5 Farewell to the Oligarchs?
Presidency and Business
Tycoons in Contemporary
Russia
YURI
TSYGANOV
Despite claims recently made by some observers1
suggesting that the role of clan politics in Russia is of small importance,
particularly in relation to Russia’s major social and economic problems, the
developments of the last few years have yet again demonstrated that not only
does the problem exist, but that it also affects many areas of contemporary
Russian development. The roots of the problem go back to the start of the
Russian reform in the early 1990s. At that stage Russian politics were often
seen as a struggle between a small group of reformists who were determined to
pursue changes, and a vast majority of conservatives, most of whom were a part
of the previous Soviet nomenklatura.
However, as recently noted by Sam Vaknin, the motivations that formed the
background of policies pursued by these Russian reformists were far from
altruistic.
With very
few exceptions, they [reformists] were out to enrich themselves by all means,
fair and foul. The kith and kin of Chubais and the Chubais-like were as
ruthless and iniquitous as any Russian gangster. A lot can be explained by
attributing the worst of intentions to this lot. The haste in privatising state
assets and lifting price controls afforded them with the touch of a Midas and
the wealth of a Croesus. A mobsters’ pact divvying up territory led to the
rising political fortunes of the regions. The illicit nature of the ruling
classes is the parsimonious explanation to recent Russian chronicles.2
But what is even more important than the
selfishness of the Russian contemporary political class which has rejected any
form of social paternalism that could have smoothed the path of transition, is
the fact that Russian social and economic life continues to be easily
manipulated by a relatively small group of people who form the ruling elite.
After 1996 the so-called political technologies, i.e. the arts of manipulation,
have developed rapidly in Russia. The last parliamentary election saw these
arts at their best, when one political group (the so-called ‘Family’)
systematically crushed all competitors in an attempt to secure another decade
of political life. Political manipulation had to a large extent pre-determined
the results of the parliamentary election of 19 December 1999 as well as the
outcome of the 2000 presidential election. The main emphasis of this
manipulation was to encourage so-called ‘negative selection’ by the electorate,
while the main emphasis of the election campaign was on the weaknesses and
possible implications of the election of an opponent rather than on the
strengths and advantages of your own candidate. This phenomenon of Russian
politics was widespread under the communist regime and often ensured election
of the most malleable (and often the least capable) candidates to bodies of
power. As a result, the ruling group became overloaded with politicians most of
whom might be regarded as political nonentities lacking positive experience in
politics, but who, whenever required, will act as loyal ‘soldiers of the
party’.
Andrei
Piontkovsky, a Russian political commentator, described the December 1999
election in terms that leave little to add:
A crook
despised and hated by the entire nation, but close to the extremely unpopular
presidential family, travelled across the country and talked governors into
creating a new pro-Kremlin party just several months before the election. He
managed to persuade three or four of them, including those most famous for
corruption scandals and the one who is suspected of organising the murder of an
opposition journalist. Two months later this ‘party’ gained a remarkable
victory at the parliamentary election. What happened during these months and
why was the famous crook so prudent as to invest in an undertaking which seemed
to be so hopeless? 3
The ‘crook’ alluded to in this quotation is
apparently one of the so-called ‘oligarchs’, Boris Berezovsky, while the
artificial party Piontkovsky speaks about is the new political movement Unity,
which comprises middle-rank nomenklatura
and was set up to fill what has long been the vacant place of the ‘party of
rulers’ in Russia.
Answering to the question that Piontkovsky asked
above, an observer would note that the Kremlin group managed to use the events
preceding the election with a high level of efficiency. I would like to remind
the reader of three major events that greatly increased Putin’s chances of
election. These were: the Chechen incursion into Dagestan, the explosions that
demolished two apartment buildings and killed 200 people in Moscow, and the
beginning of a new war against Chechnya. Regarding Chechnya, I wish to point
out that in my considered opinion the reasons for the outbreak of the second
Chechen War were nothing to do with the real or false existence of terrorist
groups in this breakaway republic. The need to bring Russian military forces
into action, including massive bombings and artillery strikes, emerged from the
decay of police force structures and, more generally, of all security services.
In post-Soviet Russia police functions were de facto privatised, in a growing
number of cases policemen were in fact no longer working for society, but
instead serving their own clans and groupings. Such a police force was unable
to deal with the numerous criminal groupings that emerged after the first
Chechen war. Military units sent to Chechnya with the officially proclaimed
goal of fighting terrorists disguise the fact that a vast part of the Russian
state machine can no longer act efficiently due to corruption and decay.
As
there is not enough evidence, I do not intend to discuss the role of the
successor to KGB, the Federal Security Service (FSB), in the above events.
However, it is important to note here that Vladimir Putin served in both secret
agencies, a fact that undoubtedly has facilitated his way to the top office in
Russia. While the latest Chechen War has left more questions than answers, its
one major outcome is obvious. It is well known that the war enormously
increased Putin’s rating and indirectly played a crucial role in the rise of
the Unity political movement, which from the start was endorsed by Putin. In
the months leading up to parliamentary and presidential elections a wave of
patriotism swept the country. The largest media companies came under the
control of the ruling group. As a result, about 60% of the population supported
Putin as Premier and three months later 52.94% voted for him as the new
President.4
I
would divide Putin’s electorate into three main groups: those who always vote
for authorities (about 20% of the population); a very significant section of
voters who really felt grateful to Putin as he personified the end of the
‘Yeltsin epoch’; and of those who long for a ‘strong hand’ in Russian politics
and favour re-establishment of a Stalinist-type regime. In modern Russia
advocates of authoritarian rule can be found everywhere; even some well-known
former liberals today prefer to be counted among the neo-Stalinists (see
Tretyakov, 1999; Belotserkovsky, 2000).
Paradoxically,
in the wake of the elections and during the first months of Putin’s rule, very
few asked the question just who this man was who, only eight months before his
election, was absolutely unknown to the public. This seems to be a very
important question, although its answer proves rather discouraging. The peak of
Vladimir Putin’s career with the KGB was in the 1980s when he held the
insignificant position of KGB major in charge of Friendship House in the former
German Democratic Republic.5 In the early 1990s he worked in the
Administration of Mayor of St.Petersburg, Anatoly Sobchak, and at the time was
accused of shady dealings in the barter of oil products.6 When in
mid-1990s Sobchak was not re-elected as mayor, Putin left the administration
but later managed to move to Moscow and was appointed to a middle-ranking post
within the Presidential Administration (Golovkov, 2000). He soon replaced
Nikolai Kovalev as the Director of the Federal Security Service (FSB).
