When the eXile launched in February 1997, Russia's oligarchy ruled over the economy, the president, and the mass media. They owned everything, and they flaunted it loudly.
At the time, it made us furious. Low pay and excess amounts of free powdered uranium only heightened the sense of outrage, that we now see was aimed not so much at the oligarchs as at the Western cabal that marketed them. If you opposed their mission in Russia, you were a revanchist, you "just didn't get it," or worse, you were a Communist. Thanks to a seamless, venal link between the interests of the Russian oligarchs, the Clinton Administration, international lending institutions and finance, the neo-liberal punditry that propagandized on its behalf, and finally, at the bottom of this grotesque career-advancing chain, the hagfish of humanity -- the Western press corps -- the oligarchs not only got away with theft, they were considered heroes of Progress.
Only now, in the increasingly bland, dry, bureaucratic-fascism of the Putin era, do we realize how much we miss the Russian Oligarchy, some of the most colorful, most amoral characters ever assembled. What happened to them? While many praise Putin's successful bitch-slapping of the oligarch class, few actually stop to wonder where they are -- which is too bad, because this story has all the juicy, depressing humor of an E! biop on the cast of Diff'rent Strokes, only on a grander scale.
Russia's oligarchy was created in late 1995 in the so-called "loans-for-shares" scheme, in which a small group of well-connected and mostly-balding ex-Communist youth leaguers, brilliant goons and two-bit shysters were handed the Soviet Union's crown jewels in return for cash "loans" -- dirty cash which had largely been stolen the previous few years by the same newly-appointed oligarchs -- in auctions that were laughably rigged. The noble purpose of all of this theft and corruption was to help bankroll Boris Yeltsin's successful re-election campaign in 1996 -- and therefore, ensure the triumph of the forces of good over Communist evil. In March of that year, the most savage and successful of the bunch -- the so-called "Semibankirschina" or "Seven Bankers" (a misnomer, since by all accounts the number included anywhere from nine to about 15 key oligarchs) -- met with Yeltsin to officially throw their weight behind the Godfather who made them in the first place.
It his hard to imagine today that just six or seven years ago, perfectly reasonable, successful, well-educated Americans and Brits proudly appeared on television or argued in print that this gang of some of the most vicious thieves the world has ever known should be considered the modern-day equivalent of capitalist ubermenschen along the lines of Andrew Carnegie, with a hefty dose of American Protestant Horatio Algers self-made mythos thrown into the mix. They argued that the creation of the oligarchy was "necessary" for the transition from communism to capitalism, that there was "no other way to do it," even though the world abounds with all kinds of counter-examples, from the authoritarian gradualism of the Chinese to the more humane approach taken by the Hungarians and Poles. In fact the whole idea of "necessary stages" itself comes from bogus Marxian-Hegelian teleology, but try telling that to a Michael McFaul or a Charles Blitzer, and the next thing you know you're the Communist revanchist!
The fact is that thanks largely to the oligarchs, who by their own account controlled over half of Russia's economy, Russia saw its GDP plunge by some 60% in the 1990s, while its population suffered one of the most appalling declines, even by wartime genocide standards.
Today, the oligarchy -- the so-called Rockafellers of Russia -- are a just an embarrassing 90s-retro memory, like Love Parades and, well, 70s retro. But unlike those miserable fads, we miss them. The age of ferocious, colorful oligarchs is over, replaced by an era of dull, obsequious bureaucrats and affected patriotism. Gone are newscasts showing General Prosecutors on TV banging whores; instead, we get Putin meeting another official who explains how production at a milk factory was increased.
So what happened to them? In this issue, the eXile opens up the Where Are They Now? file on Russia's nearly-extinct oligarchy.
1. Boris Berezovsky.
Boris Berezovsky was the most colorful, most balding and most Jewish (from a caricatured anti-Semite's point of view) of the oligarchs, and he played his role better than anyone. Berezovsky got his oligarch's start in the late perestroika years when his automobile distribution firm, LogoVaz, allegedly schemed to purchase Ladas at low "export" prices and sold them back in the Soviet market at higher "domestic" prices, reaping a huge profit from the difference, simply by convincing the right people to look the other way. In time, LogoVaz became the chief distributor of AvtoVaz cars, and it wasn't because their prices beat the competition's.
