Читать книгу Londongrad: From Russia with Cash; The Inside Story of the Oligarchs - Mark Hollingsworth - Страница 8

‘Boris, if you go down this road, I predict in a year’s time you will be in exile…or worse, sitting in jail’

- ALEX GOLDFARB to Boris Berezovsky¹

IN 1722, IN ORDER to transform the country from a disparate medieval society into a centralized autocratic state, Peter the Great set about purging the corruption that was endemic in Russian society. This included the elimination of everyone who took bribes. One of those targeted was Aleksandr Menshikov, his most successful general and the most powerful man after the Tsar himself. Menshikov was horrified. ‘If you do, Your Majesty, you risk not having a single subject left’, he told his monarch.²

When Vladimir Putin became President in 2000, he had less latitude than Peter the Great, who simply executed his more recalcitrant subjects. Even modern Russia’s arbitrary judicial system would not sanction summary executions of avaricious businessmen. Putin, who knew his history, would therefore have to come up with a different strategy to deal with a group he viewed as a major obstacle to his ambitions for the reshaping of Russia.

While there were whispers of a clampdown, the oligarchs believed they would retain their power and luxurious lifestyles and remain a protected species. After all, theirs was a cabal of the business elite who had engineered the new President’s ascendancy. Just as the oligarchs had connived and conspired to re-elect Yeltsin in 1996, so a group of them manipulated Putin into the Kremlin. In return for their backing, they expected Putin to be as malleable as his predecessor, allowing them to continue to exert influence, accumulate wealth, and be immune from prosecution. They badly misjudged him.

While Putin was Acting President and Prime Minister in 1999, there were signs of trouble to come, when the Prosecutor-General reviewed the way in which Vladimir Potanin, one of the architects of privatization, had acquired Norilsk Nickel, the giant state-owned mining group. ‘They were certainly feeling uncomfortable,’ said one government official. And with good reason. Within two months of becoming President, on the baking hot day of 28 July 2000, Putin summoned twenty-one oligarchs to the Kremlin. ‘It was more like a gathering ordered by Don Corleone than a meeting summoned by a leader of the Western world,’ noted one who was present.³ Khodorkovsky and Deripaska were both at the gathering but Berezovsky, now himself under investigation by the prosecutors, was not invited.

Before those assembled in the cabinet room, Putin effectively read Russia’s richest and most powerful business clique the riot act. He would not review the privatizations but they would no longer enjoy special privileges inside the Kremlin. During the meeting, Putin insisted that Potanin pay the $140 million he was alleged to owe on the purchase of Norilsk Nickel. At times the meeting became heated and at one stage the President pointed at a well-known tycoon and accused him of being guilty of ‘oligophrenia’ (which means ‘mental retardation’). The plutocrats were stunned. It was not the script they had been expecting.

The new confrontational President concluded the meeting - which lasted two hours and forty minutes - by setting up a permanent mechanism for consultations between businessmen and the state. The days of cliques and coteries were gone, he warned. Now the relationship was to be institutionalized. Access to Putin would be restricted through quarterly meetings with the Russian Union of Industrialists and Entrepreneurs - in effect, the oligarchs’ trade union.

Putin’s message to the shocked gathering was simple: they could keep their ill-gotten gains provided they kept out of politics and paid their taxes. The details of the meeting were promptly leaked so that in a poll a week later 57 per cent of Russians said they already knew about it. Berezovsky, omitted from the gathering, accused those present of being cowardly. ‘They are as timid as rabbits,’ he sniffed after the meeting.⁴

This was a watershed moment in the story of the oligarchs and an event that was to prompt the steady exodus to London of one wave of super-rich Russians after another. Those present knew only too well that the tide had turned. In case they were in any doubt, Putin used his State of the Nation address on July 8 to condemn the ambitious tycoons and especially the way they controlled the media. ‘They want to influence the masses and show the political leadership that we need them, that they have us hooked, that we should be afraid of them,’ he declared. ‘Russia can no longer tolerate shadowy groups that divert money abroad and hire their own dubious security services.’ He later added, ‘We have a category of people who have become billionaires overnight. The state appointed them as billionaires. It simply gave out a huge amount of property, practically for free. They said it themselves: “I was appointed a billionaire.” They get the impression that the gods themselves slept on their heads, that everything is permitted to them.’⁵

The oligarchs, blinded by their own power and influence, had greatly underestimated the sardonic but humourless Putin. In public the new President was a cold, unsmiling bureaucrat. Apart from periodic outbursts of aggression, he rarely displayed emotion. Russian journalist Elena Tregubova says that when she first interviewed Putin in May 1997, she found him a ‘barely noticeable, boring little grey man…who seemed to disappear, artfully merging with the colours of his office’.⁶ As is so often the case with autocrats, people seemed to be preoccupied with his eyes, ‘No one is born with a stare like Vladimir Putin’s,’ reported Time magazine. ‘The Russian President’s pale blue eyes are so cool, so devoid of emotion that the stare must have begun as an effect, the gesture of someone who understood that power might be achieved by the suppression of ordinary needs…’⁷

