The Oligarchs

Gusinsky started a cooperative and quickly became king of copper bracelets in the Soviet Union. The simple bracelets carried an imprint of two tiny dragons and were imprinted with the word “Metal,” the name of Gusinsky’s fledgling business. The stamping machines worked around the clock in three shifts, each machine capable of six strikes per minute. Soon the cooperative was stamping out 51,840 bracelets a day. The bracelets cost him three kopeks to make and he sold them for five rubles apiece. In a single day, his revenues were 259,200 rubles, more than five hundred times the monthly salary of a doctor of science at a leading institute. “In those days,” he recalled, “it was gigantic profit.” Gusinsky had made his first fortune and restarted his life.¹

Gusinsky and his parents lived in one room, an eighteen-square-meter flat in a working-class neighborhood. As a boy, he often felt resentment welling up in him. “I was a youngster and I knew already that the word ‘Yid’ was an insult,” Gusinsky told me. “Just like all the boys, I was very afraid of fighting at the beginning. I used to think that for sure if I hit my adversary hard and hurt him, he would certainly hit me back and I would be hurt even more—so I was scared. And then it so happened that some guys a bit older than me drove me into a corner in the courtyard and started pestering and insulting me. And I remember this strange feeling, a sudden complete sense of freedom: it did not matter to me what they were going to do to me.” That time, Gusinsky struck back, thinking he must fight back “while I still can.”

“I was never scared to fight, one street against another, courtyard versus courtyard,” he recalled. Once, a group of older men were drinking vodka and playing dominoes after work in the courtyard. Gusinsky was ten or eleven years old, and as he came home after school on a warm afternoon, the older men chided, “Here comes the little Yid.” Gusinsky erupted with rage. He seized an iron pipe and flailed at the tormentors, who ran from him, frightened that he had gone mad. “I was in tears and I was chasing them with a pipe around the whole courtyard,” Gusinsky recalled. “I was in tears from fury and insult, not from fear.”

Gusinsky grew up “on the street,” as he later put it. “I am a product of the street. I was born in the street and learned to defend myself in the street.”

After studying mathematics in high school, he felt the sting of prejudice again when he tried to enroll in the theoretical physics department at the Moscow Physics-Engineering Institute. It was a prestigious school that prepared specialists for the Soviet military-industrial complex. Jews were unwanted. “I really knew mathematics and physics well. I was absolutely confident. Everybody was telling me: they don’t take Jews there.” Gusinsky said he ignored their advice. He applied—and was rejected. He was offended, and angry.

Gusinsky enrolled instead at the Gubkin Institute of Oil and Gas because his mother had studied there. Gusinsky was a bad student at the school that students fondly called Kerosinka. “I was not interested,” he acknowledged. “I took offense at everyone, almost against the whole world.” Gusinsky did not finish his studies at Gubkin. By his own account he dabbled in the black market, working as a fartzovschik —daring young traders who dealt in imported jeans and audiocassettes and changed money for foreign tourists. Gusinsky recalled that he couldn’t get the hang of being a so-called speculator. “I bought several pairs of jeans, then I tried to sell them and it turned out I sold them cheaper than I bought them,” he told me ruefully. Gusinsky often joked that he was not cut out to be a street trader. However, in later years, he showed a knack for entrepreneurship that far overshadowed his lack of skills as a jeans trader.

Having failed his classes at the institute, Gusinsky went into the army in 1973, where he was trained as a junior sergeant in the chemical intelligence troops. These units would enter the battle zone after a chemical or biological weapons attack. But Gusinsky’s strongest memory of the army was that he had to stand his ground. “I had perfect relations with everybody in the army except for complete idiots and scoundrels,” he recalled. “I only lost several teeth in the army, so nothing horrible was going on—these were the usual fistfights; it happens. In two years in the army, I learned only one thing, the ability to fight for myself.”

After the military, he was adrift back in Moscow. A friend urged him to enroll in another prestigious school, the State Institute for the Study of Theatrical Arts. Gusinsky replied that he had not read Stanislavsky or Shakespeare or Molière. But with two months before the entrance exams, he decided to try. He spent nights poring over books. His friend reassured him, “Piece of cake—you’ll make it,” but Gusinsky feared that Jews were not welcome at the institute; the theater, like film, was under strict Communist Party control.