As if this price scam wasn't enough, Russian prosecutors in 2002 alleged that Berezovsky simply started stealing cars off the lot -- thousands of them -- and selling the "free" cars again at "domestic" prices.
After surviving a car bomb assassination attempt in 1994 -- in which his driver's head was sent shooting off into the bushes -- Berezovsky invested his windfall into prize Russian assets and political power, going overnight from a bloodstained car distributor to Davos-feted media and oil magnate and kingmaker, thanks to the famous gifts he reportedly lavished on the Yeltsin family. Among Berezovsky's holdings were Sibneft, Aeroflot, and ORT television, in many ways the most lucrative prize of all since Berezovsky used the state channel to promote his interests. Recently-murdered Forbes editor Paul Khlebnikov, claimed Berezovsky stole ORT by ordering the hit on Vladislav Listyev, ORT's popular journalist and general director, after which Berezovsky took control. (Inci-dentally, Khlebnikov's Russian publisher, Valery Streletsky, claimed that he was working on a book investigating Listyev's murder this year when he was gunned down in front of Forbes' Moscow office.)
In 1999, Berezovsky was one of the key backers of Putin's run for the presidency against the Yuri Luzhkov/Yevgeny Pri-makov faction, his sworn enemies. Several reports claim that Berezovsky engineered the Second Chechen War in order to increase Putin's popularity from around 2% in August, 1999, to his crushing parliamentary victory and assumption of total power just four months later. Around that time, Berezovsky famously claimed, "I could have got a monkey elected president." Unfortunately for Berezovsky, he never saw Planet of the Apes -- and therefore didn't anticipate that his monkey would eventually cage the humans.
Which Putin did, after ORT's critical coverage of Putin's handling of the Kursk submarine disaster in the summer of 2000. Before the end of the year, Berezovsky barely escaped Butyrskaya jail and snagglepussed out to London in permanent eXile, while two of his less-fortunate associates at Aeroflot, where he allegedly devised a scheme to embezzle all of the Russian airliner's foreign earnings, are still rotting behind Russian bars.
Best Quote:Sometimes you are Boris Yefimovich, sometimes you are Boris Abramovich, and sometimes you try to be Boris Nikolayevich." Berezovsky to then-Deputy Prime Minister Boris Nemtsov, reminding Nemtsov that he too is Jewish and will never be president of Russia. For this, Berezovsky was accused of anti-Semitism.
Transformation: Re-discovered his Jewish roots in the West after having previously converted to Orthodox Christianity in order to "get ahead" in Russia. Also, after having made a monkey president, manipulated the media and allegedly nudged the start of the Second Chechen War, Berezovsky is now one of Russia's premier crusaders for democracy, free speech, and peace in Chechnya.
Accused: Outstanding warrants for his arrest for embezzling hundreds of millions from Aeroflot and up to $2 billion from AvtoVaz. Also claims that he funds Chechen separatists.
Wealth bombed by: 80%. From $3 billion in 1997 to $620 million today, or just number 47 on the Forbes' top 100 for Russian.
Silver Lining Factor: Splits his time between London and his $30 million home in Cote d'Antibes in the south of France. Sent bottle of 50-year-old cognac to eXile columnist Edward Limonov after he was released from jail in July, 2003.
2. Mikhail Khodorkovsky.
We all know what happened to Khodorkovsky, so there is no need to recount it. Two years ago he was the world's darling. Now he's picking lice from his head.
Best Quote: "I don"t have to go to the president anymore to ask whether there will be a redistribution of property...I go to the Prime Minister." March 27, 2003.
Transformation: From world's favorite Russian businessman to oppressed dissident to Moscow Times page 7 Finance News in brief material.
Personal wealth bombed: From $15 billion to low single-digits of billions, and falling.
Silver lining: At least no one's pretending that Russia is transforming into an EU country ever since his arrest and the outright theft of Yukos' assets for Putin cronies.
