's influenceâappointing people in government, for exampleâis “entirely my fault.” Yeltsin,
Midnight Diaries
(New York: PublicAffairs, 2000), p. 69.
Alexander Korzhakov's recollections are contained in his memoir,
Boris Yeltsin: From Dawn to Sunset
(Moscow: Interbook, 1997). Despite their once close relationship, Yeltsin and Korzhakov displayed great animosity toward each other after Korzhakov's 1996 dismissal. In his memoir, Yeltsin said he had not read Korzhakov's book, but “I am told it contains much untruth and sleaze. I decided not to read it because I couldn't contain my revulsion.” He says Korzhakov was overpromoted and had “concentrated more power into his hands than he could handle.” Yeltsin said Korzhakov's influenceâappointing people in government, for exampleâis “entirely my fault.” Yeltsin,
Midnight Diaries
(New York: PublicAffairs, 2000), p. 69.
20
Berezovsky recalled in the meeting with reporters in 1998, “Earlier than others, we started thinking about what was going to happen in 1996, and together we lobbied the idea of creating ORT.”
Berezovsky recalled in the meeting with reporters in 1998, “Earlier than others, we started thinking about what was going to happen in 1996, and together we lobbied the idea of creating ORT.”
21
The agreement between the new company, ORT, and Ostankino was published in
Rossiiskaya Gazeta
, February 16, 1995.
The agreement between the new company, ORT, and Ostankino was published in
Rossiiskaya Gazeta
, February 16, 1995.
22
Berezovsky also gave Korzhakov power of attorney, turning all the shares over to Yeltsin in case there was any doubt about Berezovsky's loyalty. But this appears to have been more a gambit to reassure Korzhakov than anything else. Korzhakov said at a November 30, 1998, press conference that he never showed the documents to Yeltsin. Details of the authorization were first published in “Yeltsin Is Shareholder,”
Kommersant Daily
, November 19, 1998.
Berezovsky also gave Korzhakov power of attorney, turning all the shares over to Yeltsin in case there was any doubt about Berezovsky's loyalty. But this appears to have been more a gambit to reassure Korzhakov than anything else. Korzhakov said at a November 30, 1998, press conference that he never showed the documents to Yeltsin. Details of the authorization were first published in “Yeltsin Is Shareholder,”
Kommersant Daily
, November 19, 1998.
24
Berezovsky, interview by author, February 28, 2001.
Berezovsky, interview by author, February 28, 2001.
25
Text of Yeltsin's remarks to Ostankino journalists, March 2, 1995,
BBC Summary of World Broadcasts
.
Text of Yeltsin's remarks to Ostankino journalists, March 2, 1995,
BBC Summary of World Broadcasts
.
26
The killing was surrounded by a number of still unexplained events. I offer a summary here to give the reader a sense of the unanswered questions that followed the murder.
The killing was surrounded by a number of still unexplained events. I offer a summary here to give the reader a sense of the unanswered questions that followed the murder.
The day before the murder, February 28, Berezovsky met with a man he has identified as Nikolai Plekhanov, a member of an underworld gang. According to Berezovsky, he was told by police who came with Plekhanov that the gangster knew who had planted the bomb attack against Berezovsky the previous year, and that Plekhanov had once again been ordered to assassinate him. Berezovsky said he gave Plekhanov $100,000 that day, in the presence of the militiamen. Berezovsky also videotaped the encounter. The money was intended to forestall another assassination attempt, Berezovsky said.
Berezovsky then flew off to London on an official trip with Chernomyrdin. Upon hearing about Listyev's murder, Berezovsky returned immediately by private jet to Moscow.
Two days after the murder, Berezovsky and one of the independent Channel 1 producers, Irena Lesnevskaya, recorded a videotaped appeal to Yeltsin. Berezovsky told me the tape was Lesnevskaya's idea. They had sought a meeting with Yeltsin, but Korzhakov insisted they make the tape instead. The tape was recorded in Korzhakov's office in the Kremlin. (Korzhakov said he never actually showed the tape to Yeltsin.) On the tape, they nervously pointed the finger at some vague, power-mad, spooky Moscow organization that included Gusinsky and Luzhkov. Lesnevskaya said, “I have no doubt that this logical scheme was built up by the Most group, by Mr. Gusinsky, Mr. Luzhkov, and the structure under him, a huge pyramid with islands; the former KGB came up with this [devious] plan to assassinate Vlad.” A twenty-three-minute segment of the Berezovsky-Lesnevskaya tape was played by Korzhakov at a Moscow press conference November 30, 1998; a longer version is reproduced in Klebnikov,
Godfather.
