The Putin Mystique: Inside Russia’s Power Cult (19 page)

But then in 1991, Communist rule collapsed and the ideological norms that governed the criminal code disappeared. Private commerce became legal, and so did import and export. But because a whole business had developed around the criminalization of contraband, it continued.

“The criminal code changed, and instead of being called contraband, it was called evasion of customs duties,” Gervis recalled. Whatever it was called, the bribes were still being paid, and customs officials profited. And another important aspect of the customs service remained the same: besides petrodollars, customs duties provided the single largest source of income for the Russian government. And its
officers, seeing themselves as servants of this government, as “men of the sovereign,” saw no reason why they shouldn’t profit.

“The chief role of the Federal Customs Service is to replenish the budget. That is why there is so much attention to it from the FSB and the Interior Ministry,” Gervis said.

And as these officers watched new, up and coming businessmen getting rich with no new system of values and an entirely dysfunctional network of legal norms, there was nothing wrong, in the eyes of the officers, with profiting from those businessmen.

“For a businessman, it makes no difference how this regulation is carried out,” Gervis said. “Either way it is a tax, an
obrok
. Just like in the days of the Tartar-Mongolian yoke.”

By 2005, an informal system of duties that both customs officials and businessmen seemed to benefit from crystallized at Moscow’s Sheremetyevo Airport, the largest import hub for mobile telephones in Russia. In return for kickbacks from mobile phone importers, the head of airport customs created a simplified system of customs duties based on price range: phones costing up to $100 were all registered as costing just $20, between $100 and $200 as just $30, and so forth. For a $4.5 billion market, this constituted from $150 to $300 million in “duties.”
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Protected by the Interior Ministry, the system worked, in as much as all parties felt that they were getting rich enough. Police officials would regularly “confiscate” telephones just like precinct officers getting a share of the watermelons sold at a market under their “protection.” Because the phones weren’t entirely legal to begin with, importers like Yevgeny Chichvarkin couldn’t complain.

But then in spring 2005, the “tax burden” started getting out of hand as new Interior Ministry departments started trying to get into the racket. An officer from the newly-created Department K, which oversaw the communications sector, arrived at Sheremetyevo and demanded a bigger cut: $1 from each mobile phone. Some businesses balked at the additional “tax,” which would generate an income of $20 million for Department K, and refused to pay. In response, Department K officials launched an investigation against Sheremetyevo customs, and the whole simplified scheme was taken down. Yakov Ardashnikov, the businessman who had refused to pay the additional cut, fled to Israel to escape contraband charges,
while Valery Kuzmin, deputy head of Sheremetyevo customs, would go on to be sentenced to nine years in jail for involvement in the contraband shipment of mobile phones sold in Yevroset stores.
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The raids made a serious dent in Russia’s mobile phone business, with police confiscating about $100 million worth of phones. That and the fact that the simplified duties system was exposed and shut down virtually paralyzed local retailers like Yevroset. It became clear that something had to be done – and that’s when Economics Minister German Gref, whom Putin had appointed in 2004 to help clean up the customs business, got involved.

According to Gervis, Chichvarkin met with Gref to try to convince him to simplify the customs process.

Later that year, Gref held a two-hour meeting with top mobile phones retailers and struck a deal. Gref personally guaranteed that customs would process all their shipments on time, as long as the importers committed to paying customs duties in full. According to one retailer at the meeting, Gref went as far as urging them to call his office directly if there was the slightest delay.
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Chichvarkin had a further incentive for transparency – his company was planning an IPO, a sale of shares to the public, in 2006. And though it was about twice as expensive to pay full duties legally, as opposed to discounted “bribes” that went to customs officials, the importers benefitted in the long term, with more foreign companies willing to do business under a legitimate import scheme.

The only party that seemed to be losing out was Department K, which lost tens of millions of dollars a year from the legalization process. And Yevgeny Chichvarkin, who played a major role in convincing Gref to simplify customs legally, became a top enemy.