3. Anatoly Chubais.
It was Chubais who, as privatization chief and deputy prime minister in charge of the economy, created the oligarchy. As the locus point between American aid and Clinton politics, international lending institutions, neo-liberal polemics, and, by virtue of his almost-Western-European ability to speak English and choose the right suits, he also became the darling of the Anglo-American press corps.
When the oligarchy began to split into factions after Yeltsin's successful re-election, Chubais headed the so-called St. Petersburg group (not to be confused with President Putin's new "St. Petersburg -- Chekist" faction) of radical reformers, which eventually backed Oxeminbank chief and current Independent Media sugar daddy Vladimir Potanin.
While it is clear that the loans-for-shares scheme that Chubais oversaw amounted to little more than mass theft in exchange for political power, no one has ever proven exactly how he benefited. Rumors abound about Chubais' secret holdings. Then, in the summer of 1997, it was revealed that oligarch Alexander Smolensky gave Chubais an "interest-free loan" worth $3 million, right around the time that Chubais arranged a rigged auction for Russia's second largest banking network, AgroPromBank, which went to, you guessed it, Alexander Smolensky.
Chubais' star fell further after he was implicated in another kickback scandal, this one for a fake book publishing advance from a company tied to oligarch Vladimir Potanin's Onexim-bank...just around the time that Oneximbank won a controversial auction for Svyazinvest.
A few months after getting fired from the government for this kickback scandal, Chubais was named chairman of the board of Unified Energy, Russia's power generating monopoly. Despite frequent calls for his head, Putin has kept him there, perhaps keeping him warm for the next time he needs to make a purge of the oligarchy.
Clinton's top economic advisor and current Harvard president Lawrence Summers had called Chubais "my dear friend" and labeled him part of a Yeltsin "dream team." In an ironic twist, over the past few years Chubais came under scathing criticism from Western investors who stood to lose plenty from his plan to "break up" the Unified Energy monopoly. Ironic, because when millions of Russians lost their livelihood during Chubais' privatizations, Western investors assured them that it was a "necessary" phase.
Best Quote: "My ikh kinuli." ("We swindled them.") Chubais on how he managed to squeeze $40 billion in funds from the IMF and other international lending organizations, all of which "disappeared."
Transformation: From neo-liberal to neo-nationalist. In late 1999, Chubais vigorously supported the Second Chechen War and labeled critic Grigory Yavlinsky a "traitor."
Accused: This past summer a criminal case was briefly opened against Chubais for allegedly defrauding the state of tax revenues as head of Unified Energy. The case was hushed in exchange for Chubais siding with Putin against Yukos. Sergei Ste-pashin, head of the Accounting Chamber, is an old Chubais ally and crony.
Personal fortune bombed by: Unknown. He's still in good favor with Putin. Little is known about Chubais' wealth, except that he has always worn nice suits, he swindled the West out of tens of billions of dollars, and he got an interest-free loan from Smolensky. Incredibly enough, he didn't show up on Forbes' 100 list. On the other hand, he was named this year by a Price-WaterhouseCoopers and Financial Times survey as the world's 54th most respected business leader. Would you like to know more?
Silver lining: Chubais has gotten incredibly fat, and is now forced to diet. Waiting for the ax to fall has not been good for his complexion either.
4. Alexander Smolensky.
Another balding member of The Tribe, Alexander Smo-lensky, ran the largest private banking system in Russia prior to the 1998 default, thanks to Chubais' rigged auction in his favor. After the '98 default cost Russians and Westerners, including the Moscow Times, billions, Smolensky openly and defiantly sneered at the countless suckers whom he deemed foolish enough to park their savings in his bank.
Smolensky got his start in the Brezhnev era working as a dacha materials black marketer. He was sentenced in 1981 to two years in prison for embezzlement and reports on him at the time warned that Smolensky had a "tendency for swindling people." Under Yeltsin, he parlayed his profits into a small, dicey bank, Stolichny, and at one point in the mid-90s he fled Russia fearing for his life and freedom... until Chubais called him back to the motherland to annoint him as one of the Semibankirshina.
