August  30, 1997  
This Date's Issues: 1158• 1159 • 

Johnson's Russia List
#1159
30 August 1997
djohnson@cdi.org

[Note from David Johnson:
1. Gregory Tseytin in St. Petersburg: Re Matt Taibbi on phone 
tapping in JRL #1156.
2. Matt Bivins: Search engine for the St. Petersburg Times.
3. Gary Kern: Siberian tigers are doomed.
4. Interfax: Early elections in Russia not ruled out.
5. Interfax: Kremlin ignores threat to kill Yeltsin.
6. President Yeltsin's August 29 radio address on 
television and culture.
7. Business Week: Carol Matlack, WHAT HAPPENED TO THE RUSSIAN 
COAL MINERS' DOLLARS? At least $100 million from a World Bank 
loan is lost.
8. Chicago Tribune: FOREIGN GUSHING OVER RUSSIAN OIL HAS SLOWED.
9. Moskovskiy Komsomolets: Berezovskiy's Financial Dealings 
Examined. (Article by Etienne Jebali, preceded by introduction and 
followed by commentary by KGB Colonel Igor Malkov, "Seller of 'Thin
Air': Money Can Be Not Only 'Wooden' But Also 'Berezovski'.")
10. Obshchaya Gazeta: Yegor Yakovlev Commentary on Paper's
Anniversary.]


**********

#1
From: tseytin@tseytin.spb.ru (Gregory Tseytin)
Date: Sat, 30 Aug 1997 10:31:01 GMT
Subject: Re: Matt Taibbi on phone tapping in JRL #1156

A minor error in Matt Taibbi's article on phone tapping might
lead to an incorrect perception of the situation: FAPSI is NOT
"Federal Agency of Governmental Media", it is Federal'noe
Agentstvo Pravitelstvennoy Svyazi i Informatsii, i.e., the
Federal Agency for Governmental Communications and Information,
a special service descended from part of the former KGB.
It is subordinated to the President. Surely, this is the service
that should be responsible for both intercepting communications
and protecting government lines from someone else's
interception.

Tapping telephone lines is expensive, first of all due to the
subsequent work of transcription and analysis, so I completely
agree that an ordinary person, Russian or foreign, cannot expect
to be honored with personal line tapping. I believe, the problem
is different: the traditional system under which some services
can do it without a proper authorization. And of course, the
fact that Boris Nemtsov's conversations were tapped and then
leaked to the media (who could authorize doing it?!) is by far
more important than the language he was using (and to which JRL
treated the readers). And the most deplorable thing is that the
President seemed to know about it and tended to solve the
problem in a peaceful way rather than support Nemtsov's request
for a formal investigation.

Things might be different with other communication technologies.
I know nothing about the requirement to register fax machines
with FAPSI, but such registration is required by the principal
telephone operator in St.Petersburg where I live, so I have to
pay an extra fee for using my fax modem. I don't know what are
the requirements of alternative telephone companies, and also
know nothing about FAPSI controlling faxes and modems.

Electronic mail and other types of Internet communications are a
much easier target for interception due to the possibility of
automatic analysis of the contents, e.g., by a keyword search.
I have some evidence, both from the media and from personal
contacts, that such things are actually done. There were reports
in the media last summer (see Delovoi Peterburg, 9 July, 1996)
that special services approached Internet providers with a
request to grant them unlimited access to all they have in their
nodes. I don't know what they actually obtained (I heard about a
provider who seemed to comply with the requirement but referred
to very high costs of providing control from a remote terminal,
as they wanted).

The important difference is that overall scanning for specific
keywords is
(1) economically feasible,
(2) can bring special services' attention to ordinary
persons whose email is included in the scan, with a danger that
someone in the services might show his zeal by portraying the
person as a dangerous enemy detected with modern technologies,
(3) while one might argue that the access to a specific
person's email is duly authorized, I cannot imagine a legal
procedure authorizing special services to access everybody's
email for scanning.

At the same time cryptography, which is the only reliable method
of protecting private email from this kind of piracy, is under
exclusive control of the same FAPSI, under the presidential
edict #334 of April 3, 1995.

An unrelated remark, regarding Mark Ames' message about Minsk in
the same JRL issue: I congratulate him on his exciting
adventure, but does he think the mother who offered to him her
two daughters was "one of the 55 percent of Belorussians who
recently gave their leader a thumbs-up of approval"?

Gregory Tseytin, St.Petersburg

********

#2
Date: Sat, 30 Aug 1997 14:46:37 +0300
From: matt <matt@times.spb.ru>
Organization: The St Petersburg Times
Subject: [Fwd: search engine usage]

David,

I've had a crude search engine installed on the website for The St.
Petersburg Times; below is the search engine link and some (even
cruder) instructions as to how it works.

