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Today's paper. Last Updated: 06/01/2012

A Superb Year for Scandals

1994: In the words of an old British television show, "It's over. Let it go." Yes, true. But since it was a real vintage year for Russia watchers, it deserves a couple of glances in the rear-view mirror before it finally disappears down the highway (with the Russian Orthodox New Year's, in two weeks' time).


It was the year, after all, in which the West finally discovered the Russian mafia, and a new industry opened up. Cops from all over met together in fancy holiday locations, whispering darkly about Russian deals with Cosa Nostra, the N'drangeta and the Medell’n cartel. Secret-service operatives across Europe set up their stalls for any nuclear materials they could lay their hands on, then ended up buying it from and selling it to nobody much else than each other. The FBI, which hadn't done much to stem Russian crime on its own turf, opened an office in Moscow. Nobody seemed to have told it that the business of drug production is centered a thousand miles away to the east, or that the serious nuclear materials, if there were any, were going south, not west to Europe or the United States.


One place the FBI might have thought of setting up shop was somewhere near the Western Group of Forces, whose withdrawal from Germany in 1994 President Boris Yeltsin signaled in his own amusing way. Everybody knew they were up to their armpits in embezzlement, theft, money laundering, tax evasion, and more. A German television company had been offered MiGs and armored personnel carriers. There were Russian shops in Berlin's Kantstrasse, and a sponsored synthetic dope factory (it was said) in Kiev. There were even minutes of meetings widely available between high-ranking Western Group personnel and some very shady European and Israeli operators indeed. Yet when anybody told Yeltsin of these shenanigans, he was promptly sacked. And the man in charge of the Western Group of Forces? Yes, Colonel General Matvei Burlakov was promoted in 1994 to deputy minister of defense. It took the murder of a young journalist, who had continued to worry away at where all the Western Group's money had gone, to see Burlakov finally ousted.


Another place the FBI might have set up a new office to find out what was going on was London. Billions of Russian dollars arrived in the British capital's banks. The Metals Exchange, oil traders, department stores, car dealerships, jewelers, schools, art auction houses: All did a roaring trade with the Ivans and Alexanders who are now being dubbed "the new Arabs."


And where did their money come from? Well, often out of the blue. For 1994 was the year of "the Russian millionaire by appointment," when Bank X was handed the authority to conduct operations with budgetary funds, and Company Y was allotted quotas for the export of oil, timber or gas, for no other reason than that both had friends in some very high places. Apart from that, of course, there was a general purloining of enterprises' funds -- one group of administrators, for instance, used its factory staff's back salaries on villas in Bermuda.


The chances are, though, that the administrators in fact owned the factory in the first place. For in 1994 the privatization-voucher farce came to an end, with President Yeltsin announcing that 70 percent of Russian industry was now privately owned. The only trouble with this was that the combined value of all the privatization vouchers put in circulation amounted to only 1.2 percent of that pie. To the jack-already-in-office, one must assume, went the rest of the spoils.


What else? Well, the holiday of the year was no doubt the one offered by a Moscow biznesmen in the Schlisselberg island fortress, where the tsars used to bang up the more sensitive members of their families. The shoot-out of the year was probably in the Crimea, where party leaders and their advisers and deputies successively went the way of all flesh. And the man of the year -- to end on a triumphant note -- must be (must be!) General Alexander Kor-zhakov.


Korzhakov is the head of President Yeltsin's alarmingly large bodyguard. It was he who took the decision not to wake Yeltsin from "a deep slumber" at Shannon airport. It was he, too, who seems to have ordered the attack by the men under his command on the headquarters of Most bank, during which shots were exchanged with a KGB team.


President Yeltsin has described Korzhakov as an "inseparable" friend. With friends like this, who needs enemies? Happy 1995!




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