“All of Chichvarkin’s problems began precisely when he tried to move his company towards more transparency,” Gervis said. And though he was now legally declaring all his shipments and paying full duties, it didn’t prevent Department K officers from trying to shake him down.

In spring 2006, after legally passing through customs, a shipment of 167,500 Motorola phones was impounded by Department K officials. “Fuck you and your IPO,” an officer reportedly said then.
¹¹⁰
A Department K representative then went to Yevroset and demanded $10 million to stop the harassment. But since Yevroset had moved to
a fully legal scheme, the shake-down proved more difficult. Attempts by Department K to prove the shipment was contraband failed – Yevroset had declared it in full and paid all duties legally. And an attempt to declare the phones fake backfired – Motorola officially vouched for the shipment, and then reportedly complained to the US State Department.

For security officers, there’s possibly nothing worse than having your own private racket get so out of control that the top boss learns of it. In the centuries-old norms that governed bribery in Russia, the key rule was
brat’ po chinu
– to take according to your rank. No matter what formal, legal norms governed administrative relations, the system of
kormleniye
was still very much in place, by virtue of the impossibility of administering such vast territories with their endless webs of clashing interests. From the widespread bribery in the administration of Nicholas I to rent-seeking former KGB officers of the early 1990s, using their connections to clinch lucrative deals with foreign capital entering the market, that one rule worked in a country where all others kept changing. Take according to your rank, and make sure to remain loyal to and share with your patron. If you happened to take too much, or fail to share accordingly, then you had better make sure that your little racket did not reach the ears of the sovereign.

In the case of the Yevroset shakedown, Vladimir Putin did apparently learn of it. According to unnamed Yevroset sources cited in leading Russian publications, Putin learned of this from none other than US President George W. Bush – and, of all places, at the G8 Summit in St. Petersburg – the one venue where he could successfully nurture the illusion that his country was a civilized nation with rule of law.

Putin was reportedly enraged.
¹¹¹

That very summer, Putin already had the
Tri Kita
case on his mind. And now here was another contraband scandal that was jeopardizing hopes of Russia ever joining the WTO. Putin met immediately with Motorola officials, and then called in Interior Minister Rashid Nurgaliyev and German Gref, ordering them to sort out the mess.
¹¹²

The mess was sorted, but it had to be done with the stealth and caution that was crucial to keeping the peace among restive
siloviki
factions constantly struggling for revenue – for Putin, as we have seen, is severely limited in the punishment he can levy on security officers. Just four rank and file investigators involved in the attempted shakedown of Yevroset were charged; one is still at large, and the other three were soon released on parole.

Still, for disgruntled Department K officials, it was a slap in the face from the government that added insult to injury. Not only was a young entrepreneur who wore weird clothes getting rich at their expense (for the legal route that allowed Chichvarkin to import more phones had severely restricted their customs income), he was clearly basking in the favour of the sovereign, or at least thought he was. And Chichvarkin’s slight overestimation of that favour – and of Putin’s willingness and ability to protect him from the
siloviki
– may have contributed to his undoing.

As a weapon against Chichvarkin, officials dug up the case of a former Yevroset employee who claimed to have been kidnapped and roughed up by Yevroset’s security service in 2003. And that was where an ambitious young cop named Denis Yevsyukov came in: turning up in the wrong place at the wrong time.

The “connection” with Denis Yevsyukov should not be overestimated. He played no pivotal role in the developing Chichvarkin scandal. His precinct got caught in the crossfire between Department K and Yevroset – but that was no reason, after all, for him to go on a supermarket shooting spree. However, the mounting checks on his precinct – and how with such checks, coming from rival law enforcement structures, the roof tends to cave in on you if you are the weaker clan – illustrates the resilient complexity of Russian corruption, its all-pervasiveness, and its sprawling domino effect on all spheres of life.

