The Deceit of Riches

by Val M Karren

  ed it, defeated and deflated. The managers’ group was now on the line for close to forty thousand dollars. The room held its collective breath. Just before the gavel was dropped, Mr. P. finally put his hand and offered two million twenty-eight thousand rubles . . .and the bidding found a second wind. The price finally settled at two million thirty-three thousand rubles. It was no surprise who had the longest breath. Mr. P. wouldn’t even have to sell his Mercedes to be able to front forty thousand dollars. The bank would simply book the escrow over to the city’s account and the property would change hands without anybody even handling the cash.

  The bidders were furious. The workers’ chairwoman stood up and berated the auctioneer. The lawyer accompanying the managers’ delegation said that they would file an appeal and then both turned and started shouting at Mr. P. who didn’t show any emotion, except to check his wrist watch, his Rolex wrist watch to be exact. His arrogance oozed out of him and left rings under the armpits in his crisp white Swiss made shirt. Would either the managers or the workers still have a job tomorrow? Doubtful. They would probably be replaced with Mr. P.’s hangers-on and friends and family aligned with his current enterprises. All the current managers and staff could do was protest and shout and insult Mr. P., but everybody knew the way this auction system worked. The highest bidder had won.

  The exasperation from the observers’ table was visible as well, but they had to admit, just like everybody else in the room that the bidding process was fair and transparent and that the auctioneer followed all the rules as they had been explained at the beginning. There was no irregularity to appeal. With this ruling from the neutral observers, the managers’ delegation stood and left in a flurry of accusation and finger pointing. The chairwoman from the workers’ group looked directly at Mr. P., and told him that they would find a way to stop him from taking over their store, gathered her handbag and departed with her lawyer as well. I suppose it wasn’t the fact that Mr. P. had won the bidding, but it was the contempt that he showed everybody in the room by waiting until the very end, after driving up everybody’s hopes, and then simply outbidding them by one thousand rubles each time, just baiting them. He could have easily started the bidding at two million rubles, but instead, he tried to get it for less by waiting to understand the competition’s highest threshold. He allowed the others to feel the dream so close; the dream of working for themselves, making a good living, taking pride in their enterprise, and be rewarded financially for their labor and sacrifices; and then smashed them in an offhand fashion for just another cold investment. He then went on to buy up three smaller properties in the city for almost nothing as the other parties had all left the event in disgust, leaving him to purchase what he wished at will for prices far below fair market values. It was a disgusting display of how wealth can manipulate a system being lauded in the press and around the world as being so open, fair and transparent. The closer one looked, the less this was the reality in Nizhniy’s successes. Businesses were being privatized for the highest prices the government could earn, but at what cost? Was there not a more just way of reaching the same goal? Did the swing from communism to capitalism require rubbing the noses of the law-abiding citizens in the disdain of the illegally wealthy? Surely there was a more just way. Surely there was a way to plan for a better long-term perspective than just jettisoning assets to the highest bidders regardless of the origin of the funds. What was to be done?

  It was becoming apparent to me that through some mishap of destiny that the different options I had for writing a thesis this term were narrowing and merging and the conclusions would be one and the same, regardless of the starting point; the only way that the national and regional governments could obtain the results that they had promised to the international money lenders who were keeping Russia from falling into a deeper economic pit, was that they would have to accept that elements of the corrupt shadow economy would need to be incorporated into the official economy, and the bosses of the crime syndicates would have to be given a seat at the table of government in exchange for providing the stashed cash to keep the home fires burning. Through some sick twist of fate, Russia had become a hostage to its criminal organizations and the price of liberation was granting legitimacy to their practices by adapting the laws of the country to help them preserve their ill gotten gains for posterity. Were the people properly informed of the decisions the President and the Duma were making in Moscow that had lead to this compromise of integrity? What led to it? How did it get so far?

  14. Into the Shadows

  “Del, I need some good advice before Monday morning,” I sighed.

  “Well, you are probably in the wrong place for that. Hell, I think if we both had any good sense we would leave this place and head for the Bahamas or Puerto Vallarta and sell cold drinks on a beach for the rest of our lives,” Del said zipping up his sweater.

  “Yes, that would be good advice!” I replied with no argument.

  “What’s eating at you, kid?” he asked as he sat down.

  “You know I am busy with research for a thesis, and that if it turns out to be worth its weight in paper, could be published in June in the university’s new periodical of economics and politics. My problem is this: the theme that grabs my interest and for which I am gathering incredible data and documentation for is the privatization process of state companies. The method, the system is really bad and the people are getting ripped off, hoodwinked and robbed. The national government, and I suppose the local governments to some extent, are not being transparent about it and are privatizing everything at a huge cost to the country purely for the sake of privatizing. It’s like the ideology has taken over rational thinking and they will drive at full speed over a cliff rather than hit the brakes and reevaluate the situation before more damage is done. It’s economic suicide what is happening right now,” I forwarded.

  “Are you thinking of running for office?” Del asked mocking me.

