days, Boldyrev had written a letter to another Leningrad economist, who was now the foreign trade minister, asking him to curtail Putin’s powers. The letter was ignored. Putin had presumably created a base of wealth and influence from which he could not easily be shaken.
What exactly was Putin’s role in the government of Russia’s second-largest city? A woman who worked at the mayor’s office at the same time recalls Putin as a man with an empty office save for a desk with a lone glass ashtray sitting atop it, and with similarly colorless glassy eyes looking out from behind the desk. In his early months in city government, Putin had struck some of his colleagues as eager, curious, and intellectually engaged. Now he cultivated an impervious, emotionless exterior. The woman who worked as his secretary later recalled having to deliver a piece of upsetting personal news to her boss: “The Putins had a dog, a Caucasian shepherd named Malysh [Baby]. He lived at their dacha and was always digging holes under the fence, trying to get out. One time he did get out, and got run over by a car. Ludmila Alexandrovna grabbed the dog and drove him to the veterinary clinic. She called his office from there and asked me to tell her husband that the veterinarian had been unable to save the dog. I went into Vladimir Vladimirovich’s office and said, ‘You know, there is a situation. Malysh is dead.’ I looked—and there was no emotion in his face, none. I was so surprised at his lack of reaction that I could not keep from asking, ‘Did someone already tell you?’ And he said calmly, ‘No, you are the first person to tell me.’ That’s when I knew I had said the wrong thing.”
The “wrong thing” in the story presumably refers to the question about whether Putin had already been informed of his dog’s death. But the scene as a whole is remarkable for the palpable sense of uncertainty and even fear that it conveys.
When his biographers asked him about the nature of his work in St. Petersburg, Putin responded with the lack of subtlety that had come to characterize his answers to sensitive questions. He had tried to take over the casinos, he said. “I believed at the time that the casino business is an area where the state should have a monopoly,” he said. “My position ran opposite to the law on monopolies, which had already been passed, but still I tried to make sure that the state, as embodied by the city, established control over the entire casino industry.” To that end, he said, the city formed a holding company that acquired 51 percent of the stock of all the casinos in the city, in the hopes of collecting dividends. “But it was a mistake: the casinos funneled the money out in cash and reported losses every time,” Putin complained. “Later, our political opponents tried to accuse us of corruption because we owned stock in the casinos. That was just ridiculous…. Sure, it may not have been the best idea from an economic standpoint. Judging from the fact that the setup turned out to be inefficient and we did not attain our goals, I have to admit it was not sufficiently thought through. But if I had stayed in Petersburg, I would have finished choking those casinos. I would have made them share. I would have given that money to elderly people, teachers, and doctors.” In other words, said the incoming president of Russia, if the law got in the way of his ideas of how things should be done, that would be too bad for the law. He had little else to say about his years as Sobchak’s deputy.
In early 1992, Marina Salye had set out to learn exactly what the little man with the empty office was actually doing. The city council launched a full-fledged investigation, the results of which—twenty-two single-spaced typed pages plus dozens of pages of appendices—Salye presented to her colleagues less than two months following her visit to Boldyrev. She discovered that Putin had entered into dozens of contracts on behalf of the city, many if not all of them of questionable legality.
Putin’s department in the mayor’s office was now called the Committee for Foreign Relations. Most of its activities ostensibly centered on providing for foodstuffs to be brought into the city from other countries. The city had no cash with which to buy the food: the ruble was not a convertible currency; Russia’s monetary system, inherited from the Soviet Union, was out of balance, and efforts to right it immediately led to hyperinflation. But Russia had plenty of natural resources, which it could trade, directly or indirectly, for food. To that end, the government in Moscow allowed subjects of the federation to export natural resources.
