Issue #20/101, October 12 - 26, 2000   

PILLOW TALK: Secret Conversations of the Men Who Stole Russia

By Matt Taibbi

For years now it’s been axiomatic that Russia is an extraordinarily corrupt place—a criminal oligarchy, run like a giant mafia clan, where thievery is the chief industry and swag the #1 export. It’s a notion that’s so widespread now that even the New York Times and the Washington Post reluctantly agree, between the lines. In fact, since the August crash two years ago, virtually everybody agrees that Russia’s businessmen aren’t businessmen at all, but mobsters who cruise around town in cars with rubber-lined trunks, their ears pressed to cell phones open permanently to hotlines with their banks in Antigua and Switzerland.

But knowing a thing is different than seeing it up close. It’s one thing to know your wife is sleeping around on you, and another to walk in on her doing a double-cowgirl with a pair of Miami Dolphin linebackers. That experience leaves you with images you’ll never forget: that familiar pair of twitching pink ankles, buried under a groaning mass of black muscle; a balled-up pair of sweat socks at the foot of the bed, next to a shiny sea green Starter jacket; that little hand clutching a clump of blanket; a faint moan, then a cry of pain...

Should you have averted your eyes? For years to come, that question will ring in your ears round the clock, keeping you up at night. Maybe you should have, you think it would have been better not to know. Then again, there is something strangely compelling about the whole thing, fascinating even, which leads to run the scene over and over again in your head. Horrifying at first, after a while it becomes... a sort of recreation.

If you’re one of those people who would have chosen to avert his eyes, then stop reading now. If you’re not, then you’re in luck. A little over a week ago, the eXile’s sister publication in Russian, Stringer, published an anthology in book form of taped phone conversations between the Russian oligarchs and their minions. Some of the transcripts had been published previously in newspapers such as Moskovsky Komsomolets and Novaya Gazeta; others had been posted on the web on sites such as www.flb.ru, while still others had never been released in all.

Taken as a whole, the Stringer book— entitled “Yellow Pages: A Telephone Directory for Would-be Practioners of Big-League Politics”—reads like a Greatest Hits compilation of Russian corruption. All the famous phone calls are there: the phone call from Anatoly Sobchak to Anatoly Chubais, in which the former pleads to the latter to kill his criminal case; the obscenity-laden “Ye-Vs-Na Kh-” call starring Primoriye Deputy Governor Konstantin Tolstoshein; the “Grigoriyev sends everybody na kh-” call to Sergei Lisovsky from an angry Boris Nemtsov, whose “book advance” had not yet been delivered.

But more interesting even than those calls that are scandalous on their face are the ordinary, everyday calls between people like Alfred Kokh and Vladimir Potanin, Boris Berezovsky and Sergei Dubinin, Kokh and Oleg Boiko. In these calls the reader is able to see up close those balled-up sweat socks and those shiny Starter jackets—perceive firsthand how business has been done in this country in the past five years or so, and what the major players were thinking about while they were doing that business. You can listen in as they laugh off criminal investigations and casually discuss things like the manipulation of markets and the bullying of journalists. The very absence of drama and histrionics in these calls testifies to a level of cold-blooded cynicism that is impossible to conceive of by reading the distant, dry references to corruption in places like the New York Times. To understand what Russia’s oligarchs were all about, you have to examine them up close, listening to their caveman-ish jokes they make on the connubial bed—all the while keeping your eyes open to watch the whole ugly act from beginning to end.

Beginning with this issue, the eXile will regularly publish excerpts in translation from the Stringer book, providing commentary to help readers make sense of the seemingly obscure references in the text. We’ll commence the feature in this issue with a sampler of five or six phone calls, some notable for their humor, others for the insight they provide into events long past. We worked with Stringer editor Leonid Krutakov and staffer Alexei Fomin, who compiled the book, to draw out the context of these amazing conversations.

We begin with a call between former Central Bank chief Sergei Dubinin and that all-star of bugged-phone all-stars, Boris Berezovsky.

1. PROBLEM SOLVING

It goes without saying that a large part of the Russian oligarch’s business involves heading off trouble posed by one’s political enemies. Step one of that process involves seeing the trouble before it comes; step two involves conspiring with one’s accomplices to decide upon the right course of action; and step three involves actually taking action. In this phone call between Dubinin and Berezovsky, we see the outlines of all three steps.