Other than St Pete Times reporters, only Johnson List readers have
access to this so far, since we have not fully incorporated the search
engine into the site yet (that should happen in a few days). So yet
another bonus for your subscribers to keep in mind when debating whether
to contribute $50 or $100 or more to the DJL war chest. (I think this is
better than a tote bag ...) 

Cheers,

Matt Bivens

----------

Date: Fri, 29 Aug 1997 17:22:11 +0400 (MSD)
From: Nicholai Gluzdov <ng@nevalink.ru>
To: matt@times.spb.ru
Subject: search engine usage

Dear Matt, 

Here is the instruction. It was written just to communicate the
information. Maybe you could edit the awkward places and such.

Dear Fellow Warriors,

We have acquired a search system that covers all our archives beginning
July 1994 which can be found at 

http://www.spb.ru/times/search.html

There are a couple of nuances you need to know when using it. I will
explain them using a sample search on the word "nikitin."

1. Search results are limited to a number of 30 links. This means that
even if there are more stories about Nikitin, you'll see only the first
30, sorted alphabetically. Don't worry, this is just a default value.
Just change the "Maximum number of files returned:" to 100 or more if
necessary.

2. There is an option called "Maximum number of matches per file
returned:" This allowes you to control the number of quoted lines on
which with the word "nikitin" was found. The default is 1. This means
that even though there are more "nikitin" words in a story, the only
quoted line on the search result page will be the first one. You can
change this value to 5 or 20. 

We plan to add some enhancements in the near future, such as,
1) Sorting by rate (number of "nitinin" words found in a story) or sorting
by date; 2) A switch to turn off indexes so they don't get into search
results. 

Please e-mail me at ng@nevalink.ru for comments or improvement 
suggestions. 

Good luck,
Nicholai Gluzdov

***********

#3
Date: Fri, 29 Aug 1997 23:46:52 -0700
From: Gary Kern <gkern@ucr.campus.mci.net>
Subject: Siberian tigers are doomed

The report from the Times of London, "Magnificent Predators," reproduced
in JRL #1158, applauds "democratic Russia" for initiating its own
program to save the Siberian tiger. But the report contains facts that
all too strongly indicate that the effort is doomed: "There is a
lucrative market for tiger products in China and Korea, where they are 
used for traditional medicines. Tigers' bones are believed to heal
ulcers and their brains are thought to remedy laziness and acne. A tiger
carcass can command up to £10,000 on the Asian black market ­ far more
than an annual Russian salary." The article describes how the
magnificent predators are gunned down from helicopters by rich hunters
from Moscow, who presumably keep the skins. The local mafia then
handles all the phases in transporting the carcasses to the East.

The chief villain in this senseless slaughter is the ignorance of people
who believe, like savages, that consuming animal parts will gain them
the qualities of those parts: that they will gain the strength of the
tiger by grinding up his bones and drinking the powder in a milkshake. 
The savagery of this magical, metaphorical thinking is obscured by the
polite term, "traditional medicines." Only when the so-called
traditional medicines are universally discredited as superstitions, when
the savages who eat rhinoceros horns, bear paws and tiger bones in order
to pep up their sex lives are ridiculed and reviled as harmful idiots,
will the "lucrative trade" die out.

I suspect this will not happen anytime soon for reasons of political
correctness. In the era of the new noble savage, official
multiculturalism and obligatory respect for non-Western cultures, no
environmentalist wants to appear so insensitive as to point out that
people who eat tigers and rhinoceroses are savages, monsters and fools.
We must, after all, respect "traditional medicines."

Against the ego-driven hunters, the adroit helicopters, the telescopic
lenses, the vicious mafia, the lucrative trade, the dark ignorance of
traditional medicines and the enforced silence of political correctness,
the great Russian tiger appears doomed.

**********

#4
Early elections in Russia not ruled out

MOSCOW, Aug 29 (Interfax) - Chairman of the Russian Popular Republican 
party Alexander Lebed does not rule out early presidential elections in 
Russia. "Early presidential elections will most likely be held," Lebed 
said at a press conference Friday in Moscow. 
Lebed said he came to the conclusion after studying "the behavior of the 
president and his family who set off for an autonomous voyage." 
Lebed said he was confident Moscow Mayor Yury Luzhkov will run for the 
next presidency despite his repeated statements saying he was not 
willing to put forward his candidacy. "In the run up to the Moscow 
jubilee Luzhkov is tied up in problems. Therefore he wants to avoid 
possible attacks," he said. 
"Today the capital's mayor [Luzhkov] is one of the strongest politicians 
who concrete accomplishments behind him. He will run for presidency by 
all means," Lebed said. 

