In the course of the changes that followed the dissolution of the Soviet Union, many had dreamt of a free society, but they were bitterly disappointed as Putin’s vision of Russia took hold. Amongst those who chose exile were political dissidents and those disappointed by the failure of his economic policies, including men who had become rich under his rule.
With the simmering war in the Ukraine, coupled with economic sanctions, cracks were beginning to appear in the system. Members of Russia’s politically aware middle classes were beginning to ask questions. Amongst the working classes strikes were becoming recurrent as people sensed the life style that they had just started to get used was slipping away.
Russia’s vast regions were emptying, that is if they had even been populated by more than hand full of European Russians. Emigration to the West was again bleeding the country of its better educated classes. All of which did not mean Russians were disposed to put their trust in men like Khodorkovsky. It required more than money and a personal confrontation with the Kremlin to win the hearts and minds of ordinary men and women, not to mind asking them to make the kind of sacrifice needed to challenge the regime.
Those like Ekaterina, a modern urbanised Russian, watched on. She like others of her generation saw her modestly privileged life style fading before her eyes. Imported foodstuffs and consumer goods were disappearing and prices rocketed as the rouble dived. Those who could headed for Berlin, London or Paris, and those who could afford it invested their cash to buy apartments anywhere but in Russia.
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Sergei Tarasov had come a long way since his student days in Moscow, where he, like other students, had joined Komsomol, the Communist Youth League. As Mikhail Gorbachev implemented glasnost and perestroika, Tarasov graduated from Moscow’s Institute of Economics and Finance, left for the US, and returned four years latter with an excellent command of English.
After entering Mosbank his suspicions were soon confirmed, that is say the bank was nothing more than a façade of business respectability for Dermirshian’s criminal organisation. Undaunted and realising he had nothing to lose if the experience proved unfruitful he persevered. In the nineties Russia resembled the Wild West, an almost lawless business society in which Tarasov, with or without the blessings of the bank’s Mafiyosa shareholders, set about implementing the changes that were to transform Mosbank into a mainstream banking institution.
Mosbank became InterBank as its transition to respectability was powered by the explosive growth of Russian real estate and the privatisation of state owned property. Boris Yeltsin’s post-Soviet government carried out radical market reforms, regrettably with almost no legal structure to regulate business and finance.
Unprincipled businessmen profited from the ambient chaos by gouging prodigious margins and commissions from the export of Russian commodities. These were bought at below cost price from desperate freshly privatised combinats struggling to avoid collapse, with the connivance of their unscrupulous managers, and resold below market value to compensate for substandard quality.
Vast sums of money were diverted from payments to offshore accounts and shell companies set up by Mosbank and invested in super-prime property in London and other European capitals.
Nascent oligarchs lacking international business experience were guided by Tarasov, whose business and banking skills not only made them rich, but enabled the banker to build his own private mountain of wealth hidden offshore behind a web of accounts and companies.
In the eyes of the then existing Russian legal system none of this was strictly illegal and so called commissions were common practice in commodity trading. The export of oil, gas, minerals, fertilisers and wood products to India, China and most of the developing world boomed, third world countries avidly bought Russian commodities below world market prices with no questions asked.
InterBank loaned money to the almost bankrupt Yeltsin government, accepting state owned properties in Moscow and St Petersburg as collateral. The government foreseeable defaulted on the loans, and according to the covenants the bank automatically became owner of the properties.
Shell companies financed by the bank then bought the properties, the loans were covered, and the circle closed. Tarasov then went about developing the seriously run-down Soviet period properties: building shopping malls, offices and apartments, enabling the bank to build a vast real estate empire.
Under Yeltsin, state structures were broken-up, even revered institutions like the Bolshoi, which represented the essence of Russia’s cultural heritage, had to adapt as state funds shrivelled and the economy disintegrated. Such conditions attracted organised crime syndicates run by gangsters like Dermirshian and nearly a decade passed before the emergence of ‘clean’ oligarchs like Tarasov.