In private his aides say that the intense and brooding Putin is intelligent, honest, intensely loyal, and patriotic. ‘He smiled a lot, his body language was relaxed and informal, his eyes were soft, and his speech quiet,’ reflected British author John Laugh-land.⁸ In stark contrast to his predecessor, he drinks Diet Coke and works out regularly. He is also able to relax, notably by listening to classical composers such as Brahms, Mozart, and Tchaikovsky. His favourite Beatles song is Yesterday. He has never sent an e-mail in his life, and, while he grew up in an officially atheist country, he believes in God.

When Vladimir Vladimirovich Putin was born in 1952, his 41-year-old mother Maria, a devout Orthodox Christian, defied the official state atheism and had him baptized. She had little education and did menial jobs - from a night-security guard to a glass washer in a laboratory. His father Vladimir fought in the Second World War and was badly wounded in one leg. After the war, he worked as a lathe operator in a car factory and was ferociously strict with his son. Putin’s only forebear of any note was his paternal grandfather, who had served as a cook to both Lenin and Stalin.

The family lived in a fifth-floor communal apartment at 15 Baskov Lane in central St Petersburg, where the young Putin had to step over the rats in the entrance to the apartment block on his way to school. Universally known as ‘Volodya’, he was a serious, hard-working, but often angry child. His former school friends and teachers describe him as a frail but temperamental boy who never hesitated to challenge stronger kids. He has described himself as having been a poor student and a hooligan. ‘I was educated on the street,’ he told a biographer. ‘To live and be educated on the street is just like living in the jungle. I was disobedient and didn’t follow school rules.’⁹

Putin found discipline by learning ‘sambo’, a Soviet-era combination of judo and wrestling, at the age of twelve. It places a premium on quick moves, a calm demeanour, and an ability to not show any emotion or make a sound. A black belt, he won several inter-city competitions. Initially, he practised the sport so as to build up his slender physique and to be able to stand up for himself in fights, but his developing obsession with the sport not only kept him out of trouble, it also made him somewhat reclusive.

Meanwhile, the teenage Putin dreamed of becoming a KGB spy like the Soviet heroes portrayed in books and films. His favourite television programme was Seventeen Moments of Spring, a series about a Soviet spy operating in Nazi Germany. In his ninth year at school he visited the KGB headquarters in Leningrad. Told that the best way to get into the service was to obtain a law degree, in 1970 the aspiring agent enrolled at Leningrad State University, where he studied law and German and practised judo.

In 1975, his final year at university, he was recruited by the KGB. Posted to Leningrad, he spent seven uneventful years in counter-intelligence. At the age of thirty, he married Lyudmila Aleksandrovna, then twenty-two, an outspoken, energetic air stewardess, and the couple had two daughters. He was next posted to Dresden in East Germany, where he worked closely with the Stasi, the secret police, in political intelligence and counter-espionage. It was an isolated life and not a prestigious posting. More favoured agents worked in Western capitals, or at least in East Berlin. But his perseverance brought him the nickname ‘Nachalnik’ (Russian for boss or chief).

When the Berlin Wall came down in 1989, Putin and his KGB colleagues destroyed files in the KGB’s Dresden HQ. He remembers calling Moscow for orders. ‘Moscow kept silent,’ he said later. ‘It was as if the country no longer existed.’ In 1990 Lieutenant Colonel Putin retired from active KGB service and became Assistant Rector in charge of foreign relations at Leningrad State University, a significant reduction in status. ‘It was even less important than working for Intourist,’ said Oleg Kalugin, a former official in the Leningrad KGB. ‘This was a KGB cover rather than a career move. Putin was demobilized into the KGB reserve.’¹⁰

By this time, his former judo tutor Anatoly Sobchak had become the first democratically elected mayor of St Petersburg and he immediately recruited Putin as Chairman of the City Council’s International Relations Committee. By 1994, a year after his wife suffered a serious spinal injury in a car crash, Putin became First Deputy Mayor, gaining a reputation for probity and an ascetic lifestyle. Even his bitter enemy Berezovsky admits that his future nemesis was not corrupt: ‘He was the first bureaucrat that I met who did not ask for some money and he was absolutely professional.’¹¹

In June 1996 Mayor Sobchak, having failed to address the economic crisis and rising levels of crime, lost his bid for reelection. His successor offered to keep Putin on but he declined and resigned out of loyalty to his former boss. Now unemployed in St Petersberg, he moved to Moscow where he became Deputy Chief of the presidential staff, overseeing the work of the provincial governments. Tough, aloof, and relentlessly focused, he was renowned for his industriousness and severity.