According to Kovalev, this was done in order to close criminal cases that had
been launched by the FSB against several persons close to the Presidential
Administration (Voschanov, 2000). In 1999 Putin played a very active role in
ousting Yuri Skuratov from the office of Prosecutor-General. This happened
after Skuratov sanctioned investigations into several corruption cases
involving high-ranking officials, the ‘oligarch’ Berezovsky among them
(Golovkov, 2000). Later in the year Putin portrayed himself as a hard-liner in
the escalating Chechen conflict and in August was promoted to the office of
Premier. Finally, in March 2000, this middle-level bureaucrat completed his
four-year ascent to the top when he was elected by an absolute majority of
voters into the position of Russia’s new president.
In
my view, the rise of Putin can be explained by an symbiosis between the
centuries old Russian tradition of favouritism and the modern achievements of
‘information technologies’,7 which are more known. The result of
this symbiosis was another ‘virtual’ leader, one created in accordance with the
same scenario that was earlier invented and successfully used in Yeltsin’s
case. ‘Virtual’ Yeltsin appeared in Russian politics on the eve of the 1996
presidential election. In late June, between the two rounds of elections
Yeltsin suffered a massive heart attack and was set to lose the election race.
However, he chose to hide his illness and instead presented himself as a
healthy and strong leader, capable of leading the country. It was at that time
that Yeltsin’s ‘virtual’ image was created through the staging interviews that
the President never even held, through to the introduction of weekly
pre-recorded radio addresses to the nation, etc. Valentin Yumashev, a
professional journalist who until early December 1998 was the Head of the
Presidential Administration, had re-arranged the work of the Administration
around public relations and was the driving force in making ‘virtual Yeltsin’ a
real political figure at a time when Yeltsin himself often had a very dim idea
of who he was and where he was (Timakova, 1998).
Since
the autumn of 1997, when it became clear that neither real nor ‘virtual’
Yeltsin had any chance of winning a new presidential election, the Kremlin
group, or the so-called ‘Family’, became engaged in the search for a successor
to Yeltsin. One of the first choices of the group was a young ‘reformist’,
Boris Nemtsov, who for a short period became widely acclaimed by the mass media
but soon proved to be incapable as a statesman. The next attempt, which also
failed, was the appointment of Sergei Kirienko as Russian Premier in March
1998. At the time he was presented as another ‘young reformist’ who was capable
of implementing unpopular, but necessary, measures in order to promote Russian
reform. However, very soon Kirienko demonstrated a low level of professionalism
and a high level of dependency on those political leaders who played behind the
scenes. Following the August 1998 financial crisis Kirienko was ousted from
office and transferred to a ‘reserve force’, while Yeltsin and the ‘Family’
tried to bring the former Premier, Viktor Chernomyrdin, back to power. The
attempt to re-appoint Chernomyrdin was undermined by the combined efforts of
Yuri Luzhkov and the Communists (Tsyganov, 1999, pp.278-9). In a compromise
move Yeltsin appointed Yevgeny Primakov as the new Premier. Primakov turned out
to be too independent from the Kremlin and eight months later he was replaced
by the former head of the FSB and then Interior Minister, Sergei Stepashin.
However, Stepashin, who shared responsibility for the First Chechen War of
1994-96, refused to support the start of the second war and eventually lost his
position, seen by the Kremlin as too soft a leader.
During
the crisis of August 1998 the first attempt was made to create a new power
centre in Russia that could parallel the official presidency. Chernomyrdin
tried to unite the ‘business nomenklatura’ (which he himself
represented), regional leaders (governors Lebed and Shaimiev) and some of the
few surviving oligarchs (first of all, Berezovsky). This was a chance for the
post-Soviet nomenklatura to consolidate its position under
Chernomyrdin’s leadership and to weaken the ‘new generation’ of Russian
managers and politicians. At that time Chernomyrdin also had the best chance
among Russian politicians of succeeding Yeltsin as the new president.
Ironically, it was the most offended nomenklatura group, the one that
was united around the Communist Party (KPRF) that played the crucial role in
undermining Chernomyrdin’s chances. This group was supported by Moscow’s mayor,
Yuri Luzhkov, who at that time decided to make public his own presidential
ambitions (Tsyganov, 1999, pp.278-9). It was not long before it became clear
that neither Luzhkov nor Primakov were acceptable to the ‘Family’ as Yeltsin’s
successors. This started a new round of power struggles in the Kremlin, which
eventually brought Vladimir Putin to the forefront.
The
real success of the ‘Family’ efforts might be the creation of a ‘virtual
strongman’ image for Putin. This was done with the use of intensive,
communist-style, propaganda methods. Throughout the second half of 1999 and in
early 2000 Vladimir Putin was frequently shown by the media visiting troops in
combat; flying a jet fighter, sailing in a submarine. His specific use of
language dotted with criminal slang added to this image and his promise to
‘slaughter terrorists even in the shithouse’ became a sort of electoral slogan
for his campaign. A significant part of the population was confirmed in the
view that Russian problems could not be solved on the basis of liberal values
and that only a ‘strong hand’ could put the country in order (Roitman, 2000).
Apparently, this illusion was successfully exploited in Putin’s campaign. It is
worth mentioning that Yeltsin’s own success in defeating the August 1991 coup
was largely ensured by a popular perception of him as a strong man, which
became especially evident in comparison with Mikhail Gorbachev, who failed to
control his closest appointees during the days of the coup.
There
is evidence that Yeltsin’s inner circle tried to use the image of a ‘tough
politician’ on the eve of the 1996 presidential election (Porfiriev, 2000). To
this end, a special plan was elaborated. According to the plan, Yeltsin would
exchange his democratic image for that of the ‘strong man’ in order to keep the
power and prevent property redistribution. However, Yeltsin, being seriously
ill, rejected the plan. It was General
Lebed, who in the second round transferred his support to Yeltsin, who
successfully filled in the ‘vacancy’ of strongman during the crucial 1996
presidential election. In 1999-2000 this experience was used again to put
Yeltsin’s successor into Russian politics. The major task that the successor
was expected to fulfil was the same: keeping power, preventing property
redistribution and suppressing alien clans.
