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

by Carlito Sofer

  “I promise. Professionals earn from what they do, while I’m doing it for free,” he joked back.

  Misha also fulfilled the role of a father figure filling the void of Masha being brought up just by her mother. Her mother told her that father vanished without a trace. There were no pictures of him, no letters, nothing that even suggested that he ever existed. It was like the earth swallowed him. She swore that one day she would look for him. But that day had never come. Her intuition was that she wouldn’t like what she might discover.

  And now Misha was gone as well.

  ***

  The worst had happened. She was supposed to be prepared, but she couldn’t come to terms with the situation. She was debating with herself how to explain the events to the children. They did know that papa had an operation and that he was now recovering at hospital. However, she didn’t tell them the details and the background. How do you explain to small children that someone wanted their papa dead?

  Dima seemed to accept the situation in a surprisingly calm way. It looked like he was more upset about cancelling the trip to Rome that was scheduled in two days’ time. Little Erica seemed to be more upset than usual. She was crying frequently. But Masha was unsure whether this had anything to do with Misha’s condition. Misha was travelling often, so not having him around wasn’t supposed to be something unusual for the kids.

  Lunch started on time. The atmosphere was tense. Masha and the children were sitting in their dining room on the sixteenth floor in one of the modern residential towers in Tel Aviv. Misha’s brother and mother went to the hospital in the morning. Golda insisted going there every day to sit next to Misha’s bed and read the newspapers to him.

  “Misha hears me,” Golda explained to Masha. “When he wakes up he needs to know what happened in the world. He’s a big businessman and must keep track of what’s going on. When he wakes up we’ll all go to holiday in Switzerland. You, Misha and the children. Maybe Sasha and his family will join us, as well as your mother, Masha.”

  Masha envied Golda’s optimism.

  The view of the Mediterranean Sea from the penthouse’s west all-glass wall was magnificent. Masha was gazing into the distance when Dima’s voice interrupted her daydreaming.

  “Mama. The children at school told me that papa is suffering from assassination. This is a long word. What does it mean?”

  “Let it be, sweetheart. Your friends probably heard something from their parents and they don’t know what to ask. Papa is recovering from an operation and I hope that soon he’ll feel much better.”

  “What is an assassination?” Erica asked.

  “Assassination is if somebody was trying to hurt papa,” answered Masha. “But we don’t know whether this has happened. I think that next week you’ll stay home and study with Anastasia.” Anastasia was the children’s private tutor. “I don’t want the children at school and kindergarten to ask you silly questions and bother you. Now finish your food if you want a pudding.”

  Not going to school and kindergarten for a few days sounded like a treat for the children. The questions ceased.

  After lunch, Masha called Tanya to get an update from the hospital, but there was no news. “There isn’t any change in his condition,” Tanya reported. “If there is any news or developments I promise to call you immediately.”

  Masha looked far away at the horizon across the sea. Her sad face reflected in the window. It felt like years had passed since Misha was shot. She felt old and tired. She thought about the past as it helped block the awful reality of the present. The past was known, and filled with happy memories. It was the present that was concerning.

  “Misha, wake up!”

  16 A Perfect Storm

  In 1997 a financial crisis hit South East Asia following the collapse of the Thai baht. Because of the crisis, the demand for oil and metals dropped. The drop in oil price hit Russia hard, leading to a political and economic meltdown. Foreign investors pulled out of Russia in a panic. In March 1998 Russian President Boris Yeltsin dismissed the Prime Minister and his entire cabinet. Crisis!

  Kiev, 1998

  That was when Yuri and our Israeli partners in Neplokho Energy started calling me almost every day with anxious questions and ideas. Yuri was my friend, so it was easy to calm him down.

  “Except for immediate negative implications, I don’t anticipate any long-run disasters in the energy sector,” I explained. “We need to sit tight and wait for the storm to pass. The world still needs fuel to drive cars; this hasn’t changed. And it won’t change either. The price of oil will bounce back. Those who don’t panic will make money. That’s the way it always works. You’ll see, Yuri. Trust me.”

  “Fine. I trust you, Misha. But it’s difficult to keep our partners calm. They’re nervous about the situation. They want out.”

  “Then it’s up to you to convince them to keep their nerve. The crisis will pass, and those that blink first will be the ones regretting their impetuousness.”

  For our Israeli partners, Ukraine and Russia were one and the same. They were certain that we were heading for an economic Armageddon. So after a few attempts I didn’t bother wasting my time on calls with them, just to be their shrink, reassuring them on a daily basis that everything was going to be alright. I kindly left this task for Yuri.

  Things got worse as Russia entered a vicious circle. Revenues from its main exports of oil and metals were falling, so tax revenues were declining due to decreasing productivity and increasing unemployment. Russia couldn’t borrow money through the capital markets since investors demanded ridiculously high interest rates on Russian government bonds to compensate them for the risk of lending to Russia. Russia had no other choice but to swallow its pride and ask for foreign aid. It received bailout funds from the International Monetary Fund and the World Bank to prop up its economy.

