Spring
Some weeks later, on a balmy spring day, I stepped out of a taxi and paused for a moment to admire the small leafy square off ulitsa Tverskaya in front of the elegant yellow hued apartment building where Ekaterina lived. Like the surrounding properties it had been recently renovated. Like much of central Moscow’s architecture it dated back to pre-Revolutionary days.
During the last years of the USSR, many of the capital’s buildings had fallen into a state of disrepair and decay, then after the dissolution properties in desirable central districts had undergone a miraculous transformation. Occupants who had held positions in state organisations lost their privileges and their incomes dropped with successive devaluations of the rouble. Property values shot up, developers moved in, and apartment buildings were transformed and modernised for a new class of private business managers and young professionals.
I dropped my bags, took a quick shower and headed off to meet Ekaterina from her office, a few blocks away on Tverskoj Bul’var. With Friday afternoon traffic in Moscow more hopeless than ever there had been little point in her meeting me at the airport.
As I left the apartment building I marvelled at the metamorphosis of the garden square, the last time I had seen it, just four weeks earlier, it had lain under a hardened layer of grimy grey snow. It was magic, the trees were decked out with bright green leaves and the flower beds bursting with colour.
I felt good as I turned in the direction of Tverskaya, previously known under the Soviets as ulitsa Gorkogo, which they were now beautifying with a new granite pavement and new lime trees like those that had decorated it in the sixties.
The feeling was no doubt in anticipation of the long break I had planned with Ekaterina and not a little to do with the glorious weather I discovered on arrival, a marked contrast to the wet and wind swept streets of Dublin.
Everything looked normal in Moscow for that time of the year, the girls were pretty, the trees green, the fashionable stores still fashionable, the luxury boutiques still beyond reach of all but the rich, the flower sellers still babushkas and the traffic as snarled-up as ever.
The bright spring appearance was deceptive, it belied the difficulties of many ordinary Russians struggling to cope with the changes, but still believed everything the state media fed them about enemies at the gate. As for the class cleavages they were more pronounced than ever as the wealthy unabashedly continued to flaunt their affluence, hiding their fears that bad times were around the corner.
The middle classes who had bought new homes with foreign currency loans suffered, with the fall of the rouble they now owed twice as much as they had borrowed in euros. For the working classes the transformation from socialism to capitalism had been brutal, with many left stranded in a world they had barely time to understand.
It seemed to many Russians that post-Soviet society had favoured a privileged few, those who had cheated the people of their collective assets, natural resources, industries, banks, properties and institutions. Corruption was rampant as those close to the centre of power rode roughshod over the people’s rights.
Ekaterina, like many young ambitious outward looking Russians had embraced the changes offered by the early Putin years, but her hopes had been transformed into deep disappointment. She was not blind to the calamity of Putin’s leadership, who by his ambitions was leading Russia into a useless confrontation with the West. Her country’s future was neither with Iran, nor Syria, and above all not North Korea.
It was a sad turn of affairs because Russia had so much to offer to Europe and the West.
In the light of the changes brought about by the Kremlin, the success of China was a bitter pill to swallow. From an agrarian based society, China had succeeded in its transformation, overtaking Russia in every sense, even if it was still ruled by the Communist Party, whilst Russia after abandoning Communism had slipped back into the bad old ways of authoritarianism at an alarming pace.
‘To understand Vladimir Vladimirovich, John, you must remember his words,’ she told me ‘...it is worth acknowledging that the demise of the Soviet Union was the greatest geopolitical catastrophe of the century.’
Like all Russian mothers who wanted a better future their children, Ekaterina feared the misery of the dark days her parents and grandparents had known under the Soviet Union and its tyrants. There was of course a nostalgia for a state that had offered work, health and education to its sons and daughters, pride in its accomplishments in space, science and the arts.
Her generation’s disappointment was intense, the question now was would she like so many progressive young Russians be forced to seek a new life abroad?
Ekaterina was one of those who had taken out a mortgage in dollars. Her salary at Christie's, where she was an expert in contemporary art, had been sufficient to buy a modern two bedroom flat, but with the collapse of the rouble her repayments had doubled.
She like millions of Russians had found herself trapped by a crisis not of her making. Her optimism had been cut short by Putin’s Ukrainian adventure, then buried by the collapse of oil and the imposition of sanctions.