In contrast to the wild, erratic Yeltsin, Putin was the solid, reliable apparatchik. Impressed by his honesty, diligence, and loyalty, by June 1998 Yeltsin was beginning to see him as a potential FSB Director. The following month the current incumbent Nikolai Kovalev was forced to resign over an internal scandal, whereupon Putin received a sudden summons to meet Prime Minister Kirienko at Moscow’s Sheremetyevo Airport. After they shook hands, Kirienko offered Putin his congratulations. When Putin asked why, he replied, ‘The decree is signed. You have been appointed director of the FSB.’¹²

Within days, Putin had purged the FSB of potential enemies, firing nearly a dozen senior officials and replacing them with loyal subordinates. Many of these came from the ‘Chekists’, the clan of agents based in St Petersburg when Putin was the director there, and named after the brutal early Soviet-era ‘Cheka’, or secret police. One man who welcomed his appointment was Berezovsky. At this point their interests coincided: Putin needed political allies and the oligarch was rid of at least one enemy, the spymaster Kovalev, who had been leaking damaging stories about his business methods. By 1998, Berezovsky had lost his post at the National Security Council and much of his former influence at the centre of power and saw the security apparatus - which mostly resented the rise of the oligarchs - as a real threat. To survive in the feral atmosphere of Russian politics, Berezovsky needed new, powerful allies and was delighted when Putin was appointed over more senior KGB figures. ‘I support him 100 per cent,’ he said.¹³

But within a few months, another cloud appeared on Berezovsky’s horizon: the appointment of a new hardline Prime Minister, Yevgeny Primakov, former head of foreign intelligence. The timing was especially bad for Berezovsky. Ordinary citizens blamed the oligarchs for bankrupting the economy, Yeltsin was mentally and physically in decline, and, amid the tensions and continuing jockeying for position that dominated Yeltsin’s second term, Berezovsky’s power base was slipping further away. When the calculating but now vulnerable Berezovsky realized that the Yeltsin ‘family’ was warming to Putin, he swung his own media empire behind the new FSB boss, later leading the cabal that backed him as Prime Minister. In return, he expected Putin to be both compliant and loyal.

Berezovsky now began courting Putin, once even inviting him on a five-day skiing holiday in Switzerland. The two became friends. On one occasion Putin called Berezovsky ‘the brother he never had’. On 22 February 1999 - by which point state investigations into his business empire had already been launched - Berezovsky threw a birthday party for his new partner, Yelena Gorbunova. The party was intended to be a small, private gathering, but Putin turned up uninvited with a huge bouquet of roses. This appeared to be a genuine act of solidarity towards Berezovsky because they shared a common enemy in the form of Prime Minister Primakov, a man who disliked Putin because he had been chosen to head the FSB over the Prime Minister’s far more senior colleagues.

In July 1999 Berezovsky flew to France, where Putin was staying in Biarritz with his wife and daughters. By this time, Primakov himself had been dismissed by Yeltsin and replaced with an interim Prime Minister, Sergei Stepashin. The two men met for lunch and Berezovsky, now sidelined but still well informed about Kremlin politicking, told Putin that Yeltsin was about to appoint him Prime Minister. The following month, as predicted, Yeltsin dismissed Stepashin and appointed Putin. He was Yeltsin’s fifth Prime Minister in seventeen months.

At first Putin was deeply unpopular, with an approval rating of only 5 per cent, mainly because of his association with the despised figures of Yeltsin and Berezovsky. What turned his fortunes was a series of devastating Moscow apartment bombings in September that led to 246 deaths. Political enemies of Putin later alleged that the bombings were deliberately engineered by the state to turn the public mood and justify the latest attacks on Chechnya. Whether or not the Chechens were indeed the perpetrators of the outrages, Putin responded aggressively, first bombing Chechnya and then initiating a land invasion. Militarism played well with the Russian people and the Prime Minister’s popularity soared.

Putin’s newly formed Unity Party took 23 per cent of the vote in the Duma elections in December 1999, compared with 13 per cent by Primakov’s Fatherland All-Russia Party. Yeltsin, now close to the end of his presidency, capitalized on the new popularity and offered the top post to Putin. When asked to take the reins, Putin initially declined, but Yeltsin was persistent. ‘Don’t say no,’ he pressed. Berezovsky also urged him to accept. In his New Year’s Eve address in 1999 Yeltsin famously announced his resignation and Putin’s appointment as interim President. This gave him the advantage of being able to campaign as an incumbent President. Three months later, in the 2000 presidential election, Putin took a remarkable 53 per cent of the vote. Kremlin watchers satirized his success, comparing it to Chauncey Gardiner’s unwitting rise to power as President of the United States in Jerzy Kosinski’s 1971 novel Being There. Berezovsky, who had continued to use the media to publicly declare his support for the way that he believed Putin would run Russia, expressed delight.

