Читать книгу Putin’s People - Catherine Belton - Страница 21
Plan A
ОглавлениеMOSCOW – It was summer 1999, and a deathly quiet had descended on the Kremlin. In the warren-like corridors of the main administration building, the only sound was the steady whirr of electric motors as cleaners polished the parquet floors. In the distance, the clopping heels of a lone presidential guard on patrol echoed down the halls. Offices once overflowing with petitioners queuing for favours now stood largely empty, their former occupants huddled far from Moscow in their dachas, nervously drinking tea. ‘It was like being in a cemetery,’ said Sergei Pugachev, the Kremlin banker who’d also happened to serve as an adviser to a succession of Kremlin chiefs of staff. ‘It was like a company that had gone bankrupt. All of a sudden there was nothing there.’[2]
For Pugachev and the other members of Yeltsin’s inner circle, widely known as the ‘Family’, who were the Kremlin’s few remaining occupants, a tense new reality had begun. Yeltsin had been in and out of hospital ever since October, and outside the walls of the Kremlin, it seemed, a coup was being prepared. Piece by piece, the foundations of Yeltsin’s rule were being dismantled, a consequence of the past summer’s disastrous rouble devaluation and default on $40 billion in government debt. The easy money, the free-for-all for the well-connected few that had defined the boom years of the market transformation had ended in a spectacular bust. The government had spent four years funding the country’s budget through issuing short-term debt, creating a pyramid scheme in which the only winners had been a handful of oligarchs, the young wolves of the Yeltsin era. For a time, the tycoons had used surging interest rates on government bonds and a fixed exchange rate to pocket the proceeds of a surefire bet, while the central bank burned through its hard-currency reserves keeping the rouble stable. It had all come crashing down in August 1998, and once again the Russian population had borne the brunt of the blow. Many of the oligarchs’ banks had collapsed in the crisis, but while they themselves had managed to funnel most of their fortunes away offshore, the general population’s savings were wiped out. The parliament, then still dominated by the Communists, was in uproar. Forced onto the defensive, Yeltsin had been backed into appointing a prime minister from the top echelons of the KGB, Yevgeny Primakov, the former spymaster who’d run the foreign-intelligence service and had long been a sentinel of the networks of the KGB. Racked by ill health, his regime in tatters, Yeltsin had retreated to the Black Sea resort of Sochi, while Primakov brought a string of Communist deputies, led by the former head of the Soviet economic planning agency Gosplan, into his government. Yeltsin was repeatedly hospitalised, and a Kremlin aide gently hinted that he was to take a back seat from then on.[3]
One by one, members of the Communist old guard had been settling on perches at the top of the government, and now that they were taking control of the cabinet, financial scandal after financial scandal targeting the excesses of their opponents in the Yeltsin ruling elite was beginning to emerge. Leading the corruption charges was Yury Skuratov, Russia’s rotund and seemingly mild-mannered prosecutor general. Until early that year, he had attracted more attention for his ability to quietly close down criminal cases than for opening them. Now, however, amid the widespread outrage that accompanied the country’s financial collapse, he’d begun to target top-level corruption. First, he’d launched a broadside against the central bank. In a letter to the Communist speaker of the State Duma, he zeroed in on how the bank had secretly funnelled $50 billion of the country’s hard-currency reserves through Fimaco, the obscure offshore company registered in Jersey[4] – a revelation that opened a Pandora’s box of insider trading and siphoned funds through the government debt market.
Behind the scenes, several more threatening probes were under way. One was a case that could lead directly to the financial accounts of the Yeltsin Family. It focused on Mabetex, a little-known company based in the Alpine Swiss town of Lugano, near the Italian border, which throughout the nineties had won billions of dollars in contracts to renovate the Kremlin, the Russian White House and other prestigious projects. Initially the probe, launched by Skuratov in tandem with Swiss prosecutors, appeared to focus on kickbacks apparently paid to middlemen close to Pavel Borodin, the jovial and earthy Siberian party boss who’d ruled over the Kremlin’s vast property department since 1993. But behind that lay a potentially bigger affair. And those in the Kremlin who were ruling in Yeltsin’s stead knew this only too well. ‘Everyone was scared about what was going to happen,’ said Pugachev. ‘No one dared to come to work. Everyone was shaking like rabbits.’[5]
The groundwork for the case had been laid quietly. Part of the old guard, particularly those waiting in the shadows in the security services, had been looking for ways to oust Yeltsin since the beginning of his rule. They had long viewed his overtures to democracy with disgust, and when he appealed to Russia’s regions to take as much freedom as they could swallow, they saw it as part of a Western plot to weaken, and ultimately destroy, the Russian Federation. Still set in the zero-sum thinking of the Cold War, they regarded Yeltsin as being in thrall to the US government, which they liked to believe had helped to install him and destroy the Soviet Union in the first place. They despised his apparent friendship with US president Bill Clinton, and believed the market reforms they themselves had developed, and which had helped bring Yeltsin to power, had been perverted to create the oligarchic rule of the semi bankirschina – the seven bankers who’d outrun their former KGB masters to take over much of the economy. They cared nothing for Yeltsin’s democratic achievements: in their view he was an addled alcoholic incapable of leading the country, while the Yeltsin Family, which included his daughter Tatyana, his chief of staff (and future son-in-law) Valentin Yumashev and various acolytes of the oligarch Boris Berezovsky, was an unholy alliance that had illegally taken power behind the scenes, and was leading the country towards certain collapse.