  “If only I could, eh? The problem is this, no matter from where I start this paper it is going to have the same ending. That ending will have to name the illegal activities of some local actors in order to prove that even the much-loved privatization process, yes, right here in ‘River City’, is also falling victim to the developments out of the shadow economy. It needs to be revised to prevent entrenching the mafia goons (borrowing your description by the way) and their families into quasi-legal positions which will be nearly impossible to dislodge. It’s critical now! Without a complete collapse of the economy — and I mean a complete collapse — or legal precedence being suspended to confiscate them of their assets, they will achieve complete legitimacy and continue to wield their corrupt influences!” I was really worked up.

  “Who is the local fellow and what is he into?” Del asked curiously.

  “Mr. P. I imagine he started in common thuggery years ago, but now I am pretty sure he is running protection rackets all over the city, pimping, drugs and other contraband without paying the taxes. I wouldn’t be surprised to find that he is importing with protection through big payoffs to inspectors to avoid customs duties because the laws are so that you can’t make a profit importing cars legally. Now he is branching out in retail outlets for home electronics - and this morning he bought Nizhniy’s best-placed grocery store, so I suppose he going into consumables now,” I explained.

  “You seem to know a lot about him,” Del remarked.

  “In just the last week he has become a wall in my research. Every way I turn I come up against him. He is certainly a force to reckon with in the city. I think he may be in business with the mayor, but I have no evidence of that,” I speculated.

  “What makes you think that?” Del continued to ask short, clear questions.

  “The mayor’s office is vouching for him. I think protecting him from audits and other scrutiny because he is a good citizen on some levels. He has money to make things in Nizhniy happen, the things that politicians usually get good press for,” I remarked.

  “H
as he moved into real estate do you know?” was Del’s only interest.

  “I don’t know, but my clever Dean is somehow friends enough with him that he wants to arrange a full interview for me with him, so I can ask him about all his private ventures and learn how a modern businessman gets the job done in post-soviet Russia. I don’t know if I have the guts to go through with the interview and use it in my paper. I’d get my knees broken, that’s for sure!” I predicted.

  Els interrupted to offer good advice: “Maybe you have a bit of common sense that is stopping you from doing it, instead of not having the guts. Maybe it’s your mother’s voice you are hearing in your head.”

  Del brushed her off as over cautious, “Kid, remember, never get too deep into this place that you can’t walk away. Don't let it matter so much that your good judgment gets overridden by your ego. That’s a recipe for disaster. Gotta be able to walk away.”

  “So are you saying that I should do the interview…,” Del finished my sentence for me, “…and then yes, if it goes south, be ready to cut and run. Don’t wait around and hide and think you can just go back to life as normal after everybody calms down and moves on, because these types have a very long memory,” he cautioned.

  “This is not how I saw things happening when I left home in January. I had really wanted to stay a few years and make myself a good start here, not blow the ceiling off the place and have to high-tail it out of here burning the bridges as I go. I had really hoped to stick around and watch things change, be a neutral observer of sorts, not get involved up to my neck and then…cut and run,” I moaned.

  Els tried to bring some perspective to the discussion again, “Peter, just drop the project. There is nothing that says you need to publish in this magazine. Don’t let the Dean push you into a corner, a potentially deadly corner. I’m sure there is plenty you could write about without the Dean taking advantage of you. Have you asked yourself why your Dean would want so badly for you to go forward? What does he have to gain from it? Where are his interests? I know Del has said this to you before, but remember that everybody in Russia these days has a shadow life, the darkness of which can really surprise even spouses. So, what does the Dean have to gain?”

  “I haven’t looked into that at all, honestly. I figured the Dean is an academic and is looking for the truth like me,” I guessed.

  “Not everybody is as sincere and altruistic as you are being in this situation. Everybody has something they’re hiding. Don’t be misled into a situation that can have serious consequences for yourself while somebody else exploits your misfortune for their gain,” Els warned again.

  With the bowls empty and the bread consumed, Els began clearing the table. On that cue Del invited me into the living room with something special to discuss with me. We sat facing each other in the swivel chairs, a coffee table between each other.

  “I have an offer for you that I want you to consider,” Del stated.

  I was sincerely surprised as our relationship for the last three months was purely one of camaraderie, nothing official and certainly nothing binding.

  “I mentioned to you a few weeks ago when we came back from Germany that we had cut through some red tape and my employer was ready to take the next step. Well, that is now going forward and we’re ready to make preparations for the next step. I won’t bore you with the details but this next step will open up some opportunities that I would like your help with,” he said frankly.

  “You would like my help? I don’t know what I could possibly offer you,” I was honestly doubting I could help with much.