Putin’s dramatic decision to take on the oligarchs within weeks of coming to power had been carefully planned. He knew he had to stem the disastrous outflow of capital and quickly encouraged the authorities to toughen up on the collection of taxes. He had come to two conclusions about the oligarchs. First, as Yeltsin had also discovered, the oligarchs had the potential to be as - if not more - powerful than the President himself. Second, because the vast majority of ordinary Russians loathed them, Putin knew there would be a beneficial political dividend in being seen to take them on.

Some oligarchs certainly had no shortage of enemies, among them the senior ranks of the security apparatus whose power had ebbed away during the Yeltsin years. They resented the way that these tycoons had sapped their own political strength and reaped a vast financial windfall. They saw them as upstarts. Few of them had served as senior officials during the Soviet era and they were viewed as outsiders. When Putin, so recently the head of the FSB, came to power, the security and intelligence apparatchiks, especially the ‘Chekists’, returned to favour. Of the President’s first twenty-four high-level appointments, ten were drawn from the ranks of the old KGB. This group, known as the siloviki - individuals with backgrounds in the security and military services - now saw their chance for revenge. ‘A group of FSB operatives, dispatched undercover to work in the Russian government, is successfully fulfilling its task,’ said the new President. He was only half joking.¹⁴

Putin also had a powerful collective ally in the Russian people. While the oligarchs enriched themselves, by the end of the 1990s the government could claim that as many as 35 per cent of Russians lived below the official poverty line.¹⁵ Many felt that the nation’s resources had been sucked dry by what Karl Marx had referred to as ‘Vampire Capitalism’, whereby ‘the vampire will not let go while there remains a single muscle, sinew, or drop of blood to be exploited’.

To show how they feel, Russians love to tell popular jokes to foreign visitors. ‘A group of “new Russian” businessmen were meeting in a posh Moscow restaurant where the décor was of a very high standard. A waiter showed them to their tables and pointed out that the table was made of very expensive marble and that they should put nothing heavy on it, such as a briefcase. He went away to get vodkas and when he returned he was horrified to see a bulging briefcase lying on the table. ‘I thought I told you not to put briefcases on the table,’ he said. The man replied, ‘That’s not my briefcase. It’s my wallet.’

The oligarchs were only too aware of the widespread resentment. As Anatoly Chubais, Yeltsin’s Privatization Minister and chief political architect of the giant giveaways in the mid-1990s, acknowledged, ‘Forty million Russians are convinced that I am a scoundrel, a thief, a criminal, or a CIA agent, who deserves to be shot, hanged, or drawn and quartered’.¹⁶

Putin wasted no time in waging war on the oligarchs. But human rights activists accused him of manipulating the judicial process against businessmen to suit his political interests. They claim that the President has steadily taken control of the judiciary by controlling the appointment of judges. For Putin it was a power struggle and the state needed to reinstate its supremacy. His reputation for ruthlessness was typified by another Russian joke: Stalin’s ghost appears to Putin in a dream in which he asks for his help in running the country. Stalin advises, ‘Round up and shoot all the democrats, and then paint the inside of the Kremlin blue. ‘Why blue?’ Putin asks. ‘Ha,’ replies Stalin. ‘I knew you wouldn’t ask me about the first part.’

The President’s first target was Vladimir Gusinsky, who had made money in the early days of perestroika by promising extravagant rates of return on investors’ money and was one of the first of the dynamic young wheeler-dealers to build a fortune off the back of the transition to capitalism. He also built a substantial media empire, including the first private national television network, NTV, a daily newspaper, Sevodny, and had a part stake in the fledgling liberal radio station Ekho Moskvy - all under the umbrella of the conglomerate Media-Most. He was the nearest the Russians had to a Rupert Murdoch.

Gusinsky was somewhat unique among the oligarchs in that he could at least claim that his empire had not been mostly acquired from the state. Nevertheless, he ruthlessly exploited the business loopholes of the time and was a master at manipulating government loans, concessions, and regulations by taking advantage of political contacts in order to gain state finance. Gusinsky denied anything untoward, but ended up with state loans of close to half a billion dollars, which he used to support a supercharged lifestyle.

By the late 1990s, his media empire had brought him considerable power as well as enormous political influence. It was not to last, however. On 11 May 2000, six weeks before Putin’s dramatic ultimatum to the oligarchs gathered in the Kremlin cabinet room, masked police armed with machine guns raided the offices of Gusinsky’s Media-Most. Then, in June, Gusinsky was arrested and charged with fraud and imprisoned. Gunning for his first oligarch suited Putin’s wider political strategy but the thin-skinned President was also taking revenge for the way in which he believed Gusinsky had used his influence to oppose him, and for the biased way Putin felt his television channel had earlier attacked his policy on Chechnya.

