On May 7, 2024, Vladimir Putin will officially assume the presidency of Russia for the fifth time. The streets will be cleared, and there will be motorcades, opulent halls, and an oath taken on the Constitution. This is his twenty-fifth year in power: 25 years of the same old faces, hollow promises, fake elections, imprisoned and murdered opponents, and now war. How is this even possible? How did we find ourselves in this dire situation? Where and why did we veer off course? I'm sure you've all thought about it.
It's hard not to ask ourselves such questions. Alexei Navalny reflected precisely on this topic in one of his last texts. In August 2023, Alexei was sentenced to 19 years in prison for his political activities, beliefs, and words. By that time, he had already spent two-and-a-half years in prison, a significant portion of which was in a punishment cell – in unimaginably torturous and inhumane conditions. At that moment, half a year remained until his murder. A few days after the verdict, Navalny published an unexpected post titled "My Fear and Loathing." It delves into the 1990s, Yeltsin, the Family, Chubais, the oligarchs, the reformist government, and all those who propelled Putin into power. They bear the responsibility for Putin’s quarter-century nightmare. Alexei openly admitted that he hated them because he had once believed in them. He'd believed they would seize the unique opportunity to build a beautiful, prosperous Russia. He believed in their noble intentions and in democratic reforms. But they betrayed us all. Instead of reforms, democracy and freedom, we got Putin and the bloated bank accounts of those who put him in power. And then Alexei wrote about the fear. His greatest fear. Even while confined in the punishment cell, Alexei's greatest fear wasn't death. His biggest fear was that Russia might again be presented with the opportunity it got in the 1990s, only for us to squander it once more. Alexei himself called his text practically a confession. Many found this text surprising, and it sparked debates. However, at the Anti-Corruption Foundation, our focus was on something entirely different – the fact that the history of Putin's rise, as well as our country's modern history, has largely been forgotten, remaining partly untold and unexplained. Even worse, it's been distorted by those who took direct part in the events in question. We knew we needed to rectify this situation. Thus, the idea for a political or even historical series exploring the origins of Putin's ascent was conceived. Just four days before the scheduled release of the first episode, Navalny was murdered. I'll never have the opportunity to discuss this topic with Alexei again. However, one thing is very clear: it was crucial for him that we reconstruct the events and collectively understand this topic, which held significant importance for him. Have you ever wondered when and why things went wrong? How did we end up where we are now? Why is our country, which has everything it needs for its people to live well, mired in poverty, hopelessness, and powerlessness? Who took the chance at a life with dignity away from us? Russia could have been completely different. Everything could have been different. And it should have been different. Gas, resources, and people — we have everything. But where's the prosperity? The answer we often hear is that, well, that's just the way it is. The whims of history, Russians' unique "mentality" or special circumstances kept the country from developing properly. But this is wrong. There were no special circumstances. It's just that power in Russia was given to a man who couldn't and shouldn't have gotten it. What looks chaotic and random at first turns out on closer inspection to be a logical chain of events. A chain of decisions made by specific individuals, each of them driven by very concrete motives: self-interest, corruption, greed, vanity. I think it's very important to figure this out. Who are these people, why did they do it? We should remember everything and step by step reconstruct the sequence of events which has led us to where we are today. If we don't understand how we ended up with Putin, how the foundation for the last quarter century was laid, it will be hard for us to know how to live when he's gone – how to live differently. Just as happened in the 1990s, we'll miss a historic opportunity for a life with dignity. Traitors. The beginning. In 1991, the cortege of the newly elected president of the new Russia, Boris Yeltsin, followed the same route every day from the state dacha in Barvikha to the Kremlin. Just after entering Moscow, the road passes through the new exemplary district of Krylatskoye. For the 1980 Moscow Olympics, a rowing canal and the world's largest indoor cycling track were built here on vacant land. Later on, entire blocks of high-rise residential buildings were constructed. According to the general plan of Moscow, a residential area was to be built in Krylatskoe. A paradise for the privileged in the late Soviet Union. It was designed to maximize convenience, with schools, kindergartens, and stores within walking distance of residences. Everything is ready for the newcomers. The authorities even showed it off to Margaret Thatcher, bringing their honored guest to the Diet grocery store and having her be invited home for a cup of tea by a "random" passerby. The residents of Krylatskoye may not be very sophisticated, but they are not lacking in hospitality. Krylatskoe looked like a dream. However, only the nomenklatura lived here. Once Yeltsin was passing by in his car when he noticed an unfinished brick building hugging a forest on the outskirts of Krylatskoye. He asked his head of security, Alexander Korzhakov, what it was. It turned out that the building at 4-2 Osennyaya Street had been intended for the leadership of the Ministry of Health but had been abandoned. For 10 years the building was standing abandoned and musty. Yeltsin demanded that it be restored and completed immediately. Because he wanted to live in it. The shock workers sprung into action, and by the spring of 1992, the six-story building was in perfect condition. The head of the FSB, Mikhail Barsukov, brought Yeltsin drawings and floor plans. The house was divided into 20 apartments, each at least 160 square meters (1700 square feet). The private grounds had their own security team, state communication facilities, underground parking lot, saunas, and tennis court. Yeltsin was delighted, choosing two apartments on the top floor to combine them into one 364-square-meter apartment (almost 4000 square feet). He chose another apartment below his own for his eldest daughter, Yelena, and her