**********

#5
Kremlin ignores threat to kill Yeltsin

MOSCOW, Aug 29 (Interfax) - The Kremlin does not take seriously a threat 
to assassinate President Boris Yeltsin on September 2, while the 
security service is looking for the anonymous telephone caller who made 
the threat early on Friday, officials said. 
"Relevant bodies ensure proper safety for the head of state regardless 
of telephone threats," which usually come from "mentally unstable" 
people, a Kremlin source told Interfax. 
Meanwhile, a senior Federal Security Service (FSB) official said the 
FSB's Moscow branch had launched an operation to find the caller and 
that all of the branch's investigation services were involved. 
The official told Interfax the call came at 1:20 a.m. via the 02 
emergency police line. 
A source in the Moscow police department confirmed this information. 

*********

#6
President Yeltsin's Radio Address (EKHO Moskvy Radio Station, 9:00, 
August 29, 1997) 
[translation for personal use only]

My fellow Russians, 
In my radio address today I will speak about culture on our television. 
I recently signed a decree to create a new all-Russian cultural and 
educational television channel. The idea has germinated for some time. I 
repeatedly discussed it with our prominent workers in the field of 
culture, education and science. We have received many letters whose 
authors say, we want our children to see the wonderful old films and 
plays, so that they should know such superb actors as Lubov Orlova, 
Nikolai Cherkasov, Arkady Raikin and others. So, the decision to open a 
new channel has not been "handed down from the top," it meets the needs 
and wishes of the people. 
We Russians may be divided by ideological, social and religious 
barriers. But we have all been brought up on the same culture, on the 
paintings of the great Russian artists, on the verses of Pushkin, on the 
films of Alexandrov and Tarkovsky, the songs of Utyosov and Vysotsky. 
The yearning for spiritually is a special feature of the Russian 
national character. No matter how hard life may be people do not live by 
bread alone. 
So, in creating a new television channel we are simply repaying our debt 
to Russian culture. I want it to be a wise, kind and friendly 
interlocutor. Such an interlocutor will not scare us with horrible 
crimes, or clutter up our heads with political squabbles, it will not 
feed us with scandalous adventures of photo models or pop stars. Yes, it 
is sometimes amusing and entertaining. But if the viewer chooses the 
cultural channel his new interlocutor will talk to him about different 
things, hopefully no less exciting and captivating. 
I want this channel to extend the boundaries of the curriculum for 
school children to make it an interesting hands-on experience, to give 
tips to young people on how to use his chances, how to achieve success, 
to bring back to the elderly the films, songs and plays of their youth. 
We have rich television archives, recordings of symphony concerts, 
television films, programs of remarkable Russian and world cultural 
personalities. 
We will again be able to enjoy the works of our favorite composers, 
actors, writers and painters. Making a channel that is devoted entirely 
to culture and education is a great challenge. Many unfortunately have 
come to think that culture on the screen is boring and that educational 
programs are not interesting. Surely, this is what happens when culture 
is promoted just for the sake of doing it without putting one's heart 
and soul in it. 
I am sure we will be able to find professionals who will make it 
exciting, reaching out to millions of TV viewers who will identify 
themselves with it. We in Russia have at all times had and will always 
have top-class professionals who can talk brilliantly about culture to a 
vast audience. In the past we had Andronnikov and Lotman, now we have 
Likhachev and Kapitsa, Radzinsky and Senkevich. I have no doubt that new 
names will come along. 
I can say with confidence that the reorganization of Channel 5 will not 
infringe upon anyone's interests. The priceless contribution of St. 
Petersburg to the treasure house of Russian and world culture is not in 
doubt. The journalists and television people of St. Petersburg will be 
able to air their three-hour programs on the new channel every day. 
Our new Culture Minister Natalya Leonidovna Dementyeva herself comes 
from Petersburg. If anyone, she understands the vast potential of our 
northern capital. And of course, she will see to it that the culture and 
history and art of Petersburg are properly represented on the new 
channel. 
Initially, it was suggested that the new channel should be financed by 
private capital. But we decided against it. Government support of 
culture is one of the main areas of our policy. So, we decided to use 
solely the resources of the state. The new television will be created by 
professionals, journalists, cameramen and editors, but Russian cultural 
workers, famous directors, scientists and actors will also have their 
authoritative say. They will form a council of trustees which will help 
the new channel to find its identity. 
We have a lot to show and, most importantly, there are people who are 
willing to watch. We are a great cultural power and the new television 
marks a step toward our future. I would like to call on those who are 
not indifferent to the problems of culture to support this channel, to 
help it stand on its feet and grow stronger.