Of course most Russians were unaffected by their government’s counter measures against the West, but many Muscovites and Petersburgers worked for foreign companies, or those that imported food and goods from France, Germany or the US. For them life had become difficult as they were forced to cut back on discretionary purchases and foreign holidays out of fear of what would happen if they lost their jobs.
Russians had lost faith in the rouble, some had even invented a parallel currency, the kolion. A few lucky ones, those who owned a family home in the countryside, gave up the unequal race and left Moscow or Petersburg altogether.
Even Ekaterina had contemplated moving to her grandmother’s old family home, now a weekend dacha, situated in a village not far from Davydovo, sixty or seventy kilometres south-east of the capital, where people lived without the state thanks to home grown food, chickens, geese and firewood from the forest, where villagers could count on the help of their neighbours, or turned to the Orthodox Church for guidance, as they had in the more distant past.
Ekaterina with her flaming red hair and independence reminded me of a fiery girl I had once known in Dublin. She did not give up easily. But she was caught in a trap with no other alternative than to remain in Moscow, where she had work and a decent school for Alena.
The capital was like a vortex, sucking in those who had lived the towns and villages of the surrounding regions, as industries and jobs disappeared, as had schools, hospitals and services. Hapless distant villages fell into ruin for lack of resources. Old folk, who saw their pensions shrink to a pittance, bitterly regretted the good old days of the Soviet Union, when unlimited access to medical services and hospitals was there for all.
For many like Ekaterina the idea of her country spending money on worthless foreign adventures, nostalgic of the Soviet era, was incomprehensible when there was so much lacking at home.
Breaking News
Pat Kennedy had just disembarked in Hong Kong, automatically he checked his phone was connected to his local network. Suddenly he stopped in his tracks. He looked at his phone in stunned disbelief. His alert flashed breaking news from Reuters, Banker Michael Fitzwilliams’ yacht Marie Gallant II disappears in Irish Sea off Wexford coast.
He hurried through the controls to a discrete VIP exit and his waiting car. He was confused unable to assimilate the news, decide what to do, who to call. His driver headed out into the traffic in the direction of the Harbour Tunnel and Hong Kong Island as Pat, normally talkative sat staring blankly ahead. Then, looking at his watch, he noted it was six in the morning in Dublin.
I was woken by his call.
‘Hello John?’
‘Pat! Where are you?’
‘Hong Kong. You’ve heard the news?’
‘Yes. It’s God awful. An accident they say—late yesterday afternoon.’
‘Michael?’
‘He’s missing,’ I told him. ‘They are still searching.’
‘Jesus.’
‘What happened?’
‘There’s no details. The coastguards said there was an explosion, the boat sank—immediately—there was no mayday call, when they got there all they found was floating debris.’
‘Feckin Holy Jesus! What about the crew?’
‘The same, nothing.’
‘What should we do?’
‘If something has happened to Michael, the first thing is his family, if you see what I mean. Then comes the bank.'
‘Yes, of course.’
‘Michael’s no longer on the board. Just a shareholder, even if he holds a very large minority. It doesn’t affect the functioning of the bank, that’s our problem today.’
‘Where’s Sergei?’
‘I haven’t heard from him for the last week or more.’
‘Was it an accident?’
‘They’re talking about an explosion.’
‘That’s bad. OK John. Try to find out more and call me back when you’ve got something.’
‘I’ll call you back Pat as soon as I’ve got some news.’
If Fitzwilliams was dead it was a game changer. Was it an accident? Michael had spoken of his fears, though he’d never seriously talked of physical danger, on the other hand he often voiced his concern for Tarasov’s safety.
He’d been spooked by what happened to the CEO of Total SA, Christophe de Margerie, who was killed when his private jet hit a snow plough at Moscow airport. It was reported as a tragic accident, at least that was how it was interpreted in the French and international press. Some Russians saw it differently, a CIA plot to eliminate the Frenchman who was a leading opponent of Western sanctions against Moscow.
Michael had many enemies and not only Russians. He was also, or had been, an embarrassment to Downing Street. Rumours had been making the rounds of the extreme measures they would go to to silence individuals, especially those whose knowledge of sensitive or damaging information could affect the credibility of the government if divulged.
The INI grab—if not plot, was an opportunist swoop to remove Michael, filling the pockets of certain interested parties, whoever they were, who could have faked an accident to silence the banker. For the moment however it was a tragedy and the world would have to wait until the authorities made their enquiries.
