Putin: KGB Gang$ta for Life

Taki’s Magazine

May 23, 2011

When I was a youngster in Brezhnev’s Russia, I was taught that wealth was relative. Though most people in the West were comfortable, they were poor by comparison to the rich, a problem we didn’t have. That’s why, on balance, we considered ourselves better off.

We knew the party elite were wealthy. They lived in large flats. Had country houses. Owned decent furniture and electronic equipment. Ate good food. Wore good clothes. Though we didn’t know this at the time, they lived—at best—as well as middle-class Westerners.

Glasnost and perestroika changed that lamentable situation. A giant transfer of capital abroad ensued, with the elite using “appointed” oligarchs as the conduit. But all those Abramoviches and Berezovskys acquired use of the capital, not its ownership. They were the leaseholders, with the freehold in the hands of a new elite made up of party functionaries, KGB officers, and underworld types. Overnight the new elite’s language acquired a new noun (dollars) and a new numeral (1,000,000,000). Gorbachev, immediately after leaving office in 1991, started a foundation said to be initially capitalized at $8 billion—not bad for a man whose monthly salary had been around $2,500.

In a 2007 interview to the German paper Die Welt, the political scientist Stanislav Belkovsky estimated Putin’s wealth at $40 billion. Belkovsky provided a quick rundown of Putin’s business interests: a 4.5% holding in the world’s largest gas producer Gazprom, along with 37% of Russian oil and gas giant Surgutneftegaz, and “at least 75%” of the oil trader Gunvor. (Putin vehemently denied this one.)

I have reviewed the Russian-language facsimile of a Federal Security Service dossier on Putin first published in the Russian papers Moskovsky Komsomolets and Versia and now reappearing on the website Compromat.ru. The dossier is in the standard format used by the FSB to collate embarrassing material on high government officials. In this instance it chronicles Putin’s activities in St. Petersburg where, before his transfer to Moscow, he was second in command to Mayor Anatoly Sobchak.

The dossier states that Putin’s “quest for personal enrichment and absence of any moral barriers became obvious at the very onset of his career.” As early as 1990 a group of Municipal Council deputies “conducted an investigation of Putin’s activities in issuing licenses for the export of raw materials.” In particular, the investigation dealt with export licenses to exchange raw materials for food. Such materials dutifully left Russia. No food came back.

According to documents cited by Russia’s then-Deputy General Prosecutor Mikhail Katyshev, Putin also used the children’s home of Petersburg’s Central Borough to “export” children abroad, a practice outlawed in Britain since 1807.

The dossier states that Putin was responsible for licensing a number of casinos, charging between $100,000 and $300,000 for each license. He also made a personal bid to acquire 40% of the Hotel Astoria, which was then being privatized. He lost the bid to a vodka-factory owner. Putin allegedly threatened the lucky winner that he would destroy the factory and its owner. The terrified vodka producer settled the grievance by paying Putin about $800,000. From 1992 to 2000 Putin also sat on the advisory board of the German real-estate holding Petersburg Immobilien und Beteiligungs AG, which German authorities have since investigated for money laundering.

The dossier emphasizes that in cahoots with Sobchak and Vice-Governor Valeri Grishanov (ex-Commander of the Baltic Fleet), Putin had a former naval base converted to a port called Lomonosov. This was used for two-way contraband activities, with various goods entering Russia and natural resources leaving it.

Warships, including submarines, were also sold at bargain prices to unidentified foreign buyers. The organization nominally in control of the warships did not always go along with the racket, as witnessed by the murder of its deputy general manager in 1994. Sobchak lasted longer: he and two of his aides all died simultaneously under mysterious circumstances in 2000.

In 1999, having held several important jobs in Yeltsin’s government, Putin took over the country. Within weeks of assuming office he consolidated his position by starting the Second Chechen War, using explosions in four Moscow apartment blocks as a pretext. Rumors immediately circulated that Putin had ordered the apartment bombings, taking his cue from the Reichstag Fire.

Putin’s KGB colleague Alexander Litvinenko put together a dossier of evidence to that effect. He then published it as a book (Blowing Up Russia), eventually attracting rather extreme literary criticism from Putin’s lifelong employer.

After the explosions, Putin made his immortal speech on the fate awaiting Chechen terrorists: “We’ll find ’em wherever they hide,” Putin promised. “If they hide in a toilet, we’ll whack ’em in the shithouse,” he added in the underworld slang used throughout the KGB.

And he was as good as his word. Over a hundred thousand Chechens, most of them not terrorists, were “whacked” in the next few years. When they tried to fight back by taking hostages, they were all “whacked” together. One such action was undertaken in a Moscow theater, when the “whacking” was done with a poison gas whose composition still remains unknown.

In Putin’s Russia, the “whacking” is not limited to real or presumed terrorists. Opposition politicians and journalists are a particularly high-risk group. A disturbingly high quotient of them have been dying.

Yuri Shchekochikhin, opposition MP, died of a mysterious illness, with his internal organs collapsing one by one. His skin went blotchy and he lost all his hair. Paul Klebnikov, the American editor of the Russian Forbes, was riddled with bullets in Moscow. Andrei Kozlov, of Russia’s Central Bank, who had tried to stamp out money laundering, was shot dead. Anna Politkovskaya, who had publicized Russian brutality in Chechnya and attacked Putin as a dictator, likewise. Sergei Magnitsky, the lawyer who blew the whistle on a major corruption scam reaching all the way to the top, died in prison. The Kommersant reporter who had exposed Russia’s secret supplies of arms to Iran and Libya just happened to fall out of a window. Human-rights lawyer Stanislav Markelov was shot in broad daylight, together with the young journalist with whom he was talking, Anastasia Baburova.

Under Putin, first as president and then as the wire-pulling premier, more and more businesses have been brought under state control. Owners who objected too loudly have been killed or, like Mikhail Khodorkovsky, imprisoned. The press, which for a short while under Yeltsin enjoyed some freedom, has been reined in.

But websites such as Compromat.ru still publish information detrimental to the ruling KGB elite. In the future, hopefully they’ll be able to help answer the following questions: Is Putin now milking all of Russia the way the dossier says he used to milk St. Petersburg? How realistic is the $40 billion estimate of his wealth? And finally, can we in good conscience do business with Col. Putin?