**********

#7
Business Week
September 8, 1997
[for personal use only]
WHAT HAPPENED TO THE RUSSIAN COAL MINERS' DOLLARS?
At least $100 million from a World Bank loan is lost
By Carol Matlack in Moscow 

As the chill of impending autumn settles on mining towns across Siberia,
Russia's coal industry is again sending distress calls to the World Bank. A
year ago, the Bank provided loans of $500 million to help the industry
restructure. Now, Russia is asking for another half-billion. But there's a
problem: A chunk of last year's loan--one of the World Bank's largest
ever--disappeared down a black hole. Most of the aid was either stolen by
corrupt officials, handed over to foes of reform, or spent on projects
unrelated to coal. ``It didn't do a thing for the coal industry,'' complains
Yuri Dashko, a mining expert for a U.S.-funded reform project in the northern
city of Vorkuta.
The misspent World Bank loan is only the latest brouhaha over aid to
Russia. Critics have long faulted aid organizations for channeling funds
through high-paid Western consultants rather than directly to Russians. With
its coal loan, the bank for the first time tried to shake up a
subsidy-guzzling Russian industry. The loan also gave President Boris N.
Yeltsin's government a boost during his reelection fight. But instead of
controlling how the money was spent, the bank handed over cash in exchange
for Kremlin promises to reform the industry.
Such laissez-faire lending proved to be risky in Russia. Although the
government is eager to close nearly 100 of its 250 mines, it faces fierce
opposition from Rosugol, the state monopoly that runs the industry. Even so,
the government turned over tens of millions in aid to Rosugol and now says
most was misspent. And the government failed to curb corrupt local
officials, who also helped themselves to miners' aid.
Despite these problems, the World Bank seems set to make a second loan.
Indeed, the bank plans to ramp up lending in Russia to a total of $6 billion
over the next two years. The government says it has established tougher
controls. Still, reform-watchers are dismayed. ``We have $500 million that
has disappeared into the abyss, and the World Bank is ready to lend more,''
worries David Kramer, executive coordinator of the Russian-Eurasian program
at the Carnegie Endowment for International Peace. Another loan, he adds,
would saddle Russia with debt repayments it can ill afford. Russia is already
the bank's third-biggest borrower.
The trail of last year's $500 million loan shows how complicated aiding
Russia can be (<A HREF="aol://4344:109.B3543094.6625022.557264778">table</A>).
When the first $250 million installment arrived on the eve of Yeltsin's
reelection on July 3, 1996, it looked like relief was at hand for mining
regions. The money was aimed at closing unprofitable mines and providing
severance pay and retraining for laid-off miners. It was also geared to
easing the burden of services transferred from mining companies to local
governments.
So much for the plan. On the campaign trail, Yeltsin had made dozens of
promises, from paying overdue salaries to spending more on kids' camps. But
the government was strapped for cash, and the World Bank windfall arrived
just in time. Federal officials admit they tapped the money for other budget
needs, and not a kopeck went to mining regions.
By autumn, officials from mining regions were howling. Miners, too, had
not been paid. Local governments stopped paying doctors to free up money for
heating bills. So the bank delayed sending the second $250 million
installment to Moscow. Finally, in November, the Finance Ministry began
channeling funds to the miners. A month later, the bank sent the second
installment.
But that was just the start of problems. No one seemed to keep tabs on the
money. To the dismay of bank officials, the government channeled $55 million
of the remaining $100 million to Rosugol. The money was earmarked for miners'
severance pay, but the bank says workers saw only $6 million and Rosugol
never accounted for the rest. Critics think Rosugol diverted funds to
projects such as new mines, undercutting the drive to shrink the industry.
Rosugol rejects such claims. It says the funds were just part of its $1.4
billion in federal subsidies last year. Of that, the company says it spent
$94 million on aid to laid-off workers, including severance pay. It also
admits that corrupt managers siphoned off $11 million in subsidies to coal
companies. The company launched 16 investigations and fired or demoted some
400 executives for misuse of funds.
FEW NEW JOBS. But managers were not the only culprits. Nearly $400 million
went to mining regions, where local governments misspent at least 15% of the
money, the Finance Ministry says. Officials grabbed some. The rest was lost
to inexperience. Ironically, local officials, unaware of how to set up job
programs, turned to the coal companies.
In the Kemerovo region of Siberia, for example, authorities asked a
Rosugol affiliate for help. The company promised to employ laid-off workers
in a garment factory and brickmaking plant. But the ventures created few new
jobs. Now, bank and government officials suspect the affiliate diverted money
to new facilities. Rosugol says it doesn't know how the money was spent. Aman
Tuleev, Kemerovo's new governor, complains Rosugol is building new coal
terminals in his region while existing terminals are underutilized. Yeltsin
removed Tuleev's predecessor in June, saying $32 million in coal aid had
disappeared on his watch.
World Bank officials seem surprisingly unperturbed by the misspending.
They contend that offering loans to spur change is better than micromanaging
expenditures. In the last year, they note, the government has cut mine
operating subsidies by 40%--a key reform. And even if miners got little
relief, local governments spent on other good causes. ``The first phase
helped the government focus on some social aspects, but it also pointed up
that real structural change in this industry is going to be a lengthy
process,'' says Michael Carter, who heads the bank's Russia mission.
As the World Bank steps up its lending, miners are watching anxiously.
Paychecks are late, and living conditions remain wretched. But the loan will
help only if it is used carefully this time. Dozens more mines need to be
closed. Miners must be relocated. If $500 million more goes down a hole, not
only miners will suffer. Russia's reputation will be blackened, and so will
the World Bank's.