A Climate of Fear
Though Sergei Tarasov had feared the worst, he had surprised by the speed and determination of Moscow. Suddenly he had become a wanted man, hunted by the Kremlin and its all powerful occupier. Like all Russians he had grown up in the knowledge that he could never win against the unpredictable, all present, all powerful, corrupt state. It was a fact of life, like the Russian winter, which had to be lived with, in the same way Russians always had.
Fortunately for Tarasov, British courts treated extradition demands from Moscow in such cases as politically motivated. A similar such case had been that of Boris Berezovsky, who was later found hanged in his bathroom under mysterious circumstances. Another was the demand for the extradition of Yevgeny Chichvarkin, which was debooted after he claimed his business had been seized by corrupt officials.
Sergei Tarasov’s outspoken criticism of the government's programme, in which businesses exchanged their dollar reserves for rouble denominated government bonds, had angered the Kremlin, setting in motion a smear campaign piloted by Andrei Azhishchenkov.
Tarasov was accused of unpatriotic acts, bordering treason, including encouraging and facilitating capital flight.
Almost every Russian oligarchs owed his wealth to the privatisation of state enterprises during the period that immediately followed the demise of the Soviet Union. More by good fortune and opportunism, than by their skills, certain Russians, used to the brutal take it or leave it business environment of the Communist world, found themselves at the head of industries that were often monopolistic on a local, regional or national base. Fortunes were made overnight. High ranking officials and self-appointed political leaders took advantage of their power, either by seizing businesses and markets for their own advantage, or that of their families and close friends. Everything was up for grabs, natural resources, basic materials, refining and manufacturing industries, construction, banks, distribution, transport, food and drinks, the list was long. Combinats were dismantled, their different divisions grabbed by a hitherto unknown species of entrepreneur formed in the roughshod methods of the Soviet Union.
Sergei Tarasov had financed such entrepreneurs, one of which was the new owner of a huge industrial bakery plant, previously part of a vast virtually bankrupt chemical complex, a former Soviet combinat, which had dominated the life of a middle-sized industrial town near Ufa.
In the economic conditions that reigned in the early post-Soviet period, the combinat could no longer fulfil the social role it had played under the old regime. Its dismantlement, or rather abrupt financial collapse, saw its multiple services handed over to any dynamic manager who seemed capable of running them on a viable business basis.
The banker provided the loans necessary to capitalise the business and soon the enterprising manager found himself sole owner of the town’s only bakery with its buildings, equipment and workers, supplying tens of thousands with their daily needs. With hard work and careful management it was transformed from an inefficient loss making, socialistic style production unit, into a thriving business. In the space of the three or four years that followed his takeover, the baker became a rich man, expanding his market to nearby towns and then the region without any seriously competition to speak of.
The Yeltsin period was an extraordinary make or break moment for such enterprising men, and Sergei Tarasov himself had been one of them. However, one thing remained unchanged in the post-Soviet business world, corruption, and it was rampant in all its diverse forms. Material improvement had come for many, mostly those in Moscow, Saint Petersburg and other large cities. Home ownership, cars, foreign holidays became common place on condition the economy prospered. Regrettably, the overall economy of the Federation struggled, the transformation from a centralised to a free economy left many on the wayside.
Manufacturing industries withered, and the country became even more dependent on commodities, that is to say oil, gas, basic chemicals and minerals, leaving it vulnerable to the caprices of global commodity markets.
When the crunch came, those who could got out, and those who could not, ordinary Russians, hunkered down, waiting and hoping life would improve, a long tradition in Russia.
Sergei Tarasov in his soul was like any other Russian and behind his brash style was the dread of the age old Russian demon that came with a knock on the door in the depth of the night. Perhaps the demon had changed, abandoned his trademarks, the heavy leather coat, the fedora pulled down over his forehead, but the result was no less brutal and the prison cells as hellish as ever.
Tarasov feared assassins in the pay of the FSB who stalked the enemies of the Kremlin. He had known others and had lived in their shadow for over two decades.
As a young banker, in Yeltsin’s days, bodyguards watched over him day and night, at a time when bankers and businessmen were gunned down in broad daylight on the streets of Moscow, when gunslingers walked the streets, when the threat of assassination, kidnapping and extortion were a way of life.
