The Putin Mystique: Inside Russia’s Power Cult

by Anna Arutunyan

  Despite its moral shortcomings, tax farming was efficient enough for Russia’s emperors to keep coming back to it again and again simply because it worked to ensure management and the loyalty of state officials operating from remote places.

  “Corruption was a useful tool in that you didn’t have to pay everyone a high salary. Kormleniye is absolutely nothing new. In the 19th century, a small bribe to an official wasn’t even considered a bribe,” Galeotti explained. “Putin is certainly heir to that tradition. But he’s interested in effectiveness as well as control.”

  The practice whereby officers shaved money off enterprises and ran their own businesses, whether in benign or not so benign protection rackets, or kryshas, came with a catch.

  “As long as you do your job, as long as you’re loyal, whatever else you happen to do, up to a certain level, is permissible. Individuals are going to get sacked, get demoted. But for that to happen, you have to screw up. You have to take a bribe higher than the accepted level. Or you have to pick a turf war at the wrong time with the wrong person. Or you just have to be really bad at your job,” Galeotti said. “There is still a sense that you have to be doing your core job, and you have to be good at it, or at least at a certain level. You can’t just not bother turning up to work. You still have to earn that freedom of entrepreneurialism.”

  The spate of high-profile sackings in 2006 – when Putin fired a handful of FSB generals and replaced Prosecutor General Vladimir Ustinov over alleged links to what, for all purposes, was a protection racket – signalled that there were limits to how officers could use their jobs for self-enrichment.

  Still, within the haphazard system of feudal bonds that tied Putin to his security apparatus and his bureaucracy, his power was deeply limited. He could sack officers who abused their kormleniye privileges by taking more than their rank allowed. But by having promoted these officers to the highest echelons of power in the first place, by allowing them to make money, he tied himself down and curtailed his own manoeuvring space in the economic reforms that he clearly sought to pursue.

  These extra-legal forms of management entangled a critical mass of people to the point that made fighting corruption from the top nearly impossible.

  As Kirill Kabanov struggled to expose and punish graft case by case, he began to realize that Putin was just as dependent on his officers and the bureaucracy he had recreated as they were on him.

  “Because so many things are done outside the law, you broke the law, they broke the law. Your reputation becomes dependent on them,” Kabanov explained.

  These bonds are reflected in Putin’s personnel policy both as president and as prime minister, where he is wont to avoid high-profile sackings. When officials are rotated, they are often given lower-profile posts with a high potential for rent-seeking activity, to keep them quiet and loyal – a practice that has been compared to traditions of the Soviet nomenclature, “in which elites were circulated within, but rarely expelled from, the ruling class.”78

  In September 2006, for instance, Putin fired nineteen senior law enforcement officials suspected of corruption. In fact, it later emerged that they were still coming to work months later. “What does this tell you?” Kabanov said.

  “That they went to him and said, ‘Vladimir Vladimirovich, what is this? We did all this for you! We’re your flesh and blood!’”

  By allowing them to extract rent from the fiefdoms he had given them as part of their government posts – for that, in the absence of ideology or law, was the only bond strong enough to tie them to him and ensure his power – he severely limited his own leverage over these people; now they answered only to him, and not to the law.

  Putin’s return to a third term as president in 2012 certainly heartened a large part of the higher-tier corps within the FSB. Although he had never truly left and ran the country from his post as prime minister between 2008 and 2012, the FSB still nominally answered to the president even if de facto they took their orders from Putin.

  “As long as Putin is there, we have our krysha (protection racket),” Galeotti said, explaining why many officers were relieved to hear that Putin would replace Dmitry Medvedev as president in 2012. “The basic element is that Putin espouses the beliefs that they all share, gut-level nationalism, that sense of technocratic order of society, that sense that the masses just ought to let the elites run the country. He speaks their language in a way that Medvedev never did.”

  But the FSB, like any structure, is not uniformly content – just as not all of its members practice tax farming. There is evidence that the factors that helped enrichment spread and cemented the FSB’s loyalty to Putin are the same ones undermining the very stability of his control. Andrei Soldatov, the Moscow-based security expert, noted growing unhappiness due to funding disparities within the FSB.79 And the disparity of “extracurricular” enrichment opportunities between lower-ranking officials and senior officers is a dangerous imbalance rife with conflict. Loyalty, in other words, is directly proportional to financial well-being – and for those many officers who struggle to do their job without engaging in extracurricular enrichment schemes, seeing their bosses brag about expensive watches only aggravates their discontent.

  “They do not harbour a sense of reverence [for Putin],” Yuri Gervis told me of the attitudes of his former colleagues in the FSB, in an obvious understatement.

  It was a vicious circle: many officers contented themselves with the status quo, provided that it allowed for enrichment, as they hung on every word of the sovereign. But those who believed in the law and lived on their salaries alone were powerless to change the behaviour of their colleagues and bosses. And they too looked to the top, blaming Putin.