*********

#8
Chicago Tribune
August 29, 1997 
[for personal use only]
Source: From Tribune Wires. 
Section: BUSINESS 
Dateline: MOSCOW 
FOREIGN GUSHING OVER RUSSIAN OIL HAS SLOWED 

Foreign oil companies, which once saw Russia as a promising frontier, now
largely consider it a budget-draining, patience-sapping proposition that, for
now, may not be worth the trouble.
U.S. and other oil companies, deeply frustrated by the bureaucracy and
lack of desirable investment terms in the world's third-largest oil-producing
country, are shelving some projects, slashing budgets and cutting back staff.
Complaints are rife. Many U.S., European and Japanese oil firms that
promised after the 1991 Soviet collapse to pursue fields boldly say they are
finding it tougher than ever to do business.
"People are holding back significant investment dollars; a lot of the
companies are scaling back," a senior U.S. oil executive said Thursday.
"They staffed up, but when guys have been hanging around for three or four
years, with staff in place and overhead, you can't afford to have things not
happen. But that's what's happening. The sucking sound is on their balance
sheet."
On Thursday, many international investors were dismayed when Russian
resources minister Viktor Orlov canceled an agreement for Exxon Corp. to
develop fields in northern Russia with two government-owned oil companies.
Exxon was to have a 50 percent stake in the fields, which are estimated to
contain up to 2 billion barrels of oil.
The decree canceling the agreement is another signal that Russians want
better terms from oil production agreements and may try to renege on other
pacts or renegotiate terms with other foreign oil companies, analysts said.
Foreign investors have long bemoaned the bureaucratic and financial
troubles of doing business in Russia, with its long-held ambivalence over
whether it wants outside participation at all in its strategic oil sector.
Some deals, especially off the coast of Russia's Far Eastern Sakhalin
island, are proceeding despite difficulties.
But most proposed exploration and production deals are going nowhere, and
the complaints are now accompanied by disgust and even resignation about the
prospects for success any time soon.
"There isn't any reason for excitement or encouragement," said a lobbyist
for the foreign energy community in Moscow.
Oil executives and industry officials said nobody was ready to pull the
plug entirely in Russia and its former Soviet partners, which are estimated
to have more than 50 billion barrels of reserves.
But in a sign of the times, Amoco Eurasia Petroleum Co., a unit of
Chicago-based Amoco Corp., was further cutting its senior Moscow staff to
just three or four people from 12 to 15, sources said.
"Why? Because it's just not happening," said the senior U.S. executive,
referring to the grand old dame of stalled deals, the Priobsk field in
Siberia, which Amoco wants to tap.
In addition to that stymied $50 billion project, Amoco also has a 20
percent stake in the international Timan-Pechora Co., which wants to develop
a large field nearby but has been thwarted by parliament.
Russia has attracted only $1 billion of the $102 billion in foreign funds
it will need for six big planned output projects.
In the early years after communism, joint ventures were the favored
vehicle for exposure to Russian oil output.
Now? "A JV in Russia is a four-letter word," said the U.S. executive,
referring to taxes that have quadrupled since most projects began, growing
hassles to gain access to cramped export pipelines and Russian partners who
want to do things alone.
Many foreign firms are turning to Caspian and Central Asian regions to
work with Azerbaijan and Kazakstan.

**********

#9
Berezovskiy's Financial Dealings Examined 

Moskovskiy Komsomolets
July 31, 1997
[translation for personal use only]
Article by Etienne Jebali (translated from French), preceded by
editorial introduction and followed by commentary by KGB Colonel Igor
Malkov: "Seller of 'Thin Air': Money Can Be Not Only 'Wooden' But Also
'Berezovskiy'"