Godfather.
On the tape with Lesnevskaya, Berezovsky also complained at length about a long standoff with armed antiriot police outside the Logovaz mansion in the aftermath of Listyev's murder. They came wanting to search the club. Berezovsky refused to let them in but eventually, after phone calls to the general prosecutor (among others), agreed to be questioned. The investigators wanted a copy of the ORT charter, he said, and he gave it to them.
Three days after the killing, Berezovsky said, “I believe that reasons for the assassination of Vladislav Listyev are political, although many now speak about his commercial activities.” In 1999, Berezovsky went further and accused Korzhakov and his circle of responsibility for the killing. Berezovsky said that Listyev's murder was linked to Korzhakov and former Federal Security Service director Mikhail Barsukov. The murder “was committed by this group of people,” he said. Berezovsky told me that he believes Korzhakov attempted to frame him for the Listyev murder.
Lisovsky's offices were also searched after the murder. When I asked Lisovsky about it five and a half years later, he showed a flash of emotion and described bitter memories about what he called Listyev's arrogance. Lisovsky claimed the murder stemmed from Listyev's personal life or may have been an attempt to frame Lisovsky and others in the television business. “Naturally, this death made all of us who were members of the television community accomplices and witnesses,” Lisovsky said. Lisovsky, interview by author, December 15, 2000.
27
Anonymous source, interview by author.
Anonymous source, interview by author.
28
Berzovsky, interview by author, February 28, 2001.
Berzovsky, interview by author, February 28, 2001.
29
Franko, “Man.”
Franko, “Man.”
31
“Nikolai Glushkov: The Mass Media Should Know the Facts Earlier Than the Investigators,”
Kommersant Daily,
November 23, 2000, p. 1. This article is an interview with Glushkov.
“Nikolai Glushkov: The Mass Media Should Know the Facts Earlier Than the Investigators,”
Kommersant Daily,
November 23, 2000, p. 1. This article is an interview with Glushkov.
32
Sergei Zverev, interview by author, June 23, 2000.
Sergei Zverev, interview by author, June 23, 2000.
33
Vladimir Gusinsky, interview by author, September 22, 2000.
Vladimir Gusinsky, interview by author, September 22, 2000.
35
Korzhakov said in a 1999 television interview, “This was my decision, I did not let him out. I locked the plane and told Soskovyets, âOn you go.'”
Sovershenno Sekretno
, November 21, 1999.
Korzhakov said in a 1999 television interview, “This was my decision, I did not let him out. I locked the plane and told Soskovyets, âOn you go.'”
Sovershenno Sekretno
, November 21, 1999.
37
Carlotta Gall and Thomas de Waal,
Chechnya: Calamity in the Caucasus
(New York: New York University Press, 1998). This book contains the best account of the origins of the war.
Carlotta Gall and Thomas de Waal,
Chechnya: Calamity in the Caucasus
(New York: New York University Press, 1998). This book contains the best account of the origins of the war.
38
According to the account Gusinsky gave Chrystia Freeland in
Sale of the Century
, Rogozin also demanded that Gusinsky cough up some
kompromat
against Luzhkov.
According to the account Gusinsky gave Chrystia Freeland in
Sale of the Century
, Rogozin also demanded that Gusinsky cough up some
kompromat
against Luzhkov.
39
Savostyanov was then head of the Moscow branch of the Federal Counterintelligence Service, which was a successor to the KGB and was later folded into the Federal Security Service (FSB), the main domestic federal security service.
Savostyanov was then head of the Moscow branch of the Federal Counterintelligence Service, which was a successor to the KGB and was later folded into the Federal Security Service (FSB), the main domestic federal security service.
40
Gusinsky, interview by author, September 22, 2000.
Gusinsky, interview by author, September 22, 2000.
41
Yegveny Kiselyov, interview by author, August 2, 2000.