Today he lives in Vienna in a Tony Montana-esque guarded compound.
The prodigal son: whereas Smolensky pere was happy to deal in dacha wood, Smolensky fils blew the trust fund on the Eurotrash TVR car.
His 24-year-old Salnikovian boy, Nikolai Smolensky, is a typical prodigal son. Niko made a $25 million vanity purchase of boutique Eurotrash British carmaker, TVR, which, under his watch, is going bust as fast as you can say "fill 'er up." Already it went from profitability to posting a $1.5 million loss, and has over $5 million in Eurotrash TVR cars sitting unsold.
Best Quote: Said that foreign creditors who loaned his bank $1 billion deserved "dead donkey ears" because he would never pay them back.
Transformation: From Russian Jew to Russian Austrian.
Accused: Of so much embezzlement no one knows where to start.
Personal fortune bombed by: about 80%, from over $1 billion in 1998 to $230 million today.
Silver lining: When Stolichny collapsed, Independent Media lost $200,000 in accounts there, a hard lesson they had to pay for believing their own lies about the viability of the oligarch economy.
5. Vitaly Malkin.
Status: RETIRED IN DISGRACE
Melkin: didn_t steal all of eXile_s funds
Malkin rivaled Smolensky and Berezovsky for sheer balding Jewishness. As head of Bank Rossisskii Kredit, the third largest bank until the crisis of 1998, Malkin was big-time enough to be an official member of the Semibankirshina, which meant formal invitations to Yeltsin tithing pleas.
After the collapse of Bank Rossisskii Kredit, Malkin first reportedly fled to Israel, then later returned to Moscow, where he quietly worked in the banking sector and government sphere. Although BRK disappeared, oddly enough on its same properties a new bank, Impex, appeared, leaving creditors with nothing to liquidate.
Little was heard of Malkin until 2002, when he was named as a key figure in a Soviet-era Angolan debt scandal in which then Prime Minister Mikhail "Two Percent" Kasyanov reportedly profited.
In 2002, many Russian papers, including kompromat.ru, reported that Malkin opened up his own "zakriti klub," essentially a large, grotesquely decked-out casino-club. One of the rooms is apparently called the "Hell Hall," and on its walls are large murals depicting the oligarchs paying for their various sins in Hell. No one knows what the "Paradise Hall" was supposed to depict.
Malkin was a member of the Russian Jewish Congress.
Best Quote: "60% of Russian capital belongs to Jewish business." Speaking on Israel TV's Second Channel, October 3rd, 1996.
Transformation: From oligarch to nightclub owner.
Accused: Of arranging a Soviet-era Angolan debt swindle.
Personal fortune bombed by: Unknown. Put it this way, he went from being an oligarch to a club director.
Silver lining: Because the eXile predicted the banking collapse in August, 1998, we only lost a few hundred dollars in our BRK account.
6. Vladimir Gusinksy.
From gypsy cab driver to theater hustler to head of NTV and Most Bank, Vladimir Gusinsky was considered, for a time, to be the "intellectual's oligarch." Until 1996, that is, when NTV shifted from maverick journalism to becoming a Kremlin mouthpiece in exchange for getting valuable broadcasting licenses, essentially killing Russia's brief experiment with one of the freest presses in modern times.
In 1999, Gusinsky, an old ally of Moscow Mayor Yuri Luzhkov, threw his propagandistic weight behind the losing Luzhkov-Primakov bloc, and got crushed. In early 2000, Gazprom suddenly "discovered" massive debts that NTV "owed" it, giving Putin his first taste of media-stomping blood. Gusinsky, then head of the Russian Jewish Congress, was briefly jailed and then eXiled.
Gusinsky argued on the world stage that the government's case against him was an attack on free speech and classic Russian anti-Semitism, making him the first of many futile oligarch-dissidents. Thanks to massive "donations" he gave to scores of American and Western foundations, congressmen and lobbyists, Gusinsky was actually believed.
