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

by Masha Gessen

  By the early 1990s, in other words, the former Komsomol functionary had been completely reformed. He and his friend and business partner, a former software engineer named Leonid Nevzlin, authored a book-length capitalist manifesto titled Man with a Ruble. “Lenin aimed to annihilate the wealthy and wealth itself—and created a regime that outlawed the very possibility of becoming wealthy,” they wrote, exposing the ideology Khodorkovsky had once pledged to uphold. “Those who wanted to make more money were equated with common criminals. It is time to stop living according to Lenin! Our guiding light is Profit, acquired in a strictly legal way. Our lord is His Majesty Money, for it is only He who can lead us to wealth as the norm in life. It is time to abandon Utopia and give yourself over to Business, which will make you rich!” By the time the book was published in 1992, Khodorkovsky had his own bank and, like other new entrepreneurs, was buying up privatization vouchers, aiming to take control of several formerly state-owned companies.

  In 1995–1996 the Russian government asked the country’s richest men for loans, leveraging controlling shares in Russia’s biggest companies—which, according to the arrangement, they would be keeping once the government, predictably, defaulted on the loans. As a result, Khodorkovsky came into possession of Yukos, a newly created oil conglomerate with reserves among the largest in the world.

  His next change of heart came in 1998. The financial crisis that year put Khodorkovsky’s bank out of business. The oil company was in dire straits: the price of oil on the world’s markets was $8 a barrel but Yukos’s outmoded equipment placed the cost of producing one barrel at $12. The company had no cash to pay its hundreds of thousands of employees. “I would go to our oil rigs,” Khodorkovsky wrote more than ten years later, “and people would not even yell at me. They were not going on strike: they were understanding. It’s just that they were fainting from hunger. Especially the young people who had small children and did not have their own vegetable garden. And the hospitals—before then, we used to buy medication, we would send people to be treated elsewhere if they needed it, but now we did not have the money. But the worst thing was these understanding faces. People were just saying, ‘We never expected anything good. We are just grateful you came here to talk to us. We’ll be patient.’”

  At the age of thirty-seven, one of Russia’s richest men discovered the concept of social responsibility. In fact, he probably felt he invented it. It turned out that capitalism alone could make people not only rich and happy but also poor, hungry, miserable, and powerless. So Khodorkovsky resolved to build civil society in Russia. “Until that point,” he wrote, “I saw business as a game. It was a game in which you wanted to win but losing was also an option. It was a game in which hundreds of thousands of people came to work in the morning to play with me. And in the evening they would go back to their own lives, which had nothing to do with me.” It was a hugely ambitious goal—but, for one of the handful of men who felt they had created a market economy from scratch, not an absurdly ambitious one.

  Khodorkovsky formed a foundation and called it Otkrytaya Rossiya, Open Russia. He funded Internet cafés in the provinces, to get people to learn and to talk to one another. He funded training for journalists all over the country, and he sponsored the most talented television journalists to come study in Moscow for a month. He founded a boarding school for disadvantaged children; following the tragedy in Beslan, several dozen survivors became students there. Before long, he was stepping in where Western foundations and governments were pulling out; Russia was considered a stable democracy now, after all. Some said he was funding more than half of all the nongovernmental organizations in Russia; some said he was funding 80 percent of them. In 2003, Yukos pledged to give $100 million over ten years to the Russian State University for the Humanities, the best liberal arts school in the country—the first time a private company in Russia had contributed a significant amount of money to an educational institution.

  Khodorkovsky also became preoccupied with the idea of transforming his company into a properly managed, transparently governed corporation. He hired McKinsey & Company, the global management consulting giant, to reform the management structure, and PricewaterhouseCoopers, another world giant, to create the accounting structure from scratch. “Before Pricewaterhouse came along, all the Yukos accountants knew how to do was stomp their feet and steal a bit at a time,” Khodorkovsky’s former tax lawyer told me. “They had to be taught everything.” His partners grumbled—Khodorkovsky’s efforts seemed to be misplaced—but he was determined to turn Yukos into the first Russian multinational corporation. To this end, he hired a Washington, D.C.–based public relations firm. “We would set up five interviews in New York, and we would spend the day going from interview to interview,” the consultant who worked with him remembered. “Not many CEOs would spend this kind of time. We got a Fortune cover story. He was a poster boy for what people hoped would happen in Russia.” The capitalization of Yukos grew exponentially, owing only in part to the growing price of oil, in part to newly modernized drilling and refining systems, which drastically reduced the cost of production, and in part to the new transparency. Khodorkovsky was the richest man in Russia, clearly on his way to becoming the richest man in the world.