The oral exams were given by a renowned director, Boris Ravenskikh, chief stage director of Moscow’s Maly Theater. At the time of the exams, Gusinsky, still thin as a rail and angry at the world, came before Ravenskikh for the required interview. Behind Gusinsky was Valery Belyakovich, another drama student.

Ravenskikh asked Gusinsky, “Why are you going to study stage directing?”

“I want to understand life,” he replied. “A lot in this life surprises me.”

“What surprises you most?” Ravenskikh asked.

“Lack of communication between people,” Gusinsky responded. “People have lost the ability to understand each other.”²

Ravenskikh immediately took an interest in the intense young man, who was the only one in the class with no drama experience. “He believed very much in the idea that a stage director is a person with life experience,” Gusinsky recalled. “He was selecting people by intuition. And he told me, ‘I’ll take you.’”

But Gusinsky again felt touched by anti-Semitism. Ravenskikh was warned by a party official: “What are you doing? Out of fifteen people for this year, you are taking three Jews!” According to Gusinsky, Ravenskikh did not like to be pressured. Ravenskikh stubbornly insisted that he remain in the class.

At the institute, Gusinsky was always brimming with jokes and running in a dozen directions. Despite shortages everywhere, Gusinsky found scarce white paint to spruce up the theater at the institute. He found a pair of speakers and wired up a sound system. He put his hands on a tape recorder when his class needed one. He brought scarce or banned LPs to his friends. “He gave me a record of Krokus, it was Polish!” Belyakovich recalled. “It was banned—a very expensive gift, because it was impossible to get even a Polish LP. I had no other LPs.” At the lunch hour at the institute, Gusinsky often took five friends, packed them into his tiny car—he was the only one with a car—and they dashed away from the campus for a break.

Gusinsky “was always taking us to theaters; he had connections everywhere,” Belyakovich remembered. “In those days it was hard to get tickets; it was always difficult.” It was practically impossible to get into Moscow’s famous Lenkom Theater, but Gusinsky managed to do it for a preview of Yunona and Avos, a hugely popular rock musical that blazed new trails in the theater at the time because it lacked ideology. Gusinsky told his classmates to show up at the Lenkom at 10:30 A.M. and instructed them to wait for him outside until he gave the signal: “And then I whistle, and you follow me!”

Soon Gusinsky had them inside for a rehearsal right behind the director. The first part of Gusinsky’s last name means goose in Russian, and that was his nickname. “He was swimming like this all the time,” Belyakovich said, “and we would ask him, ‘Gus, can you get us tickets for this?’ And he would say, ‘Wait,’ he had a lot of acquaintances. He was different because of his communicativeness and networks. But bringing twelve people in was very top class! He introduced us as stage directors, claiming that we had to be there.”

His teacher, Ravenskikh, left an impression on Gusinsky. Ravenskikh refused to be pushed around and was willing to experiment even within the regimented, ideological realm of Soviet theater. Ravenskikh once was ordered to stage Brezhnev’s sugary ghost-written war memoir, Malaya Zemlya, at the Kremlin Palace of Congresses. The book describes Brezhnev’s role in a 1943 battle in which the Eighteenth Army captured and held a piece of land, Malaya Zemlya, on the Black Sea for 225 days. The role of the battle was played up after Brezhnev came to power, but Brezhnev had done nothing out of the ordinary. Ravenskikh went to the scene of the battle to ponder his assignment. He did not want to do it, but refusing would be risky. He then returned to Moscow and declared that he could not do the play and would not: Brezhnev’s role had been overstated.

Under Ravenskikh’s tutelage at the institute, students pushed the boundaries of what was permissible. They could breathe more freely at the institute than on the formal stage. Gusinsky and his class read and staged a part of Nicholai Erdman’s play The Suicide, a black comedy about an ordinary Soviet citizen who is driven by despair to attempt suicide but is finally too cowardly to carry it out. The play had been banned in 1932 and was never officially staged in the Soviet Union.

