Sobchak himself was the most nationally visible of St. Petersburg’s leaders; he had become prominent when he chaired the commission that investigated the deaths of nineteen peaceful demonstrators in Tbilisi, Georgia, when KGB and MVD troops put down demonstrations there. The commission assigned blame to top generals and implied that KGB provocateurs had infiltrated the crowd. So Sobchak’s role as a preeminent democrat and someone who was reviled by KGB leaders was firmly established by 1990 and was reflected in their subsequent writings about him.208
When Putin went to work for Sobchak, he immediately began to gather around himself the core group of people who would work with him throughout the 1990s and into his presidency. They came from varied backgrounds in the KGB, the Main Intelligence Directorate (Glavnoye Razvedyvatel’noye Upravleniye, GRU), Komsomol, and legal and business circles. Among these, the inner core consisted of Dmitriy Medvedev, Igor Sechin, Viktor Zubkov, Viktor Ivanov, Aleksey Kudrin, German Gref, Sergey Naryshkin, Dmitriy Kozak, Aleksey Miller, Vladimir Kozhin, and Nikolay Shamalov. Medvedev would be president in 2008–12 and prime minister after 2012; Sechin and Miller eventually became chiefs of the state-owned companies used as two key instruments of Putin’s foreign policy, oil and gas; Zubkov has stood astride the tax inspectorate as well as serving as prime minister for a time; Gref and Kudrin controlled the largest bank and the Ministry of Finance, respectively; and Ivanov, Kozak, Kozhin, Naryshkin, and Shamalov have served in various capacities. Of this group, Ivanov, Kozak, Kozhin, Naryshkin, and Sechin were targeted as part of the 2014 U.S. sanctions.
The newspaper Vechernyy Leningrad interviewed Putin about his responsibilities as the new chairman of the Committee for Foreign Liaison in August 1991, two weeks before the attempted coup. He already anticipated that his committee would have “a hard currency–economic department, an administration to service foreign representatives and registration chambers, and an administration for humanitarian connections.” He called for eliminating restrictions on travel abroad but also underlined the importance of vetting would-be foreign investors and preventing Gorbachev’s kooperativy (cooperatives) from having links with foreign investors without proper supervision: “Anarchy in this area is impermissible. Representation of the city’s interests in the international arena must be centralized and meticulously prepared.”209
In his role as deputy mayor he was responsible for oversight of all law enforcement, the Administrative Directorate of the city, the Hotel Directorate, the Justice Department, the Registration Chamber, and the Public Relations Directorate. He was also still in the KGB’s active reserves until at least August 1991, and it seems clear that initially he was placed with Sobchak by the KGB, which was trying to monitor the emergence of democratic leaders—a fact that Sobchak himself was evidently aware of.210 Interviews with foreigners who did business in Russia universally reported that if you wanted to get something done in the city, you worked through Putin, not Sobchak.
As a former KGB operative in East Germany, with dealings in East-West German economic relations, Putin had more experience than most Russians in foreign economic relations. And he started using those connections as soon as he returned to St. Petersburg from Dresden, when he helped Leningrad State University form a joint partnership with the city and Procter & Gamble. As the CEO of Procter & Gamble subsequently noted, “Years later, in 1999, in the course of preparing for a tax audit, we discovered that Vladimir Putin, who by then was prime minister of Russia and later became president, had signed the Joint Venture P&G USSR registration document while he was chairman of the Committee for Foreign Liaison.”211 So Putin helped establish the relationship while he was at the university but then expanded it to include the city when he started working at the mayor’s office.
In the mayor’s office, Putin dealt with literally thousands of foreign and native investors, from Coca-Cola to organized crime bosses. Because foreign exchange controls were draconian in the early 1990s, money could not go abroad without the approval of his KVS. Businesses that wanted to be established legally in St. Petersburg had to be licensed and registered, not least so that any profits could be taxed. The KVS became an early co-investor in numerous financial projects, buying shares in new companies, presumably with access to the Mayor’s Contingency Fund, a virtual slush fund under Sobchak’s control that his deputies presumably had access to in order, like in any city, to make the trains run on time. His activities came under scrutiny when money started to disappear abroad. To be sure, he was operating in an environment that was rife for exploitation by organized crime. A well-known Russian specialist on criminal activity in St. Petersburg estimated that the main areas for organized crime at the time were “bank speculation (shady transactions); fictitious real estate transactions; stealing and reselling cars; illegal export of non-ferrous metals; black-market transactions relating to humanitarian aid (bribing city functionaries for a wholesale purchase); production of and traffic in fake hard liquor; arms sales; and counterfeiting money.”212 These actions were evidently more significant financially than the usual mafia activities related to gambling, the sex trade, and narcotics.