family. The remaining apartments went out to Yeltsin's favorites. He chose them himself. In 1992, hardly anyone would have believed this story. That Yeltsin would build himself a massive house at state expense and distribute apartments to relatives and friends? It seemed unthinkable. Where do you live? In which country? Yeltsin, in a nutshell, was very contradictious. Yeltsin! Yeltsin! Yeltsin had become famous by fighting fiercely against party privileges, inequality, and social injustice. I think that the attitude towards people... constant interactions with them... Never lose contact with them. Especially with ordinary people. whether in the mine or in the field. He has always opposed the communist elite. I've never seen as many scoundrels in my 56 years of life as I've seen here at one time. Yeltsin publicly refused party benefits. Because he was different. To make modesty a cult in work and behavior. Noticing and avoiding the beginning of bossy syndrome in relationships with people. In his 1989 manifesto, he wrote truly revolutionary things and personally criticized the chairman of the Supreme Soviet of the USSR: Perestroika would not have stagnated if Gorbachev personally could have restrained himself with regard to special benefits. If he himself had renounced those completely unnecessary but traditional and pleasant privileges. If he had not started building a house for himself in the Lenin Hills, a new dacha near Moscow, another one in Pitsunda, and then a new, ultra-modern one near Foros. When people know about blatant social inequality and see that the leader is doing nothing to stop the shameless expropriation of benefits by the party leadership, the last drops of faith evaporate. Yeltsin used public transportation like everyone else. He shopped in ordinary grocery stores. He told the people around him how angry he was that pensions couldn't be increased by 10 rubles, while a minister's salary had been raised by 400. Isn't 800 rubles enough for the minister? Does he really need 1,200? Does Gorbachev have to increase his salary to 1,500 rubles? And what do you think about this video. A journalist accidentally sees Yeltsin coming out of his house. Our film crew had the opportunity to shoot a unique scene. He goes to register at a regular district medical center. They ask him what he does for a living. Yeltsin not only answers, but also explains what exactly the viewers should pay attention to. Occupation? I'm a minister. For the first time since 1917, we have a minister in the district medical center. He-he-he This straightforward political trick worked perfectly. Party privileges and the blatant inequality between the elite and the rest of the country were infuriating. In the late Soviet Union, people lived in real poverty. Higher education, professional experience, hard work – all this was useless unless you had the right connections. The whole country stood in line for hours for lousy food. The shelves were practically empty. Fresh meat was an unaffordable luxury, so everyone bought it canned. Do we have a ketchup or some sauce? What country has ketchup? We have tea, sugar, and that's good. Once a month, you'd get coupons for sugar, cereal, and oil rations. It was unjust, dishonest, and humiliating, and people felt this all the more strongly when they saw well-fed party elites who lacked for nothing. They often didn't even need to pay for their luxuries, since it all just came with their positions. People saw in Yeltsin what they wanted to see: someone who would finally speak up about this injustice, stand up for the common people, and put things in order. He is a brave person. He is a real communist. But behind the scenes, the real life of Yeltsin the privilege-fighter was quite different. Let's take the story about the medical center. And where, excuse me, Yeltsin is coming from? In 1989, he lived in a 165 square-meter five-room apartment in central Moscow. The party gave him this apartment for free. It was the center of Moscow. 2nd Tverskaya-Yamskaya Street 54. It is the Tsekovsky House (so called because members of the party's Central Committee, the "Tse-Ka," lived there). It is the Soviet version of what is now called "club houses". I don't think that we lived in great conditions, comparing to the others. How many rooms did your apartment in Sverdlovsk have? Five.
And in Moscow? Four. Yeltsin had a driver, assistants, and all the comforts of a party leader. But decided not to talk about it. Instead, he was telling the following: While we live in such poverty and deprivation, I cannot eat sturgeon and black caviar, I can not speed past traffic lights and swerving cars. I can not take imported super pills, knowing that my neighbor doesn't have aspirin for her child, because it's shameful. But several pages earlier it was not shameful for Yeltsin to complain about his apartment on Tverskaya-Yamskaya street. He complained in his book that it was "noisy and dirty." Most party leaders, according to Yeltsin, settled in western Moscow. In Kuntsevo. It's clean, peaceful and cozy. Let's get back there. 1992. Yeltsin's house on Osennyaya Street is complete. Yeltsin moved into his two combined apartments on the sixth floor of the House on Osennyaya with his wife and his youngest daughter's family, while Yelena and her family moved in below. Everyone had a free property. None of them paid a cent. And this wasn't just Yeltsin's crash pad as president – the apartments became their personal property. Then Yeltsin chose his neighbors. Back then everything was distributed by special orders, but now we can easily check and restore everything from the databases. Obviously, one of the apartments went to Korzhakov, his bodyguard: 192 square meters (over 2000 square feet) on the sixth floor. Across the landing from him was Viktor Chernomyrdin, prime minister at the time. The latter's deputy, Yegor Gaidar, got an apartment on the second floor. Another deputy, Oleg Soskovets, also got an apartment there. Head of the Main Directorate of Security of the Russian Federation Barsukov and Defense Minister Pavel Grachev, the president's closest friends and drinking buddies, were also given apartments. Both of the apartments are still owned by their families. Administrative Directorate head Pavel Borodin was also there. Moscow mayor Yury Luzhkov was given an apartment number 7, and an apartment number 6 was given to his latter's deputy Vladimir Resin. Resin, now 87, is still a member of the State Duma from United Russia. At this point Yeltsin apparently ran out of officials to give apartments to, so he started inviting friends, like his tennis coach Shamil Tarpishchev and the humorist Mikhail Zadornov. Zadornov