Rise of an Oligarch: The Way It Is: Book One

by Carlito Sofer

  My foray into drug trafficking ended earlier than expected when Carlos was shot dead. The word was that the CIA took him out as part of a covert fight against the Colombian cartels. This rumour prevented me from attending his funeral in Bogota, as it was suspected it would be closely watched by DEA agents.

  While I was upset that Carlos died, I was somewhat relieved that this business was terminated for me. Semi-illegal business, such as purchasing properties with the help of bribery and coercion, was one thing. Fully illegal business, such as heavy drug smuggling, was another thing altogether. I didn’t want to get too much involved in a business that could connect me with the most wanted criminals in the world and the secret services of powerful countries. I tested the water and found it too hot for my liking.

  Keeping a low profile was still one of my guiding principles.

  This was an unsatisfying experience. But as the famous British philosophers Sir Mick Jagger and Keith Richards said, “I can’t get no satisfaction. ‘Cause I try and I try and I try and I try.” So, I kept trying.

  ***

  We were making money that was sufficient to classify us as affluent or perhaps even rich. I was able to leave my small apartment and buy a nice studio flat in the centre of Kiev. I didn’t want to flash my wealth too much, since on paper I was a modest bureaucrat with a public service salary. However, for the first time I could afford much more than a decent living. Nevertheless, as always, I fancied more.

  After a while I quit the job at Sasha’s company, but not before I siphoned what I needed: the best workers, sufficient stock of construction materials, tools and even some heavy machinery such as cranes and bulldozers. Sasha was able to channel the properties that we wanted to buy. I was responsible for raising capital, mainly through Yuri; buying titles, convincing people to sell titles - sometimes with Gigo’s help - and selling blocks of property to developers and buyers.

  As I wasn’t a public servant any longer, I wasn’t so concerned about hiding my wealth. Rapidly climbing up the property ladder, I moved out of my small studio apartment to a 250 square metre penthouse that I had constructed by purchasing and converting six apartments on the highest floor of a historical building that was located within walking distance from the main street of Kreschatik. It had magnificent views of the city, the Dnieper River, Saint Sophia Cathedral and the Motherland Monument.

  Gigo was building his small private security service, which enabled him to extort protection from businesses, as he had strived to do from our university’s time. We had money to pay for more thugs to join his force and he effectively created a mini Georgian army in Kiev. Georgians were a minority in Ukraine and they were happy to find a welcoming home in our organisation. They were strong, tough and cruel when they needed to be.

  I had to look, relentlessly as always, for the next big opportunity. I didn’t have to look for long. What drove me on was to always dream bigger.

  9 No Turning Back

  Kiev, 2013

  Andrei was having lunch with Oxana at a fancy restaurant. Screwing her at her apartment wasn’t enough to keep her satisfied. Since he wasn’t such a frequent guest in Kiev she wanted more of his company, although Andrei had serious doubts that he was the only one she was dating. He also had to buy her presents and take her out once in a while. Showing her a good time was well rewarded in the bedroom. The happier she was, the happier she made him.

  His mobile rang and vibrated, nearly falling off the table. It was Petro.

  “This is work, Oxana, I’ll be back soon.”

  He stood up and stepped outside to the noisy street, while answering the phone.

  “Yes, Petro, any news?”

  “Well, we talked with estate agents working on the apartments in those buildings. Three apartments were rented for a short time period just around the time we’re focusing on.” Petro tried to sound neutral and not to mention specific details in case someone was listening.

  “We talked with the landlords, and one of the apartments remained vacant during the entire time, although rent was prepaid and no one asked for a refund. Nobody seemed to actually live there.”

  “Okay. Go on”

  “We’ve contacted the cleaning lady through the building’s maintenance company. She said that the apartment was clean when the renting period was over. But she can swear that someone has moved the kitchen table and left it next to the window. Guess what this window overlooks?”

  “The Business Centre,” Andrei replied, feeling the exhilaration of a piece of the puzzle falling into place. “Do we know who rented the apartment?”

  “That’s where it gets tricky. The apartment was rented by a company incorporated in Lichtenstein. We couldn’t identify the shareholders yet. The entire deal was done through e-mail exchange and they asked for the key to be left under the rug by the apartment’s door. Well, it happens this way sometimes, not too unusual. So I put out some feelers to try to find out more information and, guess what, this company didn’t do any business anywhere, ever. It’s not even used as a holding for some subsidiaries. It might have been incorporated just to rent this apartment. This is a classic modus operandi of the three letter services and rather typical instrument to leave no footprints. That’s what they do to cover up their tracks.”

  Andrei knew very well which letters Petro meant. These were either FSB - Russia’s Federal Security Service, the successor agency of the KGB, or SBU.

  “Yes, that’s right. So this could be those organisations. There are plenty of guys who were trained and learned their ways. What else do you have for me, Petro?”

  “Nothing more right now.”

  “Good job, Petro. Make one more effort in this context. There are individuals acting on behalf of these entities. Somebody wrote e-mails and somebody also collected the key from under the rug. Try to follow who these might be. Also, rent that apartment for a couple of days, but not in your name. And meet me there, I want to have a look around to see whether any other hints were left behind.”

