The New Tsar (20 page)

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L
yudmila did not want to move. She finally felt they had a family life of their own in Petersburg, outside the cloying orbit of Putin’s parents. She had no choice in the matter, though. “It always seemed to be the case that work came first for Vladimir Vladimirovich,” she told a biographer with chilly formality, “and the family second.”
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Even Putin was reluctant to leave the familiarity of his hometown, but he felt that a job with Borodin “was the best way out of my situation.”
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Borodin’s department, having the power to dispense favors, arranged for the Putins to move into a state dacha in Arkhangelskoye, a forested suburb west of Moscow. The house was old, but it had two stories with six rooms, more than enough rooms for both girls. Lyudmila soon fell in love with the capital and its bustle, the “feeling that life is in full swing.”
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By September 1996, Putin had moved into the vast presidential administration, settling into an office in a pre-revolutionary building on Staraya Ploshchad, or Old Square, near the Kremlin. With him came two of his closest aides from Petersburg: Sergei Chemezov, who had served with him in Dresden, and Igor Sechin, who had been with him on Sobchak’s staff from the beginning.

Borodin put his new deputy in charge of the legal department and the Kremlin’s vast holdings in seventy-eight countries: embassies, schools, and other properties that once belonged to the Communist Party of the Soviet Union. Putin’s arrival coincided with a decree by Yeltsin that transferred control of the properties from the old ministries that had handled them in Soviet times, like the Ministry of Foreign Affairs and the Ministry of Foreign Economic Relations, to Borodin’s directorate. Many of them were in former Soviet satellites or even former republics, like Ukraine, which claimed title to the Soviet properties in their newly independent territories. It fell to Putin to make sense of the legal morass, disposing of properties that were no longer worth having and reasserting Russia’s sovereignty over those that were. Putin’s inventory only underscored
the disintegration of the Soviet Union and the scavenging of its carcass for profit. “Sometimes things came to light that made your hair stand on end,” Putin’s colleague, Sergei Chemezov, said.
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Dozens of shadowy “corporations, proxy firms, and joint stock companies” that had been mysteriously created at this time began buying up many former Soviet properties abroad, according to a young debt collector, Filipe Turover,
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who had uncovered some of them and, fatefully for Borodin, decided to share his evidence with prosecutors in Moscow and Switzerland.

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P
utin was a subaltern, as a Moscow newspaper wrote at the time in a profile of this new addition to the Kremlin apparatus. He was “absolutely a back stage person” whose greatest professional quality was his inconspicuousness.
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This probably saved him when the power struggles surrounding Yeltsin exploded in public even as he began his new job. Aleksander Lebed, Yeltsin’s national security adviser, negotiated an end to the war in Chechnya in August 1996 with a peace treaty that deferred but did not resolve the republic’s drive for independence. Lebed then clashed publicly over the terms with Chernomyrdin and Chubais, who distanced themselves from an agreement that seemed to give away too much to the Chechens. The public squabbling became so intense by October that the interior minister, Anatoly Kulikov, accused Lebed of staging a “creeping coup” and put the national police on alert across the country. Chernomyrdin called Lebed “a little Napoleon.” The next day Yeltsin fired Lebed, who then forged a political alliance with Yeltsin’s ousted chief of security, Aleksandr Korzhakov, who in turn leaked a transcript of Chubais discussing efforts to squelch an investigation of the two campaign aides who had been caught with the box full of cash.

The clashes unfolded as Yeltsin underwent heart surgery in November, and Putin found himself pulled deeper into the Byzantine machinations. He had not even finished his inventory of the country’s foreign properties, let alone dealt with them, when he was transferred to a new job in March 1997, after only seven months in Moscow. Aleksei Kudrin was promoted and became a deputy finance minister, and on his recommendation, Putin replaced him as the head of the Main Control Directorate. The assignment also made him a deputy chief of staff in the presidential administration, working out of a magnificent new office on Staraya Ploshshad.
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A week after he assumed the job, a new presidential decree gave the directorate broader authority to investigate abuses in
government spending throughout the country at a time when governors, state enterprises, and monopolies were taking advantage of the political and economic chaos to leech money out of the nation’s coffers.

Putin’s task was to restore order, to end the most rampant schemes that were dragging the government and the economy ever downward. The work exposed him to the corruption that gnawed at the country, but also to the political risks of exposing those in power. Putin learned quickly that service in the Kremlin required delicacy and discretion in interpreting how far to take his investigations. Within days of taking over the directorate, Putin publicly absolved Yeltsin and a former defense minister, General Pavel Grachev, of complicity in a scandal in which the military command in the Caucasus had from 1993 to 1996 transferred $1 billion worth of tanks and other weaponry to help Armenia in its war with Azerbaijan, despite a Russian law against arms sales to either side. To defuse the scandal, Putin granted interviews to the newspaper
Kommersant
and the radio station Ekho Moskvy. He confirmed that the transfers had taken place and said that investigators had found those responsible, though he coyly declined to name them.

“Did you find out who was connected with this supply personally?” the interviewer at
Kommersant
asked.

“Yes, we found their names,” Putin replied.

“Can you name them?”

“I would prefer not to do this before the investigation by the Prosecutor General’s Office and the Main Military Prosecutor’s Office is complete.”

“Are they officials of the Russian Ministry of Defense?” the reporter pressed.

“Yes.”

“Is the name of the former minister of defense, Pavel Grachev, on this list?”

