“With a krysha like that,” Zaitsev told me years later, “why pay anyone?”
Nor was Sergei Zuyev a small fish. While not exactly an oligarch, he had quickly managed to amass a fortune after opening the Soviet Union’s first furniture cooperative in 1988. By 1995, he used that money to build Grant, one of Russia’s first large shopping malls. By 2000, he had expanded his empire to include Tri Kita, which the Guinness Book of World Records listed as the largest furniture store in Europe. There was a reason for that: according to Zuyev himself, 99 percent of Tri Kita’s investment capital came from foreign companies including a number of German firms.86 It would be alleged later that those firms were distantly connected to Vladimir Putin, and his pre-presidential business interests.87
All this could not have failed to play a role in another tantalizing detail that Zaitsev unearthed while he was investigating Zuyev: with his furniture empire under investigation, Zuyev was promised an audience with Vladimir Putin. According to telephone taps conducted by Zaitsev’s unit, in one conversation in November of 2000 Zuyev was told that such a meeting had already been arranged.
“I know that he was promised such a meeting over the telephone,” Zaitsev told me. “Whether it took place or not, whether they lied to him, or whether the meeting indeed happened and what was discussed, I do not know.”
There was no way to verify where those promises led, for the audio recording was among the evidence confiscated from the police by the FSB in February 2001. But it is not difficult to imagine that Zuyev’s higher-placed patrons were indeed in a position to organize such an audience: FSB deputy chief Yuri Zaostrovtsev had been acquainted with Putin during their days in the KGB directorate in St. Petersburg in the early 1990s.88
For someone facing investigation, an audience with the president would solve all his problems, and judging by the number of such promised audiences, Zuyev was not the only businessman who saw them as a panacea.
“I’ve come across so many promises that you could fill a book,” Zaitsev told me with dismay. “There’s lots of swindlers in Moscow. They can say, ‘We’ve arranged a meeting,’ and take money. This is a common occurrence – whether among law enforcement authorities or people with family connections.”
Where there is a market, there is a demand. That businessmen would seek a personal meeting with a high-placed official – or better yet with Putin himself – suggests that they themselves recognize the utter powerlessness of the law to solve their problems. In the world of Russian business, where entrepreneurs could not trust legislative protection or institutional mechanisms of conducting business, who you knew wasn’t just a valuable asset, it was your chief capital.89 And a connection to Vladimir Putin was priceless.
3.
As a teenager, years before he would go on to start a successful company in the financial services sector, Ivan Narinsky90 once found himself approached by a gang of neighbourhood thugs who tried to take his money. Being a bit of a nerd, a good student and coming from a “good family,” as he said, Ivan knew he was no match for them. So he tried something he’d seen in the movies, and it saved him from a beating. “I know Kostyan,” he told the thugs. Kostyan, of course, did not exist, but the confidence with which Ivan mentioned his name had its effect. “The guys whispered something among themselves and gave me my money back.”
Ivan recalled this anecdote after I had asked him about his attitude towards Vladimir Putin. It was December 2011, and the ancient idea that security organs in Russia existed first for their own enrichment and only afterwards for your protection was so ingrained that even arguing about it had become useless. The primary job of the security services, journalists openly wrote by that time, was protecting the sovereign and his interests.91
Ten years after starting his own business, weary of the perpetual FSB officers he had to deal with, the meetings in Lubyanka, the sweet-talk with the investigators to ensure that they didn’t go after him, and the dismay of watching two of his friends wind up in the dreaded pretrial detention centres for vague economic crimes, Ivan Narinsky had sold part of his business and was trying to move what remained of it to Europe. He was in his early 30s, and he was already exhausted.
“Putin is just another Kostyan,” he concluded. An imaginary force to be used as a talisman to ward off those who were in his service and after your money.
Ivan had tried to model his business on what he imagined an ideal American start-up should look like. Instead, he found himself adopting habits similar to those of the corrupt law enforcement officers trying to feed off his profits.
“No one knows the law because it does not apply to anything,” he told me. “There is only the law of the criminal world, which has replaced the non-existent state law.” The law of the real world – the street-wise law, the law of ponyatiya, or, literally, “that which is understood” – was more “ethical,” Ivan said, than the non-existent law of the state.
“That which is understood” governed his relations with his business partners and with the state officials whom he inevitably had to deal with. “When I go to an official, he will judge me based on whether I am right by ponyatiya or not.”
What, after all, was the alternative? It wasn’t that Ivan had adhered to every letter of the law in starting his business – because the law was impossible to adhere to in the first place, it had become irrelevant. Business structures were not determined by who owned what stock, but by personal relations, power plays, and trust.
“My former partner was the owner of the business,” he explained. “How was it that he was the owner of the business? He had no stock, no shares, no official deed. He was just the owner, and everyone accepted that.”
And that was just the way things were.
Ivan seemed to recognize that there was something deeply wrong about acting in such a system – and that may have pushed him to seek another place of residence. But he had also internalized an ethical manoeuvre to justify your actions when you had no other choice.
“When people do something immoral, they come up with a [rote justification] – it’s either believing that the other person’s worse than you, or that everyone’s doing it, and you vindicate your behaviour. These are the instruments we have, and they are all that we can use.”