  Andrei didn’t expect to find anything. Those who did it were professionals, who leave places clean after they leave. Andrei didn’t like the direction to which the investigation was leading. Clearly, they were dealing here with someone organised. Someone powerful. Maybe even a sovereign-sponsored hit which is many times worse than a private one. They were treading on thin ice and their lives were in danger.

  But, there was no turning back now, was there?

  10 Dreaming Big

  Kiev, 1996

  Our operation in Kiev continued to flourish so much that within a couple of years I’d accumulated a few million dollars and was looking to diversify the business.

  Venturing into high-risk, high-reward businesses seemed like the right move. As they say no guts, no glory; no pain, no gain. I was young, business opportunities were abundant, and I was happy to roll the dice and take the risks. I felt like I was in a card game. If it’s your day, then you’re almost unbeatable. And these definitely were my days.

  In the past all I’d wanted was to secure a better future for my family. Now I saw how I could actually achieve it. Our real estate business was relatively low risk by Ukrainian standards, with every policeman and public official corruptible, the immediate legal risks to the business were negligible. But I already knew the business had a glass ceiling. We were making money, the pace was even, but we couldn’t earn much quicker than we were doing already.

  I recognised that the real opportunity at the time was in the energy sector. The privatisation drive in Russia and Ukraine enabled entrepreneurs to buy stakes in previously state-owned oil, gas and mineral companies. These were Russia and Ukraine’s crown jewels. Now, they were offered at literally fire sale prices. I needed the cash and connections with the right people at the government to get a deal done and get my hands on a lucrative asset. Wealth and government were interconnected in Ukraine. Money could buy political decisions.

  The emerging deal involved Anton Lozinski, the First Deputy Minister of Ene
rgy and Coal Industry of Ukraine. He was in his middle thirties, short, with a round, large belly. I was wondering when was the last time that he actually saw his dick without a mirror.

  Sasha and I sold Anton a charming apartment in a central area in Kiev. Anton, who was a happily married man, housed his mistress in the flat. This was a common practice for senior men. Not having a mistress was considered strange and raised rumours about sexual preferences.

  While handing him the keys of the deluxe, renovated apartment I told Anton, “In such a cosy nest that you’ve acquired, just five minutes’ walk from your office, I’m sure that you’ll visit your mistress more often.”

  “Yes, of course!” Anton enthused. “With more frequent visits, I hope I can keep up with her; her sexual appetite is incredible.”

  “Well maybe I can help you to keep up,” I said, handing Anton a generous bag of pure Colombian coke.

  Anton’s eyes lit up and he quickly pocketed the drugs.

  “This will help me to suppress my piggish appetite,” he declared. “Coke is the best cure for obesity. And now I can fuck my mistress all night long. I lose two whole kilos in a single such session.”

  When he offered to pay for the coke I was surprised, as most officials never offered to pay for anything.

  “Forget it, Anton; keep your money. This one is on me, my friend. Friends don’t pay each other for pleasure. Consider it a small bonus for buying the apartment. We’re always glad to provide something good for your diet. Who knows, maybe in a few months you end up as thin as a movie star?”

  I knew that the day would come when Anton could be handy. He valued my discretion on his recreational preferences and we developed a relationship of mutual trust. Every couple of weeks I would pop round to his apartment and hand him some coke, neck a couple of vodkas and then leave. After one such visit, I decided it was time to reveal my plan.

  “Before I go, I want to tell you that I’m looking to purchase a stake in a company in the energy sector. Please let me know if you hear of anything interesting. I’m sure that it can be beneficial for both of us and for the country.”

  Anton smiled at my words, and I wondered if I’d revealed my hand too soon. But his reply was a pleasant one.

  “It’s funny that you mention it, Misha. A state-owned company that produces natural gas is going on sale through a tender. If that interests you, then I’ll keep you in the loop. The privatisation is important for the country and we need to find serious bidders like you to participate in the tender.”

  “Please do that, Anton, such a deal is definitely of interest to me,” I answered seriously, although inside I was screaming with delight.

  With the First Deputy Minister on my side I would know the bids in advance and guarantee my tender was accepted. While in theory the bids were supposed to be undisclosed to rival bidders for the tender to be competitive, the fact was that in Ukraine every lucrative tender was rigged. As Albert Einstein’s saying goes, if the facts do not match the theory, change the facts.

  I organised a syndicate of three investors. Two were Yuri’s connections from Israel, and the third was my newly incorporated company, called Neplokho Holdings - neplokho meaning not bad in Russian. We incorporated a subsidiary for the deal, calling it Neplokho Energy, whose three shareholders were the two Israeli investors and Neplokho Holdings. I didn’t know it back then, but this was the birth of the mighty Neplokho Group.

  Anton disclosed to me the competing bids in the tender. We tendered our bid, which was just one thousand dollars above the next highest bid, and unsurprisingly, we won. Luckily for us, the criteria focused on price, ignoring the various bidders’ experience and other factors that were inconvenient for us. Anton got his share of the deal. Everyone was happy and I was the joint-owner of a 51% stake in Azov Oil & Gas Company.