In fact, Putin's jailing of Gusinsky was little more than a Mafia hit -- had Gusinsky's bloc won, his opponents, Jewish and otherwise, would have suffered the same fate.
Former Moscow Times economics columnist Peter Ekman argued repeatedly at the time that the Kremlin's case against NTV was grounded entirely in rational economics rather than an attack on free speech. He also accused the eXile of being a Nazi newspaper because of our "Nazi Uniform of the Week" feature. Gusinsky was jailed again in Spain and in Greece, and currently lives in Israel. Ekman lost his job with the Moscow Times and is currently teaching traffic school classes in Wichita, Kansas.
Best Quote: "I want to thank everyone, all journalists, both Russian and foreign -- thank you all." June, 2000, upon being released from Butyrskaya Prison.
Transformation: From leader of World Jewish Congress to almost total confinement to world's only Jewish state.
Personal Wealth bombed by: 24%. $400 million in 1997 to $310 million in 2004.
Silver lining: We don't have to watch Yevgeny Kiselyov on television giving long three-minute questions littered with participles, conjunctions, dangling clauses and snorts through his mustache.
7. Vladimir Vinogradov:
Status: RETIRED IN DISGRACE, HEALTH FAILING
In 1997, Vinogradov was one of the Semibankirshina thanks to his slickly marketed Inkombank, which not only financed Yelstin's re-election, but also had a big hand in pumping up the GKO and real estate market bubbles. Vinogradov was not only a goy, but he lacked a trademark bald spot, which may have marked him for early doom among oligarchs, though not exile or jail.
Before the 1998 collapse, Inkombank was Russia's fifth largest with assets of $2.5 billion. After losing all of its billions, including those of Western lenders, Inkombank was accused of deep involvement in the Bank of New York money laundering scandal. Inkombank in turn admitted that it had regularly bribed New York Banking Department officials via offshore schemes. Eventually the matter was dropped because it was too embarrassing for both sides.
Sources told the eXile that ever since his bank collapsed, Vinogradov's health has deteriorated sharply due to chronic kidney failure. He tried unsuccessfully a few other ventures, particularly in the small-end banking sector, which apparently met with similar success as Inkombank. The late 1998 Inkombank that is. He lives in Moscow and leaves a "skromnii" life.
Best Quote: "In the past five years Mr. Vinogradov has been implicated in massive world-wide financial frauds, currency market manipulations, financing of narcotics trafficking, laundering of illicit proceeds, contract murder and other Russian mob-related activities." Emanuel E. Zeltser, American Russian Law Institute, speaking before a Congressional sub-committee, September, 1999.
Transformation: From "scary" to "skromnii."
Personal fortune bombed by: He ain't even on the Russia 100 anymore.
Silver lining: The collapse of Inkombank allowed the most interesting details about his frightening rise to power to emerge.
8. Viktor Chernomyrdin.
Status: INTERNAL EXILE
Chernomyrdin aims at a baby freshwater seal. He was known to "hunt" for bear cubs that were tied and bound.
In 1997, while Chernomyrdin was prime minister, a French newspaper claimed to have discovered that he owned 2% of Gazprom stock, making him worth roughly two to seven billion dollars or more. When Izvestiya reprinted that, its editor was sacked, presaging Putin's recent sacking of Izvestia editor Raf Shakirov by a good seven years. A symbol of smug Red Director venality in the Yeltsin era, Chernomyrdin was the classic cuss-happy, dirty-joke-telling, hard-driving bureaucrat who made a lot of people feel comfortable, knowing that at least all the money wasn't going to bald, sweaty Jews like Berezovsky.
The CIA passed information in 1995 to then-vice president Al Gore that Chernomyrdin was "highly corrupt," accusing him of widespread bribery and theft of possible "billions," while Yuri Skokov, former head of Yeltsin's presidential security, called Chernomyrdin "the chief mafiosi of the country."
In early 1998, Chernomyrdin's disastrous five-year stint was abruptly cut short when Yeltsin fired him in favor of whippersnapper Sergei Kiriyenko. Chernomyrdin almost made a comeback after the bank default in August 1998...but then, miraculously, he was shut down by the left-leaning Duma in favor of the almost-Putin, Yevgeny Primakov.