The charges were dropped and Gusinsky was released after he agreed to sell Media-Most to the state gas and oil group Gazprom for $300 million. In August 2000 he fled to his sumptuous villa in Sotogrande, southern Spain. Visitors to the villa had even included Putin and his wife. Following later attempts to persuade Spain to extradite Gusinsky, he left for Greece before settling in Israel, where he has joint nationality. He was merely the first of a long line of Russian exiles under Putin’s reign.

The President’s next target was his former friend and the man who had helped him in his rise to power - Boris Berezovsky. Even before Putin became President, the storm clouds had been gathering over the ‘boss of bosses’. He was out of favour at the Kremlin, politically isolated, and deeply unpopular. Although he had always insisted the collapse was not his fault, ordinary Russians had not forgotten the failure of the ‘people’s car’ in which thousands had lost their savings.

Nevertheless, Berezovsky always saw himself as a buccaneering capitalist, a catalyst who had helped to transform Russia. ‘We were true heroes,’ he told Frontline in October 2003. ‘Because of us, Russia was put on a new course.’ He admitted that the oligarchs had made mistakes in their business practices during a ‘murky time’, but added, ‘We didn’t break any laws, but if you call giving bribes a crime, then all oligarchs were criminals.’¹⁷

Public animosity was the least of Berezovsky’s problems. In early 1999, following months of threats, the Prosecutor-General, Yuri Skuratov, visited Prime Minister Primakov in January 1999 and said, ‘I am going to start a criminal case against Boris Berezovsky.’ Primakov asked him on what grounds and he replied, ‘In connection with the fact that Berezovsky is hiding Aeroflot’s money in Swiss banks.’¹⁸

Over the following weeks the police raided more than twenty offices and apartments in Moscow with connections to Berezovsky. The Moscow-based American Forbes journalist Paul Klebnikov, in 2004 the victim of a contract killing in Moscow, witnessed the first raid - on the headquarters of oil giant Sibneft - from his room in the Hotel Baltschug:

‘Suddenly, three white vans screeched up to the building [Sibneft’s headquarters] across the street. A dozen men in face masks, camouflage uniforms, and automatic rifles jumped out. Then, accompanied by other men in brown leather jackets, carrying briefcases and video cameras, they entered the building.’¹⁹

This being Russia, the investigation would not run smoothly. On the day of the first raids Skuratov resigned - officially because of ‘ill health’. He had been admitted to a Kremlin hospital on the previous day with a ‘bad heart’. But when his resignation was later rejected by the Duma, he stated that he was not in fact ill and was reinstated. The somewhat botched effort to oust Skuratov was typical of the manoeuvrings and internal jostling that characterized Russian politics at the time.

By now, however, the investigation had gathered momentum and continued under a special prosecutor, Nikolai Volkov. The alleged fraud was that millions had been siphoned off from Aeroflot, the airline Berezovsky had controlled since 1994, and into Swiss bank accounts in violation of Russian foreign exchange rules. Volkov claimed that his team’s examination of the company’s books uncovered a Byzantine network of companies by which Aeroflot’s funds were rerouted. Once Volkov started to look into things, a computer printout appeared behind his desk, a jumble of arrows and boxes that at first glance resembled a map of the human genome. In fact, it was a sketch of how Aeroflot funds were allegedly routed through a complex network of Russian and foreign companies in countries including Belgium, Cyprus, Germany, Lithuania, Panama, Syria, and Switzerland.

The two companies claimed to be at the heart of the fraud were Andava and Forus, both Swiss-registered financial service companies based in Lausanne with only a handful of staff.

Forus - or ‘for us’ as prosecutors nicknamed it - was set up in 1992 to facilitate Western finance for Berezovsky’s companies. When Aeroflot acquired its Boeings and Airbuses, for example, Forus arranged short-term loans to make the down payments. The company also handled Aeroflot’s revenues from foreign airlines, which paid to operate in Russia or fly over Russian airspace. These charges amounted to almost $100 million a year.

Andava was formed in 1994, the day after a 49 per cent stake in Aeroflot was privatized, and its main role was to handle the airline’s foreign ticket sales, essentially its lucrative overseas earnings.

On 6 April 1999 the Prosecutor-General issued the former Kremlin insider with an arrest warrant. It alleged that Berezovsky had siphoned off $250 million of Aeroflot money through Andava. Berezovsky, who was in France, responded conspicuously by holding a press conference at a Paris hotel. He insisted that the charges were baseless and politically motivated. ‘The time when the country is run by people with naked behinds is past us’, he said. Berezovsky has repeatedly denied the Aeroflot accusations, claiming that Andava and Forus performed legitimate business services for the airline and that any misappropriation was done by the KGB. He argued that when he acquired Aeroflot, he discovered that the KGB had been using the airline as a cash cow, siphoning off the airline’s revenues into offshore accounts to finance international spying operations. He said that he had merely closed these accounts and channelled all foreign revenue through Andava in Switzerland.

