The Oligarchs: Wealth and Power in the New Russia by David E. Hoffman

From the Publisher

David Hoffman, former Moscow bureau chief for The Washington Post, sheds light onto the hidden lives of Russia's most feared power brokers: the oligarchs. Focusing on six of these ruthless men Hoffman reveals how a few players managed to take over Russia's cash-strapped economy and then divvy it up in loans-for-shares deals.

Before perestroika, these men were normal Soviet citizens, stuck in a dead-end system, claustrophobic apartments, and long bread lines. But as Communism loosened, they found gaps in the economy and reaped huge fortunes by getting their hands on fast money. They were entrepreneurs. As the government weakened and their businesses flourished, they grew greedier. Now the stakes were higher. The state was auctioning off its own assets to the highest bidder. The tycoons go on wild borrowing sprees, taking billions of dollars from gullible western lenders. Meanwhile, Russia is building up a debt bomb. When the ruble finally collapses and Russia defaults, the tycoons try to save themselves by hiding their assets and running for cover. They turn against each other as each one faces a stark choice--annihilate or be annihilated.

The story of the old Russia was spies, dissidents, and missiles. This is the new Russia, where civil society and the rule of law have little or no meaning.

NY Times Book Review

dramatic and comprehensive...What makes this account both devastating and entertaining is the way Hoffman has pieced it together...

Christian Caryl

an irresistible tale...one of the most vivid and well-researched accounts...of this tumultuous period in recent Russian history.

Timothy McDaniel

devastating portrait of the so-called Russian oligarchy...brilliantly shows how seemingly...insignificant acts...culminated in changes in a whole society.

Financial Times

one the most wide-ranging and sober...descriptions of the oligarchs during the painful past decade of change in Russia.

Foreign Affairs

Hoffman makes the tale of the men's rise and fall a masterful blend of adventure and serious, informed analysis.

Library Journal

There seems to be little question that the handful of men who became wealthy and powerful after the demise of the Soviet Union were greedy to the point of being criminal. Matthew Brzezinski's Casino Moscow, Chystia Freeland's Sale of the Century: Russia's Wild Ride from Communism to Capitalism, and Paul Klebnikov's Godfather of the Kremlin: Boris Berezovsky and the Looting of Russia do a good job of documenting the chicanery. What shaped the character of the so-called oligarchs? How did the decaying Soviet system influence such a diverse group of men? Hoffman, former Moscow bureau chief for the Washington Post, digs into the background of the six main oligarchs e.g., Boris Berezovsky of the All Russian Automobile Alliance (AVVA), one of Vladimir Putin's main backers, and Anatoly Chubias, former chair of Gazprom and founder of NTV (Novoe Televidenie, or "New Television") identifying the events that made each of them so predatory and so influential. Several characteristics are common to each. They all lived restless lives. They began to take advantage of the decaying system by starting capitalist ventures called "co-ops." They were experts at building social capital among the powerful government leaders. And, as Hoffman claims, most significantly, each man had "an ability to change." The book is not a prescriptive work but a fine descriptive volume that illuminates current Russian politics and finance. Recommended for public and academic libraries. Harry Willems, Southeast Kansas Lib. Syst., Iola Copyright 2002 Cahners Business Information.

Booknews

reporter Hoffman tells how six men have led the glorious struggle to move Russia from the ruins of failed socialism to free market capitalism. On the way, they just happened to amass great fortunes and political power by robbing the country blind. Annotation c. Book News, Inc., Portland, OR (booknews.com)

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Table of Contents

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Gusinsky, a skinny young man with outsized emotions, who had endured the taunts "Yiddish snout!" in the schoolyard and responded with ferocious anger, an iron pipe in hand, was going nowhere in the mid-1980s. He drove his car as an unofficial taxi, carrying passengers to and from the new international airport, earning enough cash to support his wife and young son, and hoping to restart his life.

Late one evening, Gusinsky stepped out of his car to smoke a cigarette. By chance, he had stopped near an electric streetcar depot. He glanced at a back lot, which served as a storage area for large electric transformers.

"I turned around and suddenly I saw a vein of gold," he recalled. "What was it? A huge wooden reel, two meters tall, wound with copper cable -- copper cable that was used for the transformer of the streetcar. It was long, pure copper. And I realized, here it is, the gold mine!"

The gold mine was copper bracelets. They had become a craze at the time. The bracelets had a faintly Oriental appeal, and people wore them to fend off illnesses or evil spirits. Gusinsky started a cooperative to make jewelry, and soon became king of copper bracelets in the Soviet Union. He took one look at the wooden spool of copper wire, officially state property, and finagled three reels for next to nothing. He found an idle state factory with a metal-stamping machine on the edge of Moscow. For some cash on the side, he arranged for high-quality metal-stamping molds to be fashioned at a closed military factory. Soon, his six stamping machines were working overtime.

Gusinsky stamped out copper bracelets by the tens of thousands. The bracelets carried an imprint of two tiny dragons and the word "Metal," the name of Gusinsky's fledgling cooperative. The stamping machines worked around the clock, in three shifts, each machine capable of six strikes per minute. The Metal cooperative was soon stamping out 51,840 bracelets a day. The bracelets were the source of Gusinsky's first fortune. He sold the bracelets for five rubles apiece, and they cost him only three kopeks. In a single day, his revenues were 259,200 rubles, more than 500 times the monthly salary of a doctor of science at a leading institute. "In those days," he recalled, "it was gigantic profit."

Gusinsky had re-started his life. In a few years, he was dreaming of becoming the Rupert Murdoch of Russia.