In September, 1997, Stringer editor Leonid Krutakov—then nominally a staffer with the new Berezovsky-funded paper Noviye Izvestiya—published an expose in Moskovsky Komsomolets detailing Berezovsky’s scheme to embezzle funds from the state airline Aeroflot. The article asserted that Berezovsky had shipped Aeroflot money to Switzerland using forged hard-currency export licenses provided to him by Dubinin, then the head of the Central Bank. In the wake of that article, a criminal investigation was launched by the General Prosecutor’s office into Berezovsky’s activities. Part of that investigation included a tap on Dubinin’s phone. This phone call was one of many that General Prosecutor Yuri Skuratov harvested from that wiretap.

Krutakov and Fomin place the time of this phone call at the end of 1998, or very early in January, 1999. Specifically, this was the time after Yevgeny Primakov had announced that he was issuing an order for Berezovsky’s arrest, and just after Skuratov was derailed by the famous “Person resembling Yuri Skuratov” video. As you’ll see from this phone call, the timing is important:

CALL: SERGEI DUBININ AND BORIS BEREZOVSKY

B: Hello there.

D: Hello. I wanted to have a quick word regarding our scuffles with the prosecutor’s office. Everything’s going along nicely now on television. I think that... thanks for that, we seem to have everything under control.

B: No need for thanks [inaudible word]. We were discussing [inaudible word].

D: Here’s what really concerns me: obviously, it was no accident that he proposed moving the whole discussion to the Security Council. I think that the power ministers there have a certain prearranged position, and they want to take certain [?] political measures from that. They don’t have enough to go for anything criminal, so they’re pushing the political angle, and on behalf of the President no less. This is the Security Council, understand? If the President himself is being set up like this, then you’re all in trouble.

B: I wasn’t aware of how the situation had developed—I’m not in Moscow, I’m still in Switzerland.

D: Oh, I see.

B: I think in general there’s a chance to [inaudible] on this process.

D: It seems to me that right now no one at the Security Council needs this judgment of the market economy.

B: Of course they do, Primakov needs it, everyone understands that perfectly. Primakov is playing an entirely different game, that’s clear to everyone.

D: Of course.

B: This is where the Primakov’s position fundamentally diverges from those of myself and the other members [inaudible]. That’s why I’m going to [inaudible] on every lever to put a stop to this.

D: Generally, it would be better, roughly speaking, not to send it to the Security Council, to say that’s not the right place to move it.

B: Where did you get this information that it’s before the Security Council?

D: He said so in the press. He said that he’s proposing going to the President with this thing. Apparently he sent some kind of document there.

B: The thing is, his days are also numbered, this Skuratov.

D: But as far as I know, he intends to behave differently. He’s not going to submit his resignation.

B: If he doesn’t submit his resignation, then he’s creating a colossal headache for himself.

D: Nevertheless.

B: Well, do you have [inaudible] information?

D: Yes. So, even if...

B: If the President proposes, will he give in?

D: Yes.

B: Mm hmm, well...

D: He’ll move off into clear-cut opposition.

B: Very good, that will do nicely.

D: Who the hell knows.

B: I’m serious, I tell you.

D: I think we’d be better off with a normal, accountable, competent, honest individual.

B: That last one is especially important, because this swine is a communist through and through.

D: Really?

B: Yes. All right. Thanks for telling me. I’ll pass it on as well. And I think [inaudible word] there so they don’t look into it.

D: Sure, you’ve got to defend yourself.

B: OK.

D: Thanks, Boris.

B: Thank you. So long.

This phone call highlights one of the remarkable features of these transcripts: the fact that some of the principals actually seem to believe that they’re on the right side about things, and that their battles with each other are truly ideological in nature. Berezovsky here is anxious to see an “honest” Prosecutor—i.e. one who won’t continue the criminal case against him— replace Skuratov, who he seems quite sincerely to believe is a “communist swine” out to punish him, the honest capitalist. One could chalk this up to sarcasm, but this phenomenon surfaces often enough in other calls to make it seem at least vaguely possible that they mean what they say. “I very often have the suspicion that they actually believe this stuff,” says Krutakov.

We all know how this story ended. Skuratov was eventually moved out, “honest” Vladimir Ustinov was brought in, and Berezovsky’s case began gathering dust.