On
the last day of 1999, when Putin had successfully adopted his new hard-line
image, Boris Yeltsin made a spectacular move. Yeltsin, who at the time was
moving and speaking with great difficulty and in appearance was the twin
brother of his late party comrade Leonid Brezhnev, announced his voluntary
resignation from the post of president. Although the possibility of such a
decision had been discussed for several months (Babasyan, 2000), it was the
outcome of the December 1999 parliamentary elections that prompted him to take
the final decision. According to Mikhail Gorbachev (2000), it was the ‘Family’
that persuaded Yeltsin that it would be the right step to make Putin an Acting
President, thus utilising his high rating in the most efficient way. Yeltsin
himself eventually closed the last ‘page’ of his eight-year unchallenged rule
that had started with an unscrupulous continuation of the August 1991 coup and
the ousting of Gorbachev from the presidential office. Yeltsin’s retirement put
an end to ‘Yeltsinism’ as a specific form of rule that had emerged in the early
1990s.
It was the August 1998 crisis that marked the
collapse of Yeltsin’s political regime. This regime was established under the
1993 constitution, which was drafted in a situation of acute struggle for power
inside the group that had come to power in Russia back in 1991. The
constitution was designed to enshrine political power in the hands of Yeltsin
and the ‘reformists’. It gave vast rights to the President in the areas of
executive and even legislative power and formed the basis of a ‘superpresidential
system’ in Russia. At the centre of this system was an extraordinarily strong,
nearly authoritarian, presidential position, which was described by many
observers as a nouveau ‘tsarist rule’.8 This system also brought to
life the phenomenon of favouritism so common to tsarist times. Moreover,
Yeltsin himself often encouraged the struggle between different groups of his
supporters, each aspiring to gain ultimate influence over the President. In the
end, the actions of these groups balanced each other, allowing the President to
stand aside from political struggles and act as a supreme referee.
This
was the general framework of ‘Yeltsinism’, a specific political system that
emerged during the chaos of the Russian transition.9 Inside this
system a version of the democratic principle of ‘checks and balances’ emerged.
It substituted for the counterbalance between different branches of power a
system of struggles between rival cliques. This arrangement became deadlocked
when the referee (the President) failed to play his role, mainly because of the
poor condition of his health. This situation was further complicated by the
loss of popular support for the regime. By the mid-1990s it was clear that
seven years of ‘radical economic reforms’ had destroyed all of the ‘credit of
trust’ that the Russian people had initially awarded Yeltsin. In 1997 Russia
again found itself ruled by a weak leader who was surrounded by rival political
groups, each seeking to promote their own goals and displaying little care for
the common people and the future of the country. The regime was clearly
politically weak and incapable of solving the grave problems the country faced.
Another
distinguishing feature of ‘Yeltsinism’ was the lack of normal political
parties. Decades of suppression of any individual initiative, and the
elimination of elites that could not be integrated into Communist party
structures, had predetermined the development of a post-Soviet situation where
Russian political circles would fail to establish normal political parties that
could protect and promote the interests of various elites and social groups.
There are no consolidated elites in modern Russia, and there are also no mature
legal political structures. In such a situation only clan- or mafia-type formations
can survive. In contrast to traditional political parties, these groups are
based on a sense of common origin or on a common aspiration to dominate other
groups. Among the two hundred parties and political movements that have been
registered in Russia only a few have known leaders and practically none of them
has adopted a programme that clearly states plans and programmes for solving
Russia’s problems. Following this trend Vladimir Putin, in the course of his
presidential campaign, having said that he wanted to avoid possible criticism,
continually rejected requests to reveal his views on the economy or to produce
an election programme (Sharyi, 2000). However, this in no way complicated his
accession to the highest office in the country.
It
appears that many of these so-called parties and movements are just tools used
by their leaders to obtain power. On this point, Unity is just following the
pattern: a political leader – in the case of Unity there was a ‘division of
labour’ between Vladimir Putin as the presidential candidate and Sergei Shoigu
as the direct promoter of the movement - who manages to secure political
financing and strong support from part of the mass media, campaigns in the
regions to attract local political aspirants, who make up the body of the
political formation. The only distinctive feature of Unity was that, in
contrast to earlier political struggles with their epicentre in Moscow, this
time the ruling group put its stake directly upon the provinces, targeting
middle level local nomenklatura. Very
few local politicians in Russia would pass up an opportunity to join the
top-level political game.
In
1995-97 a particular version of the two-party system emerged in Russia, one
which united the so-called ‘party of rulers’ against the so-called ‘systemic
opposition’ (Tsyganov, 1999, pp.261-2). At the time the ‘party of rulers’ was
based on the Russia is Our Home (ROH) movement that was created in 1995 by then
Prime Minister Viktor Chernomyrdin. All major political groups that supported the
President and the federal government joined this ‘party’. It was a rather
flexible coalition that attracted a large number of minor parliamentary
factions and groupings, as well as some democratic and reformist parties and
movements that lacked parliamentary representation. On the other hand, KPRF
formed the basis of ‘systemic opposition’. However, in practice it often turned
out that the confrontation between the ‘party of rulers’ and the ‘systemic
opposition’ could easily be bridged. In many instances both sides managed to
cooperate, including on such major issues as the adoption of the state budget,
changes in taxation policy, etc.
In
March 1998 the sacking of Viktor Chernomyrdin from the post of Prime Minister
destroyed this system. At first, following the resignation of its leader from
the top government position ROH immediately lost its attractiveness to regional
leaders and the federal bureaucracy. Later, in August 1998, the federal
government lost all of its earlier political support in the Parliament when it
became obvious that no parliamentary faction was prepared to support the ‘young
reformist’ Prime Minister Sergei Kirienko. Thus, the federal government
remained as the only basis for the ‘party of power’. In September 1998, Yevgeny
Primakov’s appointment to the post of Prime Minister gave the ‘systemic
opposition’ hope that it could transform itself into the ‘party of rulers’.
However, a strange impeachment attempt in May 1999 ruled out all such hopes.
The ‘Fatherland’ movement launched by Moscow mayor Yuri Luzhkov was the next to
try to occupy this vacated political space. Under the circumstances the
‘Family’ saw the task of another Prime Minister Sergei Stepashin and then
Vladimir Putin (as the former failed) as the destruction of that movement. The
latter was successful with the ‘Family’s’ support, and now Unity incorporating
the remains of ROH and ‘Fatherland’s’ former ally ‘All Russia’ has become the
new ‘party of rulers’.