  “Just listen, it’s not as difficult as you might first think. My employer is now putting together a project team that will eventually replace me and I will move on. I’m not an architect or a builder and I do not run hotels. I’m a wedge that pushes the door open for the rest of the organization. Once they have a foothold, a legal standing and are correctly connected, I move on to the next project. So, now that the project team is being picked and I have already submitted their documents for their work and residency permits, the next step is to find them a place to live during their term here in Nizhniy. As you have discovered, and the reason I am here is that there are no decent hotels that could safely and securely house a group of professionals. The organization is not authorized to purchase real estate to house the staff, and the staff ain’t gonna invest for themselves in a Russian home, when nobody really knows who will have a right to it in two years time, and that is where you come in,” he explained.

  I sat up straight in my easy chair and leaned in to catch the details.

  “Els and I see a chance to exploit this hole in the business plan and set up a rental agency which will then rent apartments for the expats coming to town which they can expense to the company. The company itself may not sign the leases. Red tape. So we will set up a new company, rent apartments from the current owners for two years at a time and then rent those out for more than double the rental price… well, I think you get the picture,” Del was getting excited by his own explanation.

  “Do you realize that I pay all of twenty-dollars for my room, and could probably rent the whole thing for sixty dollars if I wanted to and have all the room I could possibly need. Nobody would pay five or six hundred dollars for what they could get for one hundred,” I commented skeptically.

  “Ah yes, but you are a student on a student’s budget. Do you have a telephone in your apartment?” Del challenged me.

  “No,” I replied.

  “No telephone line means no fax and no email service and you’re cut off from the world. Do you have any security at your place?” he pushed again.

  “No, I have my babushka and that’s about it,” I replied.

  “Do you have a kitchen?” he was really touching the sore places.

  “Good point,” I conceded.

  “Do you have a shower, a lift, good shopping, and restaurants or a theatre or museum nearby?” He was going for the kill.

  “No, I live in the workers neighborhood,” I admitted.

  “How long does it take you into the old town,” he was mocking me now.

  “Thirty to forty minutes on the commuter bus or metro,” I confessed

  “Exactly! Expats expect a certain standard and ease of living or they won’t, can’t even be enticed to go abroad for even two months and live like a student, not even if somebody else is paying for it. Being asked to go to Russia to start with already hikes the hardship surcharge up to the armpits, so if you get an employee so far that they will accept an offer to staff a Russian operation, and then outside of Moscow or Petersburg!? Well you had better be ready to pamper them, or your staff won’t stay.” Del seemed to know what he was talking about.

  “OK, so where do I come into this,” I asked curiously.

  “I would like you to work with Misha, my local office manager and bookkeeper to scout out apartments, advertise, whatever it takes, and then evaluate was is being offered as if you were a western expat from the USA, France, Germany or England and give us a thumb- up or down. It’s that simple. Misha will take care of setting up a little real estate agency registration in Nizhniy that has a license to broker the renting of apartments and other property. You could consider yourself a type of quality control manager of the properties offered. Does that sound like something you could manage between your studies?” he asked.

  “Yeah, that doesn’t sound too difficult or complicated. Maybe I could even find myself something better to live in, closer to town!” I answered.

  “Listen, I will pay you a running commission for every apartment you and Misha secure and are able to rent to the expats. It will take some weeks to find the right sort of property, but then it will pay off eventually,” Del offered.

  “I don’t have permission to work. I’m here on a student visa,” I stated cautiously.

  “Peter, don’t try to be holier than the Pope. Nobody cares. You’re here and that’s all that matters. It’s Russia. Half the taxi drivers in Moscow
are here illegally from Tbilisi. If you hesitate because of technicalities you’ll miss your boat,” he scolded.

  “Agreed.” I said firmly.

  “Great, I’ll get you Misha’s telephone number and ask you to meet up with him at your first chance and set up a regular schedule for viewing apartments,” Del instructed.

  “Sounds like a good way to earn my tuition for the fall term.”

  Del invited me into his office where he had hanging on the wall technical maps of the old city and conceptual sketches from an architect showing what the hotel would look like and the master planning for a parcel of land for which Del was negotiating with the city and provincial councils to be allowed to develop. To my surprise and my unexpressed concern this planned hotel was on the upper embankment walk just out past Gordost and just a stone’s throw from The Monastery. The site would have a great view of the river, perched on the bluff, and have great proximity to the city’s best attractions and restaurants. It would certainly be a prestigious location for any new project.

  On leaving the Sannings’ I called Yulia from a telephone booth on the corner of Minin Square before catching a bus across the river to the Moscovskiy train station to catch the metro line, which ran directly past her apartment and then on to mine.

  The telephone booths, like most telephone booths in the world were not meant to be free of cost, yet they were all free for calls in the city. The pay phones had of course been designed to work on coins, and probably for fifty years or more, a five-kopek coin. Now that the Russian ruble was fifty-eight to the dollar, and a small loaf of white bread, a baton, cost two hundred rubles, the kopek was no longer circulated and the telephones were always active for whoever, whenever, without charge. If you dared to speak in length about anything other than the weather or a train time table, the line was yours!

  Yulia answered “Halloah”

  “Hi, It’s me,” I said without saying who I was.