For graduation, students were required to stage a play in a real theater, not at the institute. Moscow was the center of theatrical life, yet it was nearly impossible for students to stage their diploma plays in the capital, and it was quite common to look for a stage in the provinces. For his diploma work, the equivalent of his graduate thesis, Gusinsky went to Tula, a hardscrabble industrial town south of Moscow. At the Tula State Dramatic Theater during the 1979–1980 winter season, the ever enthusiastic, ever thin, ever emotional Gusinsky staged Tartuffe, by Jean-Baptist Molière, the seventeenth-century French playwright. The show was billed as a comedy, an experimental one-act play by students. Importantly, it borrowed fragments from a work on Molière by the twentieth-century Russian writer and playwright Mikhail Bulgakov, which Bulgakov wrote in the second half of 1929.³ As Gusinsky was well aware, Bulgakov had focused on the relationship between the artist and power, between Molière and Louis XIV. The tense relationship between artist and dictator was one that Bulgakov knew well through his own great heartache and pain in the early Stalin years. His play about Molière was rehearsed for four years—but banned after only seven performances.

By 1979 Bulgakov was no longer totally prohibited but was still informally proscribed. Gusinsky’s performance in Tula gained a popular following in part because it also was slightly beyond what was usually permitted by the authorities. The audience entered the theater to guitar music or a band. Alexander Minkin, a lively, bearded drama critic who later became a well-known Moscow journalist, had studied at the theater institute at the same time as Gusinsky. Minkin concentrated on theory and criticism, while Gusinsky’s training was practical as a stage director. Minkin told me that Gusinsky implored him to come to Tula to see the premiere—to take an elektrichka, a commuter train, four hours to Tula!—but he refused. “I thought in advance that it was going to be horrible, it was going to be rubbish,” Minkin recalled. “I didn’t think he was a good director.” Moreover, he added, “Moliere is always very boring. He is a classic, but a boring one. That is why I believed neither in Gusinsky nor in the fact that he could stage Moliere.”⁴

But Minkin changed his mind and went to Tula, and Gusinsky’s production turned out to be a popular hit. “I laughed so much, my stomach ached,” Minkin recalled. “It was done with such taste, with such humor!” According to the Moscow News, the house was full every night, and Tula youth talked about nothing other than Tartuffe.⁵ Gusinsky was the heart and soul of his company, working with them late at night, driving them home in his car, bringing them gifts of sausage from Moscow.

Gusinsky had been lucky in Tula; the authorities allowed him to stage a play that was slightly off-key to the trained ear of the Soviet propagandist. Moreover, Gusinsky had added sonnets from Shakespeare, including a strongly antiauthoritarian sonnet at the close.

“It was not against Soviet power, it was about a rebellion of a man, an artist, against any power,” Gusinsky remembered. “And it was not anti-Soviet; it was just that they are all crazy, all our fucking Soviet power, all those Communists—they believe that anything going beyond certain boundaries is aimed against them.” Gusinsky took his play to Kiev, where it was closed down by the party city committee for being anti-Soviet after a few performances. The party bosses wrote a complaint to the Central Committee in Moscow. “It was probably then that I learned that I could not march in formation,” Gusinsky recalled, referring to the rigid conformity demanded by the party.

Gusinsky “stubbornly wanted to stage the next play in Moscow,” Minkin told me. “Year after year, he went and bowed from the waist to everybody—to the Culture Ministry of the USSR, to the Culture Ministry of the Russian Republic, to the Cultural Department of Moscow. He went everywhere, including all the theaters. He asked them to give him a stage. He asked head directors, theatrical leaders—nothing. And every week he hoped, because someone had promised him something. And he waited, waited, and waited. And another six months passed, and nothing again. He started anew, and he was given some promise anew, and he waited again. But that was horrible. He wasn’t doing anything! There was energy in him like an atomic bomb, but there was no way out.”