An international scandal is brewing in Switzerland. Once again the
"hero" of the commotion is Boris Berezovskiy, deputy secretary of the
Security Council of the Russian Federation.
Western mass media maintain that Russia's largest airline, Aeroflot,
controlled by Berezovskiy, has been funneling a considerable part of its
funds to the Swiss company Andava. Which, naturally, also is owned by Boris
Abramovich.
The money the RF Security Council's deputy secretary has "floated"
through Andava is estimated in the West at $98 million...
Interestingly, recently Berezovskiy sent the Russian tax agencies his
income declaration. According to which this bureaucrat earned R2.535
billion in 1996. Of this: R6 million&mdash;at the Institute of Management,
R2.6 million--at the President's Administration of affairs, and R8.7
million--at the Academy of Sciences Administration of Affairs. The
rest of Berezovskiy's earnings (approximately R1 billion) came from
LogoVAZ, the All-Russia Automotive Alliance, and securities he owns.
No Swiss companies were discovered in Berezovskiy's declaration.
Which, you would agree, suggests certain thoughts&mdash;on the subject of
the bureaucrat's sincerity when dealing with national tax agencies...
Today Moskovskiy Komsomolets will acquaint its readers with the
details of the scandal brewing abroad. 
The deputy secretary of the Russian Security Council is known in
Switzerland not just from the mass media. For instance, his older daughter
from his first marriage works in the Zurich branch of the famous auction
company Christie's, and the youngest one was just recently born in
Lausanne, where she lives with her mother--away from the unpredictable
everyday life of Russia.
Boris Berezovskiy's new family did not settle on Lake Le Mans shores
by accident. His name had been figuring for several years in the Trade
Registry of the Vaud canton, and in the company of extremely respectable
people.
Until recently the Russian Security Council deputy secretary's partner
was the solid family-owned transnational firm Andre & Co. specializing
in grain trading on a global scale, which long ago established itself in
our country... [end introduction]

In 1992 Berezovskiy managed to befriend Alain Meyor, the head of
Andre's representation in East Europe. With the help of this man, Boris
Abramovich began to build his Lausanne "base." For starters, the Foruss
Servis trading firm was registered in the Vaud canton, specializing, as can
be derived from the name, in services for Russians abroad.
(It should be noted that Switzerland's main attraction--in the
eyes of the rest of the world--is this country's financial system. And
first of all the well-oiled mechanism of managing capital permitting people
to make money, one may say, out of thin air.)
Initially, Foruss Servis was created with the goal of floating the
money the Russian company LogoVAZ earned in proceeds from car sales. A
little later the service provider company acquired a "sister"--the
firm called Foruss Leasing, which leased cars, machine tools, and
industrial equipment.
In all these operations Berezovskiy had a very reliable
partner--LogoVAZ director Nikolay Glushkov. According to the Lausanne
weekly Ebdo report (based on a foreign police force report), in 1992
Glushkov was charged with embezzlement of state property, but in some
mysterious way it had no effect on his career.
The police report reveals the mechanism of LogoVAZ's fast fortune:
Berezovskiy was able to earn large profits, first, from a big markup on the
cars it sold. Second, and more important, Berezovskiy had the opportunity
to "manage" cash proceeds from sales before paying off the
supplier--AvtoVAZ.
It was in this combination that Foruss Servis served as a source of
the bulk of Berezovskiy's profit. Actually, according to Andre
representatives, they did not see anything untoward in this. From their
standpoint the entire operation represented a quite normal financial
scheme.
At least, until a certain point in time...
* * *
In 1994 Berezovskiy and Glushkov, on the one hand, and Andre on the
other, cofounded one more joint-stock company. It was named Andava, and the
stockholders contributed equal shares to its charter capital--a total
of 200,000 Swiss francs.
The new company officially declared as its goal the "facilitation of
trade or financial operations." No specifics were given--it envisaged
the broadest possible field of activities.
Jumping ahead, let us say that over two years Andava's capital grew to
2.5 million francs. And that this money fell into its lap out of the sky.
In the most literal sense...
The point is that in November 1995 Boris Berezovskiy managed to put
his friend and companion Glushkov on the board of directors of the Aeroflot
company. One of Glushkov's first deeds after becoming the airline's deputy
general director for finance (!) was to launch the same mechanisms earlier
fine-tuned at LogoVAZ.
In May 1996, Aeroflot's general director issued a directive
prescribing that Aeroflot's 152 representations abroad transfer 80 percent
of their income to the Lausanne company's account.
According to foreign police, the total sum of Aeroflot's money going
through Andava amounted to approximately 150 million Swiss francs. Or $98
million.
The idea Boris Berezovskiy successfully implemented was simple to the
point of being genius. Andava, which possessed extremely modest capital,
extracted mind-boggling profits from managing others' money. If you ask any
financier, he will tell you that a well-invested million can bring in twice
as much in one year.
That Andava invested its money well is not in doubt. There was one
small problem, however: The entire profit went (and continues to go) not to
Aeroflot, 51 percent of whose stock is owned by the Russian state. The
money goes to the Andava owners (including some top officials of our
airline).
Judging by all the signs, Russia's tax agencies know nothing of this
income...
* * *
The police report quoted by Ebdo mentions other questionable
operations by Berezovskiy and company. For instance, last year Aeroflot
transferred through Andava 20 million Swiss francs to a certain Moscow
advertising agency. Another 10 million was transferred to the account of an
American company selling spare parts for cars. Let us note that the latter
is owned by two former Soviet citizens. The police report maintains that
they have been tasked with managing Aeroflot's operations in the United
States.
On what grounds? Why? One can only guess...
What happened next was bound to happen. All these Berezovskiy
operations caused concern among Andre's owners. You would agree: It is one
thing when a private company's income is "floated," and quite another when
it is a company whose controlling interest is owned by a foreign state.
In short, when Andava's capital grew to 2.5 million francs, the
Lausanne corporation refused to increase its share. Apparently the Swiss
decided that they would be better off getting out of this situation by
paying the compensation and not continuing to participate in a questionable
affair.
"Neither the surplus value of our operations nor the profits justified
a continuation of these activities," said Andre's general secretary Yves
Quande.
On 10 January 1997 two Andre representatives officially formalized
their withdrawal from Andava's board of directors. An announcement was made
in the Swiss mass media about the sale of stock previously owned by Andre.
It can only be sold, however, after the general stockholders meeting that
will approve the company management's annual report.
It should be said, however, that Alain Meyor made a choice in favor of
his Russian partners, having retained his seat on Andava's board.
Explaining the reason for this decision to journalists, Meyor said that
Russia "has huge potential, although it is not easy to conduct business in
this country." Therefore, maintaining a close relationship with a man close
to the President is not just a trump card&mdash;it is the key to all doors.
"In less than a half-hour he (Berezovskiy) can arrange a meeting with
anyone," says Andre's former director.
This statement of Meyor attracted William Ferrero, an experienced and
prominent specialist in international finance. In the past Ferrero worked
in Volvo Finance; he is currently Andava's general director...
* * *
Having assumed the office of deputy secretary of the RF Security
Council, the entrepreneur Boris Berezovskiy was obliged to withdraw from
the private enterprise system. Including leaving his Lausanne companies.
This required practically no effort on Berezovskiy's part: According to the
law, he could even do it by mail.
And if Berezovskiy does not trust the postal services, he had an
excellent opportunity to do this in person, when at the beginning of
December 1996 he accompanied Viktor Chernomyrdin, prime minister of the
Government of Russia, during the latter's working visit to Switzerland.
Berezovskiy stepped down as member of Andava's board of directors only
at the end of last year. No changes have been noted in the composition of
both Foruss companies.
In conclusion, let me say that the Moscow correspondent of the solid
Neues Zuricher Zeitung studied Boris Berezovskiy's life and career for a
long time, and came to an interesting conclusion: "This is a man who, as no
one else, represents a typical Moscow wheeler-dealer."
"In Russian-style capitalism, the battle is conducted in bullet-proof
vests," the journalist writes. "Over eight years Berezovskiy has managed to
put together a fortune on the margins of legality, and today it is very
difficult to determine which part of the money should be attributed to dark
criminal energy, and which, to the current economic conditions in
Russia..."