‘A certain group of people understood that things could not continue this way,’ said one of the participants in this plot, Felipe Turover, the former KGB operative who’d worked with Putin on the St Petersburg oil-for-food scheme. ‘The whole operation was started out of necessity. There was no other choice. It had to be done. Yeltsin was a drunk and a heavy drug addict. It is a matter of fact that the country was ruled by his daughter, by a bunch of idiots who were only looking after their own interests … The governors were disobeying the Kremlin. The regions were starting to almost become independent countries. We needed to get rid of that scum.’
Turover refused to disclose the names of the security officials in the group plotting to remove Yeltsin from power. But it was clear that they were angling to replace him with Primakov, who as a former spymaster was one of their number. From the start, the group was looking for evidence directly linking Yeltsin to financial corruption; for something that would taint the president irredeemably, overcoming the widespread and age-old Russian view that the country’s problems were due to the poor decisions and corruption of the courtiers, the boyars surrounding the tsar, and not the president himself. ‘Because he’d been praised as the great democrat, no one knew how to get rid of him,’ said Turover. ‘The only clear path was a legal path. It had to be clear to the people that it wasn’t the case that the tsar was good and without fault, while the boyars were the bad guys. When the president is a thief himself, then everything is clear. We needed to have something concrete.’[6]
Turover was the informant who found and then disclosed the material that formed the basis of the case. From his perch overseeing clandestine payments of Soviet-era strategic debt, he had been gathering and sifting kompromat – compromising material – on the inner financing of the Yeltsin regime for years, in the hope that the right moment would come. As a close friend of the former head of the KGB’s black-ops department for financing illicit operations abroad, he’d been a member of the KGB security establishment since the eighties. Turover was the same wisecracking, tough-talking foreign-intelligence officer who had helped Vladimir Putin set up the oil-for-food scheme in St Petersburg in the early nineties – the scheme that created a strategic slush fund for Putin and his allies from the KGB. He’d helped set up other clandestine schemes that he said were to ensure the payment of the strategic debts of the Soviet Union to the so-called ‘friendly firms’, but which were almost certainly also slush funds for the KGB.
Documents show that many of these schemes had run through Banco del Gottardo, a small bank hidden away on the outskirts of Lugano, at which Turover was appointed as an adviser.[7] Banco del Gottardo was chosen, Turover said, because ‘We needed a very small bank with a very dirty reputation.’[8] It had been the overseas arm of Banco Ambrosiano, the Vatican-linked bank that had collapsed in scandal in the eighties, with its chairman Roberto Calvi found dead, hanging from London’s Blackfriars Bridge. Now numerous Russian black-cash financing schemes were run through its accounts, including a web of barter and commodities-export schemes through which billions of dollars had been siphoned.
It was another sign that for all Yeltsin’s attempts at market reform, for all his efforts to build a new Russia out of the rubble of the Soviet collapse, the old ways of the komitetchiki, the KGB men, still prevailed behind the scenes. Although Yeltsin had tried to man the ranks of his government with so-called ‘young reformers’ who sought to liberalise the Russian economy from the control of the state and run the country along the transparent lines dictated by the institutions of the West, the rules of business were still skewed in favour of insiders close to the state, and to the foreign-intelligence community. It was through these schemes that the Yeltsin Family had been compromised, and it was all the more telling that the blow to the freedoms Yeltsin had sought to bring to Russia came from a member of the KGB foreign-intelligence establishment. Yeltsin had been unable to pull either his country or his own family out of the practices of the past.