Putin relied on his core group to aid him in his extensive efforts. Medvedev, who kept a desk outside Putin’s office,213 provided the KVS, and Putin, with legal counsel throughout. He also maintained a private practice, serving as a lawyer for clients that included the insurance company Rus’, headed by Vladislav Reznik, the influential St. Petersburg businessman who has been a Duma deputy since the late 1990s. Medvedev is said to have been the cofounder and 50 percent shareholder of a company called Fintsel.214, XXX The St. Petersburg procurators who were looking into Putin’s own corruption evidently also gathered information on Medvedev, subsequently concluding, “According to a statement of the Audit Chamber [Schyotnaya palata] of the Russian Federation, already in 1994, the humble clerk Medvedev owned 10% of Europe’s largest pulp and paper mill. Even then he was a millionaire. And this was only Medvedev, Putin’s advisor. Can you imagine what kind of money was already owned by his boss?”218 Irrespective of the percentage, there is general agreement with Medvedev’s own statements that he owned the shares but subsequently sold them when he entered public service.
Igor Sechin had worked abroad with Soviet forces in Mozambique before joining the sister cities department of the Leningrad KVS.XXXI Sechin and Putin are said to have met in 1990 on an official visit to Brazil, where Sechin worked as Putin’s translator. He started working with Putin in June 1991 as head of the administrative apparatus of KVS and went on to become one of the heads of the silovik faction in the Kremlin and deputy prime minister. Putin has always relied on Sechin as his personal adjutant. In 1993, when Putina had had a serious car accident and couldn’t reach her husband, it was Sechin who was called to collect one of their daughters who was also in the car.220 Putin would take Sechin with him when he went to Moscow in 1996, and Sechin has worked alongside him since then, advancing as Putin advanced. One cabinet minister is reputed to have said in 2004, “Sechin is not just Putin’s sounding board, Sechin is part of his brain cells.”221
Viktor Zubkov had been a state farm director and regional Party official in the Priozersk district northeast of Leningrad in the Soviet period.222 As chair of the Priozersk Municipal Executive Committee in the early 1990s, he was said to have secured the land where the Ozero dachas for Putin and his circle were ultimately built.223 He went on to become first deputy chairman of the Leningrad Oblast’ Executive Committee of the CPSU as the USSR collapsed, an important position given its role as the incubator for Bank Rossiya. In January 1992 he joined the KVS as deputy chairman, with a special focus on agriculture; he stood side by side with Putin during the food scandal, in which tenders were provided for exporting Russian raw materials to barter for food that never arrived.224 Having survived this scandal, from November 1993 to November 1998 he was chief of the St. Petersburg Department of State Tax Inspection and simultaneously deputy chairman of state tax inspection for the city. He was well placed to
shape the policy that emerged in the early 1990s of using tax inspections as a vehicle to push unwelcome competition from the Russian market, as occurred when the Swedish owners of the Grand Hotel Europa were forced to withdraw from the city.225 Zubkov would later be prime minister under Putin and chairman of the board of directors of Gazprom.
