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

by Carlito Sofer

  Only after Boris arranged for me to meet some of the new faces in the new government, and Arthur used his connections to investigate who was behind my failed assassination, did I dare show my face in Kiev again.

  Arthur didn’t find any real leads, but this was an encouraging sign as it meant that most likely it wasn’t one of the big sharks. Nevertheless, Arthur arranged for body guards to watch me 24/7. This was the price I paid for sticking my head over the parapet.

  To alleviate my fears, Arthur arranged a meeting with one of the Ukrainian SBU’s deputies. The meeting was arranged and held in Warsaw, Poland, a neutral territory. The deputy tried to convince me that the assassination attempt on my life was just a warning.

  “If you were wanted dead, you’d be dead,” he said, smiling reassuringly, but with a firm non-blinking stare, using usual KGB exaggerated intimidation tactics.

  “Next time you decide to go to politics and to sell some silly ideas to the masses, make sure right people know and agree about it in advance. Democracy or not, if politicians want long, healthy career they need to clear their agendas with us. Otherwise, how can we guarantee their safety? In your case, no matter what documents you forge, we treat you as foreigner. You should know your place,” he concluded abruptly, leaving no room for arguing.

  I wondered whether this guy, who was now smiling at me slyly, was the one behind the shooting episode. He had no comment at all about Anton’s fate, just ignoring my questions on this matter. His silence and attitude spoke loudly, confirming my conclusion that Anton’s death wasn’t accidental.

  He then added, “Your friend Colonel Ivanenko sends his regards. He’s no longer with the service. He left after he wasn’t promoted to the position of deputy director.”

  I assumed that the colonel didn’t get the promotion since he failed to subordinate my defence business. Leaving the SBU likely meant that he was retired. People at high ranks didn’t just leave the SBU. I was sure that the colonel wasn’t happy to lose his job and might’ve blamed me. I didn’t need the colonel’s acrimonious feelings towards me and I decided that I would sweeten his retirement in a generous fashion.

  The unspoken message of the SBU deputy was clear. We were out of the service, and if we wanted a favourable attitude from the SBU, we needed to put our money on the new horses.

  The meeting wasn’t great, but Arthur counselled that the immediate danger had subsided. I had my doubts about whether Ukraine was the country in which I wanted to live and it definitely wasn’t the country where I wanted to die. I also had my doubts whether it wasn’t the time to clean up my image and become an honourable businessman, not that that would help me to avoid possible future assassination attempts. I didn’t want to spend the rest of my life looking over my shoulder all the time. I didn’t want to live in a constant state of paranoia.

  It was time to diversify out of Ukraine and to go legit.

  21 Going Legit

  Geneva, 2003

  How do you go legit? How can you change from being associated with criminal enterprises to someone who is an acceptable legitimate businessman and politician within the global business community? How do you convert from being a son of a bitch to a son of a nun? Can a leopard change its spots?

  First, I had to go through everything we were involved in and get a clear idea of what had to be changed into a more plausible framework. On closer studying, I was surprised to discover that except for some illicit protection still charged by some of late Gigo’s associates and the domestic animal vaccination operation, almost all the other businesses looked perfectly normal on paper.

  Who could claim that owning an energy company or a steel mill was illegal? Indeed, the process of purchasing them wasn’t the purest, yet nothing extraordinary or too criminal could be attributed to it. I had used a few loopholes in the privatisation schemes, but so what? Could anyone prove that the auctions were rigged? Let them try. These were honourable industrial companies, employing hundreds of thousands of workers.

  I discussed with John, David and Boris how we could restructure Neplokho Holdings in such a way that any connection between me and apparently dodgy businesses would be well concealed. This was a necessary step anyway, as being a member of parliament meant I was formally required to quit any private managerial jobs.

  The first steps were to formalise all protection activities and distance myself from the vaccination operation. I didn’t think anybody questioned the vaccine’s efficiency anymore, but it was still a good idea to cut any ties to it.

  Addressing Gigo’s protection venture wasn’t complicated. We couldn’t just give up on this business since we had to retain our security personnel. Without a private armed force nobody would take us seriously.

  I arranged for Sasha’s wife, Yulia, to register a new company under her ownership: Anti-Mafia Security & Protection Limited. She appointed a retired police general whom I trusted, as the company’s general manager. All of Gigo’s colleagues were officially employed by the new company. They even got uniforms. All their clients and protégées were convinced, or coerced, if necessary, to have security service contracts with Anti-Mafia Limited. Now, it wasn’t my company anymore, and it was a decent business.

  I agreed with the Lugansk tax authority for a small kickback to retain the services of Anti-Mafia Limited to protect the authority’s headquarters and to screen all visitors. A number of other state authorities followed, once Anti-Mafia’s managerial board was reinforced by a few renowned boxing and wrestling Olympic medallists. We sent the Olympians to speak with the board members of our prospective corporate clientele. Was this business still illegal? I thought that even the goddess of justice herself would be proud of the company’s work. We were helping society to fight crime.