  On July 2, 2003, Platon Lebedev, the chairman of the board of Yukos’s parent company, Group Menatep, was arrested. Several weeks later, Yukos’s head of security, a former KGB officer, was behind bars. Khodorkovsky himself was told by those in the know and those who could simply follow the obvious logic of events that he, too, would be arrested soon. Someone even wrote up a prescription for Khodorkovsky of things to do to avoid arrest; the document, commissioned by one of his public-relations people, was never seen by Khodorkovsky because another of his publicity men ripped it up in outrage. In any case, it was obvious what Khodorkovsky should do: leave the country. His partner and coauthor with him of Man with a Ruble, Leonid Nevzlin, did just that: he moved to Israel. Khodorkovsky went to the United States briefly but returned—and went on tour.

  There was a talk Khodorkovsky had been giving for a bit over a year at this point. I had heard it once when he addressed a group of young writers, assembled at his request. The point of the speech was that Russia should join the modern world: stop running its companies like medieval fiefdoms at best and prisons at worst; transform its economy into one based on the export of knowledge and expertise rather than oil and gas; value its smart, educated people—like us writers—and pay them well. Khodorkovsky was not a great public speaker: he tended to be stiff, and his voice was soft and incongruously high for a man of his height, his looks, and his wealth. But he had the force of conviction and the weight of his reputation on his side; people generally wanted to know what he wanted to say to them.

  So instead of leaving the country or genuflecting before Putin—for this was precisely the advice the ripped-up paper had contained—Khodorkovsky decided to create his own lecture circuit. He hired Marina Litvinovich, Putin’s former image-maker, to coach him on public speaking. She told him he had a way of belaboring an idea even after the audience had come over to his side, and this caused him to lose his tempo. Khodorkovsky, a few assistants, and eight bodyguards commenced several months of living out of a chartered jet. He went around the country speaking to students, workers, even military recruits on one occasion (though that engagement seems to have been an organizers’ error). Litvinovich sat in the front row with a letter-size piece of paper with the word “Tempo” written on it; whenever Russia’s richest man perseverated, she held up the sign for him to see.

  Over the weekend of October 18, 2003, the Khodorkovsky team was in Saratov, a city on the Volga River. It snowed and, unusual for that time of year, the snow stayed on the ground. For some reason no one quite understood or at least no one articulated, the entire group went outside and wandered in the vast white expanse. They then returned to their hotel, Khodorkovsky abruptly bade everyone good night and disappeared, and the rest of the group got quickly and morbidly
drunk. The next morning Khodorkovsky told Litvinovich to return to Moscow: she had not seen her three-year-old son in weeks, and Khodorkovsky could manage the next destination without her.

  The phone calls came in the dark predawn hours of October 25: Khodorkovsky had been arrested at the Novosibirsk airport at eight in the morning, five in Moscow. So that’s why he sent me home, thought Litvinovich. Anton Drel, Khodorkovsky’s personal lawyer, got a cryptic message through a third party: “Mr. Khodorkovsky requested that you be informed that he has been arrested. He said you would know what to do.” Typical Khodorkovsky, thought Drel, who had no idea what to do. In the late morning, he received another phone call: “This is Mikhail Khodorkovsky. Would it be convenient for you to come to the prosecutor general’s office now?” he asked with trademark formality; he had already been transported to Moscow. Several hours later, Khodorkovsky was indicted on six charges, including fraud and tax evasion.

  EIGHTEEN MONTHS LATER, Khodorkovsky would be found guilty not on six but on seven counts and sentenced to nine years in a prison colony. Long before that sentence was up, he would be indicted on a new set of charges and then sentenced again, this time to fourteen years behind bars. Lebedev, the former chairman of his board, would stand trial alongside Khodorkovsky both times. Other Yukos affiliates, including the former head of security, lawyers, and a variety of managers not only at Yukos but at several subsidiaries, would face other charges and similarly harsh sentences; dozens of others would flee the country. Eventually, even Amnesty International, openly reluctant at first to take on the case of a billionaire, would declare Khodorkovsky and Lebedev prisoners of conscience. No one—not even his jailers, it seemed—would doubt, after a certain point, that he was unfairly imprisoned, but even eight years after his arrest no one would be quite certain what exactly Khodorkovsky had done that had cost him his freedom and his fortune.

  Khodorkovsky himself and many of his staff believed that he was being punished for speaking out about corruption. In February 2003, Putin had gathered Russia’s wealthiest businessmen for a rare discussion that was open to the media. Khodorkovsky arrived with a PowerPoint presentation that consisted of eight simple slides containing facts that all of those present certainly knew and just as certainly tried to pretend they did not know. Slide six was titled “Corruption Costs the Russian Economy over $30 Billion a Year” and cited four different studies that had arrived at more or less the same figure. Slide eight was titled “The Shaping of a New Generation” and contained a chart comparing three different institutions of higher learning: one that graduated oil-industry managers, one that trained tax inspectors, and one that prepared civil servants. Competition to get into the last college reached almost eleven persons per spot, aspiring tax inspectors had to beat out as many as four competitors, while future oil-industry managers had to fight fewer than two other people—even though official starting salaries in the oil industry were two to three times those in the government sector. These, Khodorkovsky indicated, were just the official figures; high school students were making their career plans counting on income from corruption.