Banco del Gottardo hosted the accounts of Mabetex, the obscure Swiss company which handled the Kremlin renovation contracts, and this was where the links to Yeltsin and his family appeared. When he’d first uncovered these ties, Turover said he’d initially objected to handling any cash flow related to Yeltsin or his family. ‘But then I stopped, because I decided that all this could come in handy for the future.’[9]
Among the Banco del Gottardo accounts he oversaw, Turover had discovered credit cards for Yeltsin and his family. They’d been issued by the founder of Mabetex, a pugnacious Kosovar Albanian named Behdjet Pacolli, who’d worked in the netherworld of financing and construction for the Soviet regime since the seventies.[10] Pacolli, once an aide to the Yugoslav Communist Party boss, had long been involved in black-cash financing schemes through the sale to the Soviet regime of embargoed dual-use military goods, said Turover.[11] On the face of it, the credit cards looked like an out and out bribe by Pacolli, paid directly into the pockets of Yeltsin and his family, while the fact that they were paid out of a foreign bank account was a direct breach of a law banning Russian officials from holding such accounts. Yeltsin’s daughter Tatyana had spent the most, running up bills worth $200,000 to $300,000 every year.[12] A further $1 million had apparently been spent by Yeltsin during an official visit to Budapest.[13]
By the standards of today’s multi-billion-dollar corruption scandals, the sums are almost laughable. But in those days the equation was absolutely different. The balance of power had already fast been shifting away from the Kremlin to Primakov’s White House. The old guard and the Communists were on the rise. In the aftermath of the financial crash, Yeltsin’s popularity ratings were at an all-time low of 4 per cent. The Communist Party, which still dominated the Duma, scheduled impeachment hearings to put Yeltsin on trial for everything they deemed as sins of his rollercoaster rule: the disastrous war in Chechnya that had taken the lives of so many Russian soldiers, the dissolution of the Soviet Union, and what they claimed was the ‘genocide’ of the Russian population – the market reforms that had led to plummeting living standards and, they believed, to early deaths for millions of Russians. Revelations about the credit cards were intended to be the final straw. ‘Primakov was meant to stand up in the Federation Council and tell the senators the president was a thief,’ said Turover.[14]
The investigation also threatened to draw uncomfortably close to the much bigger sums that had washed through an oil exporter called International Economic Cooperation, or MES, that held accounts in Banco del Gottardo and was inextricably linked with the Kremlin reconstruction contract. MES had been granted contracts from the Russian government to sell more than 8 per cent of the country’s total oil and oil-product exports, its annual turnover nearing $2 billion in 1995.[15] It had been active since 1993, when old-guard members of the Yeltsin government had sought to take back control of the oil trade, reinstating a system of special exporters, known as spetsexportery, through which all oil companies had to sell their oil.[16] It was an insider game that lined the pockets of a small and murky group of traders mostly close to the security services in the Yeltsin administration. MES had initially been created as a means of financing the restoration of the Russian Orthodox Church after decades of destruction and oppression under Soviet rule. But the billions of dollars in crude it was granted by the Russian government, export tariff-free, far surpassed any amount ever spent on the restoration of the Church.
MES was like a souped-up version of the slush funds created through Putin’s oil-for-food scheme. None of its operations were transparent, and the lines between what was strategic and what could be spent on personal needs and bribes had become conveniently blurred. Mostly, it generated black cash used to make sure politics went the way of a faction of security men in the Kremlin supporting Yeltsin. ‘The authorities always needed money. It would seem there is the state budget. But if you need finances to ensure a vote in parliament goes a certain way, you’re not going to get the cash from the state budget,’ Skuratov later told me.[17] MES’s activities were closely tied to Mabetex and the Kremlin reconstruction project. When Pavel Borodin, the Kremlin property department chief, initially asked the government for funding for the Kremlin reconstruction project, he was told the budget had no cash.[18] So he asked for oil contracts to be sold through MES to finance it instead. But the decrees issuing the oil quotas for MES – first for two million tonnes, and then for another 4.5 million tonnes – were all classified.[19] No accounting of how the proceeds were spent was ever published. And then, as if the oil sales through MES had never been granted, the government made an official announcement that it was going to finance the Kremlin reconstruction by raising $312 million in international loans.[20] MES looked to have got away with as much as $1.3 billion in proceeds from the oil sales, and no one could explain where the money had gone.[21]
In the middle of it all was Sergei Pugachev, the Kremlin banker who would later flee to London and then Paris. A tall, gregarious expert in the art of backroom deals, he’d teamed up with Borodin while the bank he co-founded, Mezhprombank, was the main creditor of the Kremlin property department.[22] In those days the property department was a sprawling fiefdom, controlling billions of dollars’ worth of property retained by the state following the Soviet collapse.[23] With Pugachev’s help it doled out apartments and dachas, medical services and even holidays to members of the Yeltsin government. It was a Soviet-style patronage network that to all appearances extended to the Yeltsin Family too: Pugachev said he’d bought an apartment through Mezhprombank for Yeltsin’s daughter Tatyana.[24]
Officials’ wages were still paltry compared to what could be earned in business in the boom of Russia’s market transition, and Pugachev insisted that what the property department did was the only way to keep state officials honest, and stop them from taking bribes. But essentially the department was the ultimate Kremlin slush fund, and it gave Borodin a position of great power, including the ability to make or break careers. ‘People were queueing to see him,’ said Pugachev. ‘If you were a minister, you didn’t get anything if Borodin didn’t give you it. If you needed an apartment, a car, any resources you had to go to Borodin to get it all. It was a very influential position.’[25]