  Vaccination was next. The shares of Neplokho Pharmaceuticals were transferred to my school friend and real estate contractor, Seva, who then drafted a will to bequest his shares to Neplokho Holdings. He signed all the legal forms transferring the shares back to Neplokho Holdings, to be held by it in trust, so I could use them if necessary. No more vaccination under my name. Ciao cows, goats, farmers and agrarians.

  As for tax planning, my tax evasion schemes were complicated to prove as they were hardly discernible from legal tax avoidance schemes. The Bookkeeper cooked the books - a real master chef.

  The defence business was formally legal, but it didn’t project a positive image. Therefore, it was distanced from Neplokho Holdings and from my name.

  Money laundering was my biggest concern. I had to stop working through Latvian banks and dubious currency exchange chains. I had an idea of how to deal with it and would need an insurance company, so I asked David to arrange it. David incorporated Neplokho Insurance and soon we were celebrating the receipt of the broadest insurance license by our insurance company, encompassing both life insurance and general property insurance.

  The main idea behind Neplokho Insurance was to achieve a steady cash income from customers who were buying insurance policies and paying premiums. The cash income was substantial enough to cover fake money injections from insiders and connected companies under the pretext of buying an insurance coverage. For example, Anti-Mafia Security & Protection Limited bought an insurance policy for its offices and car fleet from Neplokho Insurance.

  I could then legalise or launder these cash injections as insurance payments to my entities for artificial or fake insured events. If ladies can fake orgasms, we could fake insured events, as long as my insurance company was playing along.

  I couldn’t fake an earthquake or a tsunami. However, Neplokho Insurance was eagerly covering a variety of disasters that suddenly befell the other Neplokho companies, their owners and managers. Loss of harvest due to weather conditions, irreparable damage to my imaginary Stradivari fiddle collection, false failure of machinery at Lugansk Steel, and demurrage of vessels in Odessa port. We were struck by a series of calamities, and the insurance damages were much higher than the premiums paid, so clean, legal money was created
within the Neplokho network.

  This was an efficient money laundering machine, and within the supposedly regulated insurance sector. All these were just preparations. Now, after cleaning my business affairs, I had to improve my personal reputation.

  ***

  America seemed like a place for honest people. The United States of America. The land of the free and the home of the brave. The most righteous, politically correct and awesomest country in the world. It even says ‘in god we trust’ on the dollar bills. God bless America.

  I decided to go to New York City to sample the culture, the food and the constant buzz. As a Jew I would fit right in to a city with such a large and prominent Jewish community and Masha was excited by the prospect of endless shopping right on her doorstep. The time difference with Kiev would be a nuisance, but I was sure that I could overcome it. We started looking at brochures for apartments overlooking Central Park, higher than the fiftieth floor.

  This plan quickly fell apart when I was refused a visa to the United States. It was a new experience that state officials, like those in the US Customs and Border Protection department, didn’t accept payments for providing special services. They just blindly followed the rules and didn’t allow me into the United States because they suspected that my business was illegal. What a pile of crap? Me? Illegal businesses? Come on! I wonder what gave them this absolutely ludicrous impression.

  This bothered me. It was a stain that had to be removed so I hired the most prominent lobbying firm in the US to right this wrong. I retained the most expensive Washington DC law firm, which my rabbi’s friends from Kiev had recommended. I was sure that this little misunderstanding would soon be resolved. But it would take time, so I had to move to plan B.

  Plan B was to move to London; the capital of the United Kingdom and the shining beacon of the British Empire, or what was left of it. The Brits were much more relaxed about allowing foreigners to settle in England. If you brought with you a few millions to invest in the country, they welcomed you with open arms. London was almost as good as New York and the time difference with Kiev was much better. Masha talked excitingly about shopping at Harrods and Selfridges and having four o’clock tea at the Ritz.

  With my Israeli passport, entering the UK didn’t require a visa, especially since I had been there already in the past for a business meeting with Carlos. Entering the second time was always easier than the first one. Getting a visa for a long time sojourn in the United Kingdom was a mere formality.

  I bought a huge house in Hampstead, a rich neighbourhood in the North West of London, for twenty million pounds. The house had an indoor Olympic-size swimming pool, a cinema for fifteen people, a garden as big as a football pitch, and most importantly; a sauna. Boris would love visiting us as his favourite activity was drinking vodka in the sauna.

  I decided to spend a third of my time in London, a third in Kiev and a third travelling, including to Israel where my mother was still living. As my legal consultants simplified it to me, the taxation rules of most countries envisaged that if I spent less than half a year in any given country, then I wasn’t deemed a taxable resident. Perfect! I thought that once I had children I would eventually settle in Israel since I wanted them to grow up in the Jewish state. That was what my father would’ve wanted, and it had always been the long term goal.

  Now it was time to start working on my public image. I hired the PR consultants who were retained by the British Labour party during its successful election campaign, as my personal public relations experts. They were professional spin doctors that could turn any negative to a positive. It was all in the PR and the positioning.

  I considered floating Neplokho Energy - the proud owner of Azov Sea Oil & Gas Company - on the stock exchange through an Initial Public Offering

  Now that Ukraine had shown me how hostile it could be, especially if the political elite changed, I needed some hedging for my most valuable assets. An IPO would result in the Western European public co-owning my enterprises. I was sure that the Ukrainian establishment, hostile or not, would think twice about attacking a company that was publicly traded on a European stock exchange.