Gangsters were hired to eliminate business rivals, to settle debts, as rival underworld groups fought over almost everything. Casinos sprung up everywhere with rival gangs muscling in and threatening every new operation.
There was so much money to be made from gambling, nightclubs and prostitution that Sergei Tarasov’s bank was forced to work overtime, laundering the vast sums money that flowed in, most of which was converted into investments in real estate.
Just like Wyatt Earp, Putin’s no nonsense methods changed all that. The new president had the most unruly criminal elements run out of town, and in Moscow and Petersburg the Bratva10 withdrew from sight, slinking back into its own dark, sinister, underworld.
At the same time banks cleaned up their game and turned their attention to financing aboveboard residential and commercial property development as the economy boomed.
As his wealth grew and in spite of an improved climate of security in Moscow, Tarasov’s security team was reinforced, their role was to watch over him and his family, night and day, protecting his multiple residences, offices, motor vehicles, jets and yachts, travelling with him wherever he went, vetting those who met with him, securing the hotels and places he visited.
In London it was different. There he discovered he could walk the streets in Chelsea or Knightsbridge with little risk of danger, though he took the precaution of not openly displaying his wealth, unlike certain of his countrymen who flashed their money around with extravagant high profile events in hotels and celebrity nightclubs.
Resurrection
Tarasov, however, held many secrets, secrets that were better hidden, forever, secrets that could cost him his life. Fitzwilliams’ untimely death had been a warning and Tarasov knew his enemies would not hesitate to target his family. He had been no ordinary member of the inner circle, his ties to the Bratva were hidden behind an impenetrable veil and his banking group had established an overseas empire that held the secrets of just about every key figure in the Federation.
Sergei, if he had been evinced from the INI Moscow Bank, he was still the majority owner and chairman of IB2 Investment Holdings, an independent company headquartered in Luxembourg, which owned interests in oil and gas, asset management, commerce, insurance, retail trade, telecommunications and utilities. His secrets were such that his untimely death would release a flood of documents that could be fatal to the Kremlin and its men.
A good reason why he had gone to ground and why neither he nor his family had been seen at their London home for weeks. Rumours were rife, some said he had been kidnapped or murdered by FSB agents, others said he had been spotted in South America.
After a long moment of hesitation and reflection the Kremlin was forced to conclude the only way forward was through a face saving negotiation, in which Tarasov traded his promise of silence for his life and the lives of those close to him.
Suddenly Sergei resurfaced in Paris, after weeks of behind the scene negotiations by Steve Howard and his friends, which were concluded in a secret meeting in Zurich, between Sergei’s lawyers and those of the Russian Finance Ministry.
An ultra-confidential deal was negotiated whereby the banker ceded the totality of his Russian and certain overseas holdings in exchange for criminal charges and claims on his overseas assets being discretely dropped.
IB2 had been founded in 1998, during the Yeltsin presidency, by Tarasov, to protect his personal earnings against the uncertainties of that era. Over the course of one and a half decades IB2 built up its share holdings in diverse companies in Russia, Belarus, Kazakhstan, Cyprus, the UK and the USA, as well in Michael Fitzwilliams’ different banking units in London, Dublin and Amsterdam.
The Russian banker’s offshore empire had been transferred to a subsidiary Swiss holding company at the end of 2013, and his various assets were held in companies well out of reach of Moscow.
In conclusion he agreed to total blackout on all matters relating to Russian affairs of state and abstention from all criticism of the regime past, present and future. The threat of non-conformity with the agreement was implicit. The settlement came in spite of the fact Putin had called Tarasov a common swindler and had compared him to Bernie Madoff.
It was a deal in the same vein as that in which the Russian President had pardoned his enemy Mikhail Khodorkovsky. The luckless Khodorkovsky, who had spent ten years in imprisoned in Siberian jails, had promised to refrain from all further involvement in politics.
Sergei’s first very discreet sign of life had in fact been in Dingle, on the West Coast of Ireland, much to the relief of the harbour master who feared the Russian’s super yacht, the Cleopatra, had been abandoned by its a crew.
The truth was the crew had been on forced leave, Sergei, fearing an attack similar to the one that had cost Fitzwilliams his life, did not want to put his men’s lives at risk and endanger others.
His luxurious sixty metre yacht, which needed one hundred and fifty thousand euros just to fill its fuel tanks, could accommodate more than twelve guests in staterooms on its four decks and with a standing crew of eleven, represented a potential risk, a security hazard, in the small Irish harbour. Despite the efforts of the port authorities the yacht’s registered owners, a company in Bermuda, had neither returned their calls nor their mails.