2. ENSURING FAIR COVERAGE

In the late nineties, Russia’s oligarchs started buying up newspapers left and right. Astute observers saw right away that they were controlling the content of their publications and using them to attack their commercial and political enemies. By 1998, all sorts of commentators were beginning to complain that the free press was under siege by corrupt commercial interests. Journalists who wrote things the wrong way were beaten, even assassinated; once-respectable publications like Izvestia and Komsomolskaya Pravda went completely in the tank for their mafia sponsors.

By the end of the Yeltsin era, everyone knew that the oligarchs were controlling the media. But just how hands-on was their involvement?

The phone conversation below, between Izvestia editor Mikhail Kozhokin and Oneximbank chief Vladimir Potanin, helps shed some light on the matter. Kozhokin, eXile readers may recall, was the bought-off hack eventually brought in to replace Igor Golombiyevsky, the previous editor of Izvestia, who was fired after running an article (written by Krutakov, incidentally) which exposed a $3 million no-interest loan agreement between Alexander Smolensky and Potanin ally Anatoly Chubais. Golombiyevsky fought his removal but was eventually defeated in an event which signaled a sort of Alamo for the Russian free press. Potanin, whose Oneximbank held a large stake in Izvestiya, found the new editorial leadership of the paper to be much more compliant.

It is not clear just exactly which event in the Primoriye Potanin and Kozhokin are referring to in this article. But the depth of Potanin’s involvement in the day-to-day affairs of Russia’s print media is made very clear in this call:

CALL: MIKHAIL KOZKHOKIN AND VLADIMIR POTANIN

P: Hello, Mish.

K: Hello, Vladimir Olegovich.

P: I hope you’re not fed up with late night phone calls?

K: No. It’s just my wife. First she says I’m not here, then she asks who it is.

P: Something wasn’t right.

K: Yes.

P: Mikhail Mikhalich, I was looking over the events planned for the week. I see that on the 5th in Vladivostok Nazdratenko is arranging some kind of event to solve the region’s criminal problems. This is an official event, it’s right up your alley. It seems expedient to me to coincide the media actions we had planned with this event. Specifically, we should gather up everyone right now and send them out there.

K: I already discussed this today, and some people from Russky Telegraf are going.

P: We should send people from everywhere.

K: All the same, it’s better to break things up a bit. There’s going to be a big interview with him in Izvestiya this week. They’re going to call up this week and make arrangements.

P: Besides Russky Telegraf, who else can we send?

K: I think we’ll be able to send somebody, but from other papers.

P: That’s exactly what I mean.

K: Yes. I mean not from our papers, but from other ones.

P: We don’t need to send anyone from ours. We should have, say, two or three publications be present and write something about it.

K: OK.

P: The writing—let them try to come up with something, as usual. In principle, I could outline a few ideas for you that would be interesting, for example, they do some research once they’re there, and cover it if it seems good. We could probably do that tomorrow. When do you think they’ll be flying out?

K: Well, tomorrow’s the 4th.

P: They’ll have to fly out tomorrow.

K: Yes.

P: Of course, we could discuss it all by phone. I’ll give you a hint right now, you’ll get the idea. So, along with coverage of the event as such, we also want what we discussed, the situation in Primorsky krai and everything else.

K: Yes.

P: The topic is criminal, so we can cover that topic a bit as well.

K: Yes.

P: Yes?

K: Yes.

P: A historical retrospective.

K: Yes, of course.

P: Good, that’ll do. All right, I won’t bother you about this any further.

K: OK. Did they pass on the information about that call with the fellow from [doesn’t finish]?...

P: Yes, they gave me the info about the call. The only thing I gathered there was that it was on Channel Two at the end of December. Is that right?

K: Yes.

P: OK. That means we need two things now. Relatively speaking, a list of what will be done on the basis of this arrangement, i.e., roughly how it’s going to look. Remember, you said there would be some specific touches?

K: Yes, on the news programs.

P: A list, so we can pick out our sort of “savior” [inaudible].

K: Yes.

P: So I can warn the fellow that such and such is going to appear, and that it’s going to be in roughly such a fashion—that way he’ll be able to keep track. That’s the first thing. Second, let me know tomorrow who went to Primorye.