allegedly also played tennis with Yeltsin and knew how to make him laugh. Korzhakov recalls how they celebrated the housewarming. Everyone gathered with their families at the House of Receptions of the Communist Party at Sparrow Hills. They had dinner, congratulated each other, and danced. The newly-moved neighbors were entertained by the presidential orchestra. "It was fun," writes Korzhakov. No doubt. How could you not have fun? At that time, an ordinary Moscow family lived together, three generations in a 40-square-meter two-room apartment with cardboard walls. And it was not even the worst option. Better than a communal apartment or a dormitory. And here you get Moscow real estate the size of four two-bedroom apartments in one, for reasons beyond comprehension. Living rooms, dining rooms, five bedrooms, two bathrooms, a balcony. It was the balcony that Korzhakov was happy about in his book. But the house also had one very unusual resident who was neither a bureaucrat, nor an apparatchik, nor a party functionary. His presence was inexplicable to almost all of his elite neighbors, except for Yeltsin himself. Apartment number 2 was assigned to the 35-year-old journalist Valentin Yumashev. His last name is not only in the list of tenants of the house, but also in the credits of the movie about Yeltsin we've already watched. Yumashev worked as an editor in the letters department of the magazine Ogonyok. Those who saw him at the time described Yumashev as scruffy, unkempt, and always dressed in a dirty, stretched-out sweater. Korzhakov recalled that he once visited Yumashev's apartment and was shocked by the terrible mess and unpleasant smell. "Yumashev had turned his apartment into a garbage dump," Korzhakov wrote. No one in 1992 could have imagined that in a few years, this man would become the de facto leader of the country. Having gained Yeltsin's full confidence, Yumashev and his closest friends accumulated so much power that they determined in large part the way Russia looks today – and who rules it. Putin is brilliant! Together with Yumashev, who by that time will already be Yeltsin's son-in-law, we will find ourselves on yachts, villas, and parties in the Caribbean, where personally Paul McCartney and Prince will sing to us. We will find out when, how, and for what these people traded our freedom and future. And why they regret nothing. It's time to open your eyes. Memoirs This tiny book I was quoting you, played a crucial role in the Russian history. This book, and that book, a sequel to the first book. It's not about their content, it's just memoirs. It's about how and where they came from. Let's open the first one. And let's look to the section called "from the author". Yeltsin writes: "I did not want to write these memoirs, but I was persuaded to. We worked with a young journalist, Valentin Yumashev, who 'adapted to my rhythm, without weekends, working all night.' Without him, this book would not have been written." This is how they got closer. It all began with a film about Yeltsin that Yumashev made in 1989. It was called Boris Yeltsin: Portrait Against the Background of a Struggle. The same as the movie about Yeltsin and the medical center, the movie was very flattering. Here's a shot in the kitchen at Yeltsin's house. It's in an apartment on Tverskaya-Yamskaya. Modest interior, flowers on the table, tea and cookies. Here's Yumashev. As he was described, he is unkempt and wearing a stretched-out sweater. Here is Naina, Yeltsin's wife. His daughter Tatiana and Boris, his grandson. Yumashev and Yeltsin decided that they needed to make a book as well as a movie. Yeltsin recorded his thoughts on a tape recorder, and Yumashev transcribed, edited, and compiled them. The book turned out to be good, Yeltsin is satisfied. That's why Yumashev was given an apartment and almost immediately after that they began work on a second book, The President's Journal, which was published in 1994. Yumashev is mentioned in the introduction: About how he was there for these three years and it wouldn't have worked out without him. And that's true. If Yeltsin at least dictated his first book, the second was written by Yumashev and merely edited by the president. "We have been creative friends with Yumashev for more than five years," Yeltsin writes. And that's true as well. Now Yeltsin and Yumashev shared more than just a creative friendship. From the moment this book appeared, they were bound together by money. The most important difference between Yeltsin's first and second books is that this time, Boris Nikolayevich decided to make serious money from his memoirs. If Confession was the book of a remarkable but not yet world-famous fighter against Soviet power, the second was written by the president of Russia. And not just the president, but the first president, with personal stories about the collapse of the Soviet Union, the August coup, and the tumult of 1993, seen from the very epicenter of events. Popular interest was sky-high. The book was not published in the usual way, where the author sells the rights to the publisher for a fee and a percentage of the proceeds. If you look at the English translation, you'll notice that two companies are mentioned: Times Books and above there is unknown Belka Publishing. So the famous Times Books published this book jointly with an unknown outfit called Belka. Belka belonged to Yeltsin's son-in-law. In reality, he was an oil trader and had never published books. But this joint publication plan promised to be lucrative for all involved. They did the same thing in Russia: instead of selling the book to a publisher, they decided to print it themselves. And Yumashev sourced the funds from Boris Berezovsky. The two had been introduced by a man who is unjustly overlooked when it comes to the oligarchs of the 1990s: Pyotr Aven, the billionaire and current owner of Alfa-Bank. Pyotr Aven introduced me to Valya Yumashev. Today he pretends that he is Latvian, lives in Europe, collects art, writes books, and pretends he had nothing to do with Putin. In the early '90s, Aven was deputy foreign minister and head of the Committee for Foreign Economic Relations. His signature is on a now -historic document in which Vladimir Putin, a young deputy mayor of Leningrad, asks his committee to allow him to buy food supplies abroad. At the time, St. Petersburg was practically starving. It was in 1991. There was no meat, sugar, powdered milk, or baby food, and no money to buy it. Putin was asking permission to barter: food would be sent from abroad, and in return, raw materials like wood, aluminum, petroleum products, and copper could be exported. Pyotr Aven gave him the go-ahead. Let Putin and the mayor's