Salye found that Putin’s department had entered into a dozen export contracts, together worth $92 million. The city agreed to provide oil, timber, metals, cotton, and other natural resources granted to it by the Russian state; the companies named in the contracts undertook to export the natural resources and import foodstuffs. But Salye’s investigation found that every single contract contained a flaw that made it legally invalid: all were missing seals or signatures, or contained major discrepancies. “Putin is a lawyer by training,” she wrote later. “He had to know that these contracts could not be used in court.” In addition, Putin had violated the rules of these import- export barter operations, set by the Russian government, by picking the exporting companies unilaterally rather than by holding an open competition.
The food that by contract was supposed to be brought into Leningrad never made it to the city. But the commodities mentioned in these dozen contracts apparently had been transported abroad; in fact, another irregularity to which Salye’s investigation drew attention was the inordinate nature of the commissions written into the contracts: between 25 and 50 percent of the sum of each contract, for a total of $34 million in commissions. All evidence seemed to point to a simple kickback scheme: handpicked companies received lucrative contracts—and they did not even have to hold up their end.
Asked about the investigation by his biographers, Putin acknowledged that many of the firms with which he had signed contracts had failed to bring any food to the city. “I think the city did not do all it could, of course,” he said. “We should have worked more closely with law enforcement, we should have beaten it out of their firms. But it made no sense to try to go to court: the firms would just disappear instantly, stop functioning, remove their goods. In essence, we had no claim against them. Remember that time: it was full of shady businesses, financial pyramids, that sort of thing.” This was the same man who, just a day or two earlier, had emphasized to his biographers how vicious he could be if someone so much as seemed to cross him, the same man who flared up instantly and had a hard time winding down, the same man whom his friends remember all but scratching out his opponents’ eyes when he was angered. Why would this man sit idly while one private company after another violated the terms of the contracts he had signed with them, leaving his city without the food supplies it so badly needed?
Because it was rigged to end that way from the beginning, Salye believes. “The point of the whole operation,” she wrote later, “was this: to create a legally flawed contract with someone who could be trusted, to issue an export license to him, to make the customs office open the border on the basis of this license, to ship the goods abroad, sell them, and pocket the money. And that is what happened.”
But that, Salye believed, was not all that happened. Moscow had actually given St. Petersburg permission to export a billion dollars’ worth of commodities, so the twelve rigged contracts she found represented only a tenth of the wealth that should have traveled through Putin’s office. What was the rest of the story? She eventually found evidence that all, or nearly all, of the commodities, including aluminum, oil, and cotton, had been exported, or, as she put it, “had vanished”: there was simply no documentation. But her report to the city council focused only on the twelve contracts for which there was documentation; nearly a hundred million dollars’ worth of commodities ostensibly bartered for food that never arrived.
The city council reviewed Salye’s report and resolved to forward it to Mayor Sobchak with the recommendations that the report be submitted to the prosecutor’s office and that Sobchak dismiss Putin and Putin’s own deputy, whose signature was on many of the contracts. Sobchak ignored the recommendations and the report itself. The prosecutor’s office would not launch an investigation without Sobchak’s permission. Salye had already hand-delivered a three-page letter to Yeltsin outlining some of the biggest violations and asking that they be investigated. There had been no reaction. Only Boldyrev, Russia’s chief comptroller, had reacted with understanding, immediately sending a letter to the foreign trade minister and pursuing the case.
Boldyrev reviewed the documents Salye had brought him. His findings were essentially the same as Salye’s: someone had been stealing from the people of St. Petersburg. He summoned Sobchak to Moscow to respond. “Sobchak came and brought all of his deputies with him,” Boldyrev recalled in an interview later. Putin came. “They wrote down their versions of the events…. I then reported the findings to Yeltsin.”
And then nothing happened. The Russian president’s office in Moscow forwarded some documents to the Russian president’s representative office in St. Petersburg—and the story died.
“IT WAS JUST AN ORDINARY INVESTIGATION,” Boldyrev explained many years later. “It uncovered significant violations, but they were not radically more serious than what was going on in the rest of Russia. They were standard-issue violations having to do with obtaining the right to export strategically important resources in exchange for foodstuffs that never materialized. It was just a typical case at the time.”
Russia’s new elite was busy redistributing wealth. This is not to say that all of them behaved like Putin—the