  In this instance, I didn’t need the IPO for raising money. The primary objectives were sharing ownership with foreign public investors, hedging and reputational benefits. I needed transparent accountancy and reasonable revenue figures. Since by then my energy and steel businesses were already vertically integrated from supply of raw materials, through production to selling the produce to end-users, I could easily regulate the financial flows inside the structure. These were truly attractive businesses.

  Public companies traded on the London Stock Exchange could be used as my springboard into global business. They could apply for government tenders abroad and acquire businesses that I fancied.

  In addition to my new house in London, I refurbished our expensive villa in Geneva. My PR team organised for it to appear in a magazine on elegant homes. The photos of Masha standing next to a grand piano in our elegant living room, with Lake Geneva and the mountains looking glorious in the background, added an element of style. How can you be a nasty man if you have such a lovely house and such a lovely girlfriend?

  I incorporated a charity with a mission of building farms in Africa. This would help with restructuring the war-torn countries and give incentives to the locals to stop destroying the forests and wildlife. Now that they could make a living from the farms, they didn’t need to eat the wild animals. This one was in remembrance of Gigo, who had so looked forward to seeing the wild animals in Africa just before he was killed. I ensured the Angolan mission HQ had a small memorial to the late Mr Gigo Ninoshvili.

  The charity was an opportunity to combine a few trips to Africa for the arms dealing business with unique PR photo opportunities. I was surrounded by smiling children in one photo and by jumping antelopes in the next. And honestly, this charity wasn’t used for money laundering. I really wanted to save the wild animals.

  I donated a collection of paintings to the British Museum and organised a huge PR event around it. It was a collection that had apparently been stolen by the Nazis from some poor Brits, who happened to be trapped in continental Europe during World War II. When Berlin was liberated it was stolen by the Soviets. Now it found its way back to its rightful home in England. I say rightful, but evidently the English stole it before everyone else from Egypt.

  My PR experts managed to bring a prominent financial magazine reporter to Kiev to make a favourable article about Neplokho Energy and its modest and decent controlling shareholder. The story was about the outstanding, self-made industrialist and politician who humbly started from nothing in communist Kiev. He was now fighting for modernisation, westernisation, Ukraine joining the EU, the rule of law and the protection of social rights for his thousands of employees. And this wonderful guy was no one else but me.

  Even I started to believe all this horseshit. The PR machine was working. It reminded me the Soviet propaganda machine.

  I wanted to be an active member in Davos World Economic Forum, lecturing about global competitiveness in emerging Eastern Europe. Can you imagine me lecturing on competitiveness? As I mentioned before, bullshitting was one of my strengths.

  The community in Davos was rather exclusive, so I needed John to work his magic in Washington DC. I called him into my office.

  “Johnny, I have a job for you. I want you to fly back home to America tomorrow. I’ve spoken with the lobbying firm working for me. They would arrange for you to meet with a number of Democratic and Republican senators. Your task is to organise for me an invitation for Davos, as one of the mentors. I also want you to arrange for me personal meetings with at least one or two senators.”

  “Oh, Michael. You know that I’m afraid of flying. It’s a real torture for me,” John moaned.

  “I don’t give a hairy crack of a rat’s ass how you get to America, but you have to be in Washington on Wednesday. If you know a way to get there by car, fine with me. May
be you can swim across the Bering Strait between Kamchatka and Alaska. Maybe they’ve built a bridge there. I don’t give a fuck.”

  It actually worked. John did what he was asked to do and did it well. Obviously, he was a strong player on his home turf. He arranged my invitation to Davos where I met a few senators.

  All my efforts soon paid off and people started to perceive me differently. While before I was an unknown, wealthy criminal, now I was a well-known, wealthy, supposedly legitimate businessman. It was all about the image. If people associate you with money and Russia, then you’re seen as a criminal. If people associate you with money and style, then you’re perceived as legit.

  Being more well-known actually brought new business opportunities. I was invited to events and had the opportunity to mingle with the rich and famous. I didn’t need so many introductions anymore before meeting politicians and other businessmen. Just being in the same events and circles together with them showed them that I was serious.

  The leopard changed its spots. But with spots or stripes, a leopard remains a leopard.

  22 Wild Boar Hunting

  Kiev, 2003

  After a rather turbulent time, I felt at peace with myself again. I had time to think over the previous events while in ‘exile’ and I reached some conclusions. My naivety was gone. All the bullshit about changing the world almost killed me. It was just a waste of time. I had re-evaluated my goals in life and decided to aspire to top the list of the wealthiest of Forbes magazine.

  I experienced different kinds of businesses. I spent time with politicians. I tried to be a politician and change the world. I thought that I better understood how the world works. Time after time my life experiences taught me that money was the absolute mean. For many it was also an ultimate goal. I finally convinced myself that money was the only name of the game. When I realised it I decided to dedicate myself to reaching the number one place in it. If the game was money, the person who had the most was the winner and logically the most successful. Wars and football games weren’t won with superior soldiers or players, but with more money than that of the opponents.