In 2001, Chernomyrdin was eXiled to Ukraine when he was named by Putin as Russia's ambassador. He remains in Kiev today, tasked with trying to rig Ukrainian politics to make sure that it doesn't become Westernized and wealthy, but rather remains a cesspool bad enough to make Russians proud of their own country.
Chernomyrdin's crony at Gazprom, Rem Viakhyrev, was forced to step aside for Putin's chekists in 2001. Oddly enough, ever since Miller took over Gazprom, he ran it a lot like Viakhyrev: make a lot of noise about privatizing, transparency and freeing up share prices for Westerners while stealing billions for themselves in shady schemes.
Best Quote: "We wanted things to get better, but they turned out the same as always." 1998. On why Russia never improved under his watch.
Transformation: From tan president-in-waiting to obedient servant-in-exile.
Personal wealth bomb by: If he hasn't been forced to give back his Gazprom shares that he allegedly owns, he can afford a lot of salo in Kiev.
9. Vladimir Potanin.
Status: PRESERVED FOR FUTURE PURGE
When the oligarchs resumed their intra-war in late 1996, Anatoly Chubais wisely chose to side with the goy, Oneximbank's Vladimir Potanin. Chubais installed Potanin as deputy minister in charge of the economy in the interim period in 1996 when Chubais was out of the White House; when Potanin returned to the "private sector" to reap the spoils that he arranged while minister, Chubais returned to the ministerial fold and proceeded to help Potanin become what Washington Post opinion page editor Fred Hiatt would admiringly call a "baby billionaire."
After the financial collapse in 1998, Potanin lost Oneximbank (or rather, those who did business with Onexim lost their money, and Potanin transferred all of his assets into his new bank) as well as his oil company, Sidanco, which was later stripped by TNK. Ironically, Sidanco was part-"owned" by British Petroleum, which now "owns" half of TNK. Uh-huh.
Potanin's comeback from the grave was remarkable and unexpected. Thanks largely to his Norilsk Nickel "investment," in which he commandeered tens of billions worth of metals reserves in return for a couple hundred million in an auction in which his only competitor was a firm "headed" by Rashid Ismatulin, a drunkard who lived with his mother in the village of Alabushevo.
As commodity prices soared, Potanin managed to recoup other "investments" in the metals and industrial sector, allowing him to return to oligarch status under Putin. Other profits were washed through the media sector. Prof-Media, Potanin's empire, bought a 45% stake in Independent Media, parent company of the Moscow Times.
Potanin was accused of harboring similar putschish ambitions as Khodorkovsky by the siloviki, so in June of 2003, just before the crackdown against Yukos, Potanin gave a famous groveling speech before the United Russia party in which he confessed his counter-Putin sins. Thus far, he has been spared, though changes have taken place in Prof-Media's management. This past spring, the heat was on so hard that Potanin fled the country for nearly two months.
Best Quote: "Mr. Khodor-kovsky's sins are political, they are not economic...Business, by definition, cannot be in opposition to the authorities."
Transformation: From "baby billionaire" to repentant has-been and back to billionaire oligarch, and then penitent billionaire oligarch.
Personal fortune bombed: upwards. Today he's worth $5.5 billion, five times more than in 1998.
Silver lining: Club Stone's, opened as a pafosny playground for Potanin's Interos empire boasting a $7 million interior including real gold toilet seats, sucked so badly it closed. Now, as it reopens, it has to pass out flyers to attract people.
10, 11. Mikhail Friedman and Pyotr Aven.
Status: SITTIN' PERTY.
Friedman: a picture of health, financially.
Best Quote: "I"m a supporter of Pinochet, not as a person but as a politician who produced results for his country." Pyotr Aven, 1999.
Transformation: None necessary. In 1992, Putin took a trip on Pyotr Aven's yacht in the Cote d'Azur. Would you like to know more?
Personal fortune bombed by: Ask Sir John Brown that question.
Silver lining: Ames' ex-girlfriend's father no longer runs TNK.