The Man Without a Face: The Unlikely Rise of Vladimir Putin

by Gessen, Masha

  She was there, along with a staff member visiting from London, when twenty-five tax police officers descended on the office and turned it upside down. Soon the same number of officers, led by the same colonel who had run the first raid, appeared at the offices of the Hermitage Fund’s law firm, apparently looking for stamps, seals, and certificates for three holding companies through which the Hermitage Fund had managed its investments. When a lawyer objected that they lacked the appropriate search warrants, he was taken to a conference room and beaten there.

  Four months later, Browder was notified of multimillion-dollar judgments against his companies issued by a court in St. Petersburg. Put on notice by his visa annulment, frightened by the tax police raids, he was now downright terrified by a sequence of events for which there could no be reasonable explanation. Why would the tax police need registration papers, seals, and stamps for empty shell companies? How could there be judgments against these companies if their representatives had not even known of any lawsuits or court hearings? Browder asked his Moscow lawyers to investigate.

  It was not a lawyer but a young accountant who, after more than a year of sleuthing, finally reconstructed an absurd, barely believable, but nonetheless logical sequence of events. The three empty shell companies, Sergei Magnitsky discovered, had been re-registered in the names of other people, all of them convicted felons. Then the companies had been sued by other companies, which produced contracts supposedly showing that the stolen companies owed them money. Three different courts in three different Russian cities held speedy hearings and issued judgments against Browder’s former companies totaling a billion dollars, which just happened to be exactly the amount of profit the three companies had reported in the previous tax year. Then the companies’ new owners filed claims with the tax authority, requesting a refund of all the taxes they had paid: they appeared to qualify for it because, on paper, the companies no longer had a profit. The refunds, totaling $230 million, were processed in a single day in December 2007; they were transferred to the companies’ new owners and disappeared from the Russian banking system.

  It appeared Magnitsky had uncovered an embezzlement scheme that involved the tax authority as well as the courts in at least three cities: had the judges not been in on the deal, they would hardly have rubber-stamped judgments with such ease and speed. Nor would the tax authority have processed the refund so fast—or at all, considering that Browder’s lawyers had already filed six different complaints alleging the theft of his companies—had the entire scheme not been orchestrated at or near the top of the agency.

  Browder, ever the ideologue, saw an opening. By now he believed that his own banishment from Russia had come from the very top: even if he still did not know the exact reason, he could believe that someone whose toes he had stepped on could have conspired to convince the president or someone very close to him that Browder was an undesirable. But now Browder had a chance to save Russia all over again. “There is no way the president of the country could allow $230 million of the country’s money to be stolen,” he reasoned. “I mean, the tax crime is so cynical. If you made a move about it, people would say it’s just too far-fetched. We expected SWAT teams and helicopters to swoop down from the sky and get all the bad guys.”

  Magnitsky wrote fifteen different complaints aimed at exposing the embezzlement and starting an investigation. But instead of SWAT teams swooping down from the sky, criminal probes came raining down on lawyers Browder had engaged. Seven attorneys at four different law firms received notice that they were being investigated on various criminal charges. At this point Browder knew enough to offer all of his lawyers refuge in Great Britain. “You know, I was trained as a financial analyst,” he told me a couple of years later, in part by way of explaining how difficult the process had been for him, in part by way of justifying why it took him so long to realize the full gravity of the situation. “I wasn’t a soldier. I wasn’t trained that people would be putting their lives at risk. And I went to every single one of our lawyers and I said, ‘I am truly sorry that this has happened. It was not my intention to have put you in physical harm and it is not my intention to leave you in physical harm and I want you to leave Russia at my expense, and come to London at my expense, and stay in London at my expense.’ It wasn’t an easy conversation to have with any of these guys. They were all in their forties, at the top of their careers, some of them didn’t speak a word of English. And I was asking them to give up their lives, their professions, their whole community, to go into exile at a moment’s notice to protect themselves from danger.”

  Six of the seven lawyers accepted Browder’s offer and moved to London. The one who refused was Sergei Magnitsky, the accountant, at thirty-six the youngest of the group—which was how Browder explained his refusal to himself: “Sergei was from a generation who thought that Russia was changing. There was a new Russia, maybe an imperfect Russia, but a getting-better Russia. The basic fundamental principles of law and justice existed—that was his premise. He said, ‘This is not 1937. I’ve done nothing wrong and I know the law. There’s no legal means that they could come and arrest me.’”

  On November 24, 2008, Sergei Magnitsky was arrested in connection with the very embezzlement scheme he had tried to expose. Like his client three years earlier, he was certain at first that it was a misunderstanding that would soon be cleared up with the help of his lawyers. At his first court hearing, he argued he should be released, among other reasons, because his young son was ill with the flu; he was clearly certain his ordeal would be over in a matter of days. Not only was he not released, however, but the conditions in which he was held deteriorated steadily as he was shuttled back and forth between two Moscow jails. He was not allowed to see his wife or mother. His became ill and was consistently denied the medical care he required. On November 16, 2009, Sergei Magnitsky died in prison at the age of thirty-seven.