Viktor Ivanov also had a background in the KGB, beginning in 1977 with unknown assignments for the first seven years, then serving for a year in Afghanistan and then in Leningrad/St. Petersburg from 1988 to 1994, where he headed the local KGB’s anticontraband unit. It was reported that on Putin’s recommendation, Ivanov was hired to head the administrative staff at the mayor’s office as well as heading the city hall office in charge of liaison with police and security agencies. When Sobchak lost reelection in 1996, Ivanov worked locally in Petersburg for two years, and in 1998, when Putin became head of the FSB, Ivanov became head of the department for internal security at the FSB and then in 2000 became the deputy head of the Presidential Staff responsible for all personnel. He has a reputation for being “authoritarian” both in his personal style and in his philosophical outlook.226 In the Kremlin he was widely associated with the most authoritarian group, coalescing around Sechin, whose position could not have been cemented without Putin’s blessing and general philosophical alignment. As the veteran analyst Andrey Piontkovskiy commented, “It’s no secret that Putin’s political philosophy and favorite concepts—managed democracy, administrative vertical, dictatorship of law, a ‘control’ shot to the back of the head, etc.—are close to this group.”227
Ivanov also has a reputation for closely controlling access to Putin and vetting all appointments for loyalty to the system’s core objectives. In 2001 he was also appointed to represent the state interest on the boards of the Antey Corporation and Almaz Scientific Industrial Corporation (later merged to become Almaz-Antey and one of the country’s largest arms exporters), developing and producing air defense systems, including the S-300 and S-400 antimissile systems. In 2008 he was made chief of the Federal Drug Control Service and a member of the Security Council.228 His role as the gatekeeper to Putin since 1994 earned him a place on the U.S. government sanctions list.
Aleksey Kudrin was head of St. Petersburg’s Committee for Economy and Finance until 1996. He was also a deputy mayor until 1996, when he moved to Moscow, becoming first deputy chief of the Presidential Administration, then deputy minister of finance under Yel’tsin, and then minister of finance and deputy prime minister in 2000, staying in the government until 2011.
Along with him rose another economist from Petersburg, German Gref, who served as deputy director of the city’s Committee for Property Management before going to Moscow as first deputy minister of state property and then as minister of economic development and trade in the first Putin government. In 2007 he became the new president of Russia’s largest bank, Sberbank. Both Gref and Kudrin appeared to be drawn to Putin less because of his KGB past than because of his embrace of liberal economic policies and his clear ability to move the paper and get things done in St. Petersburg at a time when most people were paralyzed by the “alegal” political situation and the total eruption of criminal activity at all levels.
Sergey Naryshkin was another native of Leningrad/St. Petersburg, who, according to Gazeta.ru, studied at the KGB Red Banner Institute in the same group as Putin.229 He was attached to the Soviet Embassy in Brussels in the late 1980s and early 1990s as a third secretary, though some reports claim he was stationed there as a KGB officer.230 Upon returning, he headed the foreign economic relations subdepartment of the Committee for Economy and Finance in the mayor’s office. In 1995 he left to head the foreign investments department of the Promstroybank, owned by Vladimir Kogan, known at that time as Putin’s personal banker, insofar as in the 1990s “Kogan was president of a bank in which Putin was a client and a shareholder.”231 A biography of Naryshkin in the Moscow Times notes, “The bank attracted major clients as multinational firms quickly learned that connections were key to winning privileged contracts in a city slow to adapt to the country’s new capitalist spirit.”232 Naryshkin became chief of the Presidential Administration and speaker of the State Duma. Kogan stayed behind the scenes but continued to have a close relationship with Putin throughout his presidency. Describing this relationship, head of Moscow’s Center for Political Information Aleksey Mukhin observed, “Since 2000, Kogan has been meeting regularly with Putin in the Kremlin. These meetings have not been publicized, but as a result of them Kogan has implemented various ‘social projects.’ ”233, XXXII
Dmitriy Kozak graduated with a degree in law from Leningrad State University and served in the GRU from 1976 to 1978.234 He was deputy head of the St. Petersburg City Hall’s legal department in 1990–91 and subsequently headed that department. He stayed on in St. Petersburg, working in the office of Sobchak’s rival and successor until 1999, when he went to Moscow to become head of the government staff when Putin was named prime minister. When Putin became president, Kozak was named deputy chief and then, in 2003, first deputy chief of the Presidential Administration. He has a reputation as a technocrat and as someone people want to work with—which is not something normally said of others in Putin’s circle. He has had a number of substantive appointments: plenipotentiary to the Southern Federal District, regional development minister, and deputy prime minister in charge of the Sochi Olympics. In 2014 Putin gave his Ukrainian-born ally responsibility for the incorporation of the newly annexed Crimean Federal District’s social, political, and economic institutions into Russia’s.235 In April 2014, he was added to the U.S. government’s sanction list.236
Aleksey Miller, trained in Leningrad as an economist, replaced Aleksandr Anikin as Putin’s deputy in the KVS, where he served from 1991 to 1996. When Putin went to Moscow, Miller stayed on in St. Petersburg, first as director for development in the Port of St. Petersburg and then as director general of the Baltic Pipeline System. He became deputy minister of energy and then head of Gazprom under Putin.