“No. In the course of the investigation that we carried out, we did not find any documents indicating that Grachev had given any direct instructions or directives on this score.”
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Putin, as an intelligence veteran, understood how to calibrate his answers, speaking as if reluctantly while spooling out exactly the information he wanted to make public and no more. Grachev, whose corruption was so notorious that he was called “Pasha Mercedes” for acquiring luxury automobiles under unexplained circumstances, certainly knew too much for the Kremlin to alienate him entirely, despite dismissing
him. An official from the military prosecutor’s office, which had already questioned Grachev, complained anonymously that it was premature for Putin to exonerate anyone.
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O
verseeing the directorate took Putin across the country and brought him into close contact with the general prosecutor’s office and the security agencies, including the Federal Security Service, or FSB, which was the domestic successor of the KGB, responsible for internal security, counterespionage, and counterterrorism and still headquartered in the KGB’s ominous building on Lubyanka Square. He discovered the extent to which Russia’s government was failing on almost every level, its authority ignored, its resources wasted by governors and other officials who were conspiring with new entrepreneurs to pilfer as much as they could. Although he did not have prosecutorial power, he did have the authority of the Kremlin to scour budgets and contracts, to conduct investigations and compile thick dossiers of incriminating evidence for use when necessary. The information gave him power and influence. He became a modern-day
revizor
, the government inspector of Gogol’s satirical play whose expected arrival in a village struck such fear in mendacious local officials that they heaped tribute on an unsuspecting fop in a case of mistaken identity. By the end of his first month on the job, Putin had declared a deputy transportation minister, Anatoly Nasonov, incompetent after “selective checks” in eighteen regions found that billions of dollars had been expropriated from the Federal Road Fund. By May 1997 he had expanded his inquiries to a third of the country’s eighty-nine regions or republics, and charged 260 officials with malfeasance. By September he had announced disciplinary action against 450 officials and stressed the particularly “glaring evidence” of budgetary abuse in the Stavropol and Tver regions.
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Putin impressed his superiors with his diligence in seeking to reassert Kremlin authority, albeit selectively, and with it replenish the government’s coffers.
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He also unnerved them at times. Boris Nemtsov, a young deputy prime minister whom Yeltsin appointed the same month that Putin took over the directorate, remembered Putin’s delivering a report on theft and corruption his department had uncovered at a foundation created by Anatoly Chubais, who had passed him over for a job in 1996. The report ended with a salutation that Nemtsov, a reform-minded democrat, felt was the language of an intelligence operative: “Reporting at your discretion.” Nemtsov called him for explanation, saying that if he believed that a crime had
been committed, he should forward it to prosecutors instead of writing that. “What does it mean?” he asked his subordinate. Putin was not long in answering: “You are the boss, and you decide.”
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P
utin had been thinking about the country’s economic problems for some time. In May 1996, while still in Petersburg, Putin had formally enrolled in a university to obtain the graduate degree he had first considered when he returned from Dresden. Advanced degrees always had a cachet in the Soviet Union and Russia, and Putin’s decision to seek one reflected a desire to burnish his credentials, a need that became even more acute after Sobchak’s defeat. As when he matriculated at Leningrad State with the goal of joining the KGB, Putin saw education as a means to an end, not an end in itself.
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He did not return to the law department of his university for a higher degree, though. Instead, he chose the prestigious Mining Institute named after Georgi Plekhanov, a prerevolutionary theorist called the father of Russian Marxism. And he settled not on legal affairs but rather on a subject that he understood was vital to Russia’s future: natural resources. He was not alone. Viktor Zubkov and Igor Sechin, both close associates in Sobchak’s government, also enrolled at the institute, producing theses on the subject of Russia’s natural resources; their interests stemmed from the city’s many investments in fuel companies, pipelines, and ports.
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As Sobchak’s deputy, Putin had in 1995 drafted a report for the federal government on the need to improve the region’s export of natural resources by restructuring Petersburg’s ports, and that served as the basis for the thesis that Putin set out to complete.
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The product—218 pages long in the original Russian, with graphs and appendixes—was dry in tone and dense with facts and figures on the natural resources of the region surrounding Petersburg: not oil or gas, but bauxite, phosphates, clay, sand, gravel, cement, and peat. These resources remained underdeveloped after the Soviet collapse and needed strategic government investment in order to thrive. The thesis anticipated an economic policy focused on Russia’s immense natural resources, grounded in the emerging free market. It argued for “appropriate regulatory and procedural recommendations,” though not a reassertion of state control over economic development.
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Putin seemed to have neither attended courses at the university nor had the time to write a complicated thesis, given the demands of Sobchak’s reelection campaign, his search for a new job, and the subsequent
move to Moscow. He appears to have done what many Russians did at the time, especially busy public officials: he had someone else ghostwrite it for him. The estranged daughter of the institute’s rector, Vladimir Litvenenko, would later claim that her father had written the thesis for Putin.
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Litvenenko, who was an expert in mineralogy, went on to join the board of PhosAgro, one of the world’s largest producers of fertilizers made from phosphates, which were found in abundance in the Petersburg region, as the thesis noted. He became a very rich man, though that would not become known for many years since the company’s owners then remained secret.
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Whoever the author or authors, Putin’s thesis lifted almost verbatim more than sixteen pages of text and six charts from an American textbook written by two professors at the University of Pittsburgh, which was translated into Russian in 1982—almost certainly at the behest of or with the approval of the KGB, which under Andropov was eager to find a way out of the Soviet Union’s economic stagnation. The thesis’s bibliography includes the textbook—
Strategic Planning and Policy
, by William R. King and David I. Cleland—as one of forty-seven sources, including papers and lectures by Putin at the institute, but in the text itself the work is neither credited explicitly nor are the lengthy passages lifted from its Russian translation acknowledged. Instead, the number 23, its place in the bibliography, is simply inserted between brackets in two places. The evident plagiarism would be grounds for failure at American or European universities, though it was an accepted practice in Soviet and Russian academia to cut and paste text with minimal citation. In any case, it was not detected for years.
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