office do everything themselves: issue the necessary quotas and licenses. A few years later, it turned out that the barter scheme had been a huge scam. Putin signed the contracts not with real importers, but with fly-by-night companies linked to his friends and the St. Petersburg mafia. The raw materials were sold abroad, the intermediary companies received money for them, and the products simply did not arrive. I think there is nothing wrong with it. Aven had known Boris Berezovsky since the 1970s. Back then, the mathematician and engineer Berezovsky was working at the Institute of Control Sciences. The two were introduced by Aven's father, who worked at the Russian Academy of Sciences. According to the old notes, at about the time that Aven introduced Yumashev to Berezovsky, Aven was advising the latter at LogoVAZ, Berezovsky's firm, which traded VAZ cars and imported foreign ones. Aven commented on his introduction of the two very casually, saying Yumashev was looking to buy a car, and Aven had advised him to contact Berezovsky. That may well be so: according to old traffic police databases, Yumashev owned a Chevrolet Blazer and a Jeep Cherokee in the early '90s – the kinds of cars LogoVAZ sold. I have good relations with Valentin Yumashev. We could have call such a meeting as fateful for Russia. But this wasn't the only time Aven arranged a meeting that turned out to be fateful for Russia. He also introduced oligarch Roman Abramovich to Berezovsky, and later all three – Berezovsky, Abramovich, and Yumashev – to Putin. Berezovsky's decisive role in shaping the Russia we have today has been increasingly downplayed over time. With every year that passes since his death, his closest associates, like Aven, Yumashev, Anatoly Chubais, and Putin, try harder to erase history and distance themselves from him. Case in point is Pyotr Aven's book The Age of Berezovsky, it was popular a few years ago. In this book he's portrayed as a kind of foolish adventurer, nothing more. But it's impossible to distance themselves from him. The fact remains that in the 1990s, they were all inextricably linked to Berezovsky. Before the meeting with Yumashev, Berezovsky was just another post-Soviet entrepreneur. Afterwards, he became the person we think of now when we hear his name – the first real oligarch, who practically ruled Russia and robbed it ostentatiously, drunk on power impunity. Yumashev and Yeltsin made him and a few others like that. Not by accident, not by mistake, but for personal self-interest. In search of money and power. Thank you once again for such a great support. Berezovsky Let's go back to 1993. In November or December, Yumashev and Berezovsky reached an agreement. Berezovsky would provide funds for the publication of Yeltsin's book in Russian – around $500,000. Half of the money would come from Berezovsky himself and the other half from Vladimir Kadannikov, Berezovsky's partner and the general director of AvtoVAZ. There is no explanation for it. The book could easily have been sold to dozens of publishers, but the point of the arrangement was different: it created a way to pay bribes to Yeltsin. "Royalty payments" proved the perfect cover for the money that, according to Korzhakov, Yumashev would bring to Russia's first president. Later, "royalties" served as an explanation for Yeltsin's purchase of a dacha in the elite Rublyovka and other expenses by his relatives, even years later. Berezovsky's personal acquaintance with Yeltsin cost him half a million dollars. Here is what is presumably their first photo together: The presentation of Yeltsin's book on April 9, 1994 in the Grand Kremlin Palace Berezovsky became famous throughout Russia on June 7, 1994. An assassination attempt took place right in the center of Moscow, when his armored Mercedes was blown up near his office. Boris Abramovich survived, 9 people were injured. According to our information, he has an injured eye and many burns on his face. The driver was killed instantly, his head blown off. Berezovsky himself miraculously survived, though he suffered numerous injuries and burns. Five days later, Berezovsky was supposed to attend a Russia Day reception in the Presidential Club in the Sparrow (formerly Lenin) Hills. The Club was in the old reception building of the Communist Party's Central Committee, where the housewarming party of the newcommers of the building on the Osennyaya Street took place. In the Soviet Union, the party elite used to entertain here. Then, in '90s, Yeltsin founded the Presidential Club there. It was a place for ministers, governors, and officials to make informal contacts, meet with the president, and relax. There were swimming pools, saunas, tennis courts, and fitness studios with personal trainers. You could only get into the Presidential Club by personal invitation from Yeltsin. And Berezovsky had an invitation. In the memoirs of people from this Club, I tried to find information about what fateful decisions for Russia were made there. But all I was able to find was Yeltsin and Korzhakov getting drunk here, cutting their hands with a knife and mixing blood. We cut ourselves. Did you mix the blood? Yeah yeah. Berezovsky was obliged to be a part of this Club. It was unthinkable to miss the meeting here. On June 12, 1994, he arrived at the Club to appear before Yeltsin with a burned face and wrapped in bandages I decided to go just to show the President what's going on with the people even in his inner circle. Yumashev is supposed to have advised him not to let his injuries get in the way of the reception. You don't even have to imagine, here is the photo from that reception. Yeltsin, Korzhakov, Administrative Directorate head Borodin, Foreign Minister Andrei Kozyrev, and Berezovsky with a bandaged eye Our Valya Yumashev is visible in the back. Berezovsky's appearance made a strong impression on Yeltsin, and he demanded that the mystery of the assassination attempt be solved immediately. The result so far is known. No one has been found. Starting in June 1994, fateful events began following each other in rapid succession. The course was set for Russia's next few decades so rapidly that it's difficult to comprehend today. Five months later, Berezovsky would seize control of the country's biggest state television broadcaster ORT. The loans-for-shares scam, which turned Berezovsky and his associates into richest people in the world, would take place in one year. Yeltsin's 1996 re-election would take place in two years after that. And three years later, Yumashev would invite Putin to join the Presidential Administration. Russian people will have no trouble remembering what the big prize on the game show Field of Wonders