During those desperate years, failing state businesses suffered the same fate as the Yeltsin government with banks foreclosing on them and seizing properties in every major city. The subsequent redevelopment of these properties generated huge profits.
Those who tried to expose the system, like the unfortunate Vladimir Petukhov, who naïvely appealed to the Kremlin for help, ended up dead, shot down on the street in what the police described as a contract killing.
Contract killings became as common as road deaths: bankers, businessmen, casino and night club owners, not forgetting over ambitious or would be politicians, were assassinated. The favoured method was overkill, using of a whole range of imaginative techniques: bazookas, grenades, poison, defenestration and of course a burst from a Kalashnikov. Dermirshian’s Bratva hitmen were experts in all these deadly techniques.
Tarasov’s steered the bank away from its Mafiyosa beginnings, creating an image of respectability, enforced by the Ministry of the Interior, an arrangement that left its founders as passive, though very rich, shareholders in the prosperous institution.
At the outset Putin promised to clamp down on the oligarchs, however, his entourage composed of former KGB friends wanted part of the action. Thus an arrangement was made which permitted those who played along with the system to continue, whilst those who refused were dispossessed of their wealth, thrown into prison, or if lucky allowed to flee overseas before the vice closed.
Tarasov had no desire to end up like Khodorkovsky, who had either overestimated his power, imagined he was immune, or left it too late for an honourable exit. Whatever the case, a secret-police commando unit stormed his private jet at the crack of dawn during a refuelling stop in Siberia and grabbed the hapless oligarch.
Accused of fraud and tax evasion, Khodorkovsky was judged, found guilty and sentenced to nine years imprisonment in a labour camp on the Siberian steppe, where winter temperatures fell to minus thirty degrees centigrade.
Tarasov by refusing the Kremlin’s demands, had either overplayed his hand, or deliberately provoked Putin as a ploy to escape the suffocating court of the autocrat. Whatever the reason he found himself in fear for his life and his families safety.
Unlike Khodorkovsky whose wealth was bound to oil and gas under the permafrost, a large part of Tarasov’s wealth was beyond the reach of the Kremlin. His assets were owned by companies in London, Paris, Zurich, New York, or in one or more of a string of tax havens that spanned the Caribbean.
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Tarasov had no precise idea of the total value of his overseas assets, but they were certainly well in excess of one billion pounds sterling, possibly two. It was complicated, they were scattered across the planet from Panama to Hong Kong.
But what was the use of all that wealth if he were to end up poisoned like Alexander Litvinenko or Alexander Perepilichny. The first by polonium, the second by gelsemine. The latter, a Russian businessman, was found dead outside his home in Surrey, in 2012, returning from his daily jogging session. Initially his death had been put down to natural causes, an accident due to heart failure. Subsequently, a toxicology report indicated the existence of traces of a deadly poison in the dead man’s stomach.
The poison was identified as coming fr
om gelsemine, a plant found in China containing a toxic compound related to strychnine. The substance was well known to specialists and writers of whodunits, more notably Sir Arthur Conan Doyle, the celebrated creator of Sherlock Holmes, who had experimented by ingesting a small amount of gelsemine. In 1879, in a letter to the British Medical Journal the author described the symptoms, which included persistent diarrhoea and severe headaches.
Gelsemine, a favourite tool of Chinese and Russian killers, had been used to silence whistle blower Alexander Perepilichnyy, who had almost certainly been targeted after exposing a scandal related to the Magnitsky affair.
Sergei Magnitsky, a thirty seven year old Russian accountant and auditor specialised in civil law with a Moscow law firm, had unmasked officials in a case of massive tax fraud and money laundering, only to be thrown in jail himself, where he later died as the result of a savage beating by prison wardens and left dying in a pool of his own urine.
What intrigued Swiss investigators was how a modest Moscow tax official, with a declared family annual income of under forty thousand dollars, could own a three million dollar sea front villa in Dubai’s Palm Jumeirah, the artificial palm shaped island in the Persian Gulf, one of the world’s most exclusive pieces of real estate and home to the super rich.
