The Oligarchs (49 page)

Korzhakov said it was Yumashev who first brought Berezovsky into the Yeltsin inner circle, just after Yumashev finished writing up Yeltsin's second memoir, published in Russian as
Notes of the President.
It was late 1993, after the violent October clash with parliament. Yumashev had penned the book quickly, but the Kremlin did not have a good idea how to get it published. “Now I understand that if we had organized an open tender, there would have been a line of publishers,” Korzhakov recalled. “But Valentin presented the whole business of publishing the book as a feat, a courageous act, implying that only Boris Abramovich Berezovsky was capable of such an act.” Yumashev invited Berezovsky to the Kremlin and introduced him to Yeltsin. Berezovsky supposedly arranged for a million copies of the book to be published in Finland. The publisher was Ogonyok. Berezovsky brought the royalties to the Yeltsin family, Korzhakov recalled. He claimed a London bank account was opened to accept Yeltsin's royalties.
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“That is how this businessman found himself in Yeltsin's grace,” Korzhakov said.
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Berezovsky was soon invited to join the Presidential Club, an exclusive Moscow sports enclave Yeltsin had set up for his closest cronies. But instead of playing tennis there, Berezovsky set about lobbying for the television channel with a clever line that played to Yeltsin's political instincts. The Russian president was under attack from all sides. The new channel would be Yeltsin's instrument, Berezovsky promised; it would be the “president's channel.” Berezovsky was aided in his lobbying efforts by Yumashev, who had Yeltsin's trust.
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The charm offensive worked, and on November 29, 1994, Yeltsin signed a decree, number 2133, which effectively privatized the enormous television channel without an auction as required by law. The new owners' founding capital was $2.2 million.
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The name of the new organization was Russian Public Television—ORT in the Russian acronym. The idea of “public” television, which would not be state television, was a novelty, and no one knew precisely what it would become. The government retained 51 percent of the shares of ORT, but the rest were divided among a group of wealthy bankers and a smattering of industrialists. An ORT oversight board was created with Yeltsin as chairman, but Korzhakov later said it never met. Berezovsky was the driving force behind the new channel; the state was sure to be an absentee landlord.
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Berezovsky drew his partners from the Sparrow Hills club of businessmen. The new shareholders included Berezovsky, Khodorkovsky, Friedman, Smolensky, and a few others. Khodorkovsky recalled that Berezovsky simply telephoned him to ask if he would take 5 percent. “I fully trust him; he created his own deal, which successfully developed,” Khodorkovsky said.
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Berezovsky later consolidated most of the shares in his own hands.

Berezovsky said that when he began to take over the television channel, costs were running at $250 million a year while advertising revenues were only $40 million.
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He said a large amount of advertising revenues were being siphoned off by the independent producers. He slashed spending and came up with a plan to recapture the advertising market.

The new owners were preparing to take control in April. The channel's new executive director was to be a popular television personality, Vladislav Listyev. With his handlebar mustache and probing, brazen style, Listyev, thirty-eight, was perhaps the best-known television star of his generation. His broadcasts had broken public taboos on topics such as sex and money in the late Soviet years, and his
Field of Miracles,
a sort of
Wheel of Fortune
game show, was a hit. Listyev was not only an on-air host; like other independent producers, he owned an advertising agency, Inter-Vid, which had been a participant in Reklama Holding.

Berezovsky decided the only way to regain control over advertising was to stop everything and start over. He proposed a three-month moratorium on advertising on the new channel. “This was my personal idea,” he said. “This caused wild surprise.” Berezovsky said Listyev was originally against it but eventually agreed.

On February 20, 1995, Listyev announced a moratorium on advertising on Channel 1, a risky move designed to give the new channel time to cut out the cancer of corruption and theft. Malashenko later told me that Listyev and Berezovsky had no choice if they were taking control of Channel 1. “You could not reform Ostankino,” Malashenko said. “The only thing you can do is you start a new entity, transfer the license, and take anything you need from Ostankino, and just destroy this piece of shit entirely. And it was done.”