Pugachev would not explain the extent of his involvement with MES. But his Mezhprombank had helped bankroll the operation,[26] and he’d developed a deep friendship with the head of the Russian Orthodox Church, Patriarch Alexei II, working closely with him ever since his appointment.[27] Pugachev had nursed the Kremlin reconstruction project, and guided its every step. He was an adept of the Byzantine financing schemes of Yeltsin’s Kremlin, and reaped a fortune for himself along the way. He’d somehow managed to set up a financial arm of Mezhprombank in San Francisco in the early nineties,[28] and spent large parts of the year in the United States. His direct access to the Western financial system further ingratiated him with the senior officials of Yeltsin’s government. ‘I could explain to them how the Western financial system worked,’ he said. He rented the most expensive house in San Francisco, and later bought a fresco-covered villa in the south of France, high on the hills overlooking the Bay of Nice. He’d become close to the Yeltsin Family, in particular to Yeltsin’s daughter Tatyana, when he’d worked as part of a team helping to secure Yeltsin’s re-election in 1996, bringing in a team of American spin doctors who ran a US-style campaign that helped boost Yeltsin’s flagging ratings and focused on the threat of a Communist return.[29]
All the while, Pugachev worked closely with Behdjet Pacolli, the owner of Mabetex. He personally oversaw the entire Kremlin reconstruction project, from the signing of the contract to the renovations themselves, he said. From the beginning, it was a lavish operation. Though he insisted that he tried to make sure the Kremlin got the best price possible, it seems that no expense was spared. Wood from twenty-three different types of tree was used to recreate the ornate patterns of the Kremlin Palace floor. More than fifty kilograms of pure gold was purchased to decorate the halls, and 662 square metres of the finest silk to cover the walls.[30] The Kremlin was to be transformed to its tsarist-era glory after decades of Communist rule in which all the treasures of pre-Revolutionary times – the mosaic floors, the precious ornamentation, the golden mirrors and chandeliers – had been ripped out and replaced with the plainest of decorations. Two thousand five hundred workers toiled day and night to create a palace fit for Russia’s new tsar.[31] Every last detail had to pass under Pugachev’s gaze. When Yeltsin asked why an urn had been placed outside his office, snapping ‘We don’t smoke here,’ Pugachev had it swiftly removed. And when Yeltsin asked why the new floors creaked and squeaked, he gently explained that there were now caverns of cables beneath them to carry the Kremlin’s top-secret communications.[32]
When it was all completed, visiting foreign leaders were awed by the grandeur they saw. US president Bill Clinton and German chancellor Helmut Kohl could not help but gasp when they were shown the vaulted gold-leafed ceilings of the Ekaterinsky Hall, dripping with golden chandeliers. ‘And these people are asking for money from us?’ Kohl remarked.[33]
The reconstruction had cost around $700 million,[34] at a time when Russia was receiving billions of dollars in foreign aid, supposedly to help it survive. But the financing that had been disbursed by the state for it was many times higher. The oil quotas MES had received alone were worth as much as $1.5 billion, while Yeltsin had signed off on an official decree for $300 million in foreign loans. Pugachev had also leaned on the first deputy finance minister, Andrei Vavilov, to approve an additional $492 million in guarantees for a treasury bill programme for the Kremlin property department – apparently another scheme to fund the reconstruction programme.[35] None of it was accounted for.
Pugachev had been aware of the credit cards for the Yeltsin Family soon after Pacolli issued them. ‘I said to him, “Why did you do it?” He thought if he gave them the cards he would have them on a leash. He understood it was criminal, that this would mean the president was essentially taking bribes.’[36] He said he was also aware of bigger sums that had apparently gone to the Yeltsin Family. Later it emerged that $2.7 million had been transferred to two accounts in the Bank of New York in the Cayman Islands held in the name of Yeltsin’s daughter Tatyana’s then husband, Leonid Dyachenko.[37] A lawyer for the oil firm Dyachenko ran later said the funds were for work he’d done.
So when, on a cold grey morning in late January 1999, Swiss prosecutors sent in helicopters and several dozen armed vans to raid Pacolli’s Mabetex offices in Lugano and left with a truckload of documents, it was, to put it mildly, a bit of a shock.[38] Pugachev and Borodin were immediately informed by Pacolli, and the news travelled like a poisoned dart to Yeltsin’s daughter Tatyana, who in her father’s absence was acting as unofficial head of state, and to the man who was later to become her husband, Valentin Yumashev, or ‘Valya’, as he was affectionately known, who until recently had been the Kremlin chief of staff.[39] For Pugachev it was a threat because of all the sums that had washed through MES. For Tatyana and Yumashev, it could potentially lead to the credit cards and other, larger, sums that appeared to have been transferred to private offshore accounts.
Quietly, without anyone being informed, the prosecutor general Skuratov had opened a criminal investigation into the possible siphoning of funds for the Kremlin reconstruction through Mabetex.[40] For the past few months he’d been working in the shadows with the Swiss prosecutors’ office, but until the raid, no one had been aware that he’d launched an investigation. He’d received he first batch of documents on the case in the weeks immediately following the August 1998 default. To avoid interception, the Swiss prosecutor general Carla del Ponte had sent them to him via diplomatic pouch to the Swiss embassy in Moscow.[41] A few weeks later, towards the end of September, Skuratov held a secret meeting with del Ponte, skipping town from an official visit to Paris to meet her in Geneva. It was there that he first met Felipe Turover, the KGB informant who started it all, who soon made a clandestine visit to Moscow to give official witness testimony.[42] Only Skuratov’s closest deputy was in the know.[43] He’d also consulted, on the quiet, with the old-guard KGB prime minister Yevgeny Primakov.[44] But once Skuratov sent the order for the raid in Lugano in January, the secret was out. ‘All our efforts to ensure the confidentiality of the case collapsed,’ he said. ‘Under Swiss law, del Ponte had to show Pacolli the international order that was the basis for the raid. Of course he contacted Borodin immediately.’[45] Turover too was upset by the sudden end to the secrecy: ‘She [del Ponte] didn’t need to make so much noise. She didn’t need to send all those helicopters. It was a signal to Moscow they had taken the books.’[46]
The raid marked the moment when Pugachev began a tense game of cat and mouse to bring about the removal of Yury Skuratov as prosecutor and end the case. It was then too that Pugachev – and the Yeltsin Family – began the chess game for their own survival that helped propel Vladimir Putin to power. It was the tipping point when they realised they were totally under siege.
