The Russia Conundrum

By the end of the 1980s, our little computer cooperative had 150 employees and around 5,000 people contributing to its research and development. These were brilliant, sparky youngsters, mainly students and recent graduates, who were coming to me every day with ideas for new projects. We were desperate to develop the ground-breaking innovations they came up with, but we didn’t have the funds. In a free, democratic society, we would have tapped up investors, explained the potential of our new projects and everyone would have benefited. But in those days, the only source of money was the official state banks. Loans were available only to state industries as part of the State Loan Plan.

Someone must have been watching over me, because out of nowhere an angel appeared: the remarkable Mrs Krushinskaya, manager of the state bank branch where we had our account. For some reason, she took it upon herself to help us. She took me aside and said, ‘Look, I’ve heard you’re after a loan. And maybe you’ve heard that the government has just authorised the creation of independent banks. Well, if you were to go out and create a bank like that, I might be able to give you a loan as an official banking institution…’ She gave me the number of a contact at head office and suggested I try my luck. I met the man in question, Viktor Bukato, who told me, much to my surprise, that he would provide the recommendation needed to get our charter written. ‘What would you like your bank to be called?’ he asked me. It really was as easy as that.

Within a month, we had set up the KIB NTP Bank (later called the Menatep Bank), one of the first private Russian banks since 1917, with an authorised capital of 100,000 roubles and an approved credit line. It was the start of a new world. Finally, we could expand into new areas, develop new IT solutions and kick start the projects we’d been sitting on for a year or more. We bought a company car and moved into bigger premises. I started wearing a suit and a tie, and all at once we started to look like a grownup business.

The loan money and the excitement of owning our own bank went slightly to our heads. We branched out into some wacky projects, including the import of Napoleon brandy, but we weren’t much good at anything other than our core speciality. Computers and IT remained our mainstay, especially when we discovered a way for our clients to buy and sell them in hard currency, i.e. using stable foreign currencies rather than roubles. At that time, the rouble was non-convertible – you couldn’t use it for purchases outside of Russia – so there was a premium attached to being able to trade in dollars and other foreign denominations. We were eventually earning so much hard currency that I was summoned to see the state bank chairman, Viktor Gerashchenko, who wanted to know how we did it. I explained it all to him and he looked through the regulations, hoping to catch us out, but in the end he had to admit we hadn’t broken any rules.

An interview during the peak of my business years

We were pretty good at exploiting any opportunities that the rules allowed. Because there had never been any private enterprise in the Soviet Union, people just accepted that it wasn’t a possibility: the guiding principle of Soviet law was, ‘everything which is not authorised is forbidden’. But Gorbachev’s new spirit of enterprise flipped that to, ‘everything which is not forbidden is allowed’. We took him at his word.

We moved into so many fields of IT supply and cornered so many markets that several government departments, including the Soviet Committee for Science and Technology, took an interest in us as an example of the success of the new economic policies. It was while we were working for them that the Moscow mafia took an interest in us.

Organised criminal gangs had always existed, but they became much more powerful in the perestroika era. It was a time when businesses were turned over by the mafia as a matter of course. In our case, contact came from the Izmailovo crime syndicate, who invited me for a ‘friendly chat’ and offered us ‘protection’ from their own henchmen. As you can imagine, I was on my best behaviour. I conversed politely and respectfully, and agreed that we would be in touch.