  As a new member of the supervisory board of the company, I flew east to its headquarters in Donetsk to have a look at my new acquisition. Escorted by Anton, I was greeted by Boris Uralski, the company’s chief executive officer. He was already an industry veteran at the age of forty three, which was young for managing such a large company. When I entered the company’s office building Boris was waiting in the lobby.

  “Welcome Mr Vorotavich,” he said, shaking my hand firmly while smiling warmly.

  “It’s a pleasure to meet you, Boris,” I replied.

  “The pleasure is mine. The board is looking forward to working with you.”

  Boris didn’t mention my young age or inexperience in the energy industry. He personally greeted me at the lobby, and his body language was open and confident. Either he really meant what he said or he was a good politician. After he introduced me to the company’s executives, we went to his office and raised a glass of vodka to our health and the company’s success. I had a good feeling about him.

  Normally I would put my own man in charge of the company, but Boris was Anton’s man and surprisingly enough he did a great job, managing to keep most of the company’s assets following the turmoil in Ukraine and the privatisation process.

  His official objective was to run the company as efficiently as possible to create shareholder value. His unofficial objective was to primarily funnel revenues into our private pockets. I didn’t want to share the profit with an insignificant minority shareholder - the state still holding a 49% stake.

  Another significant advantage of having Boris on board was his connections with senior, powerful figures in the government. During his time as the CEO of Azov Oil & Gas, he’d established solid relationships with officials as he was running one of the largest companies in Ukraine.

  Since Boris was older than me, the state officials took him seriously. They didn’t consider him a young, inexperienced kid, as some of them would’ve perceived me. After they got to know me, however, and in particular after I paid them for their extracurricular services, they would soon change their minds about me. But until they had done so, it was helpful to have Boris around.

  Ukraine’s own production of natural gas covered only about a quarter of its domestic demand. However, we weren’t interested in selling domestically since the price was regulated. Boris, using his connections, managed to get us a quota for unregulated sales abroad for half of our production. Even Anton, who had tried to help with his own connections, was surprised by the positive result that Boris achieved. Boris demonstrated his true value to the company. Over the years he would become my right-hand man.

  ***

  As I was constantly seeking new business ventures and projects for Neplokho Holdings, and our business was expanding rapidly, I needed to recruit help with managing the Group. David Zabbana, my good friend from law school, was an obvious candidate.

  After finishing his military service in the Israel Defence Force, David completed his law degree, as well as a degree in business administration. David was smart and energetic, and a reliable friend I could trust. I also felt that I owed him a favour since he helped me finish my law degree when I returned to Kiev.

  David’s mother was Russian and his father Romanian. But his look had nothing European or Slavic in it - a mystery. I told him that he should run a DNA test to confirm the identity of his real father. His answer was always, “Go fuck yourself.”

  David knew how to get by and bend the rules. We called it a kombinator in Hebrew - a person who knows how to pull some tricks to manipulate the system or to find on the fly solutions for problems. That and his command of Russian made him perfect for doing business in Ukraine.

  I called David and tried to entice him into working with me.

  “Listen, David. Why don’t you come to work with me here in Kiev? Except for your parents, you have nothing in Israel. Nothing! What’s the worst that can happen? I’ll pay for your flights - first class, and put you in a nice hotel with an endless supply of drugs and women. You’ve never seen prettier and easier women in your life; believe me. Come here for a month, try it out and if you don’t like it, you can go back. Worst case scenario is it wo
uld be a nice, free vacation before you become a lawyer, slaving for twelve hours every day. At least you would have some unforgettable memories to sweeten your boring, grey routine. Come on, you deserve it. What do you say?”

  After putting it like that, it was an offer he couldn’t refuse, so the next day David Zabbana flew to Kiev.

  ***

  Since we always kept an open mind, extraordinary opportunities soon presented themselves. One noteworthy project involved a new regulation concerning veterinary vaccinations of domestic animals such as cattle, pigs and sheep.

  Anton, who after our successful dealings considered me as a reliable and discrete business partner, introduced me to his friend Roman, the head of the State Veterinary and Phytosanitary Service of Ukraine. David had arrived in Kiev that morning, so as a way of introducing him to the manner in which business was conducted in Ukraine, I took him with me to the meeting at a traditional Ukrainian restaurant to meet Roman and discuss his brilliant scheme. After introductions, and the customary vodka shots, it was time to talk business.

  “The process is simple,” Roman began. “We pass a new regulation requiring mandatory vaccination of domestic animals. Unfortunately there’s no proof whatsoever of the vaccine’s effectiveness. But we purchase falsified academic research papers from real scientists to highlight the immediate need for the vaccine and the real danger of not using it. We then produce it and everyone must buy it. We create the demand and the product from absolutely nothing. By the time the regulation is enacted, the logistics for its implementation should be in place. There will be a certain amount of investment involved, and that’s where you come in. Anton has informed me that you could be the perfect partner for this operation.”

  “So we pay set up costs and purchase the scientific papers, the vaccination law is passed, and our company is guaranteed to win the tender?”