  Kirill Kabanov insisted that corruption could be fought only when a critical mass of officers internalized norms of behaviour that had no room for tax farming. But in frustration, he once told a small group of journalists: “Everyone in this room knows the name of the person from whom this corruption is coming.”80

  Chapter 6

  The Audience

  “In Russia only he is great whom I am talking to – and only while I am talking to him.”

  - Emperor Paul I

  1.

  COLONEL PAVEL ZAITSEV of the Investigative Committee, Russia’s equivalent of the FBI, had many contraband cases under his belt – one nearly got him sent to jail. But none stupefied him more than a mysterious shipment of Chinese goods he discovered during a routine check of a Chinese vendor in Moscow in spring 2005.

  It wasn’t that someone was importing cheap, Chinese-manufactured shoes and underwear without paying customs duties – the out-of-control consumer market that hit Russia in the 1990s meant that tons of the stuff was unloaded at outdoor venues without the police so much as batting an eyelid as long as protection was paid. But this particular shipment indicated a magnitude and regularity that Zaitsev had not encountered before.

  “It was as though someone had lifted the border like a curtain and let a hundred train wagons pass, and then let it down again,” Zaitsev told me years later, when, like many whistleblowers, he had left the Investigative Committee to become a lawyer.

  At first, according to the documents he obtained from the Chinese vendor, it seemed that the importer was using as cover a military unit designated with the number 6302. But his colleagues in the Defence Ministry weren’t able to locate a military unit with that number anywhere in Moscow.

  And as he investigated further, the facts continued to defy logic. He learned that each year, 5,000 train wagons of cheap Chinese goods were delivered to the same recipient, evading customs. Each wagon, according to various estimates, including Zaitsev’s, contained goods with a retail value between £200,000 and £350,000.

  “I go back to my office, trying to wrap my brain around it. Five thousand wagons a year. That’s ten to twenty wagons a day. It took them two weeks to get to Moscow. And while I was sitting there, more were on their way.”

  Each day, at least a dozen train wag
ons carrying goods that had not passed customs were travelling across Russia from the Far Eastern port town of Nakhodka. And each day for the last year they had travelled thousands of kilometres without anyone detecting them.

  He dug further in search of the mysterious military unit while his team gathered more documents about the shipment. And soon the answer hit him, obvious as daylight: there was no importer trying to hide behind a non-existent military unit. Instead, the military unit in question turned out to be none other than the central headquarters of the Federal Security Service (FSB) on Lubyanka Square, right in the heart of Moscow. It was the FSB that was importing thousands of tons of cheap Chinese shoes and underwear – and facilitating an off-the-books retail turnover that exceeded $1 billion a year.

  “Just like that!” Zaitsev added for emphasis, grinning mischievously. Invoices gathered in the investigation suggested the FSB wasn’t even hiding the fact: each shipment was paid through FSB accounts, and the identification number of the FSB officer receiving the shipment was indicated in every invoice. It was the same person each time.

  Indeed, having the FSB mentioned in the accompanying documents was the whole point: no one at customs would dare question a shipment of goods being imported by the FSB – with that kind of authority, the shipment didn’t even need to pass customs. Any law enforcement officer who dared to stop the trainload over its two-week course through the Siberian steppes would cease asking questions as soon as he saw those three ominous letters.

  Zaitsev went to the FSB’s internal affairs department, where he had close contacts. But they told him only that they knew about the case all along – and hadn’t bothered informing him because they knew he “wouldn’t agree to reach a deal.”

  But having started the investigation, Zaitsev was determined to move it further. In April 2005 he had police intercept 130 wagons of the shipment and hold it at a sorting station just outside of Moscow, deploying an armed Rapid Response Unit (SORB) to guard the wagons. That was when the trouble began.

  Learning of the interception, the Federal Customs Service, which had close ties with the FSB, launched its own criminal investigation and sent its own Rapid Response Unit to take custody of the shipment.

  “They tried to take the shipment from us by force. The police Rapid Response Unit against the Customs Rapid Response Unit,” Zaitsev explained. When I asked why, he was incredulous: no one was concealing the commercial interest that the shipment presented.

  “That was money standing there! I was glad that a war didn’t break out. They could have started shooting.”

  It was due to an amazing coincidence that the standoff between two armed units representing the same government didn’t lead to bloodshed: as the officers pointed their rifles at each other, they recognized their comrades from the battles they had fought side by side trying to quell separatist unrest in Chechnya. But in the murky world where they operated, the vassal of your vassal was not your vassal. Your well-being and your success depended solely on the strength of your krysha, or protection – and whether that particular protection was favoured at court at that particular moment.

  The totality of what was happening made little sense – as though Zaitsev and the officers he was investigating lived in two parallel worlds, and the world of law and order he had sworn to uphold was negligible by comparison. One had to simply mention the FSB to any law enforcement officer who stopped you – and, if your connection was convincing enough, the officer would suddenly behave differently, either negotiating for a piece of the action or quietly turning away as he swallowed his pride.

  In other words, it wasn’t that some unsavoury importer was using the name of the FSB to intimidate customs and police – it was the FSB itself leasing out its very mystique for a large share of the retail profits. The distinction between that share of profits going to the state as customs duties or as kickbacks to individual FSB officers didn’t seem to matter. The FSB officers were the government as much as the treasury was.

