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GODFATHER OF THE KREMLIN: Boris Berezovsky and the Looting of Russia. - Review - book review

Washington Monthly, Oct, 2000 by Andrew Cockburn

GODFATHER OF THE KREMLIN: Boris Berezovsky and the Looting of Russia by Paul Klebnikov & Drenka Willen Harcourt Brace, $28.00

ONE OF THE MORE ENTERTAINING sporting events of this spring was the great "Worst Western Journalist in Moscow" contest sponsored by exile, the outstanding expatriate-edited Moscow journal. Through succeeding elimination rounds, masters of the cliche, manglers of syntax, virtuosos of plagiarism, and, above all, those who persist in misreporting Russia as a land advancing into the sun-kissed territory of "reform," were awarded by the judges for their superior awfulness with advancement to the final bouts. While the final was a somewhat lackluster and predictable walkover for David Hoffman of The Washington Post, the event provided an illuminating survey about why we know so little about what is going on in Russia.

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Paul Klebnikov, who (perhaps wisely) does not live in Moscow, did not qualify for the competition, but he would hardly have gotten past the first round. For years, he has been delivering unvarnished reports to the readers of Forbes magazine on the reality of life in Russia today. They do not make a pretty picture. Now, with Godfather of the Kremlin: Boris Berezovsky and the Looting Klebnikov has given us an indispensable as well as riveting account of the rise of this cunning, rapacious, and ruthless figure, the most successful (so far) of all the predatory creatures who prowl in the jungle of Russian capitalism.

Berezovsky is an intriguing the Soviet system crumbled he was halfway through a distinguished career as an academic mathematician. Yet when the new world dawned he sprang into action. The foundation of his fortune lay in an arrangement he forged with the management of Avtovaz, the huge and ramshackle Russian car maker. In exchange for cutting senior management into the action, he was able to get cars straight off the assembly line for far less than the cost of production, which he then sold at immense profit through his newly founded chain of auto dealerships. The factory workers paid the difference by going without pay for months on end.

The early '90s, when Berezovsky was getting under way, was the time of the great gang wars in Moscow, as rival criminal coalitions shot it out for control of key industries and businesses. Businessmen could only ward off extortion or worse by paying one or other criminal group for a "roof"--protection. On one side in the most important war stood the Chechens, much feared for their ruthlessness, and impenetrable to outsiders. On the other were the "Slavic alliance," native Russian gangsters determined to fight off the Chechen threat. It appears that Berezovsky forged an alliance with the Chechen forces, who provided his roof, a connection that would have terrible consequences in years to come. In the meantime, his fearsome allies took him through some tough times, such as the bloody gun battle on Lenin Prospekt outside one of his showrooms in 1993, or, more seriously, the detonation of a large bomb beside his passing car, which killed his bodyguard, decapitated his driver, and left him badly wounded.

By 1994, Berezovsky had moved beyond dependence on mobster protection. He had forged a more potent alliance by paying for the publication of Boris Yeltsin's memoirs, thus gaining entree to the inner circle around the grateful author/president. This court was populated with strange figures, such as the "hippie journalist" Valentin Yumashev, through whom Berezovsky obtained his entree; Yeltsin's tennis coach, who ran a large criminal empire of his own from a Kremlin office; not to mention Alexander Korzhakov, for a while the powerful chief of Yeltsin's Praetorian guard who later reported that Berezovsky had asked him to kill a business rival. Korzhakov performed great services to history by his assiduous bugging of everyone's phones, leaking the tapes when it seemed useful, and by his forthcoming reminiscences once he had fallen from his master's graces.

Once inside "the family," Berezovsky masterfully parlayed political connections into cash. Key to his modus operandi was the realization (shared by many of his peers in the rising business oligarchy) that it was not necessary to control a business, simply its cash flow. In a remarkably candid 1996 interview with Klebnikov he termed this approach the "privatization of profit" A fascinating chapter lays out in detail, complete with the transcripts of bugged phone Calls, how this method was successfully applied to the looting of Aeroflot, the formerly profitable state airline. Thanks in part to the appointment of Yeltsin's son-in-law as the company's head, Berezovsky was able to siphon off huge chunks of Aeroflot's considerable hard currency earnings through a series of shell companies in Switzerland.

From aviation, Berezovsky moved on to the really big money in Russia--oil. His entry into the oil business was facilitated by the most egregious of all the great ripoffs that have charactarized post-Soviet Russia, the "loans for shares" scheme by which our hero and his fellow oligarchs helped themselves to priceless chunks of the country's resources, for pennies on the dollar, in return for financing Yeltsin's re-election in 1996. Following that free, but hardly fair, election, the godfathers increased his political profile, taking various high-level government posts (without of course ceasing his business operations for a second). It was at this time that his interest in Chechen matters re-emerged, in the form of lavish ransom payments to kidnappers in Chechnya for the retrieval of their victims. Klebnikov points out that this flow of money to the gangs in the devastated territory effectively made it impossible for the elected Chechen leader to stabilize his country. The consequent anarchy, culminating in the invasion of Dagestan in the summer of 1999 by fundamentalist Islamist Chechens, provided the backdrop for the second Chechen war and the rise to power of Vladimir Putin. Klebnikov suspends judgment as to whether any of the leadership in Moscow had a hand in the terrorist bombings in the capital that provided the final pretext for the invasion of Chechnya last year, although George Soros has been less demure, heavily hinting in an article in the New York Review of Books that Berezovsky deliberately fomented the war in furtherance of his political intrigues.

GODFATHER OF THE KREMLIN: Boris Berezovsky and the Looting of Russia. - Review - book review

Washington Monthly, Oct, 2000 by Andrew Cockburn

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