‘It took them just four days to get organised,’ said Skuratov.[47]
*
When Pugachev looks back now and remembers it all, he says, parts of it seem like a blur: the constant telephone calls, the meetings stretching far into the night. Some of the dates are mixed up, remembered only by the time of year, how the weather was outside the window. But the meetings themselves, the important ones, are remembered distinctly, inscribed forever into his brain. Others are recorded in diary entries from those times.[48] Those were the days when Russia’s future was decided, when Pugachev was trying to act so fast, in the belief that he was countering the threat of takeover by Primakov’s alliance with the Communists – as well as saving his own and the Yeltsin Family’s skin – that he didn’t notice he was ultimately helping to usher in the KGB’s return. Pugachev’s story was the untold, inside account of how Putin came to power. It was the one the Yeltsin Family never wanted aired. At the time of the raid on Mabetex, Primakov’s political star was rising, and an alliance he’d forged with the powerful Moscow mayor Yury Luzhkov and other regional governors was already threatening to bring down the curtain on the Yeltsin regime. Skuratov’s criminal case could bring them a still more powerful weapon.
For years, Pugachev had developed his own network within the Russian prosecutor’s office. Like any powerful Russian institution, it was a den of vipers, where deputies jostled for position and collected kompromat on each other. Pugachev’s particular ally was Nazir Khapsirokov, the wily head of the prosecutor’s own property department, a sort of miniature version of the Kremlin department overseen by Borodin. With the power to issue apartments and other benefits to prosecutors, Khapsirokov, who was a master of intrigue, wielded the same ability to help make or break careers within the prosecutor’s office as Borodin and Pugachev did in the Kremlin. ‘In essence he was my guy in the prosecutor’s office,’ said Pugachev. ‘He brought me all the information. He told me an uprising was being organised against Yeltsin. Then he brought me a tape. He told me, “Skuratov is on it with girls.”’[49] Pugachev said that at first he didn’t believe Khapsirokov: such a tape would be the ultimate kompromat, powerful enough to cost Skuratov his job and close down the Mabetex case.
Pugachev took the tape back to his office, but, unused to handling technology himself, he was unable to get it to play on his video recorder – he fumbled and fumbled with the settings, trying to find the right channel. Eventually he had to enlist his secretaries’ help. As soon as they managed to switch it on, he regretted that they’d become involved. The grainy footage of the rotund prosecutor general cavorting naked on a bed with what appeared to be two prostitutes made for grim viewing. Pugachev cleared his throat, red-faced. But his secretaries made a copy of the tape nevertheless. Pugachev believes it was a decisive moment. ‘If we hadn’t made a copy, then none of this would have happened,’ he said. ‘History would have been different. Putin would not have been in power.’
He said he gave the original tape to Valentin Yumashev, Yeltsin’s son-in-law and former chief of staff, who essentially still occupied the same position behind the scenes.[50] Yumashev was to take it to Nikolai Bordyuzha, a former general from the Russian border guards who’d recently been appointed official Kremlin chief of staff in Yumashev’s place. Bordyuzha was then to call in Skuratov and tell him about the tape, and that his behaviour did not befit the office of prosecutor general.
Always prone to overstating his role, Pugachev said that no one else knew how to act: ‘They were all still shaking.’ Bordyuzha awkwardly held the meeting with Skuratov, who agreed on the spot to resign. Bordyuzha then handed the tape to him, as if to indicate that it should all be forgotten among friends.
Instead of securing Skuratov’s removal, that Kremlin meeting on the evening of February 1 led to an endless standoff. The position of prosecutor general had been protected under special laws seeking to enshrine its independence. For Skuratov’s resignation to come into force, it had to be accepted by the Federation Council, the upper chamber of parliament. But many of the senators in the Council at that time were already aligning themselves with Primakov and Moscow’s mayor Yury Luzhkov against the Kremlin. They were intent on protecting Skuratov. While he disappeared from sight for weeks, apparently to receive treatment at the Central Clinical Hospital, the Council stalled on putting his resignation up for a vote.
By that time the Yeltsin Family was dealing with the beginnings of a potential coup. Just a few days after the January raid on Mabetex, Primakov had laid down the gauntlet with a public challenge to Yeltsin’s hold on power. With the backing of parliament he announced a political non-aggression pact, ostensibly to end the mounting tension between the Communist-led Russian Duma and the Kremlin.[51] The Duma was to agree to drop its impeachment hearings and set aside its constitutional right to topple the government with a no-confidence vote, at least until the parliamentary elections at the end of the year. In return, Yeltsin would give up his right to dismiss both the Duma and the Primakov government. Yeltsin was scandalised by the proposal, which had been agreed and announced without his being informed at all. ‘Because this all happened behind his back he was absolutely flabbergasted,’ said Yumashev, who was still Yeltsin’s most trusted envoy in those days.[52] ‘The main thing was that Primakov was already not hiding from the people who worked with Yeltsin that he intended to be the next president.’ Making matters worse, Primakov had also proposed that Yeltsin should be granted immunity from future prosecution for any illegal deeds he might have committed during his eight-year rule. It was as if he believed Yeltsin had already agreed to step down.