Three days later Russian Interior Minister Sergei Stepashin announced that if Berezovsky returned to Russia and spoke to prosecutors, he would not be arrested. ‘Berezovsky will arrive in Russia, present his explanations, and this, I hope, will be the end of the incident,’ he said.

A week later Berezovsky returned to Moscow, visited the Prosecutor-General’s office and was questioned for four hours. He was released after the interview and told his own television crews, ‘The case against me was instigated by the Prime Minister in violation of the law’. On 26 April 1999 Berezovsky was formally charged and barred from leaving Moscow while prosecutors investigated the case.

On 1 July 1999 Swiss police raided the Lausanne-based offices of Andava and Forus in response to requests by Skuratov. The Swiss investigation was led by Carla Del Ponte, the Swiss prosecutor who had uncovered connections between the Italian drug trade and Swiss money launderers in the late 1980s and had, as a result, been targeted for assassination by the Italian mafia. She later became Chief Prosecutor of the International War Crimes Tribunal in The Hague.

Then, out of the blue, on 4 November 1999 the Russian Prosecutor-General’s office terminated its investigation. But although things seemed to have gone quiet, the case was far from over.

The threat of prosecution still hung over Berezovsky’s head and the highly public controversy would haunt him for years to come, even though he strenuously protested his innocence. In mid-July 2000, however, he received some good news: PricewaterhouseCoopers announced that it had investigated Forus’s transactions with Aeroflot - on Forus’s behalf - and had found no evidence that funds were being illegally transferred. But while the investigation seemed to go quiet for several years, the Russian authorities later tried to extradite Berezovsky from London to Moscow. It was all to no avail: the extradition application failed and Berezovsky did not return to Russia. Eventually, on 28 November 2007, a Russian court convicted and sentenced Berezovsky - in absentia - to six years in jail. From his new base in London, he dismissed the conviction as ‘trumped up’ and ‘politically motivated’.

Berezovsky’s business dealings have always been subject to controversy. One person who fell out badly with Berezovsky over his business methods was George Soros. The two had once been friends and Soros had considered financing a number of the oligarch’s deals in the 1990s. But by 2000, the ‘love affair had turned sour’, according to Alex Goldfarb, one of Berezovsky’s closest allies. Soros once told Goldfarb, ‘Your friend is an evil genius. He destroyed Russia single-handedly.’ Berezovsky retorted, ‘Soros lost money because the “young reformers” fooled him…And then he tried to convince the West - out of spite - that the oligarchs were evil and should not be allowed to control the beast.’

Business for Berezovsky was a vehicle for bringing in the wealth to finance his real interest: indulging in political intrigue. He was easily bored by the detail of entrepreneurship and left that to others. At a conference in Moscow in 2000 Ian Hague, manager of the emerging markets Firebird Fund, which invested heavily in Russia, asked Berezovsky directly,‘Could you explain how it is that every time you’ve been involved with a company, its capitalization has run down to zero?’ Berezovsky countered that the value of just about all Russian companies had fallen because of political uncertainty, adding later that each of the companies with which he had been connected had actually improved its performance.

Although events were moving against him, Berezovsky retained enough powerful contacts to get himself elected to the Duma in December 1999 as a deputy for Karachayevo-Cherkessia, a small republic close to Chechnya. This carried the additional advantage of providing immunity from prosecution. Although he may still have hoped to reattach himself to Putin’s coat-tails, it is also likely that, despite their apparent closeness, Berezovsky had by now started to have doubts about Putin. Years later he would admit to having second thoughts about Putin as President, but put them to one side.²⁰

In the ruthless, cut-throat world of Kremlin politics alliances rarely survived for long and Berezovsky was fast losing friends. Desperate for political intelligence, in October 1999 he even asked Roman Abramovich to attend Putin’s birthday celebrations in St Petersburg. Abramovich did so and reported back to his mentor, ‘You sent me to spy on spies but I found no spies there. Normal crowd, his age, wearing denim, someone playing guitar. No KGB types around whatsoever.’²¹

Berezovsky had every reason to feel nervous about Putin. While both men had once been friends and Berezovsky had thrown his political weight, money, and television channel behind Putin’s successful bid for the presidency, within weeks of his succession, the two alpha males were at war.

There were fierce political differences: Putin was vigorously prosecuting the Chechen war, while Berezovsky argued that a military solution was not possible and openly called for peace talks. They also had very different visions for the future of Russia: Berezovsky advocated a liberal, economic, pro-Western approach that would have kept the oligarchs and himself at the centre of power and with access to contracts. Putin preferred a central role for the state. He was more interested in modernizing Russia than in democratizing it. ‘The stronger the state, the freer the individual,’ he wrote in an open letter to the Russian people before becoming President.