was. There's a car being raffled off in the super game! In the early '90s, the cars they gave to winners came from Boris Berezovsky's LogoVAZ. The show's beloved host, Leonid Yakubovich, was the face of the company's advertising, while Berezovsky's other project, AVVA, was also advertised on Field of Wonders. AVVA stands for All-Russia Automobile Alliance. Today's Field of Wonders is broadcasting with the support of a Russian company LogoVAZ. Berezovsky's plan was to develop and begin mass production on a people's car: cheap, reliable, and affordable for all. We will drive by a domestic car to the next World Cup in France. The plan was to assemble the cars in a brand-new factory in Togliatti, which Berezovsky wanted to build with funds provided by average Russians. They'd buy AVVA shares, and AVVA would use the money to build the factory. Then shareholders would receive not only cars, but dividends. Everyone has an opportunity to participate in this project. The price of the shares varies from 10 thousands rubles to 10 million rubles. The CEO named the total number of shares. Approximately 37 million securities are expected to be distributed. Here is how the people's car should look like. We will create a new car. We need it. AVVA. Alas, they never got further than a blueprint, because this was a classic pyramid scheme. The same as MMM. It was designed to trick poor Russians with no investment experience into thinking they could get rich quick, and at the same time to get the most important symbol of wealth – their own car. It was a sensation. Advertisements on TV, lotteries where you could win thousands of cars if you're a shareholder, loud promises of instant income. Two-and-a-half million people fell for it and gave away their savings. Why should people be suspicious? The people who came here to buy shares today are people who believe in the future. This is not a one-day project. You won't get 700 percent tomorrow. You will get a lot, on a permanent basis. You and your children. People who came here believe that they will live well in the country and their children will too. AVVA had the full support of the government. After all, deputy prime ministers Yegor Gaidar and Alexander Shokhin, AvtoVAZ head Kadannikov, and the governor of the Samara region, where the factory was to be built, talk about investing in the people's car. This is the largest project in Russia's development, except for the fuel and energy complex. And we are not going to always be a country that is focused on exporting resources. This is the most important direction of state policy. The privatization of state vouchers had begun a year earlier, and Berezovsky's scam blended right in. Today Russia begins issuing privatization vouchers, for the privatization of state property. Every Russian citizen will receive a voucher for 10,000 rubles or approximately $40 by the end of the year. AVVA shares were traded out of suitcases at metro stations and hawkers' stalls, together with the infamous Chubais vouchers. This document means the right of each citizen to acquire property at a price of 10 thousand rubles. Here it is. The main symbol of the beginning of the 90s. The main brainchild of the government of reformers and the father of Russian privatization Anatoly Chubais. 148 million of the latter were printed and distributed to every Russian citizen, from newborns to the elderly. In August 1992, Chubais had launched an unprecedented campaign: everyone would receive a slice of state property. Factories, companies, and much more – a significant portion of the economy was recorded, valued, and divided into 148 million pieces. Take yours for free and use it wisely: exchange it for shares in any company at a check auction, invest in one of the many check funds to receive dividends, or just sell it. Sounds difficult? Yes, that was difficult. It was hard to believe that people who had spent their entire lives in the Soviet Union, where there was no private property and entrepreneurship was illegal, would know what to do. It was hardly possible. Did you drink your voucher? Yeah. Two bottles. When was it? When I got the voucher, I drank it right away. Nevertheless, voucher privatization was touted as the most important event of the century. Chubais said each voucher could be exchanged for two Volga cars. He and Gaidar attended auctions in person. An expensive television ad promised viewers "your share in the new Russia." The future is in your hands. And you have a right to create it as you wish. This is your share in the new Russia. Take it. Keep it. Think of it. The people's privatization was a total failure. The vast majority of Russians never got their share in the new Russia. The check funds where Russians deposited their vouchers with the promise of immediate payout turned out to be fraudulent; the vouchers were stolen and the money never appeared. And it was almost impossible to sell vouchers at a profit, so people exchanged them for vodka, carpet, or laundry detergent. The lucky ones traded them for boots. What did you get for the voucher? Cigarettes. Why only cigarettes? There are no other goods. The shares in Soviet companies that had been promised to the people ended up in the hands of big buyers, speculators, and the managers of those companies, who snatched up millions of vouchers. The privatization in Russia has happened. The saddest part of what happened wasn't so much this brazen highway robbery as the complete collapse of hopes and expectations for the new Russia. People believed in Chubais's fairy tales about golden mountains of vouchers. They did everything the government told them, everything that was promised in the ads, but then they were cheated, and no one was punished for it. Now look at Berezovsky's AVVA stock. On the front side, we see a portrait of the 19th-century entrepreneur and philanthropist Mamontov. The face value is 10,000 rubles (just like on Chubais's voucher), and below are tear-off coupons for dividend payments for eight years to come. On the opposite side are the stamp of AVVA and the signature of the CEO of AvtoVAZ, Kadannikov. On the front side, it is clearly written: one inscribed common share. In fact, it wasn't even a stock. AVVA promised the paper could be exchanged for real shares at some point in the future. This was the crux of the scam, because that future never came. They didn't even start making the people's car. They just said that negative economic trends got in the way. It just turned out this way. Appologies. Abramovich! Come out to the people! We'll talk. Talk about how you stole from the people. There must be a conscience, right? In six months, some $50 million was raised on the basis of