Strongman, The

waited for the president to arrive were the government’s young team of reformers – Kasyanov, Kudrin, Gref – who above all needed the tycoons to pay their taxes so they could get the country’s finances in order. The oligarchs themselves had other concerns, having heard Putin threaten their existence ‘as a class’. They had just seen their colleague Gusinsky effectively stripped of his wealth and hounded out of the country. His fellow media tycoon Boris Berezovsky was nowhere to be seen.
    The oligarchs were seated democratically around a huge doughnut-shaped table. But when the president joined them in the circle there was no doubt about who was in charge. The meeting lasted two and a half hours, but Putin’s offer was simple: there would be no reversal of the privatisation process, on two conditions – that the oligarchs started paying their taxes, and that they kept out of politics. Putin was careful not to put it in the form of an ultimatum, but that is what it was.
    In an interview, German Gref summed up what happened: ‘Putin sent a strong message that no nationalisation or expropriation of property was planned. He put it to them like this: “We are making a gesture to you, we are sharply decreasing taxes, we are creating a favourable investment environment and defending property rights. But please, since we are lowering the taxes, you should pay them. And secondly, if it’s business you’ve chosen, then do business.” ’ 5
    The businessmen emerged from the meeting almost singing with relief. Most of them had no desire to get into politics anyway, and paying taxes was a small price to pay for their fortunes. Vladimir Potanin, president of the mining and metals conglomerate Interros, sounded almost repentant: ‘The oligarchs had set themselves up as an elite, but society doesn’t accept this elite. We have to behave better.’
    The initiative for this meeting had come from Boris Nemtsov, the former governor of Nizhny Novgorod who had helped to kick-start the privatisation process in the mid-1990s and now headed a political party, the Union of Right Forces, to defend the interests of the nascent middle class. He described the event as a watershed – the point where (he put it, with irony, in Marxist terms) ‘the ten-year history of the primitive accumulation of capital’ came to an end. In other words, this was the moment when Russia’s ‘robber barons’ were given the chance to turn into respectable businessmen.
    For the most part, the oligarchs went along with that. Gusinsky and Berezovsky went into exile – the former quietly, the latter continuing to wage battle against Putin from abroad. Roman Abramovich, the owner of the oil giant Sibneft, did become a member of the Duma, and also governor of the remote region of Chukotka. But he did not use his political influence to challenge Putin. He was far more interested in his British football club, Chelsea, which he bought in 2003.
    Only one oligarch refused to toe the line – Mikhail Khodorkovsky. His intransigence would land him in a Siberian prison camp for many years and turn him into one of the greatest sources of tension between Russia and the West.
    The Khordorkovsky affair
    Khodorkovsky had taken his earliest steps in business almost as soon as it was possible, back in the days of Mikhail Gorbachev’s tentative perestroika reforms. As a communist youth functionary, he used his connections to set up a café, an import business and, eventually, one of Russia’s first commercial banks – Menatep. From then on his rise was vertiginous. In 1995, in the ‘loans for shares’ scheme designed to bail out the bankrupt Yeltsin government, he acquired a major stake in Russia’s second-largest oil company, Yukos. The following year he bought the shares – effectively from himself – and ended up with a majority stake in Yukos for just $309 million, a fraction of its real value. Within months the company was worth $6 billion. None of this broke the law: the scheme was devised by the government itself.
    There is no doubt that Khodorkovsky was a devious wheeler and dealer as he built his empire. In his excellent study, The Oligarchs , the American journalist David Hoffman confesses that even after painstaking investigation he could not fathom some of Khodorkovsky’s manoeuvres and schemes, involving offshore transactions, front companies and ‘sleight of hand’. 6
    But once he had complete control of Yukos he underwent something of a