From the moment Putin became President, Berezovsky embarked on a series of politically reckless acts. Such bravado was typical of the man but it was also his undoing. When Gusinsky was arrested, Berezovsky was shocked. He had not expected Putin to go so far. Two weeks later a furious Berezovsky fired off an open letter attacking what he saw as Putin’s authoritarism. This was triggered, too, by Putin’s intention to exert greater central control over Russia’s regional authorities. Quoting Aristotle and the Russian poet Osip Mandelstam, who had died in one of Stalin’s gulags, the letter was the first public declaration of their emerging differences. Berezovsky was even more outspoken in a television interview on ORT: ‘All the decrees, all the laws proposed by Putin are directed at again enslaving people.’

Berezovsky was incensed by the way that Gusinsky had been forced to sell up and go into exile. Although the media baron was a former rival, and the two had become bitter opponents, Gusinsky’s fate intensified Berezovsky’s deepening doubts about Putin. In interviews he denounced Putin and compared his policy of centralizing state power to the human rights abuses of Chile’s General Pinochet. The next month he resigned his seat in the Duma, thereby losing his immunity from prosecution. He had been elected only six months earlier. ‘I do not want to take part in this spectacle,’ he said. ‘I do not want to participate in Russia’s collapse and the establishment of an authoritarian regime.’²² He also declared that he intended to create a new opposition party to take on Putin directly.

A fired-up Berezovsky dismissed dire warnings from his inner circle. His old friend Alex Goldfarb told him, ‘Boris, if you go down this road, I predict in a year’s time you will be an exile…or worse, sitting in jail…For Putin, the substance does not matter - as long as he sees you as one of his gang. But if you go against him publicly, you will cast yourself out of his pack.’²³

The feud finally reached a critical state over the way Berezovsky used his media empire. In 1994 Berezovsky, in partnership with Badri Patarkatsishvili, had been awarded a 49 per cent stake in the television station ORT, broadcaster of Channel One. Under Patarkatsishvili’s leadership, ORT was instrumental in the campaign that saw Yeltsin re-elected in 1996, and the company was handsomely rewarded. By late 1998, Berezovsky and Patarkatsishvili had increased their holdings in ORT. Channel One, the nation’s most popular television station, has an audience coverage of 98 per cent across Russia. As well as ORT, Berezovsky also owned the major weekly business newspaper Kommersant and the popular daily Nezavisimaya Gazeta. By 2000, he was, with Gusinsky, one of Russia’s most powerful media tycoons.

Patarkatsishvili was Berezovsky’s closest friend and by far his most important business partner. They were like brothers. Known as ‘the Enforcer’ in Berezovsky’s inner circle, Patarkatsishvili implemented all his most commercial controversial schemes. A smart, strategic businessman, it was always he who found the money.

Badri Patarkatsishvili was born in October 1955 to a family of Jewish Georgians in Tbilisi. Quiet, unassuming, erudite, and an authentic Zionist, Badri, which means ‘son of a little man’, was different in many ways from his best friend. For Berezovsky, his Jewishness suited him and provided business and political opportunities. For Badri, it defined him and he was heavily involved in Israeli charities. Also, in contrast to his confidant, Badri always preferred living in the shadows and shunned the spotlight most of his life. He hated politics and media attention and it was out of character when he later rose to become a key figure in Georgia’s own fevered politics.

Bright and ambitious, Badri’s first job was in a Georgian textile factory, where he rose to become Deputy Director of the plant. After the collapse of the Soviet Union, the factory was privatized at Badri’s initiative and became the private company Maudi Manufacturing, which he took over.

During the 1990s, Badri became co-owner of almost all of Berezovsky’s companies and held executive positions. This is how they worked: Berezovsky generated a huge number of ideas and then Badri decided if they were feasible and profitable. ‘Badri made Boris all his money,’ a former associate who knows both well explained. ‘Badri was his business mentor. Without him, Boris would be nothing and nowhere. He would still be a second-hand car dealer…Boris is incapable of closing a deal and seeing things through. He does not have the patience or the concentration. He is also very bad at judging people. But Badri is the real thing. He checks out the financial details and makes it happen. They had a symbiotic relationship and complemented each other. Badri was his only true business partner. They were very, very close.’

According to Aleksander Korzhakov, former head of the Presidential Security Service: ‘The official position of Badri at that time was Deputy Chairman of the board of directors of LogoVaz. In fact, his responsibility was to ensure the repayment of debts and to provide protection against gangsters.²⁴

Badri’s earliest collaboration with Berezovsky was in 1990 when he became Regional Director for the Caucasus of Berezovsky’s car distribution company LogoVaz. In 1992 he became Deputy Chairman and was awarded a 3.5 per cent share in the company. A year later he moved from Georgia to Russia, first to the town of Lyubertsy, then to a flat in Moscow. Otari Kvantrishvili, the boss of a Georgian organized crime group in Russia (and killed by rivals in 1994), used his connections with Russian authorities to arrange Badri’s residence visas in Lyubertsy and Moscow.