empty promises. Berezovsky immediately spent the money on shares in AvtoVAZ for himself. He already controlled 20% through his partners, and he wanted another 30%. In this way Berezovsky made the country's biggest automobile concern his private property, using other people's money. He usually preferred not to spend his own. ORT Perhaps, Berezovsky could have launched a people's car. Well, in theory. To find partners, other investors. To somehow figure it out. But in June '94, just when AVVA shares were being actively sold, Berezovsky miraculously survived. It forced Berezovsky to rethink his life priorities. He realized he was no longer interested in business and wanted to get involved in politics. He wanted power, recognition, and a seat at the table of the country's rulers. That's what he'll be doing for the rest of his life, for the last 19 years. But how could a businessman, even a very rich one, ascend such heights? How could he go from being the owner of car dealerships to calling the shots in the Kremlin? Since the very beginning, I considered mass-media as a business. I thought that it is an influential tool of a powerful tool in the political struggle we were all about to face. Now it sounds obvious, but in the pre-internet era, TV decided Russia's entire political agenda. It was considered as the only one source of truth. What they say on TV is true. People see that they are not respected. Let's escalate our conversation to the max. Let's show just one quote. 31% of Russians consider Gorbachev to be the biggest deceiver of the post-revolutionary period. And here is the thing. If it is not government but you who decides what to show on the TV and if it is you who decides which program to air, you are the one who shapes the reality. It is a tremendous power to be able to decide for people what was important and what wasn't. You could turn anyone into a star, a hero, in the blink of an eye – or ruin their lives and careers forever. For 10,000 dollars you could buy a program that could smear the president, or for the same money you could make a program that would praise the president as a czar. Berezovsky decided to take over Channel One. And in 1994, Berezovsky got the unique opportunity to do so. At the time, the company was on the verge of bankruptcy, with high debt, mass layoffs, and strikes. It was running out of money, and the advertising revenue that could have saved it was… disappearing somewhere. How do we survive? After all, the budget that goes to Ostankino is so small that it is ridiculous to even talk about it. The situation was critical. According to the head of Ostankino, Alexander Yakovlev, the money given in 1995 would have been enough for only five hours of broadcasting per day. There were heated discussions about the fate of the channel. It could be auctioned off – there would have been many bidders for such a valuable asset. A special tax could be levied so that viewers themselves would pay for public television. Someone could put an end to the theft of advertising revenue. But in November 1994, Yeltsin signed a decree that caught everyone off guard. A new company, ORT, would take over Channel One The new channel will acquire what had belonged to the previous broadcaster, Ostankino. The state would receive 51% of the shares in ORT, while 49% would go to private owners. There was no tender or auction for these shares; 49% were simply given to new owners appointed by the government. Who they were only became known more than three months later. Here's the transcript from the State Duma dated March 10, 1995. The head of Ostankino, Alexander Yakovlev, gave a speech to the Duma. During this warming discussion, MPs trying to figure out what happened to ORT and why it was simply privatized and who is going to rule it. Yakovlev named the new owners: the Association of Independent Television Companies, the National Sports Fund, Boris Berezovsky's LogoVAZ, Mikhail Khodorkovsky's Menatep Bank, the National Credit Bank, Alexander Smolensky's Capital Bank, Gazprom, Mikhail Fridman's Alfa-Bank, United Bank, and the Mikrodin Group. They formed a consortium that took control of 49% of the channel. Everything looks reliable. 10 largest companies, 5 private banks. Even Gazprom. That is what was officially anounced. And here is what happened in reality. After a short time, some of the shareholders called it a day. Gazprom sold its shares to LogoVAZ. Some banks transferred their shares to Berezovsky for fiduciary management, and it turned out United Bank was under his control. In other words, ORT, despite the long list of official owners, was in the hands of one man – Berezovsky. In the beginning there were 7 companies, then there was only one left - LogoVAZ. How is this possible? Did Berezovsky decieve everyone? No. It was a conspiracy. The group of businessmen had simply been pretending to save Channel One from bankruptcy, as some of them eventually admitted. Conspiracy is easily proven by comparing two interviews of Mikhail Khodorkovsky. In April 1995, the banker Mikhail Khodorkovsky, was published. It was a period of warm discussions about the future of ORT. His company Menatep held a 5% stake in the channel. Khodorkovsky argued very persuasively that ORT was an attractive project, that he believed in his investment and was convinced he'd get a good return. He discussed the financing model and the channel's plans in detail. Twenty-four years later, Khodorkovsky gave another interview and described his role in ORT quite differently. And here is a different story which completely disproves everything he said before. "Yes, Boris Abramovich came to us. He said: 'I want to take over ORT. Will you help me, will you take a few shares? Support me, this is for me, it's mine. Any money needed to fund ORT will be my problem, you won't owe me anything." this is what Berezovsky said. "Then he came and said, 'You supported me, thank you very much. Give it back.' We gave it back. It was purely a 'friendly favor,' as they say." 25 years passed, and this is how we got to know that there was no investment project, no consortium. It was just a friendly favor – a favor from a nominal owner in order to conceal the real one. In 1998, the Audit Chamber began to review the history of the creation of ORT and found many violations and instances of stock fraud. The report read, "The audit failed to identify the economic and social need for the establishment of ORT." So why did Yeltsin hand over a channel watched by the vast majority of Russians to a shady fraudster? It's pointless and stupid. The answer to this question can be found in one of the most important documents from the Yeltsin-Putin era: transcripts of more