The answer lay with Alexander Perepilichny, an investment banker specialised in offshore finance, a key witness in a conspiracy, involving Russian officials, relating to fraudulent tax claims, fraud and money laundering. Perepilichny had been actively assisting Swiss prosecutors in their investigations into a series of bank accounts thought to have been used by tax officials and their families who for some unexplained reason had suddenly become extraordinarily rich.
The two hundred million dollar fraud had been originally uncovered by Magnitsky, who had been hired by a British investment fund, Hermitage Capital Management, to investigate the case. The result of Magnitsky's findings pointed to a number of Russian Interior Ministry officials and underworld figures as being behind the scam.
Whatever the details, such cases justified Tarasov’s fears, it was the irrefutable proof of the existence and determination of the Kremlin’s killers and evidence that no one was beyond the long reach of Putin and his executers.
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In 2007, Alexei Miller, CEO of Gazprom and close friend of Vladimir Putin, vowed to grow the giant into a one trillion dollar mastodon.
That was never to be, times had changed and Gazprom was in deep trouble. Once rated the world’s third-largest public corporation, valued at more than three hundred and fifty billion dollars, it had sunk to an ignominious 170th place, worth a mere fraction of its previous value.
The question was what had gone wrong? Of the world’s top five thousand company not one had come anywhere near such a staggering reversal of fortune.
For any Kremlin watcher the answer was simple: Gazprom had become an instrument of Putin’s geopolitical agenda. The Kremlin had precipitated the giant into a whole series of money losing, politically motivated, undertakings: the Sochi Winter Games; the conflict with the Ukraine; and a means of pressure to force unwilling partners to conform to his vision of the world.
Gazprom, in spite of its vast oil and gas reserves, had become a symbol of the malaise that had afflicted Russia since Putin’s re-election in 2012. It was a tragedy for Russia, given its vast potential, to once again fall victim of an old fashioned strongman, a leader who was evidently caught in a time warp, dreaming of past imperial glories, as though the vast country he ruled was threatened or needed territorial gains.
Putin’s dangerous adventure in the Ukraine had cost Gazprom dearly. It’s exports to Russia’s populous neighbour came to a full stop in mid-2015, losing the company billions in revenues and putting the fear of God into its rich European customers, sending them scrambling in search of alternate suppliers.
The Kremlin’s much touted replacement deal with Beijing looked more and more like a pyrrhic victory as China’s economy slowed. A costly enterprise in which Gazprom would have to bear the cost of building pipelines as well as extracting, processing and storing the gas.
The agreement was further compromised by gas prices being indexed to the price of oil: one hundred plus dollars a barrel at the time the deal was agreed, double the mid-2015 market price, transforming the face saving deal into a non-starter.
The battle in Ukraine’s eastern regions continued and the toll of death and destruction rose, Fitzwilliams’ belief that life and property meant nothing to the Russian leader hardened into stark reality. He, like many others had long known it, but the lure of profits had too strong. On this occasion, however, there was no escaping the truth as he himself, Michael Edward Fitzwilliams, was directly concerned and a potential pawn on the check board of a thug parading as czar.
As Kremlin backed forces pushed into eastern Ukraine and the rouble headed for seventy to the dollar, S&P, for the first time in a decade, downgraded Russia’s sovereign debt rating to junk status.
G
azprom HQ Moscow
Fitzwilliams, if he needed any further evidence of Putin’s power to meddle, had no further to look than Greece, where in the latest act in the ongoing drama, the Greek leader, Alexis Tsipras, launched a barely veiled threat to Brussels, playing Russia off against the EU.
As a former member of the Communist Youth of Greece, the new leader’s ties to Russia were long-standing. That together with the tenuous link of a shared religion offered numerous possibilities for blackmail, since the Balkans, and more especially Greece’s neighbour, Serbia, had long been the stomping ground of Russian Orthodoxy and interference.