The friction between Primakov and the Yeltsin Family was immediate. Primakov had sent shivers down their spines when, hours before Skuratov was summoned to the Kremlin and told to consider resigning over the kompromat tape, Primakov had called for space to be freed in Russia’s prisons for businessmen and corrupt officials.[53] ‘We understood that if he really did come to power that he had in his head a totally different construct for the country,’ said Yumashev.[54] And when the next day, in a final show of defiance just hours before his resignation was announced, Skuratov had sent prosecutors to raid the oil major Sibneft, it was a move clearly directed at them.[55] Suspicions had long circulated that relations between Sibneft and the Yeltsin Family were too close, that the company had been the basis for its owner, Boris Berezovsky, to become the consummate insider oligarch. Sibneft had sold oil through two trading companies: one of them, Runicom, was owned by Berezovsky’s business partner Roman Abramovich; the other, a more obscure outfit known as Belka Trading, was owned and run by Tatyana’s then husband, Leonid Dyachenko.[56] ‘The raid on Sibneft was deadly dangerous for the Yeltsin Family,’ said one close Berezovsky associate.[57] Clearly trying to contain the damage, they began trying to distance themselves from Berezovsky, who had become politically toxic for them.
Yumashev had already stepped down from his post as chief of staff in December.[58] He said he’d done so when he first realised that Primakov was aiming for the presidency, which went far beyond the bounds of their agreement when Yeltsin first forwarded him as prime minister. They’d intended for Primakov to be a caretaker prime minister while Yumashev and Yeltsin searched for a suitable successor to take over the presidency. ‘It was my personal responsibility that Primakov was brought in,’ said Yumashev. ‘Now he was behaving in violation of all our agreements.’[59] There was also a suggestion that Yumashev’s replacement as chief of staff with a security man, Nikolai Bordyuzha, an officer from the border guards, was part of an effort to remove the taint of the Family from Yeltsin’s rule.
Sergei Pugachev claimed that he took it upon himself to try to reach a deal behind the scenes with the Federation Council, to make sure Skuratov was eliminated from view.[60] But the politically powerful regional governors on the Council were consolidating around Primakov and Luzhkov against the Kremlin. In the meantime, the ever-rising tension over Skuratov’s investigation was starting to reach the top layers of Yeltsin’s Kremlin. Horrified at where it might lead, they began to drop away one by one. First, Yeltsin was hospitalised again, for a bleeding ulcer. Then Nikolai Bordyuzha wound up in the Central Clinical Hospital after apparently suffering a heart attack shortly to be joined there by Pavel Borodin, the earthy head of the Kremlin property department and the focus of the Mabetex probe.[61] The Kremlin was rapidly emptying, and in the apparent vacuum Skuratov slipped back to work.[62]
On March 9, more than a month after Skuratov was supposed to have departed, the Federation Council finally scheduled the vote on his resignation.[63] Yet still Pugachev’s efforts to secure the governors’ votes for his removal failed. On the day of the vote, March 17, Skuratov arrived unexpectedly to address the Council, and gave a blistering speech claiming he was under attack from powerful enemies close to the Russian president, and calling on the senators to reject his resignation.[64] They voted down his resignation almost unanimously.
Rumours of a tape compromising Skuratov had already wafted through the media. But, stung by the collapse of the vote, Yumashev and the still little-known Vladimir Putin, who the summer before had been appointed head of the FSB, took matters into their own hands, claimed Pugachev. They handed the copy of the tape to a federal TV channel, which then aired it to millions of viewers across the country, with little regard for the modesty of Skuratov or the feelings of his family. They just wanted him out. ‘Skuratov is an idiot,’ said Pugachev. ‘We wanted to deal with it decently, but he dug in his heels.’[65]
It was then, Pugachev said, that he first began to really notice Putin. The day after the video was aired, Putin gave a press conference together with Sergei Stepashin, the country’s interior minister, at which he vowed that the tape was authentic. In comparison to Putin’s clear, insistent manner, Stepashin kept his eyes glued to the floor, as if embarrassed to be part of the show. Pugachev said it was then that he began to see Putin as someone he could rely on:[66] ‘He spoke very coolly. He looked like a hero on TV. This was the first time I noticed. No one else was thinking of him then. But I thought, he looks good on TV. We’ll make him president.’[67]
Despite everything, Skuratov was still in position, and was increasing the pressure over the Mabetex affair. On March 23, while Swiss prosecutor Carla del Ponte was visiting Moscow again, matters reached boiling point. Skuratov sent a team of prosecutors to seize documents from Borodin’s property department, as well as to the Moscow offices of Mabetex.[68] The raid by a prosecutor on a Kremlin office was unprecedented. The Family – and Borodin and Pugachev – were in shock. The theatrics were already ominous, but the old guard had a further point to make. That same day, a leading Communist lawmaker, Viktor Ilyukhin, stepped up the pressure another notch, holding a press conference at which he claimed he’d received evidence that part of the $4.8 billion bailout loan granted to Russia by the International Monetary Fund at the height of the 1998 financial crisis had been siphoned off to companies linked to the Yeltsin Family, including $235 million through what looked to be an Australian bank, Bank of Sydney, to a company 25 per cent owned by Leonid Dyachenko.[69] The media furore reached fever pitch, with political analysts saying they were no longer sure whether Yeltsin could secure the support of the army.
