How have they made it so soon?

John Lloyd

A recent interview I had with the chairman of the Russian Central Bank exemplifies the dangerously tense atmosphere within which the politics of the Soviet Union have been conducted since the August putsch – and underscores the importance of what Arkady Vaksberg writes in his uneven, irritating but critically important book.

What Georgy Matiukhin wanted to say was that a large part of the developing business culture of the Soviet Union was criminal. In seeking to bring the new commercial banks under the control of the Russian Central Bank, his inspectors had discovered, first, that the banks’ capital came either from the Communist Party or from organised crime – the Mafia – or from both; and secondly, that many of their operations, especially in the foreign currency area, had to do with the placing abroad or ‘laundering’ of funds accumulated by these organisations.

He named the banks involved without any caution as to libel. They included Credobank and the Menatep group, one of the biggest of the new banks-cum-trading companies begun by a group of young men who had once been leading members of the Komsomol. The Credobank, started three years ago and expanding rapidly – it is set to move from its dingy warehouse offices on an embankment of the Moscow river to a newly-renovated mansion on the inner ring road – has recently begun to offer its customers VisaCard services. Both banks, he said, were engaged in transferring Party funds abroad (there had been much speculative material on this in the Soviet press) and he likened their activities to those of Nazi officials towards the end of the last war who pushed funds overseas in order both to provide for themselves and their fellows after the loss of a war which they dared not try to end, and to create a base for a revival of the party’s fortunes.

Even more serious were Mr Matiukhin’s allegations about the banks’ and the new business circles’ political activities. He said that the directors of the banks, the new commodity exchanges, the co-operatives, the joint-venture companies, and some of the semi-independent state enterprises, now constituted an essentially criminal class, that they obeyed no rules and that they had inherited much of the fortune and many of the methods of the organised crime structures of the Communist period. Having achieved economic power, he said, they were now openly engaged in trying to exercise political power: to dictate which ministers were appointed to which portfolios, which officials to which institutions. The hostility to him in the press (which had been and still is virulent) was orchestrated by these people: they wanted him out in order to put in their own appointee, someone who was more amenable to their flouting of the rules and who would not ask awkward questions.

On one level, this was what reporters in American films about newspapers used to call ‘sensational’: here was the chairman of the Russian Central Bank saying that the economy was deeply criminalised, naming some of the guilty institutions and alleging that the new Mafia was bidding to take over the government of the country only weeks after the Communist Party had finally been relieved of the job of holding the Union together. On another, it was hard to know how seriously to take it all. Matiukhin was under attack; the atmosphere was – is – polluted with the most extravagant insults, most of them directed at the Communist Party, which acted, and still acts, as a convenient scapegoat for almost every ill, past and present; and there is no effective law of libel or slander so that anyone can say anything, especially to a foreign correspondent. Underlying this was another consideration, routinely evoked by those who attempt to do business in (or with) the Soviet Union and productive of a kind of insouciance about abuses – which is that criminality is inevitable because criminal sources alone are able to provide the necessary new capital. Until the present period, and in many ways even now, capital, like property, could only (legally) be owned by the state. If some enterprises or institutions had any capital in their account, it was in a fiduciary capacity.

This being the case, it is worth asking, as Mr Matiukhin now claims he is asking, where the new ‘capitalist’ institutions got their starting capital from. Many of the new banks opened up with millions of roubles of founding capital: they have very quickly acquired fine, gaudy mansions in which they do business, and fleets of Mercedes or BMWs for their directors – who fly in and out of Moscow’s Sheremetevo airport wearing well-cut double-breasted suits and carrying slim leather attaché-cases, just like their Western equivalents. How have they made it so soon?

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