Vladimir Kozhin came up through Leningrad Komsomol circles and established an early Russian-Polish joint venture called Azimut International, evidently agreeing to bring in Putin’s Committee for Foreign Liaison as a partner when it was registered.237 He then worked for Putin as assistant to the deputy mayor and in March 1993 became the director general of the St. Petersburg Association of Joint Ventures, which had earlier secured the shares from the CPSU’s Leningrad oblast’ bank to create Bank Rossiya, and then transferred those shares to the Ozero Cooperative founders. From 1994 to 1999 he was the chief of the Northwestern Center of the Federal Directorate for Currency and Export Control of Russia. While he was there, according to Novaya gazeta, the office of the procurator in St. Petersburg started a criminal case against Kozhin under Articles 170 and 293 of the Criminal Code for buying a holiday in Bulgaria for himself and his wife from the tourist agency St. Petersburg Holidays, paid from the accounts of the Northwest Center. The newspaper reports that according to their information in 2001, this case was never closed.238, XXIII
Kozhin’s ability to control the movement of money across borders made him a key part of what he called “Team President.” He became the head of the Presidential Property Management Department under Putin in 2000 and has remained in that position ever since. All state-owned or -supervised property, including the Kremlin and all the official and unofficial residences of high government officials, including “Putin’s Palace” in Gelenzhik, are under his authority. As such, Kozhin has been part of what he himself has described as “a small informal club of people who can be called team president in the narrow sense—who came in 1999–2000, from St. Petersburg, and who are now working in various capacities. We try to get together at least once a month, just to see each other, have a beer, play pool, and talk like a human being, without bringing up politics. We always emphasize that we are there not on the basis of the position we occupy, but on the basis of our relationship to each other. And as far as I can judg
e, for eight years, these relationships have not changed.”239 Kozhin’s wife, Alla, was the Putin family dentist and was also close to them.240 Kozhin admitted to having a close relationship with Gennadiy Timchenko for a long time, “when St. Petersburg was Leningrad, the country was different and he and I were both other people.”241, XXXIV
Nikolay Shamalov, who was originally trained as a dentist, worked for Putin’s KVS in 1993–95 and became the representative of Siemens in Russia’s northwest. He was a cofounder of the Ozero Cooperative and was listed as the legal owner of “Putin’s Palace.”244 But before this, he and Putin had established a relationship through Petromed. Kommersant reported on November 21, 1992, that Putin himself, as deputy mayor of St. Petersburg, had “signed a decree authorizing the City’s Finance Committee to transfer to Vneshekonombank loans and guarantees in the sum of 450 million rubles [$1.6 million] for the purchase in Germany of medical equipment for City Hospital No. 2. The sum was to be covered by a commensurate reduction in city expenditures.”245
To carry out this project, Putin turned to a newly formed medical equipment company, Petromed. It was formed by Dmitriy Gorelov, who had studied with the future minister of health Yuriy Shevchenko at the Military Medical Academy in St. Petersburg, and Andrey Kolesnikov, a biophysicist from the Polytechnic Institute who had previously established a cooperative to manufacture medical devices for sale to the city’s health department. But then Putin had a bigger idea: to import much larger amounts of equipment from abroad. Thus this small start-up co-op linked up with the city. Putin’s Committee for Foreign Liaison got 51 percent of the shares; 10 percent went to the city’s Committee on Health, and 39 percent to the newly formed Center for International Cooperation, headed by Gorelov. In January 1992 the same team founded Petromed. Kolesnikov subsequently confirmed that the renovation of Hospital No. 2 was Petromed’s first big project, involving 95 million Deutschmarks of imported equipment. On the German side was Siemens, and the representative of Siemens to the northwest region of Russia, including St. Petersburg, was Shamalov, who was hired by Putin in 1993.
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