Ivan himself had come to this understanding through his extensive experiences dealing with various law enforcement authorities in a number of capacities. A pivotal incident taught him not to judge them or to position himself against “them” – but to understand that just as there were different businessmen, there were different officers – even among those whose job it was to shake him down. Ultimately, they were all part of that system.
“I was once called in to the Investigative Committee for questioning,” he described. “I come in, and they tell me, ‘you’re done for.’” It turned out that he had fallen victim to a group of extortionists who worked together with investigators, prosecutors, and judges. Both he and his investigators understood that any business owner with a modicum of success was vulnerable to persecution because somewhere, somehow, he had broken the law. And if he had come to their attention, investigators were obliged to launch a case – whether the motives were wholesome or not.
“After a long and difficult talk, the investigator – she was a smart woman – told me, ‘I see that you’re a good man. Go.’” The investigator offered some advice on the glaring vulnerabilities of his case, and pointed out weak spots in his activity that could be used against him. But she also told him what exactly he would need to write, and how to frame his argument, if he were to get into a fix.
“I walked out of her office feeling relieved that there were decent people out there,” he said. “But then it becomes clear that she’s not free. She has a boss. It is not possible to have people within this system that do not obey its rules.”
For Ivan, it was easy to understand how an officer who went ahead with a commercially-motivated case could easily justify his actions. “‘Morally, I am right,’ he wo
uld say, ‘because I gave him a much lighter punishment than he deserved.’”
Everyone, it seemed, was both a victim and an executioner in the system at the same time, and each one used the instruments at his disposal because he had no choice. This was an honest outlook, but understanding the reality of how things worked and how you were involved in it took a psychological toll.
“It’s not that it’s the Stockholm syndrome,” he said as he mentioned the FSB officers he has had to deal with. “It’s just that when you’re talking to them, you realize that they’re normal, decent, even charming people. But I’ve also had to deal with 30-year-old jerks in the Lubyanka. For them everything is for show.”
Whoever you were, you used the instruments at your disposal to get what you wanted and get ahead. You used your connections, because if you didn’t, then someone else would use them against you. In order for your connections in authority to work, you had to believe in their power – you had to convince everyone around you of their power.
Ivan, who lived in a gated suburban settlement outside Moscow, among million-dollar mansions, described a neighbour who was a general in the FSB. Not only did he run a private security agency on the side and use his authority to raid businesses, but he also bragged about it, as though it was a logical result of his authority.
“Everyone brags about how many generals they know,” he said.
The bitter irony that Ivan had discovered, however, was that paying such people to protect you didn’t normally work. “You develop a relationship with someone – the higher up he is, the better. The FSB is considered the most coveted. But if something happens, they won’t help you. They can only start a criminal case against your rival. They are not the instruments. They are the bosses.”
Paying an FSB “handler” to protect you could backfire. “He starts intimidating you, you become scared. Then he asks for more money. But when it comes to actually protecting you, it turns out that everyone has his fiefdom, and whoever you pay for protection will not go against the interests of his colleagues.”
That too was part of the system – one that Ivan had learned to take for granted as if it was a force of nature that was at times brutal, at times convenient.
One other factor explained his humility: an Orthodox Christian, he was deeply religious. And he applied his faith to his idea of what a government should be. “We delegate to him [the sovereign] the right to be a god. But Putin is no Tsar, not even a little bit. Because a Tsar is God-given.”
It wasn’t that Putin had enabled the murky, extra-legal world of “understandings” that Ivan, like law enforcement officers and fellow businessmen, found themselves obeying. That world had always existed in Russia. It was that Putin, having come from it himself, had failed to transcend it.
“Putin?” he concluded. “He’s not even interesting. He won’t even make history.”
4.
In 2000, the law had proved useless in the clash of interests between a furniture magnate, the FSB and the Prosecutor General’s Office on the one hand, and the Investigative Committee on the other. It was similarly useless in 2005, when the Investigative Committee tried to put a stop to the FSB’s million-dollar Chinese import business. The trial of Pavel Zaitsev demonstrated just how superfluous this paper law was in the face of the “understandings” reached between powerful groups with fiefdoms to mind.
Having closed the case against furniture magnate Sergei Zuyev in 2001, the Prosecutor General’s Office went ahead and launched criminal cases against Zaitsev and the two customs officials who had investigated Zuyev in the first place.
Zaitsev was acquitted by the Moscow City Court in September 2002, but on the appeal of the Prosecutor General’s Office, the Supreme Court called for a retrial in February 2003. During that retrial, the judge, Olga Kudeshkina, blew the whistle. She dismissed herself from the case, claiming that she was being pressured to hand down a guilty verdict not just by Deputy Prosecutor General Yuri Biryukov, but also by the presiding judge of the Moscow City Court, Olga Yegorova.92 Another judge then sentenced Zaitsev to a two-year suspended sentence, but to sweeten the pill, he was allowed to keep his job.