In Place of an Afterword

Whose Security Is Boris Berezovskiy Watching Out For?
The Moskovskiy Komsomolets editor turned for comment on this explosive
material to an experienced specialist, KGB Colonel Igor Malkov, who has
been dealing for a long time with issues of our country's economic
security.
"The security of capital turnover is a necessary condition of
successful entrepreneurship. In private companies this task is accomplished
by security services. The core of such services are not security guards, as
it may appear to the uninformed eye&mdash;it is specialists in the area of
economics and law, in the area of organizing information collection and
processing, intelligence and counterintelligence. These services engage in
the collection of information on the competition and partners, capital
movements in markets and the state of the market, and carefully check and
analyze the information obtained.
"In addition, these information units engage in disinformation of
rivals and protection of commercial interests.
"An entrepreneur, especially a major one, will give anything to be in
the know regarding economic, social, financial, and other decisions being
planned by the state. And it is not accidental that commercial structures
today spend enormous sums to bribe state functionaries.
"The case of Boris Berezovskiy is simply unique. As a minimum, this
man should have made the Guinness Book of Records twice. The first time
when he was appointed to a high government office while being a citizen of
another country. You see, being an Israeli citizen, he--by Israeli
law--was obligated to expend every effort to strengthen the security
and national interests of that country. That is, to work for the benefit of
Israel.
"I want to emphasize that this is an inviolable rule, because
otherwise Berezovskiy would run into major problems on all fronts. The
Jewish clan of businessmen all over the world is penetrated by Mossad
(Israeli intelligence) agents--representatives of the special services
of any country will tell you this.
"Top secret information of a political and economic nature and
operational reports on the activities of political leaders and major
entrepreneurs go through the Security Council of Russia, which drafts
long-range and tactical plans on the state's domestic and foreign policy.
Every entrepreneur and banker who has reached a certain level of financial
activity dreams of possessing such information firsthand. Information has
become a weapon that produces and protects capital better than a team of
zombie skinheads armed with Kalashnikovs.
"And now look at what issues Berezovskiy supervises in the Security
Council! His travel routes strangely coincide with the routes of Russian
oil pipelines in the Caucasus and near abroad, where he finds business
confederates...
"Berezovskiy's demonstrative step of withdrawing from managing his
capital in Russia after his appointment to the Security Council turned out
to be a populist move. He still personally runs all the chief profitable
enterprises abroad, which comprise the bulk of his capital. And the Russian
ones--from which he ostensibly has withdrawn--obediently carry
out his will in moving money.
"There is another important nuance in Berezovskiy's activities. The
information is floating around government corridors that Boris Berezovskiy
today has become the chief cash disburser, sponsor, and financial director
of Yeltsin's tightly knit family. People in the White House no longer
whisper about this--they say it out loud. Anyone with even minimal
access to the power Olympus will tell you that if you wish to fall into
disfavor, just say a few unkind words about Berezovskiy in the presence of
Tatyana Dyachenko.
"Boris Abramovich is gathering strength. I am convinced that the
scandal flaring up around him in Switzerland will not affect this man's
career in the least. Unfortunately..."