  No, there was no use in going against the FSB, and Zaitsev, who had already nearly gone to jail for doing just that, was taken off the case.

  2.

  In what would become Vladimir Putin’s largest purge of his security agencies, some nineteen officials – including senior generals of the FSB and the Interior Ministry – were sacked in the course of a week in September 2006.81 Outwardly, the purge was said to be tied to the so-called Tri Kita (Three Whales) scandal – an earlier FSB-linked furniture contraband fiasco that went public in 2000 thanks to Pavel Zaitsev’s ill-fated investigation.

  But according to Pavel Zaitsev, something else had to have caused heads to roll in the fall of 2006. That something appeared to be the far larger contraband racket being run right out of the FSB’s Moscow headquarters: the real trigger for the purge, Zaitsev and several government officials alleged, was the disgrace of a near-shoot-out between police and customs Rapid Response Units over the shipment of Chinese shoes and underwear. The subsequent purge opened the door for Putin’s hand-picked investigator, Vladimir Loskutov to eventually solve Tri Kita, one of the longest running criminal investigations in Russia’s recent history, and lead to the accused being brought to justice.

  But for nearly six years, there was a standoff over Tri Kita – a case where a furniture store was alleged to be protected by no less than the deputy head of the FSB. The case would involve a tangle of counter-allegations from three different law enforcement agencies deliberating whether one Pavel Zaitsev could be permitted to investigate a well-connected businessman. In that turf war, Zaitsev, who didn’t have many patrons other than the law, clearly lost out. Two people connected to the case would die – one of them a journalist and a parliamentarian.

  Why it took Vladimir Putin’s personal involvement and a high-profile purge to untangle the knot can be explained by a winding chain of personal connections that went up to the very top – for the case involved the interests of those in direct proximity to Putin.

  The case that would fundamentally shake up Putin’s court – and perhaps even sway his very decision about a successor – started small, and it started just a few months after Putin himself was inaugurated as president in 2000.

  Two customs officials – Alexander Volkov and Marat Faizulin – first noticed that something was amiss at a string of Moscow furniture stores in the summer of 2000. Some 400 tons of high-quality Italian furniture was bypassing customs and arriving – via a shady firm called Liga Mars – at a chain of high-end furniture stores called Tri Kita. The chain and the firm were owned and operated by furniture magnate Sergei Zuyev. The amount of money was small – just $2 million worth of contraband furniture, costing the Russian budget about $600,000 in unpaid customs duties.82 But Volkov and Faizulin – whether out of ambition or commercial interest of their own – were intent on doing their job, and on August 25 they led a raid of fifteen armed men on the furniture centre.83 On September 7 they launched a criminal case.

  The investigation landed on Zaitsev’s desk in October 2000, and his routine checks started unearthing what amounted to a whole conspiracy – judging by the colossal pressure to put a stop to the case, Zuyev was an untouchable.

  “On November 22, one of the investigators in [my unit] questioned a witness who testified that resistance to the investigation was coming from someone by the name of Zhukov – an officer of the FSB’s central apparatus,” Zaitsev later said.84

  Just hours after the witness was questioned, an officer from the Prosecutor General’s Office – an agency that rivalled the Investigative Committee – arrived demanding that the case be transferred to his agency. Zaitsev and his unit were taken off the case, and the investigation was taken up by the Prosecutor General’s Office. After letting it sit for a few months, it closed the case in May 2001, absolving Sergei Zuyev of any crime.

  And in another indication that Volkov, Faizulin and Zaitsev had clearly messed with the wrong man – a man protected by no ordinary superior – the officers were to face retribution.
Faizulin and Volkov would be charged with abuse of authority, while Zaitsev would face two years in prison for an unauthorized search and arrest. All three would manage to avoid jail time, but the defence witness for Faizulin and Volkov, would be murdered. The murder has not been solved.

  Who was Sergei Zuyev, and who, most of all, were his patrons, that the men who investigated his alleged crimes would be hounded for the next half a decade?

  On November 22, 2000, just hours after prosecutors had removed the Tri Kita case from Pavel Zaitsev’s jurisdiction, he continued digging into the origins of the pressure. Who, exactly, were the FSB officers that figured in the witness’s testimony, and why were they resisting the investigation?

  Having a name, it was easy to connect the dots. The Zhukov who figured in the testimony turned out to be Colonel Yevgeny Zhukov, who served as an aide to the chief of the FSB’s economic crimes department, Yuri Zaostrovstev. Zaostrovtsev was the deputy chief of the FSB.

  There was more, however.

  Zaitsev learned that Zaostrovtsev’s father, Yevgeny Zaostrovtsev, was closely connected to Zuyev’s furniture empire. By some accounts, he owned firms that were among the official founders of Tri Kita. By other accounts, Yevgeny Zaostrovtsev ran a private security agency that worked for Tri Kita.85 The formal association, however, meant little: what really mattered was that Zaostrovtsev Sr., himself reportedly a former KGB officer, was a direct associate of Sergei Zuyev.