Millions of dollars were at stake. Listyev's announcement meant losses for those who had already booked time or wanted to sell time in these months on the station, including the independent producers. At least in theory, those who would suffer losses also included Lisovsky,
Berezovsky, and Listyev himself. Lisovsky, the advertising mogul, tried to get Berezovsky to negotiate a new contract. Berezovsky refused and demanded a moratorium on all advertising. “We calculated how much we were going to lose” without commercials, Berezovsky recalled, “but how much more we were going to gain later,” once they controlled the advertising. The moratorium was a bold move—and one that potentially could create many enemies.

On March 1, 1995, a month before he was to take over a revamped ORT, Listyev was gunned down by two unknown assailants in the entranceway of his apartment. The murder shocked the country. Yeltsin came to the Ostankino station and denounced the “cowardly and evil murder of a very talented world television journalist.” Yeltsin sacked the Moscow prosecutor and police chief and blamed Luzhkov, whom he accused of “turning a blind eye to the mafiosi” in the city.
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It was a gesture meant to underscore the Kremlin's distrust of Luzhkov, which, as we shall see, was deepening.

No one was ever accused of the Listyev murder, and the investigation eventually ran cold. The case was entangled in speculation and intrigue; the truth seems to have long vanished.
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Yevgeny Kiselyov, the prominent NTV journalist who had left Channel 1 to work for Gusinsky, told me he did not accept the theory that Listyev was killed because of the conflict over advertising. “I am quite convinced he had nothing to do with advertising,” Kiselyov said. “All the financial matters, concerning advertising—to stop advertising—they weren't his decision. Other people were responsible. He was just in charge of programming. . . . He was a creative person.”

Others also agreed that the moratorium, which lasted four months, was decided by Berezovsky, not Listyev. As Lisovsky said to me, “Everyone knew perfectly well that from the moment ORT was created, it was Boris Berezovsky who managed all the issues concerned with advertising. Solely Berezovsky. Because Berezovsky said from the very start that money is to be discussed only with him, and only he will make the decision.”

Another television figure who was close to Berezovsky at the time told me, “Everyone knows that Berezovsky controlled all the finances. Lisovsky and Listyev came to see
him
about money.” Although this source said no one really knows who killed Listyev, he believes the assassins were shadowy security services, or their hired guns, seeking to prevent the channel from being passed to Berezovsky.
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Later, in taking over the channel, Berezovsky set up a new monopoly advertising system. In this arrangement, the channel sold blocks of airtime to Lisovsky's agency, Premier SV, which was the sole agency reselling the time to advertisers. Berezovsky said the moratorium had worked, and the contract with Lisovsky was on favorable terms. “We dictated the conditions,” he said.
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Berezovsky also controlled the news decisions at ORT, and the Logovaz waiting room was often full of television officials coming to him for their instructions.

“We prevented the ruin of the main national channel. We blocked the rivers of theft,” Berezovsky said.
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He made a similar claim about the way he handled the assembly line in Togliatti. There Berezovsky became a big player who displaced all the small-scale operators. He had created a “civilized car market,” as he liked to say. Likewise, in television, he took over the advertising market. He took control of the money—blocking out all the small-scale rip-offs. “Berezovsky, it's another one of his traits,” Lisovsky recalled. “When he comes to a place, he controls all financial flows himself. That is his strict rule.”

Berezovsky had reached his goal, taking over Channel 1, but the way he went about it injected a sour note into the club on Sparrow Hills. Shakhnovsky recalled the businessmen “were supposed to communicate there and work out some common approaches, while business should have remained outside.”

“What destroyed it? If we look back, it was Berezovsky's position that destroyed this idea. When concrete business was introduced to this club's work, it actually ruined it.”

 

In the summer and early autumn of 1994, Vladimir Gusinsky was doing well. His new television station, NTV, was bristling with the best talent and had been given coveted additional time on Channel 4 for broadcasting. His alliance with Luzhkov was in full swing, and it was helping them both. He had thriving businesses in construction and banking, as well as an expanding news media empire that included the newspaper
Sevodnya
and a radio station, Echo of Moscow
.
When a public relations company, Vox Populi, came up with a list of Russia's wealthiest and most influential bankers that summer, Gusinsky was ranked first among the richest and second among the most powerful. By contrast, Berezovsky was seventeenth among the wealthiest and thirteenth among the most powerful.
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Yet Gusinsky was not invited to Sparrow Hills, and it was no accident. Shakhnovsky told me as he met the businessmen that summer, trying to organize the club, Gusinsky was blacklisted by the others. “Everybody spoke against it because Gusinsky had a conflict with practically every one of the participants,” Shakhnovsky recalled.

