The Oligarchs: Wealth & Power in the New Russia [Hardcover]

David E. Hoffman (Author)

Book Description

ISBN-10: 1586480014 | ISBN-13: 978-1586480011 | Publication Date: February 19, 2002 | Edition: 1st

A brilliant investigative marrative: How six average Soviet men rose to the pinnacle of Russia's battered economy. David Hoffman, former Moscow bureau chief for The Washington Post, sheds light onto the hidden lives of Russia's most feared power brokers: the oligarchs. Focusing on six of these ruthless men Hoffman reveals how a few players managed to take over Russia's cash-strapped economy and then divvy it up in loans-for-shares deals. Before perestroika, these men were normal Soviet citizens, stuck in a dead-end system, claustrophobic apartments, and long bread lines. But as Communism loosened, they found gaps in the economy and reaped huge fortunes by getting their hands on fast money. They were entrepreneurs. As the government weakened and their businesses flourished, they grew greedier. Now the stakes were higher. The state was auctioning off its own assets to the highest bidder. The tycoons go on wild borrowing sprees, taking billions of dollars from gullible western lenders. Meanwhile, Russia is building up a debt bomb. When the ruble finally collapses and Russia defaults, the tycoons try to save themselves by hiding their assets and running for cover. They turn against each other as each one faces a stark choice-annihilate or be annihilated. The story of the old Russia was spies, dissidents, and missiles. This is the new Russia, where civil society and the rule of law have little or no meaning.

Editorial Reviews

From Library Journal

There seems to be little question that the handful of men who became wealthy and powerful after the demise of the Soviet Union were greedy to the point of being criminal. Matthew Brzezinski's Casino Moscow, Chystia Freeland's Sale of the Century: Russia's Wild Ride from Communism to Capitalism, and Paul Klebnikov's Godfather of the Kremlin: Boris Berezovsky and the Looting of Russia do a good job of documenting the chicanery. What shaped the character of the so-called oligarchs? How did the decaying Soviet system influence such a diverse group of men? Hoffman, former Moscow bureau chief for the Washington Post, digs into the background of the six main oligarchs e.g., Boris Berezovsky of the All Russian Automobile Alliance (AVVA), one of Vladimir Putin's main backers, and Anatoly Chubias, former chair of Gazprom and founder of NTV (Novoe Televidenie, or "New Television") identifying the events that made each of them so predatory and so influential. Several characteristics are common to each. They all lived restless lives. They began to take advantage of the decaying system by starting capitalist ventures called "co-ops." They were experts at building social capital among the powerful government leaders. And, as Hoffman claims, most significantly, each man had "an ability to change." The book is not a prescriptive work but a fine descriptive volume that illuminates current Russian politics and finance. Recommended for public and academic libraries. Harry Willems, Southeast Kansas Lib. Syst., Iola
Copyright 2002 Cahners Business Information, Inc.

Review

"Hoffman makes the tale of the men's rise and fall a masterful blend of adventure and serious, informed analysis." -- Foreign Affairs, May/June 2002

"an irresistible tale...one of the most vivid and well-researched accounts...of this tumultuous period in recent Russian history." -- Christian Caryl, Newsweek International Edition, March 11, 2002

"dramatic and comprehensive...What makes this account both devastating and entertaining is the way Hoffman has pieced it together..." -- New York Times Book Review, April 28, 2002

"one the most wide-ranging and sober...descriptions of the oligarchs during the painful past decade of change in Russia." -- Financial Times, March 23, 2002

See all Editorial Reviews

Product Details

• Hardcover: 567 pages
• Publisher: PublicAffairs; 1st edition (February 19, 2002)
• Language: English
• ISBN-10: 1586480014
• ISBN-13: 978-1586480011
• Product Dimensions: 9.6 x 6.5 x 1.7 inches
• Shipping Weight: 2.2 pounds
• Average Customer Review: 4.5 out of 5 stars  See all reviews (13 customer reviews)
• Amazon Best Sellers Rank: #1,424,196 in Books (See Top 100 in Books)