It
appears that very few of the national political collisions that drew public
attention in Russia in the period after the summer of 1999 10 – the
Kremlin-Luzhkov conflict, the establishment of Unity, the two election
campaigns – were a reflection of the real processes that were driving the
political establishment. The political parties that are represented in the
current Russian Parliament (Duma), such as Unity (also known as Medved’ or the Bear party), SPS (Union of
Rightist Forces), the Liberal Democratic Party of Russia, ‘Yabloko’ and even a
significant part of the ‘Fatherland’ movement, are all fingers on the same hand
of behind-the-scenes manipulators. Very often they have the same sources of
political financing. Being ideologically neutral they can easily achieve
compromises with each other. Despite recent changes in the leadership and in
the names of some parties, they still represent the same old ‘party of rulers’
and the same old ‘systemic opposition’ of Yeltsin’s Russia. In the course of
recent years these two groupings have developed a variety of mechanisms that
now allow them to peacefully coexist. During the 1999 parliamentary election
campaign they did not fight each other; it was rather the party of rulers that
was suppressing an ‘uprising’ inside its loose formation. This was Luzhkov’s
attempt to create an electoral bloc, which was effectively destroyed by a broad
attack through the mass media.
This specific ‘two-party’ system is the tip of
the political iceberg of Russia’s ‘clan-corporate capitalism’ as developed
during the last decade. The first symptoms of this development were already
visible during the Brezhnev period. This development has its roots in the
legacy of the command economy – now a number of small management pyramids have
emerged from the collapse of the central, authoritarian, bureaucratic
government. In addition to Soviet roots these pyramids have also been based on
emerging capitalist relations and have incorporated traditional forms like
semi-feudal clan relations which existed in Russia in various forms since
Tsarist times. Privatisation of state property has completed this process,
leading to the emergence of the so-called ‘oligarchic’ groups. Even before
privatisation became an official state policy, various political groups were already
actively privatising state property. The result of this process was the
emergence of the so-called ‘oligarchic’ groups.
Specific
features of the Russian economy, like its monopolistic and highly centralised
structure, have greatly facilitated the process of development of
‘clan-corporate’ capitalism in Russia. In Russia 80% of all taxes in the
federal budget are paid by just 50 companies. At the same time, just 2% of
companies account for 80% of the share market (Novoprudsky, 2000a). Such a high
level of centralisation of wealth in the economy means that there is a very
narrow circle of executives and property owners controlling the bulk of the
Russian economy. This, together with the existing strong links between business
and the government, has created fertile ground for the rapid development of
oligarchic structures in post-Soviet Russia.
Another
important factor that played a crucial role in the development of oligarchic
relationships within contemporary Russia was the former Soviet nomenklatura system, which largely has
managed to retain its control over the post-communist management system. In
1992 Dmitri Yuriev argued that the nomenklatura, as a special group of administration
professionals united by common political and economic interests, managed to
preserve 80 to 90 percent of Soviet positions at all levels of government in
the areas of economic and land management.11 The emergence and
growth of the oligarchic groups in Russia was based upon their connections to
Russian officials who in the early 1990s were substituting for the former
USSR’s apparatus. In contemporary Russia the level of proximity to federal or
regional authorities became one of the most important determining factors of
the influence of any particular group. On the other hand, as became evident at
the 1995-96 elections, the state authorities in turn had become dependent on
the oligarchs.
However, it is necessary to note that the
formation that is usually called ‘oligarchy’ includes a variety of financial
and political groupings which often have different agendas. In the strict sense
of the word, this formation does not even deserve the term. It is rather common
for an oligarchy to be an extremely amorphous entity with its various groups
engaged in continuing struggles with each other. There are serious policy and
economic interests that divide the oligarchs, for example the issue of economic
protectionism. At the same time one of the major conflicts that divides the
oligarchy is the conflict between the bureaucracy and the new manager-bankers:
these two groups coexist, but they do not merge. In his recent study on the
‘new Russian corporatism’ Sergei Peregudov (1998, p.114) points to the
dispersed and chaotic character of interaction between oligarchic groups and
official authorities in Russia, which eventually forces elites to pursue mere
egoistic and short-term goals.
Following
Yeltsin’s re-election in 1996 the oligarchs started to publicly demand
‘rewards’ for the support they had provided during the election, including
provision by the state of unrestricted access to the property that still
remained in the state ownership. These favours did not come automatically and
in reality many oligarchs had to fight for them. The situation was further
complicated by Yeltsin’s health problems; this was when power in Russia became
mostly concentrated in the hands of one political group within the Presidential
Administration, i.e. the notorious ‘Family’. Only one of oligarchs managed to
get into this group: Boris Berezovsky (Dikun, 1999).
The
August 1998 crisis was the last straw that broke the political and economic
might of the Russian commercial banks controlled by oligarchs. For several
months before the crisis the Kirienko government was making attempts to protect
the rouble from devaluation, supporting bankers and helping them with their
repayments on international borrowing.12 The government was
successful in securing an enormous amount of funds from abroad and in the 2-3
weeks before the crisis a significant part of this new credit (more than US$ 6
billion) was sold by the Russian Central Bank to commercial banks in order to
prevent these banks from going into liquidation. However, by mid-August the
state currency reserves were exhausted and the government was forced to
undertake a devaluation of the rouble. But this devaluation was carried out
with little planning and even less responsibility; its immediate effect was
chaos in the entire Russian economy. However, massive sales of currency by the
Central Bank in the days preceding the crisis helped the oligarchs to at least
save their own personal assets. Kirienko’s government did nothing to protect
individual customers, who lost access to their savings (only comprising 7% of
total bank assets), which rapidly depreciated following the devaluation of the
rouble. The crisis demonstrated that by the end of the 1990s Russia’s
oligarchic businesses had failed to become self-sustaining and could not
survive without continuing governmental support.
Thus,
it would be right to say that most of the recent discussions about the overall
dominance of oligarchs in Russian political and economic life have not been
well grounded. In practice, their influence has turned out to be much more
limited than was thought at the time. In the late Yeltsin period the oligarchs
were a small group of seven people, all of whom had made a large part of their
fortune through the servicing of state accounts in the commercial banks they
controlled. However, with the collapse of the system of Russian commercial
banks in 1998, a majority of the oligarchs failed to recover much of the
economic control and political influence they had earlier enjoyed.
In this section I will examine more closely
what happened to the businessmen who used to be called oligarchs. On the of the
seven oligarchs, Vladimir Vinogradov, who used to be the head of one of the
largest commercial banks in Russia, Inkombank, was ousted by his partners from
business, while in 1999 the bank in which he personally held 8% of shares was declared
insolvent.13 SBS-Agro, a bank headed by another oligarch, Aleksandr
Smolensky, was also declared bankrupt. Smolensky, however, managed to preserve
control over several companies that were earlier controlled by his bank.