Yegveny Kiselyov, interview by author, August 2, 2000.
42
The Soviet war in Afghanistan, 1979â1989, had been hidden and propagandized.
THE EMBRACE OF WEALTH AND POWERThe Soviet war in Afghanistan, 1979â1989, had been hidden and propagandized.
1
Charles Ryan, interview by author, March 16, 1999; January 30, 2001.
Charles Ryan, interview by author, March 16, 1999; January 30, 2001.
2
The Russian government and Central Bank announced on August 24, 1995, that they would maintain the corridor, which had begun on July 5, until the end of the year. The outer limits were set at 4,300 and 4,900 rubles to the dollar. The ruble closed that day at 4,428 to the dollar. Chubais claimed that the first two months of the corridor had chilled speculation; before the limits were introduced, he said, about $1 billion a week was passing through exchange markets, which fell to $400 million.
The Russian government and Central Bank announced on August 24, 1995, that they would maintain the corridor, which had begun on July 5, until the end of the year. The outer limits were set at 4,300 and 4,900 rubles to the dollar. The ruble closed that day at 4,428 to the dollar. Chubais claimed that the first two months of the corridor had chilled speculation; before the limits were introduced, he said, about $1 billion a week was passing through exchange markets, which fell to $400 million.
3
The annual interest rates on these bonds was 262.9 percent in January 1995 and 236 percent in February, and it remained above 100 percent for eight months of that year, according to the Russian Central Bank, “Interest Rates in 1995,” available at
www.cbr.ru/eng/statistics/creditst_statistics/print.asp/file=interestrates_95_e.htm
.
The annual interest rates on these bonds was 262.9 percent in January 1995 and 236 percent in February, and it remained above 100 percent for eight months of that year, according to the Russian Central Bank, “Interest Rates in 1995,” available at
www.cbr.ru/eng/statistics/creditst_statistics/print.asp/file=interestrates_95_e.htm
.
4
Bank Menatep (Group)
Independent Auditor's Report,
Arthur Andersen, International Accounting Methods, 1995.
Bank Menatep (Group)
Independent Auditor's Report,
Arthur Andersen, International Accounting Methods, 1995.
5
Mikhail Khodorkovsky, interview by author, June 19, 2000.
Mikhail Khodorkovsky, interview by author, June 19, 2000.
7
Nat Moser and Peter Oppenheimer, “The Oil Industry: Structural Transformation and Corporate Governance,” in Brigitte Granville and Peter Oppenheimer, eds.,
Russia's Post-Communist Economy
(Oxford: Oxford University Press, 2001).
Nat Moser and Peter Oppenheimer, “The Oil Industry: Structural Transformation and Corporate Governance,” in Brigitte Granville and Peter Oppenheimer, eds.,
Russia's Post-Communist Economy
(Oxford: Oxford University Press, 2001).
8
Khodorkovsky wrote an article in a Russian newspaper at the time describing
the “radical changes” in the old state-run structure of the oil industry, and its needs for new investment credits. Mikhail Khodorkovsky, “Investment Activity Is Vital for Russia's Fuel and Energy Sector,”
Finansovye Izvestia
, November 19, 1992, p. 7. Menatep Bank also announced in 1992 that it was seeking outside credits to help the oil industry. In 1992 Khodorkovsky told Thane Gustafson, a long-time specialist in Soviet and Russian energy issues, that he was providing credits to the oil industry. Thane Gustafson,
Capitalism Russian-Style
(Cambridge : Cambridge University Press, 1999), p. 121.
Khodorkovsky wrote an article in a Russian newspaper at the time describing
the “radical changes” in the old state-run structure of the oil industry, and its needs for new investment credits. Mikhail Khodorkovsky, “Investment Activity Is Vital for Russia's Fuel and Energy Sector,”
Finansovye Izvestia
, November 19, 1992, p. 7. Menatep Bank also announced in 1992 that it was seeking outside credits to help the oil industry. In 1992 Khodorkovsky told Thane Gustafson, a long-time specialist in Soviet and Russian energy issues, that he was providing credits to the oil industry. Thane Gustafson,
Capitalism Russian-Style
(Cambridge : Cambridge University Press, 1999), p. 121.
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