More About the Author

David E. Hoffman is Contributing Editor at the Washington Post and has been a journalist for 30 years. He came to Washington in 1977 to cover Congress, and later served as the Washington correspondent for the San Jose (Calif.) Mercury-News. He covered Ronald Reagan's campaign for the presidency in 1980, and was national economics correspondent for Knight-Ridder Newspapers. In 1982, he joined The Washington Post to cover the Reagan presidency. As a White House correspondent, he covered the major U.S.-Soviet summits of the Reagan years, including Geneva and Reykjavik, as well as domestic policy and politics. After Reagan left office, he covered the George H. W. Bush presidency. Later, he was diplomatic correspondent at the time the Soviet Union collapsed, and then served as Jerusalem correspondent, covering the Oslo peace accords. From 1995 to 2001, he served as Moscow bureau chief. His first book, based on reporting in Moscow, was The Oligarchs: Wealth and Power in the New Russia (PublicAffairs, 2002). On returning to Washington in 2001, he was Foreign editor and then Assistant Managing Editor for Foreign news, managing the Post's foreign service, until 2009.

Customer Reviews

Most Helpful Customer Reviews

13 of 14 people found the following review helpful:

4.0 out of 5 stars The Power of Six, April 28, 2002

By 

Cheryl-Ann Tan (Moscow, Russia) - See all my reviews

This review is from: The Oligarchs: Wealth & Power in the New Russia (Hardcover)

David Hoffman's "The Oligarchs" documents in great detail the rise of 6 businessmen--Aleksandr Smolensky, Yuri Luzhkov, anatoly Chubais, Mikhail Khodorkovsky, Boris Berezovsky and Vladimir Gusinsky--who became the "oligarchs" who shaped the political and economic landscape of the New Russia. They were merely ordinary Russians until the Soviet Union collapsed. So how did a mere handful Russians end up controlling such an epic proportion of Russia's economy and have such great influence in its politics? And how did they manage to rise at Russia's decline? Hoffman's book will answer these questions by piecing together extensive research and interview to create a well-balanced, serious but at the same time, a downright fun and readable book. "The Oligarchs" is a landmark.

6 of 6 people found the following review helpful:

4.0 out of 5 stars Good Job!, October 5, 2002

By A Customer

This review is from: The Oligarchs: Wealth & Power in the New Russia (Hardcover)

Much better than I expected, a serious work with a great deal of research invovled. It avoided the typical lurid embellishments of the genre, and also made the point of the important period of transistion in the Gorbachev period, where nascent Russian capitalism started. It lacks somewhat in that it focuses on only six men, and they are of varying importance in the post-Yeltsin period. As Putin reportedly said when asked about Berezovsky--"Who?" Nevertheless, a good job, an interesting read and thankfully avoids falling into the tabloid style of so much of the literature on the topic.

5 of 5 people found the following review helpful:

5.0 out of 5 stars Yeltsin's Oligarchs, September 6, 2010

By 

Susan Southworth "author" - See all my reviews
(REAL NAME)   

Amazon Verified Purchase

This review is from: The Oligarchs: Wealth And Power In The New Russia (Paperback)

The most stunning suggestion in this chronicle of the making of new billionaires in the Yeltsin era is the theory that in his mid-twenties Mikhail Khodorkovsky caused the bankruptcy of the Communist Party. When it was discovered that billions in cash and gold were missing, the treasurer jumped or was thrown from a window. Several weeks later the previous treasurer jumped or was thrown from the same window.

Although the operational details are left to the reader's imagination, we are told that beginning in the late 1980's the young Khodorkovsky set up "amorphous scientific technical" cooperatives that never did any scientific or technical work. Like an alchemist, he manipulated these shells in order to trade non-cash Soviet credits for actual rubles and even hard currencies from the Treasury. The rubles were used to throw lavish parties and to extend Khodorkovsky's network of shells. The hard currencies were deposited in Swiss and other foreign banks. One investment banker at Riggs Valmet Bank said Khodorkovsky had been a client since 1989.

Today Khodorkovsky remains in prison. Boris Berezovsky emigrated in October 2000 a few weeks after Vladimir Gusinsky and two years before Khodorkovsky's arrest. The other Oligarchs have either lowered their profiles in Russia or left the country permanently in fear of prosecution--all except Yuri Luzhkov, Mayor-for-Life of Moscow since June 1992 when Yeltsin appointed him to the position. "As he built his Empire, every storefront and every factory was a potential source of revenue." Luzhkov may not be a billionaire, though his wife, Elena Baturina, a former factory worker, earned 31 billion rubles (over $1 billion, primarily from public contracts) in 2009, according to Forbes. Yet his salary--8 million rubles a year ($270,000)--is unusual among Russian public employees at any level. Luzhkov's Chechen henchmen have been such effective enforcers that President Yeltsin publicly accused him of running a mafia city. He ignored Yeltsin's Kremlin when he wasn't openly battling it. Yet in 1996, it suited both to plaster all of Moscow with posters of smiling Yeltsin and Luzhkov together. (For the 65th anniversary of Victory Day 2010, Luzhkov spoke of putting up posters of Stalin. One can only guess who vetoed that embarrassing idea with the World War II allies participating for the first time.)