Russian state authorities recently opened a criminal investigation into
Smolensky’s activities.14
Boris
Berezovsky was the only one of the oligarchs who was not engaged in the
commercial banking business on a large scale. In 1999 he was sacked from his
post as Executive Secretary of the Commonwealth of Independent States (CIS).15
Later he was accused of breaking the law while pursuing business activities,
including money-laundering operations that used the money and accounts of the
Russian national air carrier, Aeroflot.16 But in the last months of
Yeltsin’s rule Berezovsky managed to secure the support of the Kremlin
grouping, the ‘Family’, and expanded his influence in the mass media. He
established his control over the Kommersant newspaper and channel
‘TV-6’. Criminal proceedings against him were stopped and in the December 1999
parliamentary elections he was even elected to the lower house of the Russian
Parliament (the State Duma) as a representative of a tiny Caucasian republic of
Karachaevo-Cherkessia. In recent months Berezovsky has announced that he is
creating a new Russian media holding.17
Another
oligarch, Vladimir Gusinsky, had established one of the most powerful media
holdings in Russia, ‘Media-Most’. This controls the only national independent
TV channel NTV. With the help of the Moscow government he managed to save his
Most-Bank from bankruptcy in 1998. When he later became involved in the power
struggle between the Kremlin and Moscow mayor Luzhkov the state-owned
Vneshekonombank refused to restructure Most-Bank’s debts of US$42.2 million.
This was followed by a series of other state actions against his holding,
including a search of ‘Media-Most’ headquarters in May 2000 by a joint team of
investigators from the FSB, the Procurator-General’s office and the Taxation police.18
In a court ruling later these actions were characterised as illegal. That,
however, did not stop the state authorities from applying further pressure. In
June 2000 Gusinsky was himself arrested and put in prison. He was released
three days after without any charges being laid.
According
to some observers, there are grounds for believing that the entire operation
undertaken by the state against Gusinsky and his ‘Media-Most’ holding were
aimed at transferring the control of his NTV channel to the state. At the time
of writing, in September 2000, the state-controlled gas monopoly Gazprom was in
possession of 14% of ‘Media-Most’ shares. However, in addition to that, the
gas-producing giant also controlled two packages of shares equal to 40% of
Media-Most. Gazprom received these packages as collateral for loan guarantees
that it provided on behalf of ‘Media-Most’ to Credit Swiss-First Boston bank.
Thus, in practice a total of 94% of shares of Gusinsky’s media holding were
controlled by Gazprom and its Chairman, Rem Vyakhirev. Moreover, ‘Media-Most’
itself owes US$211 million to Gazprom.19 It is no surprise that the
state, which owns Gazprom, has attempted to convert these ‘Media-Most’ debts
into a real influence over the holding. In September 2000, at the time of
writing, Alfred Kokh, the head of the ‘Gazprom-Media’ company which was
specifically created with the task of managing media assets that belong to
Gazprom (including the NTV channel and ‘Media-Most’ shares), was engaged in a
series of negotiations on the issue of transferring part of ‘Media-Most’ shares
in repayment of the media holding’s debt.
The
criminal case against Gusinsky was closed on the 26th July 2000. Six days
before that it was announced that an agreement had been signed between Alfred
Kokh and Vladimir Gusinsky, under which Gazprom had de facto established its
control over ‘Media-Most’. The Russian Press Minister, Mikhail Lesin,
personally supervised this deal and also provided guarantees to Gusinsky that
no further legal action would be taken against him.20 But when on 9
September Vladimir Gusinsky publicly announced that he viewed the deal as one
made under pressure, it became clear that he was not going to fulfil it. The
criminal investigation against him was immediately reopened, while the
Procurator’s office put an arrest on the stocks of ‘Media-Most’ and its
affiliated companies. While at first sight this story looks like a struggle for
property control between a private company and the state, some observers
emphasize that this is in fact a political issue. There is plenty of evidence
pointing to direct pressures coming from the Kremlin, as the ‘Family’ attempts
to effectively destroy the independence of Gusinsky’s media holding in an
effort to prevent any further criticisms of the Kremlin grouping (Bovt, 2000).
The
fifth oligarch, Vladimir Potanin, was one of those closest to reformists who
had been in the Russian government and was himself part of the government in
1996-1997. During the 1998 crisis Potanin’s Uneximbank transferred a large part
of its funds to an affiliated Rosbank, leaving only the shell of the business.
In mid-2000, after the Russian Central Bank restored its banking license,
Uneximbank announced its merger with Rosbank through an exchange of shares with
Rosbank shares.21 Potanin’s banks also managed to maintain their
control over the largest group of companies in Russia. These include the
‘Norilsk Nickel’ joint stock company, the Novolipetsk Metallurgy Plant and the
‘Perm Motors’ joint stock company. These three companies together have a
combined share of about 7% of gross Russian exports. It seems that Potanin’s
holding will also be able to retain its control over the ailing oil company
Sidanko (Pravosudov and Mason, 2000).
Despite
the fact that the 1998 crisis only marginally affected Potanin’s business
interests and influence, in the attack on oligarchs launched from Kremlin in
1999-2000 Vladimir Potanin is often seen as the second target after Gusinsky.
In July 2000 it was announced by the Office of the Procurator General that
Alfred Kokh, the former head of the State Property Committee and an important
member of the Anatoly Chubais ‘team’ in the Kremlin, had received bribes in
relation to his organisation of the privatisation auction of ‘Norilsk Nickel’,
the world’s third largest producer of non-ferrous metals with a global market
share of about 22%. The auction was organised in such a way that the
Uneximbank-Interros financial group (controlled by Potanin) managed to
establish its control over the company for an exceptionally low price.22
According to the investigation team, the support from Kokh enabled Potanin’s
Uneximbank to obtain 38% of shares in the company at a price that was US$140
million lower than the market price. The Office of Procurator General demanded
that this sum be paid back to the state budget.23
The
sixth of the oligarchs, Mikhail Khodorkovsky, became prominent as the head of a
large commercial bank Menatep. However, this bank did not survive the August
1998 crisis and went into liquidation. But an affiliated company of Menatep,
the oil company Yukos, has continued its operations and is doing well,
particularly because of the recent increase in world oil prices. In September
2000 Yukos finalised its takeover of the Eastern-Siberian Oil and Gas Company
(ESOGC) through buying a 19.9% stake in it (Davydova and Manvelov, 2000). In
previous months companies controlled by Yukos had already acquired a
controlling share in ESOGC and by the end of 2000 the company should be fully
integrated into the organisational structure of Yukos. ESOGC explores for and
produces crude oil in the Yurubcheno-Takhomsky oil and gas zone of Krasnoyarsk
region in Eastern Siberia. This zone contains about 700 million tons of oil
reserves and has a significant amount of natural gas. The Eastern Oil Company,
a Yukos affiliate, together with Slavneft are the main producers of crude oil
in the area. A takeover of ESOGC will allow Yukos to significantly expand its
influence in one of the most oil-rich areas of Russia, making Khodorkovsky one
of the most successful Russian oligarchs in the post-crisis period.