K: OK.

P: Agreed?

K: Agreed.

P: So long.

Probably the most interesting part of this call is the passage in which Potanin and Kozhokin talk about sending reporters “not from our papers, but from other ones.” It used to be said that oligarchs controlled only the information in newspapers they themselves owned. Not so; there are other ways of getting the news out. Without knowing specifically what these two are referring to here, it seems logical to assume they were talking about arranging for “zakazukhi”, commissioned articles by reporters in other publications.

Rumors abound these days that Vladimir Potanin is on the short list of candidates to assume control of parts of Vladimir Gusinsky’s crumbling Media-Most empire.

3. PRESSING THE FLESH

Scary as they are, oligarchs and their friends can’t make money on their own. In Russia, they need help from the state. Specifically, they need the ear of influential politicians, who can help them gain the contracts—or simply give them the properties and licenses— that they need to get by.

In this phone call, we see an old oligarchical hand who been roughed around a little—Alfred Kokh—sucking up to Yeltsin aide Ruslan Orekhov (at the time, head of the Presidential Legal Department) in the wake of the August crisis. Kokh had only a year before been head of the State Property Committee, only to lose his job after being caught in the infamous “book advance” scandal. He left his government job to join the infamous Montes Auri fund, which is where he is working at the time of this call.

There’s nothing particularly illegal being discussed in this call from Kokh’s side—just some good old-fashioned intelligence-gatherting. If you work at an investment fund, it of course helps to know which way the wind is blowing regarding the possible dissolution of the parliament, which of course affects the market. Here Kokh and Orekhov discuss Viktor Chernomyrdin’s chances of being confirmed as Prime Minister:

CALL: ALFRED KOKH AND RUSLAN OREKHOV

K: Ruslan Gennadyevich, hello.

O: Hello.

K: How’s it going?

O: As usual.

K: Admit me [for a visit], please.

O: What if it’s not today?

K: Tomorrow then.

O: OK, tomorrow. Call me in the morning.

K: Ruslan, let’s set the time now. You’re hard to reach.

O: I’m always hard to reach. The problem is, we’re deciding on the problem with the dismissal of the government tomorrow. So you see, I just won’t be around.

K: I don’t insist. Let’s agree on Friday, but firmly.

O: I’d rather deal with all that after today’s voting. You called today, so call again tomorrow.

K: What a bastard you are.

O: I just want to find out how this whole business [lit. song] is going to turn out for us.

K: How’s it going to turn out. Tell me what you know.

O: Fuck knows. I don’t know. Today, for example, an hour ago the prime minister’s analysts gave him their report. They count anywhere from 210 to 240 votes.

K: So it’s still dangling in the balance.

O: Yes. They’re anywhere from 15 under to 15 over.

K: What’s he so worried about. No matter what, BN isn’t going to dismiss the government, he’ll dissolve the parliament first.

O: As I understand it, first of all, the prime minister isn’t so sure about that. Second, to all appearances, they’re going to resign if the vote passes today. And if they resign, this creates all kinds of problems for us, purely technical things—for example, they’ll have to submit their candidacies to the Duma, write it all up. Write up how the government is to be run during this time. This only bothers me from one viewpoint. I don’t care how they work things out among one another, what concerns me is the share of things I’ll have to handle after all that. You know how lazy I am.

K: Don’t be so hard on yourself.

O: So let’s get in touch tomorrow morning. Then I’ll know for sure.

K: Join up with me. I understand that you’re not much interested in petty investment bankers. I’ll tell you all kinds of interesting little things, how our market’s operating.

O: I heard something about the market starting to fall on Friday.

K: Yes, it’s falling. It was up, for about three days it was up the week before last, then it stabilized. And today it’s fucking... another three tenths of a percent. But it’s hardly fucking.... Let’s just say that it’s stable. It was up, then it went back down. But it’s still above the August peak.

O: That’s good. I guess that means we should send Dima Vasilyev his bonus.

K: What’s Dima got to do with it?

O: Who’s responsible for the market then, you?

K: He’s not responsible for the market. He’s responsible for regulating the market, but not for the quotations and not for bringing in Western investments.

O: But things can be regulated in such a way that nothing comes of it. You know yourself.

K: OK, OK. We’ll give Dima his bonus.

O: All right.

