tables and pointed out that the table was made of very expensive marble and that they should put nothing heavy on it, such as a briefcase. He went away to get vodkas and when he returned he was horrified to see a bulging briefcase lying on the table. ‘I thought I told you not to put briefcases on the table,’ he said. The man replied, ‘That’s not my briefcase. It’s my wallet.’
The oligarchs were only too aware of the widespread resentment. As Anatoly Chubais, Yeltsin’s Privatization Minister and chief political architect of the giant giveaways in the mid-1990s, acknowledged, ‘Forty million Russians are convinced that I am a scoundrel, a thief, a criminal, or a CIA agent, who deserves to be shot, hanged, or drawn and quartered’.16
Putin wasted no time in waging war on the oligarchs. But human rights activists accused him of manipulating the judicial process against businessmen to suit his political interests. They claim that the President has steadily taken control of the judiciary by controlling the appointment of judges. For Putin it was a power struggle and the state needed to reinstate its supremacy. His reputation for ruthlessness was typified by another Russian joke: Stalin’s ghost appears to Putin in a dream in which he asks for his help in running the country. Stalin advises, ‘Round up and shoot all the democrats, and then paint the inside of the Kremlin blue. ‘Why blue?’ Putin asks. ‘Ha,’ replies Stalin. ‘I knew you wouldn’t ask me about the first part.’
The President’s first target was Vladimir Gusinsky, who had made money in the early days of perestroika by promising extravagant rates of return on investors’ money and was one of the first of the dynamic young wheeler-dealers to build a fortune off the back of the transition to capitalism. He also built a substantial media empire, including the first private national television network, NTV, a daily newspaper, Sevodny, and had a part stake in the fledgling liberal radio station Ekho Moskvy - all under the umbrella of the conglomerate Media-Most. He was the nearest the Russians had to a Rupert Murdoch.
Gusinsky was somewhat unique among the oligarchs in that he could at least claim that his empire had not been mostly acquired from the state. Nevertheless, he ruthlessly exploited the business loopholes of the time and was a master at manipulating government loans, concessions, and regulations by taking advantage of political contacts in order to gain state finance. Gusinsky denied anything untoward, but ended up with state loans of close to half a billion dollars, which he used to support a supercharged lifestyle.
By the late 1990s, his media empire had brought him considerable power as well as enormous political influence. It was not to last, however. On 11 May 2000, six weeks before Putin’s dramatic ultimatum to the oligarchs gathered in the Kremlin cabinet room, masked police armed with machine guns raided the offices of Gusinsky’s Media-Most. Then, in June, Gusinsky was arrested and charged with fraud and imprisoned. Gunning for his first oligarch suited Putin’s wider political strategy but the thin-skinned President was also taking revenge for the way in which he believed Gusinsky had used his influence to oppose him, and for the biased way Putin felt his television channel had earlier attacked his policy on Chechnya.
The charges were dropped and Gusinsky was released after he agreed to sell Media-Most to the state gas and oil group Gazprom for $300 million. In August 2000 he fled to his sumptuous villa in Sotogrande, southern Spain. Visitors to the villa had even included Putin and his wife. Following later attempts to persuade Spain to extradite Gusinsky, he left for Greece before settling in Israel, where he has joint nationality. He was merely the first of a long line of Russian exiles under Putin’s reign.
The President’s next target was his former friend and the man who had helped him in his rise to power - Boris Berezovsky. Even before Putin became President, the storm clouds had been gathering over the ‘boss of bosses’. He was out of favour at the Kremlin, politically isolated, and deeply unpopular. Although he had always insisted the collapse was not his fault, ordinary Russians had not forgotten the failure of the ‘people’s car’ in which thousands had lost their savings.
Nevertheless, Berezovsky always saw himself as a buccaneering capitalist, a catalyst who had helped to transform Russia. ‘We were true heroes,’ he told Frontline in October 2003. ‘Because of us, Russia was put on a new course.’ He admitted that the oligarchs had made mistakes in their business practices during a ‘murky time’, but added, ‘We didn’t break any laws, but if you call giving bribes a crime, then all oligarchs were criminals.’17
Public animosity was the least of Berezovsky’s problems. In early 1999, following months of threats, the Prosecutor-General, Yuri Skuratov, visited Prime Minister Primakov in January 1999 and said, ‘I am going to start a criminal case against Boris Berezovsky.’ Primakov asked him on what grounds and he replied, ‘In connection with the fact that Berezovsky is hiding Aeroflot’s money in Swiss banks.’18
Over the following weeks the police raided more than twenty offices and apartments in Moscow with connections to Berezovsky. The Moscow-based American Forbes journalist Paul Klebnikov, in 2004 the victim of a contract killing in Moscow, witnessed the first raid - on the headquarters of oil giant Sibneft - from his room in the Hotel Baltschug:
‘Suddenly, three white vans screeched up to the building [Sibneft’s headquarters] across the street. A dozen men in face masks, camouflage uniforms, and automatic rifles jumped out. Then, accompanied by other men in brown leather jackets, carrying briefcases and video cameras, they entered the building.’19
This being Russia, the investigation would not run smoothly. On the day of the first raids Skuratov resigned - officially because of ‘ill health’. He had been admitted to a Kremlin hospital on the previous day with a ‘bad heart’. But when his resignation was later rejected by the Duma, he stated that he was not in fact ill and was reinstated. The somewhat botched effort to oust Skuratov was typical of the manoeuvrings and internal jostling that characterized Russian politics at the time.
By now, however, the investigation had gathered momentum and continued under a special prosecutor, Nikolai Volkov. The alleged fraud was that millions had been siphoned off from Aeroflot, the airline Berezovsky had controlled since 1994, and into Swiss bank accounts in violation of Russian foreign exchange rules. Volkov claimed that his team’s examination of the company’s books uncovered a Byzantine network of companies by which Aeroflot’s funds were rerouted. Once Volkov started to look into things, a computer printout appeared behind his desk, a jumble of arrows and boxes that at first glance resembled a map of the human genome. In fact, it was a sketch of how Aeroflot funds were allegedly routed through a complex network of Russian and foreign companies in countries including Belgium, Cyprus, Germany, Lithuania, Panama, Syria, and Switzerland.
The two companies claimed to be at the heart of the fraud were Andava and Forus, both Swiss-registered financial service companies based in Lausanne with only a handful of staff.
Forus - or ‘for us’ as prosecutors nicknamed it - was set up in 1992 to facilitate Western finance for Berezovsky’s companies. When Aeroflot acquired its Boeings and Airbuses, for example, Forus arranged short-term loans to make the down payments. The company also handled Aeroflot’s revenues from foreign airlines, which paid to operate in Russia or fly over Russian airspace. These charges amounted to almost $100 million a year.
Andava was formed in 1994, the day after a 49 per cent stake in Aeroflot was privatized, and its main role was to handle the airline’s foreign ticket sales, essentially its lucrative overseas earnings.
On 6 April 1999 the Prosecutor-General issued the former Kremlin insider with an arrest warrant. It alleged that Berezovsky had siphoned off $250 million of Aeroflot money through Andava. Berezovsky, who was in France, responded conspicuously by holding a press conference at a Paris hotel. He insisted that the charges were baseless and politically motivated. ‘The time when the country is run by people with naked behinds is past us’, he said. Berezovsky has repeatedly denied the Aeroflot accusations, claiming that Andava and Forus performed legitimate business services for the airline and that any misappropriation was done