  The Russian government failed to properly address the crisis, and about five billion dollars from the bailout aid were alleged to be stolen. Consequently, on 13 August 1998 the Russian stock, bond and currency markets completely collapsed. Inflation in 1998 surpassed 80%, the stock market was down 75% and Russia officially defaulted on its national debt. A real, full-blown financial crisis was in effect. A perfect storm.

  Although I didn’t foresee the magnitude of this crisis, I sensed the opportunity that it offered. Being inside the events, rather than seeing them reported by TV channels, I knew that nothing extreme was going on. People were panicking out of all proportion.

  Our Israeli partners in Neplokho Energy, worried by world news reports, asked for an urgent conference call. When I took the call, the voice on the other end sounded on the verge of hysteria.

  “We’re losing all our investments. The economists here and in the United States say that this is the end of the Russian economy. The country is bankrupt. The value of our investment is plummeting. They’re falling off a cliff. It’s a disaster. We want out. Now! We want nothing to do with Russia. You gave us your personal pledge.”

  My answer was simple.

  “I understand your worries, and I agree that it was a bit farfetched on my part to guarantee your investment, but I’ll honour my commitment and buy your shares at their nominal price.”

  I paused to let my offer sink in, and then continued.

  “I got you into this mess, and I’ll get you out of it. I’m a man of my word, and if you so wish, we can do the transaction today. Personally, I think that the economists don’t know what they’re talking about. But what do I know. It’s your choice. You’ll get back your original investment.”

  I was certain that they were ready to sell the shares for any price, to save at least some of their money. However, Yuri had insisted that I offered them the principal back. That was anti-business, not to use their panic to achieve the best price. But my friend and partner’s opinion was an important factor.

  Yuri made the point that it was best to keep amicable relations with the investors since we may wish to partner with them again in
the future. It was essential to maintain our reputation. I agreed with Yuri and bought his partners out for the same price as their original investment.

  A few years later, the value of the shares that I bought in Neplokho Energy during the 1998 crisis for a few hundred million dollars reached several billion dollars. That’s right; several billions. Every crisis is an opportunity if you just see the big picture.

  As it always happens in life, when the shares skyrocketed, Yuri’s partners weren’t grateful anymore that I bought them out when everything was crumbling around. Instead they complained that I bought their share for a lentil soup, even accusing me of blowing the crisis out of proportion. Silly hypocrites!

  17 Here comes Johnny

  Maldives, 1999

  New Year was approaching, so I decided to take Boris, David, Sasha and a few select business partners and clients away from Ukraine’s cold winter to somewhere nice and warm. We decided to go to the Maldives Islands in the Indian Ocean.

  Most people who visit the Maldives stay in nice hotels and resorts, most of which are located on magnificent private islands, offering a luxurious, secluded vacation. We, however, wanted to experience the Maldives the way the mega rich and famous do. After all, while I was trying to avoid being famous I was certainly filthy rich.

  I rented the Soneva Gili Resort exclusively for three days, which cost me one million dollars. I spent another two million to ensure that my fifty guests had everything that they ever dreamt of in terms of food, drink, drugs and women. To me, these were the four fundamental needs of every man. I wanted everyone to remember this as another unforgettable Misha Vorotavich party, competing with the one on the ship on the Dnieper. We were about to enter the new millennium - a good reason to celebrate.

  I always believed that three days was a magic number for parties. I was sure that after partying for three days in non-stop decadent fashion, I wouldn’t survive another day. The three days on the island were like a dream. As often happened at my events, people were having the time of their life. The place soon looked like the last days of Pompeii with people dancing on the beach, having sex everywhere, and taking drugs in the open. All social inhibitions and conventions were thrown aside. Some women spent the whole time naked, and unfortunately, so did a few of the men.

  As I was mingling among the guests, David, probably for the first time during the evening released himself from a girl’s embrace, and introduced me to John Wiseman, an MBA graduate of the prestigious Harvard Business School. John was an American Jewish boy who David met in Tel Aviv when John was there for a student exchange programme. He was twenty eight, two years older than me, and was about to be promoted to a more senior position in Oldman Sucks’ headquarters in New York City.

  David invited John to the Maldives since he thought that it would make sense to establish a closer relationship with our insider at the bank. John had played a pivotal role in the approval of Oldman Sucks’ seventy million dollar loan for Lugansk Steel’s purchase, so getting him closer to us could be advantageous.

  Having an insider who can disclose information from behind the scenes can save a lot of money because he can tell you the price that you can realistically achieve. Like in poker, knowing your opponent’s hand is a huge plus. When you deal with investment banks you can never know how they extract money from you. When you purchase a firm, and they represent the buyer, they depress the price to increase their fees. When you sell a company, and they represent you, they inflate the price to increase their fees. Hell, they do anything to increase their fees. This is basically legalised corruption.

  John had short, straight brown hair. He wore a polo shirt tucked into his khaki shorts, a brown belt and brown leather boat shoes. His business casual, yuppie, nerdy style clearly marked him as the token American among us. He looked a bit startled with what was going on around him.

  I took David aside and whispered to him, “Make sure that your friend is integrated into our humble celebration. If you cared to invite him at the first place, ensure that he’s having a good time. I want him to see the attractiveness of cooperating with us.”