  After his death, the prison released to his family his notebooks, in which Magnitsky had meticulously copied every complaint, appeal, and request he wrote: once he realized that his arrest was no misunderstanding, he had waged a fierce one-sided battle, writing 450 documents in his 358 days in jail. He created an encyclopedia of the abuse he had suffered. He described the overcrowded cells in which he was reduced to eating and writing while sitting on his cot. In one of the cells, the glass in the windowpanes was missing and temperatures inside hovered around freezing. In another, the toilet—or, rather, the hole in the floor that served as the toilet—overflowed, flooding the room with sewage. He described being systematically denied hot meals and, often, any food at all for days on end. Most egregiously, he was denied medical attention even as his chronic abdominal pain grew so severe he could not sleep, even as he wrote letters documenting his symptoms and spelling out his legal rights regarding health care. He died of peritonitis.

  Browder and his investment fund staff were finally fated to become soldiers. They launched a highly visible, vocal, and effective campaign they called Justice for Sergei Magnitsky. They collected copious evidence against the people who had been connected to the jailing and torture of their colleague and against those involved in the embezzlement scheme he had uncovered. Within a few months, bills that would require visa bans and freeze any local assets of these officials were pending in the U.S. Congress, the European Parliament, and parliaments of European Union member states.

  BY THIS TIME, the dominant Russia story had finally changed in the U.S. media. It had taken most of Putin’s second term in office to transform the narrative: “emerging democracy” slowly gave way to “authoritarian tendencies,” which gradually yielded to a picture of what had become for all intents a criminal tyranny. Back in 2003, when Khodorkovsky attempted to talk to Putin about corruption, the global organization Transparency International ranked Russia as more corrupt than 64 percent of the world’s countries: in its annual rating it looked slightly more corrupt than Mozambique and marginally less corrupt than Algeria. In its 2010 report, the organization sh
owed Russia as more corrupt than 86 percent of the world: it now fit in between Papua New Guinea and Tajikistan.

  Russia finally lost its bona fides in the eyes of international business and media. Browder was spending his time criticizing the Russian regime not only in the world’s parliaments but also at forums such as the annual big-business gathering in Davos, Switzerland. Andrei Illarionov had resigned his post. “Everyone had their own turning point,” he explained to me. “Mine was Beslan. That was when I realized it was a modus operandi. There was the real possibility of saving lives, and he [Putin] opted instead for the killing of innocent people, the killing of the hostages. I mean, I was at work, and I could watch and listen, and I could see it all clearly close up. I could see that if the standoff continued for at least a few more hours, lives would be saved, all of them or most of them. There would be no attack and the children and their parents and their teachers would be saved. And if this was the case, then there could be only one explanation for storming the school building when they did. It all became clear to me that day, September 3, 2004.”

  Illarionov resigned his position as sherpa—Putin’s personal representative—to the Group of Eight; winning Russia’s full membership in the G8 had been one of Illarionov’s main accomplishments. “Being an adviser is one thing,” he explained. “Being an adviser is being an adviser: it’s an important post, but it’s not the same thing as personally representing someone. And I told my employer that under the circumstances I could no longer function as his personal representative.”

  Six months later, Illarionov resigned his job as the president’s adviser as well. “It had just become ridiculous. No one was heeding my advice on the economy or on anything else. The train of the Russian state was moving full speed ahead on a completely different set of rails.” He proceeded to write a series of scathing articles defining this “different set of rails.” Russia, he wrote, had become the opposite of a liberal economy: an unfree, warmongering state ruled by a corporate group. Like Browder, Illarionov became a tireless and vocal roaming critic of the Putin regime.

  Mikhail Kasyanov, the prime minister, had also left. His turning point came when Khodorkovsky was arrested. “There had been signs before,” he told me. “There was the television takeover and the handling of the theater hostage crisis—these were all signs—but I did not think this was a plan. I thought these were mistakes that could be corrected. And I kept thinking this way right up until the point when Lebedev and Khodorkovsky were arrested. This was when I realized these were not accidental mistakes—this was policy, this was his general understanding of life.”

  Kasyanov had conscientiously observed Putin’s request that he stay “off his turf”— meaning out of politics—so conscientiously, in fact, that he had willfully blinded himself to the political life of the country. So, in the summer of 2003, when Putin told him that the prosecution of Lebedev and Khodorkovsky was their punishment for donating funds to the Communist Party, Kasyanov was shocked. “I could not believe something that was legal required special permission from the Kremlin.” The conflict between Putin and his premier quickly became public: Kasyanov openly criticized the arrests, calling them an unwarranted and extreme measure. It was clear Putin would not keep this outspoken premier around for his second term, but the president’s patience seemed to run out early: in February 2004, a month before the election, he fired his cabinet.