Pugachev said he returned to the Federation Council to press for another vote on Skuratov’s resignation.[70] But the former Communist senator who led it once again indicated that he had more powerful backers elsewhere. Pugachev then went to see Luzhkov, the Moscow mayor, whose voice was carrying ever greater weight with the senators of the upper chamber. But Luzhkov had been trying to stack the parliamentary vote against the Kremlin ever since the August financial crisis hit. He’d developed his own ambitions for power, said Yumashev: ‘Luzhkov was working actively in the Federation Council. He was telling the heads of the regions, “I will be president and I will give you this and do this for you. We are fighting the president, and the prosecutor general for us is a powerful resource.” In essence, there was a fight for the future of the presidency.’[71] ‘Luzhkov was boasting he had 40,000 guys from the Moscow interior ministry behind him, as well as the local FSB,’ said Pugachev.[72] ‘Primakov and Luzhkov had been working to get the support of tens of thousands across the mid-level of the army. This was starting to look like a real state coup.’ One Russian tycoon close to Luzhkov said the Moscow mayor’s political weight had indeed risen rapidly: ‘Against the background of the flailing Yeltsin, it was clear he was the new centre of power. Marshals and generals began coming to him. They came to bow to the new tsar. They were asking for orders from him.’[73]
What happened next, Pugachev insists, was motivated by the best intentions. He said that he could not allow Primakov and his crew to come to power and endanger the freedoms of the Yeltsin years, and that he’d felt the stench of Soviet stagnation and corruption as soon as Primakov and his team had entered the White House: ‘The first thing they did was ask for bribes. I’d spent so much effort making sure the democrats remained in power and the Communists were kept out,’ he said, referring to his efforts in Yeltsin’s 1996 re-election campaign. ‘You need to understand that the Yeltsin Family were normal people. This was nothing compared to the corruption you see today. My idea was not to let it all collapse.’[74] But fears over the money trail Skuratov was pursuing and where it could lead undoubtedly weighed heavier still.
Skuratov had spent the morning of April 1 handing over a report to Yeltsin on what he said were the illegal Swiss bank accounts of twenty-four Russians.[75] By the evening, Yeltsin’s Kremlin had launched another attempt to oust Skuratov from his post. Skuratov’s deputy, Yury Chaika, and the chief military prosecutor Yury Demin were called in to the office of the Kremlin chief of staff, by then a Berezovsky associate named Alexander Voloshin, a slight, bearded economist.[76] There, Voloshin, together with Putin, Nikolai Patrushev, who’d risen with Putin through the St Petersburg KGB and had served for the past four years in senior positions in the FSB, and Pugachev leaned on them to launch a criminal case against Skuratov, claimed Pugachev. They wanted him suspended for cavorting with the prostitutes.
Chaika and Demin were scared. ‘They didn’t understand why they were there. It was like a meeting of deaf and blind,’ said Pugachev. ‘They were both frightened. “How can we open a criminal case against the prosecutor general?” they said. They were looking at who was there at the meeting. Putin was no one then, Patrushev was no one. They looked at us and thought, “We’ll end up outsiders, and then we’ll be accused of organising a state coup.” I could see this going through their heads. I understood this in five minutes. So I called them away individually.’
Pugachev said he went to a meeting room opposite Voloshin’s office. First, he called in Chaika. ‘I asked him, “What do you want to open a criminal case?” But I saw there was no chance. Then I called in Demin, and asked him, “Are you ready to be prosecutor general?”’ Seeing that his offers of rich rewards and promotions in return for cooperation were having little effect, Pugachev asked them to at least explain in detail what would be needed to open a criminal case. ‘We talked for six hours, going over it all. They said only a prosecutor general could launch a case against a prosecutor general. I said, “Look,” to Chaika, “you are the first deputy and you will become the acting prosecutor general. You can open a case against the former prosecutor general.” But he said, “No, the Federation Council has to sign off on it.” I said that if there was no criminal case, the Federation Council wasn’t going to sign off on it. And we went round and round in circles for hours. I understood that it was not possible to deal with them, that nothing was going to work out.’
It was already after midnight, and Pugachev was rapidly running out of options. He had one avenue left. In the small hours of the morning, he called the head of the Moscow city prosecutor’s office at home. ‘I said, “I need you.” He said, “Yes, Sergei Viktorovich, what do you need?” I told him I couldn’t tell him by phone. But he asked me again what the problem was. He said, “You have to tell me.” So I sent one of my guys round to his house with a note.’[77] But the Moscow prosecutor appeared to have little desire to respond in person. Pugachev believes Chaika called him and warned him off. When Pugachev phoned him again a little while later, he advised Pugachev to call the prosecutor on duty for the night instead.