  With David on his tail, I was sure that John wouldn’t miss much of the action on offer. He had to see that with us he could get any vice that a man wanted. This was the first step in shifting him to the dark side.

  John was naive as most Americans I met seemed to be. But he knew finance, he wasn’t afraid of taking risks, and he was eager to make money. I thought that I could use such a guy working for me as I was thinking to take over a bank in Ukraine or Russia when a good opportunity presented itself. We would need an in-house investment banker if we were to pull off such a coup. But now was not the time to discuss business, so we just exchanged pleasantries.

  “Thank you for coming John,” I said as I shook his hand. “Please, enjoy your time here and don’t be shy, eh? Make yourself at home and take pleasure in the hospitality.”

  “Thank you sir, it’s certainly very...different to what I’m used to.”

  “Have a drink, smoke a joint, dance with a pretty girl.”

  John smiled, thanked me once again, and wandered off to mingle with the other guests. A couple of hours later, I caught David’s eye and gestured for him to join me.

  “So how is our American friend enjoying the party?”

  “He seems to enjoy what he’s seeing. But he’s a spectator, not a participant. No drugs, no women, just light beer. What is it with light beer? I don’t get the point of having a beer with low alcohol.”

  “Ha ha, yes I know what you mean. Okay, David; you go back to your women. I’ll have a word with him.”

  I invited John to join me. We settled on two plush striking white sofas on a balcony that overlooked the party. Around us chic drapes were billowing softly in the wind. The beautiful powdery white beach was in front of us, and the glass-like inky ocean stretched to the horizon with barely a ripple. Below us, beautiful women danced around the coconut trees and paddled naked by the shoreline and the lapping waves. The ambience was laid-back with a glam party vibe.

  We were smoking Cuban cigars and drinking single-malt whiskey, which John didn’t dare refuse, as we surveyed the scene.

  “This is quite a view, don’t you think?” I finally said to break the silence.

  “It takes some beating, sir.”

  “That’s why we work so hard. We work hard and play even harder. Sometimes I forget that.”

  “I’ll drink to that.”

  “Listen, Johnny: I don’t think you should continue working for Oldman Sucks any more. If you want to make real money, you should come and work with me in Kiev. Look around you.” I gestured with my hand to the partying people around us.

  “Do you think that you’ll go to such parties while working for Oldman? I don’t think so. You’ll have fun with me. And I’ll make you rich beyond your wildest dreams. Come work with me and you won’t regret it.”

  I handed John my business card. “Think about it, but not for too long, and give me a call.”

  John took the card and studied it before placing it in his wallet.

  “Thank you, sir,” he replied. “I appreciate your offer. Let me think about it, I promise I’ll get back to you very soon.”

  “Good. Please call me Michael,” I replied.

  ***

  A week later, John called me.

  “I’ve been thinking about your offer, Mr Vorotavich and I’m very interested. But I need a written offer. If I’m going to quit Oldman Sucks just before getting a promotion and move to Kiev, I need to have assurances,” he said.

  “Johnny, please call me Michael,” I reminded him. “I have a better assurance for you. I’m going to transfer to you an advance of two million dollars on your salary if you come over here. We’ll open for you a Swiss bank account and transfer the money immediately. Nobody needs to know that you got this money. Is that a sufficient assurance for you?”

  John didn’t know yet that contracts and written offers didn’t have much weight in
Ukraine. Deals were based on mutual respect and fear.

  The line went silent for a few seconds, and I knew I had him hooked.

  “I guess I’ll see you in a few days, Mr. Voro…Err…Michael,” he finally said.

  I immediately called David and told him the news.

  “This is excellent. A corporate banker on the team will be most useful,” David enthused.

  “I’m glad that you’re happy. You’ll be guarantor for the two million dollars I’m about to transfer to him. He’s your recommendation, after all.”

  “Fair enough,” David said without a hint of protest. Losing two million dollars wouldn’t have a huge impact on him. “He’ll show up, I’m sure of that.”

  John arrived in Kiev a few days later and we made sure he felt welcome and warm. We gave him a nice two bedroom flat in the centre of Kiev within walking distance of the office, and a silver Mercedes with a driver on standby twenty four hours a day, seven days a week.

  “You should just ask for whatever you need, including drugs and women. Everything will be delivered to your apartment. Everything will be prepaid. No questions asked. All you need to do is to tell your driver how you like your drugs and girls and how many you want.”

  You can’t be more explicit than that.

  John, however, wasn’t accustomed to the warm and welcoming Eastern European hospitality. He was too shy or afraid to ask for any good vices. I told Boris that John hadn’t accepted our offers of generosity, and Boris wasn’t too impressed.

  “It doesn’t make any sense, Misha. He’s young and single. Why wouldn’t he want pretty Ukrainian girls? If he were married, I could buy it. Americans are sometimes funny about being loyal to their wives. I couldn’t understand it, but I could buy it. This isn’t natural. I’m telling you he’s a virgin or a pederast.”

  “Oh Boris, you’re so funny sometimes,” I sniggered. “I think our American friend is just a little shy.”