As the pressure grew and new sanctions were announced against Russia, Putin was like a cornered bear, ready to lash out at his taunters. The idea that sanctions would inflect Putin’s aggression in Ukraine had as much hope of succeeding as Fitzwilliams, or others implicated in the conspiracy surrounding the seizure of Tarasov’s InterBank, had of escaping the Kremlin’s long arm if Moscow decided its interests were compromised.
PART SIX
A GRINGO
The previous day Barton had taken a flight from Madrid Barajas International airport, destination Bogota. Avoiding unwanted attention he had slummed it in business class and comfortably ensconced in the new long haul Airbus A300-600 had slept for a good part of the twelve hour flight.
During his waking moments he contemplated the reasons for his sudden departure: it was a long needed vacation, he explained to himself. How long a break was another matter. Any outstanding business would be taken care of in his absence by the bank’s team pending future decisions.
The weather had been fine when the Iberia Airbus took off from Madrid: a clear blue sky and an outside temperature of ten degrees centigrade, and although the summits of the surrounding hills were white with snow, it was an improvement on London’s persistently damp, dismal, cold weather.
The next morning in Bogota he felt a distinct whiff of spring in the air, it was ten degrees warmer than Madrid. However it was not spring, Bogota was five hundred kilometres north of the equator at an altitude of 2,540 metres above the sea, where the maximum daytime temperature very rarely exceeded 20°C or sunk below 10°C.
After a little exploration in the city centre he paused on the terrace of a café named Juan Valdas, which according to his newly acquired guidebook was reputed to be one of the best coffee houses in the Colombian capital, which he was discovering as a noisy dusty city perched high on the Cordillera Oriental.
He studied the customers: business people taking a break; a Chinese girl, a tourist like himself; and a few young professionals. Some were looking at their smart phones. An older man was having a shoeshine, which explained the waxy smell of polish mixed with that of coffee hanging in the air.
He ordered a micro machiatta, the sachet of sugar was marked with the word Panela which he figured was some kind of cane sugar.
Juan Valdas was more like a Latino Starbucks, noisier, easy going in a different way. The
re was a constant coming and going; the animated chatter of mid-afternooners exchanging news with their business friends or simply take a pause.
They were not the poorest Colombians. The customer having his shoes polished nodded to the fifty year old shoeshine boy signalling an additional buff, and in doing so defined their respective roles. Yellow taxis and large SUVs rolled past on the narrow street. A couple of twenty-thirty year olds started canoodling. It was time to go, it seemed there was nothing much more to discover in Bogota.
He decided he would head north the next morning, in the direction of Villa de Leyva and Barichara, and returned to the hotel he booked a car rental with a little help from the front desk.
He needed to regenerate himself, he had enough of glass towers, offices and hotels, impersonal ostentatious surroundings. He had been living in a crystal bowl: surrounded by fawning service personnel, and those hoping that some of his accumulated wealth might rub off on them, hopeful deal makers, and those who had made it like himself, but whose lives were lost in trying to own the most expensive super car, the most expensive home with the most expensive wife, in the most expensive part of town.
In short the novelty had worn thin. He needed to feel what real life was about again: to be free of the never ending constraints and obligations. He had drifted apart from Sophie, he simply hadn’t had time to consecrate to building a lasting relationship, constantly flying back and forth between London, Paris and wherever, when he wasn’t heading off to Moscow or Shanghai.
It had got to the point where he felt he no longer controlled his own life. Fitzwilliams, Kennedy, Tarasov were caught on an infernal roller coaster, running from one appointment to another: meetings, conferences, receptions and always decisions to be made. Sifting data, deciding which information served to them by their subordinates was useful in a constant pursuit of profit and growth. Which country, commodity, currency or company to bet on. Where to build a new office tower, condominium, set-up a new manufacturing unit, close an old one, open a new market, it was an endless game of monopoly and to what end? At least that’s the way it seemed to him.
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