This summer while Moscow choked in record heat and thick smoke from raging wildfires, Luzhkov blithely continued his holiday. High profile contract murders go unsolved but if an unwelcome demonstration is organized in Moscow, Luzhkov springs into action. He bulldozes and fences the planned street or park location. This week Triumph Square is fenced to prevent opposition protests there. Luzhkov is the godfather of the city-state that is Moscow.

Befriending Luzhkov was crucial to the success of Vladimir Gusinsky. Failing to make a career in the theater, he became a fixer, helping western businessmen negotiate the unfamiliar maze of bureaucratic Moscow. He set up a bank with the advice of Lehman Brothers after he and Luzhkov toured the US in Lehman's private jet.
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One important contribution of this book is the spotlighting of the tutorial provided by George Soros and other American and European investment bankers. From them the young tycoons learned to deal with government "in one crude way: bribery and coercion." It appears that extra-legal appropriation was equally important in building their power networks and fortunes. To keep what they had appropriated, they built private "armies and intelligence agencies..." Force was not the primary method of coercion. The kompromat (compromising evidence) often "...manufactured--using forged documents..." was a preferred tool. It could easily be published or simply revealed to the victim who would comply with any demand to keep the kompromat quiet. Was poisoning Litvinenko just another clever kompromat?

Forbes Editor Paul Klebnikov titled his book about Boris Berezovsky, "Godfather of the Kremlin." He documented Berezovsky's relationship with Chechen gangsters and close proximity to murder victims until Klebnikov himself was murdered one night in 2003 on a Moscow street. Victims included journalists who spotlit unsavory deeds or means of acquiring his wealth, business associates who were in his way or to whom he was indebted and even a flamboyant nuisance like Litvinenko, who depended entirely on Berezovsky for his own and his family's existence. This phenomenon did not end when Berezovsky settled in London. The unlikely death of Badri Pataratsishvili 4 hours after he was with Berezovsky reminded some of the death of 39-year-old Boris Fyodorov, a founding shareholder of one of Berezovsky's companies. No murder charges have ever been filed against him, so they must be a series of coincidences.

Berezovsky is the most visible Oligarch in exile, just as he was the most visible inside Russia in the Yeltsin era. He acquired ownership of the vast Ostankino broadcast television network by promising to turn it into a Yeltsin propaganda machine. He controlled the news coverage to make Yeltsin popular throughout all the Russian time zones, assuring electoral victory if ballot fraud didn't. "By dictating the news coverage, Berezovsky could become a power broker." And Kremlin power broker he became, seeing himself as the ultimate ruler to the point of choosing Prime Ministers and even terminating them. Prime Minister Chernomyrdin learned his fate on Sunday night when Berezovsky predicted the change during a TV interview taped several days earlier at his luxurious dacha. Chernomyrdin was fired the next morning, Monday, March 23, 1998.

Alexander Smolensky had no fancy education, nothing more than a dump truck. Yet somehow he formed a cooperative, Moskva 3. His SBS Agro banking group grew out of Stolichny Bank which he created without knowing anything about banking. Instead of making loans, he engaged in currency speculation and pumped up the value of his bank by owning shares in the other new banks while they owned shares in Stolichny, creating the fictional value. No financial reports were published and his activities were conducted in complete secrecy. In the early 1990's fake avisos from Dagestan and Chechnya ordered Russia's Central Bank to transfer millions of rubles to Stolichny Bank. By the time it was discovered they were fake, $30 million had been transferred. Nevertheless, no charges were brought against Smolensky before he emigrated.

Anatoly Chubais is the odd man out--neither a billionaire nor an exile--but he was once the bureaucrat who made billionaires through his giveaways of Russian national assets. Growing up in a patriotic Soviet family, he only reluctantly gave up Soviet orthodoxy after intense debates with fellow economics students about the shortage economy of socialism.

In the epilogue to this chronicle of the Soviet origins and rise of six prominent men in the Yeltsin era, the author quotes the subsequent President at a 2001 news conference. Putin responded to a question about his former supporter, "Boris Berezovsky--who's that?'