Sergei’s disappearance had been a source of much talk and speculation and the press, alerted to his sudden appearance at the exclusive Bristol in Paris, sent an excited buzz through the media.
From his window he had an unimpeded view of the Elysée Palace, where a complicit nod had been given to the oligarch’s presence.
That evening he dined with Steve Howard, Arnaud Diebold, the head of one of France’s leading business empires, and myself in his suite at the Bristol. The iconic but pretentious Brasserie Lipp, the French establishment’s intellectual haunt, was not for Sergei, though it had been used to mediatise Khodorkovsky’s return. Neither did Sergei choose vodka, herrings and potatoes, as had his compatriot.
As for establishment intellectuals like Bernard Henri Levy and George Gluckmann, who had been present to fête, in a misplaced cause célèbre, the liberation of Khodorkovsky, a fellow member of the diaspora, they were absent.
The international business world saw Sergei Tarasov as a victim of the Kremlin’s machinations. Many reputed international asset management firms had invested in his Russian real estate projects only to see their funds blocked, be it temporarily, after his bank was seized by the Russian authorities following his refusal to invest in the Kremlin’s Patriotic Fund.
As a prospective partner of Diebold, Sergei had been accorded the tacit approval of the French government, which found itself in an uncomfortable position with the Russia after the cancellation of two French built warships, the consequence of Western sanctions against Moscow.
The atmosphere at the Bristol was that of a gathering of old friends to celebrate an occasion, and occasion it was. The French billionaire, Arnaud Diebold, friend of the politically powerful, had accepted Sergei’s offer to invest in the construction of a vast property development on the east side of Paris.
Steve Howard, a long time friend of Diebold, had brokered the deal and the news was to be announced the following day at a press conference at the billionaire’s offices in La Défense, the business district of Paris. Sergei’s New York investment firm, Millennium Capital Management, would head the pool to finance the development.
Mansuetude
Though Putin reinforced his grip on power, he was willing to let those who wanted to get rich, get rich, with one condition, don’t rock the boat, play by the rules, my rules. The same went for Russian Jews, get rich, but do it my way.
It was almost as if the fictional Gordon Gekko was speaking, ‘Greed is good. Greed is right. Greed works.’ How that fitted in with Adam Smith’s ‘Theory of Moral Sentiments’ is another story, as sharing always had been. In any case in mainstream economics moral values are either ignored, or assimilated under broader, vaguer, headings.
Putin showed he was magnanimous, prepared to forgive those willing to recant, like Sergei had, in the same way as he had offered freedom to Khodorkovsky.
Those who persisted in their wayward ideas often ended up dead like Anna Politkovskaya, or Boris Nemtsov, others were arrested on trumped up corruption charges like Kirill Serebrennikov or Yulia Latynina.
The parallel with China was striking, getting filthy rich was good, being a dissident often meant ending up dead.
But in spite of his ambivalent image in the West, Putin retained an approval rating, worthy of a dictatorship, of over eighty percent, that is according to state media.
Democracy did not exist in the Soviet Union and few of its now scattered component parts had democratic governments.
In spite of his failings, since Putin’s arrive in the Kremlin in 2000, Russia had experienced an extraordinary improvement, offering a better life to many, though not all Russians, even if the nation’s newly found wealth was to a great extent derived from the export of commodities.
With the seizure if the Crimea and the conflict in the Ukraine, sanctioned and falling oil prices, the shine had faded and Russians were suffering again. Real incomes had started to sink as pensions and wages stagnated.
But Russia’s strongman, a dictator if you like, was not about to surrender his power, willing to use authoritarian methods to impose his will, at home and in the near abroad.
With elections in view, opposition leader Alexie Navalny, took advantage of the worsening situation, as he had in previous elections when he had piloted demonstrations that shook the Kremlin. Which explained the wave of arrests and imprisonment designed to intimidate the opposition.
Putin used the corruption case against Alexey Ulyukaev11, the former minister of economy, as an example in his much publicised crusade against corruption, and to show no one was immune even at the highest level, though at the same time his system of crony capitalism continued to flourish. The case raised a number of questions as to why Putin would risk a show trial, the answer no doubt lay in his fear of a palace revolt with the trial serving as a war