Obviously it’s funny that Orekhov, a government official, would be talking about giving Federal Securities Commission chief Dmitri Vasiliyev a bonus for “regulating” the market in way that “nothing comes of it.” It’s even funnier to see Kokh, the private businessman, as it were, reluctantly giving Vasiliyev his due—and agreeing to his bonus.

Within two years Kokh would be a big-time heavy again, this time as the head of Gazprom-Media, the quasi-governmental group set to move in on Vladimir Gusinsky’s media empire. Gusinsky was an ally of Kokh ally Anatoly Chubais throughout most of Kokh’s tenure in government, although Kokh did arrange things in such a way that Gusinsky lost the auction for the state telecommunications company Svyazinvest.

4. GLOATING

When all’s said and done, and a hard day’s work is in the can, it’s Miller Time. In this phone call, Boris Berezovsky snickers on the phone with an unidentified associate about the downfall of the abovementioned Kokh, a downfall Berezovsky—who was another Svyazinvest loser with a gripe against Kokh-had almost certainly engineered himself.

CALL: BORIS BEREZOVSKY AND AN UNIDENTIFIED MAN

B: That’s not important, I’ll wait for you as long as is necessary.

M: After the Kremlin, I’m coming right to your place.

B: All right.

M: No, not to your place, rather “Sh-1” [Sheremetyevo-1 airport].

B: OK. Second, did you hear BN’s [Yeltsin’s] statement about Kokh?

M: Not yet.

B: A fantastic statement.

M: A good one?

B: Staggering. He said that Kokh was compelled to leave because he too obviously displayed a preference for one or two banks, which is intolerable.

M: A splendid statement.

B: It’s even more serious.

M: I’ll take it now.

B: Take it.

M: Don’t you want to tell me the third thing?

B: No. It’s regarding Ivan Petrovich’s visit to “B.”

M: Good news?

B: Absolutely.

M: Thank God. Well done. But that’s of no consequence. I’m on my way to Tanya and Valya, then I’ll hurry to Sheremetyevo-1.

B: If it’s not a problem, call when you leave from there.

M: I’ll be there by eight.

B: Agreed.

M: Business aviation, right?

B: Yes. “Sh-1,” business.

M: Take care. Thanks, Borya.

B: So long.

Another interesting aspect of this conversation is the oddly subordinate tone Berezovsky takes with this person. It is hard to imagine just who in Russia would pull enough weight to get Boris Berezovsky to wait “as long as necessary”. The phone call recalls the old Soviet joke about Mikhail Gorbachev waking up one day to find his chauffeur asleep, drunk, in his limousine. In a hurry, Gorbachev puts the driver in the back seat and takes off himself for the Kremlin. Two cops stop him for speeding. When the first cop takes his license and walks back to the car, the second cop asks: “Who’s that?”

“I don’t know,” the first cop says. “But Gorbachev is his driver.”

5. EVERYONE’S A COMEDIAN

Another striking feature of the Stringer book are the jokes. Russian wiseguys, it turns out, have A-list senses of humor. In one call, for instance, Oleg Boiko accuses Kokh: “So, Reingoldovich, you’ve been hiding from me, you toad.” In another, an unidentified conversant says, “I’m eating your liver about TNK.” Here Alfred Kokh—an ally to the Chubais crew which once hauled the notorious “Xerox” box out of the White House—plays a friendly prank on Vladimir Potanin:

CALL: ALFRED KOKH AND VLADIMIR POTANIN

P: Alik, hi. What do you have there?

K: I can’t find them.

P: You can’t find them?

K: No.

P: Where’d you lose them?

K: Who the hell knows. It seems they got lost in the move.

P: During the move from where to where?

K: From the White House.

P: You had them in the White House?

K: Yes.

P: I see. OK then, what now? To hell with them. If you lost them, then you lost them. We’ll just assume it was....

K: (interrupting) April Fool’s joke.

P: Yeah, that’s a parody.

It’s unclear just exactly what Potanin wanted from Kokh, but whatever it was, Kokh agreed later on in the call to hand it over when they met at a dacha that weekend. “We’ll relax to the Max,” Potanin promises. Things are fun, when you’re running things. Or just listening in...

Anyone interested in acquiring the Stringer book should contact Alexei Fomin at stringer@stringer-agency.ru.

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