There is, of course, no way to get inside Yevsyukov’s head to gauge what role, if any, the checks on his precinct in spring 2009 played in his growing psychosis. Igor Trunov, the lawyer representing Yevsyukov’s victims, called the connection tenuous and far-fetched, saying that though he’d received Chichvarkin’s report before it was published, he decided not to pursue it. One of Yevsyukov’s lawyers,
Tatyana Bushuyeva, told me the connection was intriguing for lack of other motives. Yevsyukov’s other lawyer, Mikhail Vokin, was reticent and warned me sternly against asking too many questions. He did, however, pass on my own questions to Yevsyukov in his jail cell, and relayed his one-word answer: “Nonsense.”

Nevertheless, it is a fact that just months before Yevsyukov’s shooting spree, there was growing interest in his police precinct from investigators, police officers, and even the FSB. And while Viktor Ageyev, Yevsyukov’s boss and key patron, resigned the day after the shooting, he had actually submitted his resignation on April 22 – less than a week before the shooting incident. In other words, an important resignation that appeared to be the direct result of Yevsyukov’s shooting spree was in fact anything but.

The reasons for the growing interest in Yevsyukov’s police precinct have very much to do with Chichvarkin, Yevroset, and the small incident in 2003.

In 2002, Yevroset had started having problems with one of its couriers, Andrei Vlaskin. That year, Vlaskin, according to Yevroset, started stealing telephones from Yevroset and selling them on the side, making about £20,000 a month – a racket he kept up for at least eighteen months.
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The reason he got away with it for so long was the same one that made any racket, on any level, possible: the phones were illegal to start out with, since no import duties had been paid. In those years, everything was contraband – for the laws regulating customs and commerce were so cumbersome and so detached from reality that adhering to them would have made business impossible. Shady, informal methods governed business relations in Russia instead.

In that messy, twilit world, it’s hard to identify the line between what is acceptable and what isn’t, what is criminal and what is legal. According to Yuri Gervis, Yevroset’s security department filed a complaint against Vlaskin with the Southern District Police Department, where Yevsyukov then worked as a police detective. Various sources suggested
¹¹⁴
that Yevsyukov personally handled the complaint and initiated the case in summer 2003. Yevroset security head Boris Levin said that Yevsyukov’s handling of the case was routine: the paperwork was signed by him or his underlings.
¹¹⁵

But according to investigators who, as Chichvarkin claims,
were bent on building up a kidnapping case against Yevroset, the firm’s security department used friendly, informal relations and some £40,000 in bribes to involve Yevsyukov’s police department in Vlaskin’s detention.
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The officers at the Southern District Police Department launched a case against Vlaskin, who went on the run. According to an investigative source, it was Yevsyukov who was responsible for the search for Vlaskin.
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Police found him in Tambov and transferred him to the Southern District Police Department in Moscow. There, one of Yevsyukov’s colleagues, Alexander Kurta, personally handed over Vlaskin to Boris Levin, Yevroset’s vice president and the head of its security service.

Vlaskin claimed he was handcuffed and taken to a rented apartment in southern Moscow, where he was chained to a radiator and, according to various sources, “pressured” to pay back what he’d stolen – some $409,000 plus an additional 570,000 roubles.
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Chichvarkin has denied his own involvement in the kidnapping. According to Gervis, the pressure on Vlaskin was mild – and once a deal was struck to sell Vlaskin’s property in Tambov, Yevroset helped him do it. They also bought him a Moscow apartment in compensation. Yevroset security head Boris Levin would later be cleared of kidnapping charges, but did not deny that he held Vlaskin and in one instance, as he put it, forced him to return stolen property using measures that were outside of the “lawful protocol.”
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Whatever the case, an obscure complaint was made by Vlaskin and filed away. Usually, a murky kidnapping like this where there were no good or bad guys, was forgotten.

But in 2008, some five years later, officials at the Interior Ministry’s K Department pulled the complaint out from the files. On September 2, armed, masked police officers raided the offices of Yevroset and arrested Boris Levin on kidnapping charges. According to Yuri Gervis, Department K officials once again came to Yevroset, demanding a sum that was half of the company’s capitalization to close the case.