The
last of the former seven oligarchs was Mikhail Fridman, whose Alfa-Bank
survived the 1998 financial collapse without many losses, mainly due to the
fact that the bank was significantly less dependent on servicing budgetary
funds than the other leading Russian commercial banks. In the post-crisis
period Alfa-Bank received much broader access to state funds and with the
election of the new Russian president the bank seems to have become the
Kremlin’s new ‘court bank’.24
The
last months of Yeltsin’s rule and the rise of Putin were accompanied by the
inclusion of new people in the oligarch group. For example, one newcomer is
Roman Abramovich, who is Boris Berezovsky’s partner in the oil company Sibneft.
In early 2000 he was thought to have the same influence as Berezovsky. At the
beginning of 1999 Roman Abramovich managed to organize a scheme through which
Sibneft stocks were exchanged on a non-equivalent basis (one to four and one to
eight) for the stocks of its affiliates. This ‘technical’ operation reduced the
government share in Sibneft to less than 10%.25
The
rise of Abramovich signifies an important development in the evolution of
Russian oligarchic capitalism. If in the earlier years the Kremlin group was
exercising its influence through the control or supervision of other business
groups or individual oligarchs, in the early 21st century this group
has started to acquire business interests of its own. This process was facilitated
by the fact that Anatoly Chubais, leader of the ‘reformist’ group that
virtually made-up the Russian government throughout the Yeltsin period, left
the government in the late 1990s and transformed himself into a ‘normal’
oligarch. He did this by securing control over the Russian electricity
monopoly, UES.
In
the recent months there have also been two other newcomers to the group of
Russia’s business tycoons. These were Rem Vyakhirev of Gazprom and Vagit
Alikperov of LukOil. In previous years the two were never considered part of
the notorious oligarch group of the ‘seven bankers’. Moreover, Vyakhirev
actually openly demonstrates his dislike for political struggles and has
publicly proclaimed that the stable development of Gazprom is his only policy priority.
These declarations, however, mask the fact that Gazprom brings in one-third of
government revenues, which inevitably makes Mr Vyakhirev a very important
figure in the modern Russian ruling elite. Recent moves by Gazprom towards
increasing its control over the mass media, as described above, also contradict
these statements. As in the case with Vyakhirev, the mere fact that Mr
Alikperov heads Russia’s largest oil company also makes him one of the leading
players in Russian politics.
An
updated list of the Russian oligarchs in 2000 can easily be compiled from their
signatures on the letter published on 14 June that year and addressed to the
Prosecutor General. The letter called for the release of Vladimir Gusinsky from
custody and the signatories included V.Potanin, A.Chubais, V.Lisin, M.Fridman,
P.Aven, V.Vekselberg, K.Benukidze, M.Khodorkovsky, A.Karachinsky, A.Kokh,
A.Mordashev, V.Yevtushenkov, V.Maschitsky, Ye.Shvidler, R.Vyakhirev and
O.Kiselev. Understandably, the list did not include Gusinsky himself. While
Sibneft president Yevgeny Shvidler did sign the letter, the two people who
control his company, Berezovsky and Abramovich, were not among signatories. As
was widely reported in the Russian press in mid-2000 it was actually Berezovsky
who was considered to be the main initiator of Gusinsky’s arrest.
Vladimir
Potanin, Anatoly Chubais, Mikhail Fridman, Petr Aven, Mikhail Khodorkovsky as
well as Viktor Yevtushenkov and Rem Vyakhirev are often mentioned in the
Russian media as being among the leading ‘oligarchs’, either as members of the
group of ‘seven bankers’ or just as having an equal influence. The other signatories included businessmen
who are little mentioned in the mass media but who have significant political
influence and can be included in the group of ‘oligarchs’. These are, in
particular, the Chairman of the Board of the Novolipetsk Metallurgy Complex
V.Lisin; the head of the large aluminium producer, SUAL, V.Vekselberg; the
General Director of the Urals Machinery Plant K.Benukidze; the president of the
International Business Systems Group, a partner of Dell Computer Corporation,
A.Karachinsky; the General Director of Vympelcom, a large company in
communications, L.Zimin; A.Kokh of ‘Gazprom-Media’; A.Mordashev, General
Director of the Northern Steel Plant; the president of the Rosinvestneft Group, a crude oil-producing company,
V.Maschitsky; and the president of Impexbank O.Kiselev. Although drawing up a
full list of all Russian oligarchs is rather a difficult task, the above
listing gives a picture of who some of the most important of these people are.
In
general, the post-crisis developments in Russia over the last two years have
lead to a significant decline in the almost absolute influence that the
oligarchs had enjoyed during most of the 1990s. Five of the initial seven
business tycoons are no longer actively engaged in politics. Moreover, if in
the early years of Russia’s post-communist development politicians were often
seeking the support of the oligarchs, nowadays it is the oligarchs that seek
support from the authorities and try to demonstrate their loyalty to the state.
The explanation is simple: in modern Russia businesses continue to depend
greatly on the state while their leaders are often afraid of authorities. This
is because the economic environment in Russia is still more defined by the
personal inclinations of the national leader and his appointees in the
government, rather than by the rule of law. Even if they provide politicians
with substantial funding Russian businessmen continue to be in an inferior
position to state officials. In the
words of one of Russian commentator, this new pattern of relations between the
government and business that has emerged in 2000 can be summarised by the
following phrase: ‘What is good for Putin is good for business’ (Novoprudsky,
2000b). Thus, the dominant role that was played by the state (in a direct or
indirect way, legally or through breaking the law) in the creation and
development of all large Russian businesses has lead to the appearance of a
specific form of Russian capitalism and has prevented Russian businessmen from
organising themselves into an alternative and independent source of power.