  When he was speaking, Khodorkovsky also mentioned the recent merger of the state-owned oil giant Rosneft with a smaller, privately held oil company. “Everyone thinks the deal had, shall we say, a second layer,” said Khodorkovsky, alluding to the glaringly high price Rosneft had paid. “The president of Rosneft is here—perhaps he’d like to comment.” The president of Rosneft did not care to comment, and this looked very much like an embarrassing and public admission of guilt.

  The person who responded to Khodorkovsky was Putin himself. He got the same smirk on his face with which, at the press conference a few months earlier, he had suggested that the French journalist be castrated—the facial expression that indicated he was having difficulty containing his anger. “Some companies, including Yukos, have extraordinary reserves. The question is: How did the company get them?” he asked, shifting in his chair to raise his right shoulder in a gesture that made him seem bigger and smiling a thuggish smile that made it plain this was a threat, not a question. “And your company had its own issues with taxes. To give the Yukos leadership its due, it found a way to settle everything and take care of all its problems with the state. But maybe this is the reason there is such competition to get into the tax academy?” In other words, Putin accused Khodorkovsky of having bribed tax inspectors and threatened a takeover of his company.

  Then there was the school of thought that the reason for Khodorkovsky’s trouble was politics: he meddled too much. He made donations to political parties, including the Communists. Immediately following Lebedev’s arrest in July, Khodorkovsky asked Prime Minister Kasyanov, with whom he had a distant but genial relationship, to find out what had happened. “It took three or four attempts,” Kasyanov told me. “Putin kept saying that the prosecutor’s office knew what it was doing. But finally he told me that Yukos had been financing political parties, not just the [small liberal parties], which Putin had given him permission to finance, but also the Communists, which he did not allow him to fund.” Eight years later, Nevzlin—the Yukos partner who left the country—maintained that the company’s donations to the Communist Party had “of course” been cleared by the Kremlin. Some people in Khodorkovsky’s circle took to calling the party-financing situation “the double-cross cross,” believing Khodorkovsky had been set up by someone close enough to Putin to tell Khodorkovsky—falsely—that his funding the Communists had been cleared. All these discussions were taking place in the lead-up to the December 2003 parliamentary election—the one after which The New York Times reported that Russia was “inching toward democracy.”

  A third group of observers had the simplest of all explanations for Khodorkovsky’s fate. “He did not go to prison for tax evasion or stealing oil, for God’s sake,” Illarionov said to me seven and a half years after the arrest. “He went to prison because he was—and remains—an independent human being. Because he refused to bend. Because he remained a free man. This state punishes people for being independent.”

  But in October 2003, when news of the arrest broke, its darkly absurd nature was far from obvious to everyone. William Browder, for one, applauded the arrest. In an op-ed piece published in the English-language daily The Moscow Times and distributed to investors, he wrote, “We should… fully support [Putin] in his task of taking back control of the country from the oligarchs.”

  ON NOVEMBER 13, 2005, Browder was returning to Moscow from London. He had been living in Russia for nine years, and though he spoke no Russian, he felt as much at home in Moscow as anyone could. His money guaranteed a level of comfort familiar to the very wealthy in oil-producing countries: he traveled on a luxurious separate track from the moment he landed in Moscow, where he would be whisked through airport formalities and picked up by his driver, a former police officer who retained his badge, which made him king on the lawless roads of Moscow. But this time Browder found himself stuck in the airport’s VIP lounge: his passport was apparently held up at the border. A couple of hours later, he landed in the detention area of the airport, a blank room with cold plastic chairs and several other detainees, each a prisoner of his own uncertain fate. Fifteen hours after arriving, Browder was put on a flight back to London: his Russian visa had been revoked.

  Surely this was a massive misunderstanding. Browder called the cabinet ministers and the Kremlin staffers who had liked his PowerPoint presentations so much. They were vague, evasive, noncommittal. After several phone calls, it began to sink in that his visa issues would not be resolved anytime soon. For all his faith in Putin’s best intentions, one thing Browder knew for certain was that no business should be left unattended in Russia. He began moving his operation to London. The analysts moved; the fund divested itself of $4.5 billion worth of stock in Russian companies, without anyone’s seeming to notice. By the end of the summer of 2006, the Hermitage Fund’s Russian companies were empty shells with a small office in Moscow occasionally visited by t
he company’s secretary.

  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.