*********

#10
Yakovlev Commentary on Paper's Anniversary 

Obshchaya Gazeta, No. 24
August 14-20, 1997
[translation for personal use only]
Article by Yegor Yakovlev: "We Thank You for Your Attention"

Seven days less than six years 
ago, the first issue of Obshchaya Gazeta appeared. Since
that time, much water has flowed under the bridge and it
has been possible to understand much. The thinking process
for most of us at that time rested upon three tremendous
legends. The legend of Yeltsin. The legend of reforms. And
the legend of democracy. Today there are probably not many
who think about Boris Nikolayevich that he is the only fish
in the sea. And there are even fewer who await the latest
in a series of edicts concerning the latest in a series of
reforms--it will be signed any moment now!--and we will
finally start living in clover. And as for those who see in
democracy a magic wand for getting us out of all the
unpleasantnesses, you can look everywhere, but you won't
find any. It is always beneficial to get rid of myths: you
become a bit more independent, and you begin to count only 
on yourself. But also, alas, you prove to be definitely 
uninsured against new delusions.
In the final analysis, life is a long, long serial 
with a change of the characters, with meetings at the
crossroads of fates and unavoidable repetitions. And so
now, as though coming up for air out of the first series,
there suddenly arises a little word that is familiar to us
to the point of tears, although slightly forgotten--
"stagnation." Where has it come from if, during all the
recent years, we were seemingly moving ahead toward a
prosperous civilian society and were standing up for
commodity-monetary relations?
As happened many times in ancient Russia, we went into
one door, and found ourselves hostages of a criminal 
monopolistic regime. It is not enough to say that the
country started moving along the capitalist path. One must
reply: what kind of path is that? Because one cannot unite,
for example, under the word "winter" what happens in
December in the Far North and on the Mediterranean coast.
The capitalism that has become entrenched so actively
in our country does not have any counterparts in the 
developed countries. It leads to an explosive social gap, at
the extreme ends of which are unexplainable wealth and
intolerable poverty; it deprives our fellow citizens of
their democratic ideals and their socially significant
goals; it destroys the authorities and transforms into
valor the shameful desire to eavesdrop on people, to be
peeping Toms, to whisper about people.
Why am I engaging in this enumeration? Do I want to 
say once again that we have failed? No! If the results of
social development are obvious, then it is also necessary
to proceed from them in every decision, in every action.
Does it make sense, for example, to criticize the details
in the overall unpleasant picture? The picture will not
change as a result of that. Is it reasonable to reproach
the government constantly if it has been given so little?
But is really ridiculous, from decade to decade, to repeat
one and the same thing: life would be wonderful for us if
we had a government that was a little bit better...
Yesterday things probably were, in certain respects,
simpler for us. We were united by a single task: pulling
ourselves out of the chains of the communist dictatorship.
But today we have difficulty answering the question: what
kind of system is not to our liking? What do we want
instead? How can we achieve that? And no one will help us 
with the answer--not God, not the tsar, and not the 
president's aides who are practicing witchcraft over the 
national idea.
We ourselves must seek and find the answers. By 
relying on our own knowledge, our own experience, and our
own efforts. And we will be able to do that if there exist
ahead of us those who want to create, rather than act like
petty politicos. If we are able to support everyone who is
striving toward socially significant labor. If, from day to
day, we begin to demonstrate in practice how much can be
achieved within the framework of firm and reasonable laws.
If we can convince ourselves and others that our ideal is
the norm and the enemy is everything that opposes that
norm.
It is for the sake of this that we are making changes
in our Obshchaya Gazeta, the renewed issue of which you are
now holding in your hands. We hope that our efforts will 
attract the reader's attention. And we thank you for this.

*********