Despite the political weakness of the
so-called ‘oligarchs’, Russia in 2000 did see a number of attempts aimed at
consolidating the unity of its ruling elite. If successful, this process could
lead to the creation of a real oligarchy in Russia, where several people
determine all the major developments in the country. A major feature of this
new development would be the desire and ability of a new oligarchic circle to
absorb some of the most important representatives of the old nomenklatura, private and state-owned
businesses, the secret services and the military. The main initiator of this
process was the Kremlin’s ‘Family’ and so far it has been quite successful in
its attempt.
Although
the notion of the ‘Family’ comes from the closeness of its members to the real
family of Russia’s first president, Boris Yeltsin, it is not made up
exclusively of members of Yeltsin’s household. Strictly speaking, Yeltsin’s
daughter Tatyana Dyachenko is the only representative of Yeltsin’s family in
the group. All the others are former favourites and colleagues of Yeltsin. It
was reported that on some occasions Yeltsin’s wife Naina interfered in
decision-making, but apparently she always had a very limited influence; for a
number of years Tatiana was the real leader of the grouping. Two other important
members were Valentin Yumashev, who received the informal ‘title’ of Yeltsin’s
adopted son, and Aleksandr Voloshin, who joined the group in the late 1990s and
who served as the head of Presidential Administration under Yeltsin and
continued in the post under Putin. This ‘trio’ forms the basis of the ‘Family’.
Reportedly, all others depend on this trio. This includes Boris Berezovsky, who
apparently lost his influence within the group because of the scandal involving
Aeroflot, which is headed by Yeltsin’s son-in-law Valery Okulov.
A
new member of the ‘Family’ group is Roman Abramovich, who has managed to get a
leading position within a very short time. In the spring of 1999, during the
fierce struggles between the ‘Family’ and Procurator General Yuri Skuratov, who
at the time was trying to pursue a criminal investigation into the activities
of some of the members of the group, the ‘Family’ received its newest member,
the then FSB Director and Secretary of the Security Council Vladimir Putin. At
the time Putin was characterised as ‘stubborn, purposeful and loyal to the
team’ (Dikun, 1999). Another member of the ‘Family’, Anatoly Chubais, had
recently lost a lot of his earlier influence, but he remained a person whose
advice was always valued by Yeltsin. Chubais was usually called to the scene in
critical moments. Although in mid-2000 there were signs that his position as
head of the UES electricity monopoly was coming under increased scrutiny, it
was still too early to conclude that his political role has diminished.
It
was President Yeltsin himself who drew the boundaries of how far the ‘Family’
could intervene in decision-making and in what areas. While the ‘Family’ had a
very low influence in military or foreign policy-making, in economic issues the
authority of the ‘Family’ easily competed with that of the Russian government.
The
origins of the rise of this and other ‘clan-type’ political groupings in modern
Russia can be traced back to the 1993 Russian constitution. This constitution
was rather authoritarian in nature and was drawn up mainly as a tool for
political struggle that Yeltsin could use against his current and future
rivals. It gave the president wide powers and responsibilities, which
inevitably had to be transferred to a third body. Memories of past
confrontations and the fear of losing his grip on power discouraged Yeltsin
from transferring part of his absolute power to the parliament, the government
or the Constitutional Court. Instead, what appeared was the so-called
‘collective Yeltsin’ represented by the president himself, along with the inner
circle of his favourites. At first these favourites included Burbulis and
Poltoranin, then Korzhakov, Ilyushin and Barsukov. It was after the 1996
presidential election that the ‘Family’ finally replaced the previous groups of
favourites. The names of the favourites might have changed but the nature of
the phenomenon has remained the same.
From
1996 this Kremlin grouping was concerned with the need to find a suitable
successor to the ailing Yeltsin. It was then that the ‘Family’ started to
actively build up its financial base. A recent independent investigation has
found, for example, that the mass capital outflow from Russia is actually being
controlled by a group of powerful Kremlin insiders.26 Aleksandr
Mamut, the head of the Board of MDM-Bank and also a member of the ‘Family’, is
closely connected with Tatyana Dyachenko, Valentin Yumashev and Roman
Abramovich, is playing a key role in capital export. Although he always keeps a
low public profile, Mamut is considered a very powerful person. For instance,
recently channel NTV revealed that it was Mamut who had initiated the removal
of Dmitri Saveliev from the executive office of the Transneft, Russia’s
monopolist in the field of oil transportation. Aleksandr Mamut is a son of a
professor at Moscow State University and is married to the ex-wife of Andrei
Brezhnev, grandson of the late Soviet communist leader Leonid Brezhnev.
MDM-bank, which Mamut controls, is a project financing company and supervises
the allocation of World Bank funds. Mamut also controls another financial
company, Sobibank. He is known to have close and friendly relations with
Alfa-Bank, which is controlled by one of the seven oligarchs Mikhail Fridman.
The three banks together - MDM-bank, Sobibank and Alfa-bank - have in their
deposit accounts approximately half of the money belonging to the State Customs
Committee. In addition to its ability to influence the appointment of the head
of the Customs Committee, this direct control of the Committee’s accounts gives
the ‘Family’ a very strong lever of control over Russia’s exports and imports.
It
is in this context of the continuing struggles to control Russia’s diminishing
financial resources that one should view recent attacks against oligarchs. In
July 2000 Vagit Alikperov was the third ‘oligarch’, following Gusinsky and
Potanin, to find himself under pressure from the state. This time accusations
of fraud came from the Federal Tax Police, they announced that Alikperov’s
LukOil company was guilty of tax evasion and had not paid the federal budget
dozens of millions of dollars. While some years ago LukOil received an official
title as a ‘Good Taxpayer’, and was even awarded a prize, the recent audit
suggests that in 1998-1999 the company managed to evade taxes via receipt of
value added tax rebates under the pretext of false export of oil products.
27
Indeed,
Russian business is known to be one of the most corrupt and probably the least
law obeying in the world. On the other hand, the Russian state has to carry a
great deal of responsibility for creating this criminal environment. It
provides draconian, and at the same time contradictory and extremely obscure
business legislation, as well as having corrupt and inconsistent practices in dealing
with business. Moreover, in its attempts to implement justice the state has
acted very selectively. While some ‘oligarchs’, who for this or any other
reason have fallen out of favour, suddenly find themselves prosecuted by the
state, others, still in favour, have enjoyed almost total immunity from the
law.