At ORT Badri and Berezovsky soon crossed swords with Vladislav Listyev, one of the country’s most popular television presenters. A charismatic figure, he was appointed by Berezovsky as the new Managing Director, but they fell out over an attempt by Listyev to end the advertising monopoly. The broadcaster believed that the advertising companies were being run by organized crime, which was bringing them millions in revenue, but his decision to take on the mafia cost him his life. On 1 March 1995, a few weeks after taking over as manager, he was shot dead outside his home. Badri was arrested on suspicion of the murder but was later released. However, suspicions over his involvement never disappeared, though he always maintained that the FSB tried to frame him for the killing.

In the summer of 2000 Putin was growing increasingly impatient with the way that Berezovsky and Badri were using ORT and their media empire as a blunt instrument to destabilize his regime. This came to a head in August when a nuclearpowered submarine, the Kursk, sank, killing all 118 crew. ORT television news broadcast interviews with the wives and sisters of the submariners who attacked Putin for handling the incident ineptly. Putin, meanwhile, was on holiday in the Black Sea and was seen jet-skiing while ORT transmitted footage of perilous, icy waters and distraught families. Putin’s refusal to cut his holiday short turned the tragedy into a major political and public relations disaster.

Furious, Putin blamed Channel One’s owner, Berezovsky, for the negative coverage and telephoned him to complain. Berezovsky suggested a meeting, to which Putin agreed. But when Berezovsky arrived the next day, he was greeted not by Putin but by Alexander Voloshin, the shadowy, reclusive head of staff. Voloshin had once advised Berezovsky during his political cultivation of Yeltsin but now, as head of the presidential office, he issued a stark warning to his former friend, ‘You have two weeks to sell back your shares in ORT or you will suffer the same fate as Gusinsky.’ Berezovsky refused and demanded a meeting with Putin personally.

Three days later Berezovsky was summoned to meet the President at the Kremlin. It was a heated exchange, with the two denouncing each other face to face. A clearly tense Putin first listened to Berezovsky as he mounted a defence of ORT’s coverage. According to Berezovsky, the President then coldly repeated the threats made by Voloshin and made his own position only too clear: ‘You are starting a fight against me. Your channel is interviewing prostitutes who say they are wives and sisters.’

Berezovsky replied that they were genuine relations and that they had already granted interviews to the state TV company but, as these were not broadcast, they approached ORT.

The President was unimpressed: ‘I want the state to control ORT.’

‘How?’ asked Berezovsky. ‘It belongs to me.’

‘We’ll take control. You need to sell.’

‘I don’t need to sell.’

The President then got up, said goodbye, and walked out. It was the last time they spoke.²⁵

A shaken Berezovsky was now faced with the full reality of his decision to back Putin for President. Shortly afterwards, he was again questioned about the alleged embezzlement of Aeroflot funds. Unperturbed, Berezovsky ensured that ORT continued its hostile coverage of the handling of the Kursk disaster.

After his former cheerleader refused to sell his ORT shares and ignored his threats, Putin approached Badri. At that stage the two were still on friendly terms. Badri was telephoned by the head of the FSB, Nikolai Patrushev, and summoned to his office. From there, he was escorted to the Kremlin and greeted by an impatient Putin. ‘What strange game is Berezovsky playing?’ he asked. ‘I want both of you to clear out of television. No one has the right to take risks with television.’²⁶ Putin said they could sell the shares and negotiate a price with media minister Mikhail Lesin. As Badri departed, the President said that they were friends but if he stayed in television they would become enemies.

Badri subsequently met with Mikhail Lesin, who offered $300 million for the ORT shares - the maximum the state would pay. But Berezovsky still refused to sell. Instead, he announced that he would put the shares into a trust to be managed by a group of journalists and other representatives (a bluff that came to nothing).

The rift between Putin and Berezovsky was now irreparable. In October 2000 Putin was asked by a journalist about his former supporter. ‘The state has a cudgel in its hands that you use to hit just once, but on the head,’ he replied.²⁷ (He later told reporters, with a half-smile, that his favourite judo move was the ‘deashibati’, a swift attack that knocks one’s opponent off his feet.²⁸) On 17 October the media tycoon spent two hours at the Prosecutor-General’s office in Moscow, facing further questioning over the Aeroflot allegations.

A week later Berezovsky mounted the steps of his private jet, a Bombardier Global Express, to take him from Moscow to Nice, a journey he had made hundreds of times. On this occasion, however, there was to be no return flight. Life for Russia’s most controversial oligarch would never be the same again.