The Moscow theater world was crowded and competitive, and it would have been painstakingly difficult for Gusinsky to break into it under any circumstances. He had good connections, having studied under Ravenskikh and the renowned Yuri Lyubimov, director of the Taganka Theater. But he still could not break down the barriers and get a play to the stage in Moscow. Gusinsky believed the reason was anti-Semitism, and perhaps his lack of talent. “I am a Jew. It was prohibited. Plus, in fact, I was not a very talented stage director.”

Through the early 1980s, Gusinsky searched in vain for a place in the theater. His quest was a long and frustrating one. “Many times he told me, ‘This is my last attempt,’” Minkin remembered. “‘If they deceive me once more, if they don’t let me stage a play, I will go into business. I won’t take it any longer.’”

He found work organizing public events such as concerts and sports. As stage director for Ted Turner’s Goodwill Games in 1986, he organized the opening and closing ceremony, setting up performances at the Kremlin Palace of Congresses for the foreign participants. He enjoyed good connections with the Komsomol and the KGB. But when I asked him about it years later, he said it was dreary. “I was simply earning money,” he said.

Minkin was more blunt. “That was shit,” he recalled of the events Gusinsky organized. “For a theater director to be involved in that was horrible. Is this real work for a director—to stage how girls walk and throw those stupid sticks? No, that’s impossible.” Minkin recalled that Gusinsky was still dreaming of a break into the theater at the beginning of perestroika, hoping that changes in the political mood might leave him an opening. But one day his organizing of public events took a turn for the worse because of a stretch of black ribbon.

In the early days of perestroika, Gusinsky organized a Day of the Theater, sponsored by the Komsomol city committee. On the broad main avenue in Moscow then known as Kalininsky Prospekt, Gusinsky set up a string of small outdoor cafés with special themes: one for writers, one for artists, one for musicians. “All was well because this was a day of culture, and I took very earnestly everything that Gorbachev was saying—here, it started, freedom came.” But one thing had not changed: the party tightly controlled public space, especially open squares and buildings. Kalininsky Prospekt was a special street, the route that party leaders and others took to the Kremlin. Some of the artists who were helping Gusinsky decided to change the way Kalininsky Prospekt looked, and they laced the trees with black ribbon. It was a harmless gesture, but some low-level KGB men took offense. Gorbachev might see it as his limousine sped toward the Kremlin! They hauled Gusinsky before the Komsomol city committee and accused him of anti-Soviet activity. As he had many times before, Gusinsky got his back up. He lashed out. He argued with the Komsomol chiefs as they demanded he change this, change that, hew to the party line. And they insisted that he apologize to everyone in the Gorkom, the city Communist Party committee.

Gusinsky erupted. He shouted that they were fools, that their parents had been fools, that they would die fools. He slammed the door and walked out. The Day of the Theater was to be held in two days. They canceled some of the events and flooded the rest with uniformed and plainclothes security men, a tactic designed to throw a wet blanket on any public event. The local KGB men wanted to lock up this impertinent young man, Gusinsky, and throw away the key, but Gusinsky told me years later they did not succeed. They “were prevented from eating me up, let’s put it this way,” he recalled. “I was not staging any more mass performances; this was the last one. But they were not given the chance to finish me off.”

The episode proved a valuable lesson for Gusinsky. He realized that he had to work on maintaining good relations with people in power, even if he despised them. At the time, he was quietly protected by a high-ranking party official, Yuri Voronov, who was deputy head of the Culture Department of the Central Committee. There was another episode too. According to a close friend, Gusinsky in this period was also caught trading hard currency, which was forbidden. No charges were ever brought against Gusinsky, the friend said, but as a result of the brush with the authorities, Gusinsky established close ties with some KGB officers. Gusinsky came to the attention of Filipp Bobkov, a deputy KGB director who headed the notorious Fifth Main Directorate, which waged war on dissidents. Bobkov, whose job included keeping tabs on the intelligentsia, may have found Gusinsky a valuable source of information about what was happening in the theater. Many years later, Bobkov became part of Gusinsky’s corporate high command. Gusinsky was learning how to cultivate friends in high places.⁶