In
conclusion, I would like to emphasize that in my view it was not by mere chance
that Yeltsin decided to appoint Vladimir Putin as his successor. In the
post-crisis period all earlier candidates in this role had connections with the
Russian or Soviet secret services. If Russian developments in the future were
to take a critical turn, the ruling elite could easily sacrifice democracy
altogether or whatever democratic façade Russia still has. Democracy, or rather
Russia’s pseudo-democracy, has performed its role in masking the real outcomes
of privatisation, it has helped to exchange the political power of the nomenklatura for property rights and to
establish oligarchic control over the economy. Now democracy is no longer
needed. What Russia’s real ‘oligarchy’ needs is safety and the security for its
capital, and protection from the millions of frustrated people who were
impoverished and deceived during the so-called ‘reforms’. The very nature of the
oligarchy, as an exploitative but not a development and asset-increasing force,
is an obstacle to any further extensive expansion of new ‘oligarchic’ groups.
This means that the current ‘oligarchs’ will inevitably continue to clash with
each other in competition for scarce national assets. These groups will
increasingly feel the need for a ‘supreme referee’ to whom they can appeal and
who can guarantee a certain order within the country. Russian political
commentator Boris Kagarlitsky (2000) argues that it is the possibility of the
establishment of an oligarchic state through future reforms that poses the real
threat to Russia’s democratic development. While in the past many observers
expected and feared a possible dictatorship in Russia coming from the ‘left’,
as a result of the return to communism, it is the dictatorship of the ‘right’
that has more chance today of becoming Russia’s next reality.
1 For example, Malle (2000, p.6) wrote: ‘What is worrying is the perception among Russians that petty politics,
the formation of inner circles of power and sordid alliances are the main
causes of Russian problems … In my
view, these perceptions are highly questionable …’.
2 Central Europe Review, vol.2, no.26, 3 July, 2000
(http://www.ce-review.org/00/26/ books26_vaknin).
3 Novaya
Gazeta, 22 December, 1999.
4 ‘Vybory Presidenta RF priznany
sostoyavshimisya’, Elections.ru, 5
April, 2000.
5 According to the last KGB Chairman,
Vladimir Kryuchkov, this position was a mere sinecure, one of many others used
by the KGB to provide its officers with sources of additional income. Kryuchkov
told a correspondent of Moscow News
that Putin did not serve in the intelligence service and was an officer of
other department (so-called the Department for the Security of the Constitutional
Regime, which played the role of political police). This is why, upon returning
from the GDR, Putin, who did not achieve any remarkable results, was removed
from active duty and joined the reserve force of KGB (Nikitinsky and Shpakov,
2000).
6 ‘V 1990 godu Putin obvinyalsya v
korruptsii’, Lenta.ru, 13 January,
2000 (http://www.lenta.ru).
7 Editor’s note: The Russian notion
of ‘information technologies’ used in a political context refers to what is
more commonly known in the West as ‘public relations’.
8 See for example Lidia Andrusenko,
‘President ili tsar?’, Nezavisimaya
gazeta, 1 February, 2000.
9 For more on ‘Yeltsinism’ see Tsuladze,
2000.
10 For example, the conflict between the
Kremlin and Moscow Mayor Luzhkov, the establishment and rapid rise to power of
the Unity movement, the two election campaigns of 1999 and 2000.
11 Rossiiskaya
gazeta, 4
March, 1992.
12 In my view, one of the best analyses of
Russia’s 1998 crisis is that was published
recently by Andrei Illarionov, Director of the Institute of Economic Analysis
and economic adviser to the President. See Illarionov, 2000.
13 Aleksandr Persikov, ‘Kak rossiiskiye
oligarkhi proveli 1999 god’, Komsomolskaya
Pravda, 25 December, 1999.
14 Alexey Zhuravlev, ‘Pomenyaet li Aleksandr
Smolensky zamok v Vene na kameru v “Matrosskoi tishine”’, Argumenty i fakty, 14 April, 1999.
15 ‘Otstavka B.Berezovskogo’, Polit.ru Monitor, 5 March, 1999 (http://www.polit.ru/
monitor/99/0399-1/050399-1.htm#snos3).
16 ‘Priglasheniye na kazn’’, Profil’, No.13 (135), 12 April, 1999
(http://www.profil.orc.ru/koi/archive/n135/hero.html).
17 Mila Kuzina, ‘Berezovskomu ne dayut stroit
Media Kholding’, Gazeta.ru, 27 July,
2000.
18 Pavel Zimin, ‘Shagi komandora’, Utro.ru, 6 July, 2000.
19 ‘Gusinskiy peredumal prodavat ‘Media-Most’’,
Gazeta.ru, 9 September, 2000.
20 This was reported in ‘Khronika tonuschego
kholdinga’, Izvestia, 20 September,
2000.
21 Nils Iogansen in Izvestia, 19 September, 2000.
22 ‘Prokuratura Moskvy osparivaet prodazhu
Norilskogo Nikelya’, Lenta.Ru, 20 June,
2000.
23 ‘Prokuratura sobiraetsya peresmotret’
rezul’taty zalogovykh auktsionov’, Lenta.Ru,
21 June, 2000.
24 ‘“Alfa” shturmuyet Kreml’’, apn.ru, 26 April, 2000.
25 The Joint Stock Company Sibneft was
established under a 1995 presidential decree. At the time the controlling share
of 51% was left with the government. The company consists of four oil-producing
and oil-processing companies: Omsk Refinery, Omsknefteproduct, Noyabrskneftegaz
and Noyabrskneftegazgeofizika. The major production unit is Omsk Refinery. In
1998 Sibneft produced 17.32 million tons of crude oil. On 1 January 1999 the
Joint Stock Company Sibneft had 1837 stockholders, but just four months later,
on 6 April 1999, the figure had
already reached 5840. When, at the annual meeting of stockholders on 29 June
1999, government representatives were not elected to the new management board,
the state totally lost its control over the company ownership. The major
stockholders were the Financial Oil Corporation Ltd. (46%), SINS Firm Ltd.
(14%), Rifan Oil Ltd. (10%) and Dart Management (5%). However, despite this
official listing of corporate control over its shares it is believed that the
real owners of Sibneft are Roman Abramovich (who controls more than 40% of
shares) and Boris Berezovsky (30%). The President of Sibneft is Yevgeny
Shvidler and Chairman of Board of Directors is Konstantin Potapov
(Politkovskaya, 1999).
26 This was a newspaper investigation based on information received from
sources in the Government, the Presidential Administration, the State Customs
Committee, and the Federal Tax Police. See ‘Kto i kak organizovyvaet ottok
kapitala iz Rossii?’, gazeta.ru, 4 October 1999
(http://www.gazeta.ru).
27 Lenta.ru, 11 July, 2000.
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