than 30 days of hearings at the High Court in London, where Berezovsky was suing Abramovich. Much was written about this trial in 2011 and 2012. Last Friday, the High Court in London dealt with the enrichment of Russian oligarchs and with the Russian history of the 90s. Boris Berezovsky tried to sue his former partner Roman Abramovich for a $5.5 billion stake. Every day, the participants told unbelievable details under oath about how Russia worked: how hundreds of millions of dollars in bribes were paid, how the country was sawed apart at auctions, how documents were falsified, how bureaucrats, officials, and Yeltsin and his family were bought. More than 6,000 pages of court transcripts lay it all out. But for now we are just trying to find an answer to the question of how Berezovsky took over the ORT channel. The lawyer asks Berezovsky: "Was it you who put together the consortium of Russian businessmen that bought 49 per cent stake in ORT?" "It's me," Berezovsky says. "The partial privatization of the broadcasting business was the result of a successful lobbying campaign by you, was it not?" "Definetely." "Definitely?" "Da," for some reason Berezovsky answers in Russian. Then Berezovsky describes how it was done. Berezovsky said he acted through Yeltsin's bodyguard Alexander Korzhakov and his new friend Valentin Yumashev. He convinced them that Ostankino should be privatized and that if he got the channel, he would invest $200 million a year in developing it. The decisive argument was that if he became the owner, he would guarantee Yeltsin full and unconditional support in the presidential election a year and a half later – and the destruction of all his rivals. So through your acquaintance with Yumashev and Korzhakov you got to President Yeltsin and convinced him that privatizing Ostankino was a good idea? You used these people to influence the president, right? Is that right? It is Korzhakov and Yumashev then arranged a meeting between Berezovsky and Yeltsin. Berezovsky confirmed that Yeltsin knew exactly what was going on and that Berezovsky would get ORT. The purchase of the channel was all about the 1996 election and Yeltsin's victory in it, as Berezovsky confirmed during the trial in London. As a result of a behind-the-scenes deal with Yeltsin, Yumashev, and Korzhakov, Channel One came under private control. ORT made sure Yeltsin, and later the Party of Unity (which was to become United Russia) and Putin himself, got elected. Their opponents will never have a chance again. Berezovsky, who ran the channel single-handedly and literally dictated stories to journalists, became the supreme power broker for several years. Since then, 1994, Channel One has been owned by oligarchs – though Putin replaced them with his own 20 years later. I'm deeply convinced that Russia can't escape dictatorship. It will surely come, the only question is who will be the dictator. There is an unexpected plot twist to this story about the powerful media tycoon Berezovsky. It will only come to light again through testimony in the London court. Berezovsky undoubtedly single-handedly managed the ORT channel. But it was actually another person who truly funded and maintained the channel. It was Roman Abramovich. Abramovich Remember when I said that in those years it was like time went faster and all the events were faster and more intense? Just one month after the transfer of ORT to Berezovsky, a fateful event occurred far from Russia. In the Caribbean. In December 1994, Alfa-Bank's Mikhail Fridman, Pyotr Aven, and German Khan went to the Caribbean on vacation, renting two yachts and inviting friends. There sre several cabins left, and since Aven already introduced Berezovsky to Yumashev, Pyotr Aven decided to make one more fruitful connection. Berezovsky took one of the guest cabins. Roman Abramovich, a mutual friend of Fridman and Aven, took another. Abramovich was only 28 years old. He was already a very rich man, but unlike the others, he was completely unknown to the public. Abramovich was very quiet and modest. He was born in Ukhta and moved to Moscow right before his school years. He went to school, then served in the army. He tried to study at a university but never get a higher education. He went straight into business. He started with a children's toy cooperative. But he quickly found a more profitable business - oil trading. By 1994, he had earned tens of millions of dollars in a very simple way: buying cheap Russian oil and shipping it abroad. As he asserts, by 1994, he had become the primary fuel supplier for power plants in Romania and Moldova. The meeting of the Berezovsky and Abramovich on the yacht was not an accident. Aven brought the friends together because he thought it would be good for both of them. There, on a yacht in the Caribbean, Abramovich told his new acquaintance Berezovsky about the most important project of his life. He wanted to merge the two Siberian companies he was working with — Noyabrskneftegaz and Omsk Oil Refinery — to form Sibneft and become its owner. The united Sibneft would bring in hundreds of millions of dollars in revenue every year. But one little detail was in Abramovich's way: both companies belonged to the state. And there was absolutely no reason why they should be privatized and sold to a 28-year-old oil trader. Berezovsky proposed a solution. He would get Yeltsin and the government to approve the creation of Sibneft and transfer it to him and Abramovich. In return, he wanted a monetary allowance. In just two months, Abramovich will receive his first bill. Abramovich had to pay for almost all of Channel One's expenses, from cassette tapes and energy bills. He even paid for to the purchase of television shows and cameras for the journalists Sergei Dorenko and Vladimir Pozner. And then it turned out that not only ORT expenses should be fully covered. Today, Abramovich is known as an oligarch and a philanthropist, but back then he was just a boy running errands for Berezovsky. He would spend hours waiting in the reception area, hoping to catch Berezovsky's attention. Berezovsky affectionately called him Romochka or "dear." He would often ask Abramovich for help with various tasks, like arranging a private plane when necessary. — Hi, it’s me, Roma.
— My dear Roma, hello! — Thanks for calling me. Romochka, can you please get the jet ready for us so we can leave tonight?
— Okay. Do you want me to go with you?
— Yes, I want you to go with me. Research a certain topic, prepare a certain report. — By the time he was elected, he had renounced his citizenship — Got it. So he publicly renounced his citizenship?