This man was Vyacheslav Rosinsky, a grey man in glasses who that night was in a terrible state. He had been drinking – his daughter had recently committed suicide, hanging herself in her flat, and he was still mourning the loss. But Pugachev sent a car to bring him into the Kremlin nevertheless. As Rosinsky was driven through the Kremlin gates, said Pugachev, ‘he was flabbergasted. He had no idea where he was being taken. When he got to my office, he sat there in a drunken funk. He was very down. But I told him, “Look, it’s all very simple. You can open a criminal case against the prosecutor general.” I showed him the charge sheet’ – which of course had been prepared in advance. ‘He told me what I needed to change. And then he signed.’[78]
Pugachev began to think about what he could offer in return. ‘I told him I couldn’t make him deputy prosecutor general immediately. But he said, “That’s all right. I don’t want that. If possible, I’d like to be the prosecutor general of Moscow.”’ Pugachev told him he’d make it happen. Although in the end he couldn’t pull it off, that didn’t matter. The criminal case accused Skuratov of abusing his position, and led to his immediate suspension by Yeltsin. His position was undermined when the prostitutes on the tape testified that they were paid for by a relative of a businessman and banker who’d been under investigation by Skuratov.
For a while, Skuratov still fought tooth and nail against his suspension. He slammed the tape as a fake, and said the criminal case was a political stitch-up aimed at preventing him from investigating corruption at the top of the Kremlin. He said it had been launched illegally – and the Moscow military prosecutors’ office, called in to investigate, agreed. The Federation Council rejected his resignation again in a second vote, even after the criminal case had been launched. Voloshin, the recently-appointed chief of staff, gave a disastrous speech, stumbling and stammering over his lines as he was heckled by senators. The Kremlin’s loss for a second time was heralded in all the newspapers the next day as signalling the end of Yeltsin’s power. ‘Today, April 21 1999, presidential power in Russia collapsed,’ said one leading governor.[79]
Primakov and his coalition of the Communist-led Duma and regional governors in the Federation Council – as well as the KGB men propelling the Mabetex case – looked to have the Family on the rails. But at some point, it seems they went too far. Pugachev said he tried to frighten Luzhkov and Primakov into backing down with threats that they’d be charged with sponsoring a state coup, while agreeing with Yumashev that he could offer Luzhkov the prime ministership just in case.[80] But Pugachev’s manoeuvrings would never have amounted to anything had not Yeltsin returned to the political scene and roared.
For months Yeltsin had been in and out of hospital, further weakening his position in relation to Primakov, who in his absence was seen to have taken over the reins of power. But by April he’d gathered his strength for a final showdown. Just three days before the Duma was scheduled to begin impeachment hearings, Yeltsin, with an animal-like instinct for survival and a penchant for dramatic political gambits, decided it was time to act. He called Primakov to the Kremlin and told him he was fired. He was to be replaced by Sergei Stepashin, the interior minister, who’d been a close Yeltsin ally since the early days of the democratic movement and had served as one of the earliest heads of the FSB. Though the media had long speculated that Yeltsin might make such a move, it still came as a shock. Yeltsin had waited till the final moment. ‘He understood that if he waited three more days it could be too late,’ said Pugachev.[81] ‘The Duma was absolutely unprepared,’ said Yumashev. ‘Many of our colleagues in the Kremlin considered it was suicide, that we would turn the Duma even more against us. But in fact the opposite happened. We showed all the strength of Yeltsin. He was absolutely calmly firing such a powerful force as Primakov, and the Duma was cowed by this show of strength.’[82] There was nothing Primakov could do, and his dismissal took the wind out of the Duma’s sails.[83] Amid fears that Yeltsin could dissolve parliament, the impeachment vote collapsed just days later.
The KGB’s Plan A had failed. ‘Primakov should have been president in this scheme,’ sighed Turover. ‘During the second Federation Council vote on Skuratov, he was meant to stand up and say, “The president is a thief.” He was meant to present the evidence. It would have been enough. The impeachment hearings had already been scheduled. It would have been enough for him to stand up and say, “I have the legitimate power to end all this.” He had all the proof. But he didn’t have the balls. At the last moment, he lost his nerve.’[84]
Though Skuratov insisted that he had never been playing a political game, that he was just seeking to bring an end to corrupt dealings in the Kremlin, he also understood all too well that Primakov could have finished Yeltsin’s rule: ‘There were two centres of power then. On the one hand there was the legislative power – the Federation Council and the government of Russia, led by Primakov and the Moscow mayor’s office. And then there was Yeltsin at the top of power, and the Family on the other side. And of course, if the Federation Council and Primakov had agreed and put on the pressure, the Family would have crawled away. Everyone would have supported Primakov. The secret services would have supported him. The Family would have scuttled away like cockroaches. And Yeltsin, due to health reasons, would have transferred the presidential powers to Primakov, and the country would have been different. But Primakov … he is a very careful person. Perhaps he was not decisive enough. He did not fight for the country to the end.’[85]