  After firing Kasyanov, Putin planned to keep him on in a less public position. He made him three job offers, each more insistent than the last: there was the option of heading the security council or running a new state-affiliated bank venture, an offer Putin made twice. When Kasyanov finally said no, his former employer’s tone turned from seductive to menacing. “I was already at the door when he said, ‘Mikhail Mikhailovich, if you ever have a problem with the tax police, you may ask for help, but make sure you come to me personally.” Kasyanov interpreted Putin’s parting words as both a threat and an offer to keep a door open. Tax trouble duly began: Kasyanov’s consulting company, which he formed right after losing his job, was audited. Kasyanov chose not to seek help, which meant not only that the tax audit dragged on for two years (the two sides finally managed to settle on an extremely minor violation, improperly entering in the books a box of writing paper), but also that Kasyanov became persona non grata in Russian politics. In the years following his firing, he tried to run for office and register a political party—reportedly even managing to collect the absurdly high number of signatures required—but his papers were consistently turned away by the registration authorities. With no access to television or large newspapers, Kasyanov went from mainstream to marginal as fast as any politician ever had.

  The Khodorkovsky case came to trial in mid-2004 and dragged on for ten months, despite the fact that nearly all motions by the defense were denied, drastically cutting the number of witnesses and cross-examinations at Moscow’s Basmanny Court. As the verdict neared, Igor Shuvalov, a lawyer and a newly prominent assistant to Putin, said, “The Yukos case was a show trial intended as an example for other companies using various schemes for minimizing their tax burden. If it hadn’t been Yukos, it would have been another company.” Even the Moscow press corps, used to writing about some of the most cynical politicians on the planet, were shocked by the open use of Stalin-era language to mean more or less exactly what Stalin had meant: that the courts existed to do the bidding of the head of state and dole out punishment as he saw fit to those he saw fit to punish.

  In fact, only two of the seven charges against Khodorkovsky concerned alleged tax evasion, and what happened in the Moscow court was more show than trial. The defense called few of its witnesses—not only because the court turned down so many of its motions but also because the prosecution’s case seemed so flimsy it hardly warranted a full-force defense, especially since testifying for the defense seemed to incur considerable risk. Ten Yukos affiliates, including two lawyers—both of them women—had already been arrested, and nine more evaded arrest by fleeing the country; soon these numbers would seem quite small, as dozens of people would be in prison and hundreds on the run.

  Finding itself in the middle of a Kafkaesque trial, the defense adopted a pointedly understated style. In his final arguments, Genrikh Padva, Khodorkovsky’s lead attorney and possibly the country’s most famous defense lawyer, sounded more like a schoolteacher than the passionate participant in a judicial contest. Over the course of three days of hearings, Padva read his arguments, methodically listing all of the prosecution’s errors, aiming to show that the prosecutors failed to supply any documents even proving that the defendants were in any way involved with some of the companies listed in the charges, much less actually guilty of the crimes. “And I won’t even mention the fact that the charges are filed in accordance with laws that went into effect years after these supposed deeds took place,” was a typical Padva aside. His tone conveyed that he entertained no illusions about his ability to convince the judges of anything, but in the interests of history and future appeals to international judicial bodies, he needed to get all his arguments on record. The judges, three overweight women around forty, each sporting a shiny helmet of combed-back hair, sat still, their lips pursed in identical demonstrations of displeasure. Their demeanor seemed meant to say: The decision has long been made, and your insistence on procedure and proper discussion is an offensive waste of everyone’s time.

  Khodorkovsky and Lebedev were each sentenced to nine years in a prison colony; three months later, an appeals court cut a year off the sentences. The men were shipped off to different colonies, each as faraway and difficult to get to as a colony could be. To visit their client, Khodorkovsky’s lawyers had to travel nine hours by plane and another fifteen hours by train. Russian law mandated placing convicts in prisons within easy travel distance of their homes—so the law had to be changed, retroactively, to accommodate the Khodorkovsky case.

  For six months following his arrest, Khodorkovsky tried to run his company from
jail. Finally realizing this was untenable, he signed his shares over to Nevzlin, the partner who had moved to Israel. But the company, bombarded with tax liens and lawsuits, its assets inside Russia long since seized by the state, was cracking. Within a year of Khodorkovsky’s arrest, Russia’s largest and most successful oil company, which had once paid 5 percent of all the taxes collected by the federal government, was facing bankruptcy proceedings. Its most attractive asset, a company called Yuganskneftegaz, owner of some of Europe’s largest oil reserves, was up for auction. The state gas monopoly, now run by Putin’s former deputy in St. Petersburg, looked poised to win the auction. To prevent the deal, Yukos’s lawyers filed for bankruptcy in a Texas court and then sought a staying order on the sale of the company there; Gazprom, the Russian company, certainly was not going to listen to an American court on this matter, but it so happened it planned to buy Yuganskneftegaz with funds borrowed from American and West European banks. The financing was pulled and it looked, briefly, like the takeover might be temporarily averted—when a newly registered company called Baikalfinansgrup appeared out of nowhere to register for the auction. Journalists immediately descended on its registration address in Tver, a godforsaken town about three hours outside Moscow; it turned out to be a small building that was used as a legal address by 150 companies, none of which appeared to have any physical assets.