— Yes. — Roma, please find some more cases like this. Year by year. I really need it. Abramovich paid for Berezovsky's security and his driver, rented an apartment for him, bought cars for his wife and mistress, and even financed Berezovsky's family vacations, which were lavish – the bill for one trip to Spain in 1996 came to $140,000. And this is just the first year of acquaintance. Demands for money increased with every year. I know Abramovich for a long time. He is 33-years-old young man and I think he is very capable and smart. Abramovich simply did what was asked. No matter how brazen and humiliating it was. He knew full well that the only way he'd get Sibneft was through Berezovsky. Sibneft What Sibneft is? At the beginning of 1995, there was still no Sibneft, but two separate companies: Noyabrskneftegaz, which produced oil in Yamal, and the Omsk Oil Refinery, which refined that crude into gasoline, diesel, kerosene, and bitumen. At the time, this was one of Russia's largest and most advanced refineries, employing several thousand people and accounting for a third of the Omsk region's tax revenue. The companies were state-owned and managed by two different "red directors" (so called because they'd held high posts at Soviet-era organizations). Relations between the Head of Noyabrskneftegaz Viktor Gorodilov and the Omsk refinery's Ivan Litskevich were poor, which repeatedly led to conflicts, underdeliveries of oil, delays, and other problems. One solution was to merge the two companies under one team with a common strategy. This idea of Abramovich was not new. Other major oil concerns had already been restructured this way: Yukos, Lukoil, Surgutneftegaz. To make it happen for Sibneft, the government, the governor, the heads of both companies, and Yeltsin himself would have to reach an agreement – but they could not. Litskevich was against this idea. He was concerned about this idea and he had his own ideas what should be done. In court, Abramovich explained the gist of the deal with Berezovsky. The latter was supposed to get Yeltsin to sign two decrees: one on the creation of Sibneft and another, immediately afterwards, privatizing the company. In return, Abramovich promised to pay Berezovsky $30 million a year. Founding the company was the easy part. In fact, the decision to create Sibneft had already been made, but the plan was to incorporate it into the state-owned Rosneft. Berezovsky had to do the almost impossible: he had to convince Yeltsin to give up all the revenue that Sibneft could bring to the federal budget and auction it off – and not to the highest bidder, but to him and Abramovich. In economic terms, it was madness. It's all made possible by ORT. Everyone knows about the role of the ORT in the 1996 elections. In the spring of 1995, Berezovsky met with Yumashev and Yeltsin and told them that he urgently needed money to finance the channel. He didn't mention Sibneft or ask for privatization – he just complained that the channel was out of money ahead of the presidential election, and since Yeltsin couldn't win without the support of ORT, they had to find some cash for it. Yeltsin agreed – they had to. Separately, Berezovsky reached an agreement with Yumashev and Korzhakov that Sibneft would provide the cash. What luck! They were already planning to create the company, they just had to privatize it. But luck had nothing to do with all this. It was just a cynical backroom deal to swap billions in state property for complimentary stories on ORT. Lawyer: Now, the deal therefore, in summary, that you made with Boris Yeltsin was this, wasn't it: "You, Mr. President, get the support of my television network and I get put in a position where I can extract large sums of money from these two Siberian businesses"? That's the deal, isn't it? Berezovsky: It's correct. The biggest opponent of the founding and privatization of Sibneft was Ivan Litskevich, the director of the Omsk refinery. On August 19, 1995, he died under mysterious circumstances. Everyone talks about it. While on his way home from work, Litskevich asked his driver to stop and went for a swim in the Irtysh River. On an August evening in Omsk, it is about 13 to 15 degrees Celsius. His body was found the next day, and the case was dismissed as an accident. A week later, on August 24, Yeltsin signed a decree creating Sibneft, allegedly at the request of the workers' collectives of the Omsk refinery and Noyabrskneftegaz, as well as of the regional governors. First part of the plan is done. But Sibneft is still state-owned. The second decree was signed on November 27: 51% of the state's shares were to be pledged at so-called pledge auctions, and very quickly – in just four weeks. Yeltsin, Chernomyrdin, Chubais and other officials signed it. This is de-facto a privatization. We will deal with how the loans for shares system worked later. In December, Abramovich and Berezovsky took control of Sibneft. The first profits rolled in and they took the money abroad. In January 1996, it emerged that the Omsk refinery's contributions to the regional budget had dropped by more than two-thirds, and the oblast government was facing bankruptcy. The Omsk parliament formed an emergency commission, and the deputies tried to figure out what had happened and where the money had gone. A few weeks later, one of its members, Oleg Chertov, was shot to death in his apartment building. The crime was never solved. Nevertheless, the deputies continued their work and published a resolution: the only way to save the budget was for the region to buy back the shares in the refinery pledged by the oligarchs. Governor Leonid Polezhayev ignored the demand. Abramovich gradually bought up all the shares and the company remained with him. Ten years later, he sold it back to the state (Gazprom) for the record sum of $13 billion, making Abramovich the richest man in Russia. He generously rewarded those who had taken part in the founding and privatization of Sibneft, providing for them for the rest of their lives. Viktor Gorodilov, the director of Noyabrskneftegaz, was appointed president of Sibneft. His son Andrei Gorodilov became vice president of the company and later vice governor of Chukotka Abramovich also hired the son of the head of the Omsk region, Alexei Polezhayev. Here are Alexei Polezhayev, his father, Omsk region governor Leonid Polezhayev, and Roman Abramovich watch a Chelsea match in London Here is Polezhayev, Jr. vacations with Abramovich in Scotland Those involved in the deal still live next to each other. Abramovich has a huge estate in Skolkovo, and literally on the other side of the fence live the sons of Gorodilov and Polezhayev, whose fathers decided to be more cooperative than the drowned Ivan Litskevich In the next episode...