In the months that followed, Gusinsky sailed into a storm. The dark clouds were the result of a combination of factors that suddenly came together like a hurricane, an unpredictable mix of high winds and choppy seas. One reason for the storm was the frenetic energy of Berezovsky, who was ruthlessly expanding—and colliding with Gusinsky. Another was Yeltsin. Forever guarding his own political supremacy, plagued by paranoia and weakened by illness, Yeltsin was especially nervous about Luzhkov's growing popularity in Moscow. With the fears about Luzhkov came paranoia about Gusinsky. Moreover, the Kremlin was stumbling into a dirty little war in Chechnya, the horrors of which were magnified many times—and for the first time—by Gusinsky's television station, NTV.

Berezovsky was indefatigable. He liked to say that in Russia, the first treasure to be privatized would be profit, then property, and finally debt. Berezovsky meant that the first thing he wanted to take in a company was its cash flow, and only later would he be interested in owning it, and perhaps never. It was in pursuit of such cash flow that he ran headlong into Gusinsky over a lucrative business deal. At the time, Gusinsky's Most Bank and Avtovaz Bank, which was under Berezovsky's control, were competing for the right to handle hundreds of millions of dollars in overseas ticket sales from the Russian national airline, Aeroflot. At the time, Aeroflot often ran short of fuel, and pilots went unpaid for months. Aging planes—beached dinosaurs with droopy wings, punched-out windscreens, doors open forlornly to the winds—could be seen on tarmacs scattered across the country, missing engines and parts that were scavenged to keep other planes in the air. The decrepit, huge, erratically scheduled airline was another vivid example of post-Soviet theft. The government paid for the fuel and salaries, sometimes, but the cash from ticket sales, especially tickets bought with hard currency overseas, just disappeared. Just as the auto factory and television station gave rise to corrupt middlemen, so too Aeroflot spawned theft. The cash from ticket sales, instead of flowing back to the airline, was being siphoned off to hundreds of secret foreign bank accounts. Nikolai Glushkov, one of Berezovsky's
partners, later claimed that Aeroflot was a treasury for the Russian secret services abroad.
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Sergei Zverev, who was a lobbyist for Gusinsky then, told me that Most Bank planned to take over the Aeroflot accounts, which they were sure contained hidden treasure. “We knew that if we could command the financial flows in the right way, we would be able to find additional tens of millions of dollars inside the company, or even hundreds of millions,” he recalled.
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But Berezovsky had the same idea. Ownership of shares in Aeroflot was not an issue—the company had been privatized but the majority of the block of shares remained state-owned. The trick was to get control of the huge cash flow, which Glushkov estimated at between $80 million to $220 million at any one moment.

In the corridors of the Kremlin and at the exclusive Yeltsin sports club, Berezovsky spread tantalizingly poisonous gossip about his rival, Gusinsky. According to Korzhakov, Berezovsky “would regularly report what and where Gusinsky said about the president, how he cursed him, what name he called him, how he wanted to deceive him.” Berezovsky came to the Kremlin with real or imagined bits of intelligence, what Korzhakov called “new ominous details.” For example, according to Korzhakov, Berezovsky claimed “Gusinsky was sitting in a bunker with Luzhkov and drinking. And making a toast to Yuri Mikhailovich as the president.” Berezovsky then supposedly told Korzhakov that Gusinsky sent a little package every Thursday to the Moscow government, with a specific sum of cash for each person, from five hundred to several thousand dollars, depending on how useful they have been. It is impossible to know who is more creative in this tale: a vengeful Korzhakov, who later turned against Berezovsky, or Berezovsky himself, devilishly competitive, who was trying to discredit Gusinsky and Luzhkov simultaneously.