Judging by the widespread evidence of how guilty verdicts are passed, not only is this easy to imagine, but it is surprising that Zaitsev wasn’t jailed outright. An experienced criminal defence lawyer once described this process to me: in a trial, the prosecutor often simply passes his flash card to the judge. The judge, to save time, copies the prosecution’s statement onto his computer, changes the title, prints it and reads it out in the courtroom as a verdict.
Yevgeny Arkhipov, representing Sergei Magnitsky, the lawyer for the Hermitage Capital investment fund who died in pretrial detention in 2009, explained part of the reason why this was so easy. Just because the concept of presumption of innocence was spelled out in the Russian Constitution did not mean the idea was accepted by all of its citizens.
“Most laymen have absolutely no understanding of the presumption of innocence or human rights,” he said. “Judges, investigators, and prosecutors are also laymen.”93
Extra-legal “understandings” better fitted the concept of fairness and justice for a large number of judges, investigators and prosecutors. But what happened when their “understandings” clashed with the understandings of another, equally powerful group?
Much like in the court of an absolute monarchy, it was up to the chief arbiter – the sovereign – to pass judgment.
Vladimir Putin officially announced in 2002 during a meeting with security officials that he would be taking the Tri Kita investigation under his personal control.94 Having to keep up the appearances of a legal framework, there was a delicate balance to maintain – his role as arbiter had to be kept hidden, he had to remain impartial and mind the interests of all parties involved in order to keep their loyalty, and he had to make sure that, at least publicly, his words were not influencing what was still supposed to be an independent investigation.
The problem had been officially brought up before the president in 2002. That February, an investigative journalist from Novaya Gazeta, Yuri Shchekochikhin, had raised the issue at the State Duma security committee, in his capacity as a parliamentarian. (After repeated telephone threats, Shchekochikhin died in 2003 from an extremely rare, and lethal, allergic reaction that some evidence suggests could be linked to a poisoning. Investigators have launched several probes into his death, but they were all closed. Zaitsev, as many others, believe that Shchekochikhin was murdered.)95
That March, Putin appointed Vladimir Loskutov, a senior investigator from the Leningrad region and reputedly a close acquaintance, to the case. The appointment was significant since Loskutov did not answer to Prosecutor General Vladimir Ustinov – whose interests were reportedly affected by the case. While Putin, as was his wont, would not voice any opinion on the case, his later comment about Loskutov’s appointment suggested he could only trust an outsider to investigate it: “I was forced to bring an investigator from the Leningrad region because he needed to be a person unconnected to law enforcement bodies.”96
But four more years would pass before any arrests were made. Two things apparently made that possible: in spring 2006, Putin involved another agency, the Federal Drug Control Service, headed by his close ally, former KGB officer Viktor Cherkesov, in the case. And in May 2006, he sacked Prosecutor General Vladimir Ustinov.97 The road, it seemed, was clear for the first arrests. Those followed that summer: Sergei Zuyev and five of his accomplices were taken into custody in June. Their trial would drag out for four more years. In 2010, Zuyev would be found guilty and sentenced to eight years in prison. His other accomplices would be given lighter terms.98
Three months later, reports appeared about a massive purge in the FSB and the Interior Ministry. And while on the surface they seemed a direct result of the Tri Kita investigation, evidence suggested that the extent of their involvement in rent-seeking activities went far beyond Tri Kita. Moreover, those officials directly named in t
he Tri Kita scandal, like Zhukov and Zaostrovtsev, would be quietly transferred to other posts later on.
When the purges were leaked to the press, sources close to Putin’s administration, within the FSB and from other law enforcement bodies specifically linked the firings not to Tri Kita, but the Chinese contraband scandal that Pavel Zaitsev uncovered the previous year.99
More unsettling still is evidence that a number of the FSB officers announced in the purge continued showing up to work as if nothing had happened.100 They would quietly be removed months later, when the scandal was forgotten. Kirill Kabanov believes this is the direct result of Putin’s close ties with these people.
But even the purges, quiet and incomplete as they were, could not prevent the case from escalating into an all-out clan war. In the autumn of 2007, the FSB arrested Viktor Cherkesov’s deputy at the Federal Drug Control Agency, Alexander Bulbov, for unauthorized wire taps in the Tri Kita investigation. The move was a clear retaliation for the purges, which were interpreted as a blow to the FSB and the Prosecutor General’s Office. That it was indeed a clan war within Putin’s court was stated by none other than Viktor Cherkesov himself, who penned an open letter calling on security organs to avoid a battle and reconcile – especially since a transfer of power from Putin to a successor was about to take place. Not only was Cherkesov warning against a clan war; his letter was an unprecedented statement by a senior security official that commerce among officers was unacceptable.101
All these processes coincided with a momentous shift in Putin’s course. With just months left until his second term as president expired, in the autumn of 2007 all of Russia was holding its breath about which course Putin would take: either sidestep the Constitution barring him from a third term and run again, or pick from one of two potential successors. The first and likeliest candidate was long-time Defence Minister and former KGB officer Sergei Ivanov, a hardliner who had recently been promoted. The other was a soft-spoken lawyer, Dmitry Medvedev, who had once headed Putin’s campaign staff in 2000.
The Putin Mystique: Inside Russia’s Power Cult Page 13