At first, the draw of power, the absolute beauty of making money by your own ingenuity and someone else’s permission slip or signature, was appallingly simple. After the bracelets bonanza, Gusinsky opened a new cooperative that made cheap figurines, copies of famous Russian artworks from molded plaster. They were covered with a microthin layer of copper, using special chemical baths. As with the bracelets, the costs were minimal, the profits fantastic, and the copies were beautiful—as long as you did not notice the plaster core. Hood ornaments for foreign-made cars were very popular too; he made a mint with imitation Jaguar hood ornaments. But to duplicate Russian art he needed protection. He wanted to formally export the fake figurines, which would mean handling hard currency, and that was another reason he needed protection. Moreover, Gusinsky’s cooperative was officially registered as part of the Soviet Cultural Foundation, of which Raisa Gorbachev was a board member. This government foundation was prohibited by Soviet law from engaging in commercial activities; if he flaunted the law, there could be trouble. Again Gusinsky found a way out by using his connections. He turned to Voronov, the Central Committee man who had protected him during the black ribbon scandal, and managed to get a letter of permission from the Soviet prime minister, Nicholai Ryzhkov, allowing him to export his fake figurines for hard currency. It is not clear precisely why the party man helped Gusinsky. But for Gusinsky, it was a fantastic mix: plaster, permission, and hard currency. Gusinsky told me it was his first big political success, and it led to more.

“I realized then there are ways of working with the authorities,” Gusinsky said. At some lower levels, it was as simple as bribes. But Voronov and bureaucrats in the Central Committee were above this petty corruption, Gusinsky realized. He discovered that at higher levels, the trick was to establish good relations with officials. Finally, he learned somewhat later that it was also possible to influence the very highest officials, but the approach, the delicate dance, must be handled with great care. The key was to offer something the official needed to advance his career. Then bribes weren’t even necessary, not even a good personal relationship, Gusinsky discovered. The official would almost always help, out of self-interest. “So it was always important for me to understand, what does this boss need?”

The most important boss Gusinsky would befriend in these years was Yuri Luzhkov, the stout, strong-willed bureaucrat who had been put in charge of Moscow’s chaotic vegetable bases and also licensed the cooperatives. Gusinsky and Luzhkov had their quarrels and differences, but their paths were intertwined for more than a decade.

In the late 1980s, Gusinsky recalled, Luzhkov would meet well into the early morning hours with the young entrepreneurs of the cooperatives. Luzhkov listened patiently to their problems. It was foolish to go to Luzhkov’s office before midnight because that’s when he began working with the new businessmen, often not finishing before dawn. For Gusinsky, it was amazing: the average person in Moscow might wait on line for a week to see a local bureaucrat, but here was a man who was deputy head of the Moscow city executive committee who would see every single cooperative businessman in his waiting room before going home.

Luzhkov was a widower in those years, and late one evening he invited Gusinsky to his home. “A lonely man, he was not old then, but perfectly lonely,” Gusinsky recalled. “He said, ‘What shall we have, let’s have tea.’ I said, ‘Let’s drink tea.’ Now, what have we got for tea? Out of his refrigerator he took a piece of stale, moldering rye bread. This I remember distinctly. He had nothing at home because he didn’t live there. He would sometimes sleep there, but very often he simply spent the night at his office. Strange person. My relations with him then grew very warm.”

In 1988 Gusinsky opened a cooperative, named Infeks, as a consulting company to help Western investors fathom the complexity of doing business in the Soviet Union. He was still a skinny young man wearing outsized eyeglasses and a big smile. For a fee, Gusinsky served as a fixer and provided legal advice and crude marketing data. He was working out of a cramped, windowless office on the far outskirts of Moscow, hardly a financial kingpin, but he was increasingly a man with connections who knew his way around the corridors of power.

Gusinsky’s horizons were rapidly expanding beyond Moscow. In 1988 a group of American businesspeople came to Moscow looking for investment opportunities, among them Margery Kraus of APCO, a consulting firm owned by Arnold & Porter, then Washington’s largest law firm. Kraus and Gusinsky quickly found that they understood each other and on December 13, 1988, announced plans for a joint venture partnership to bring business prospects to Moscow. When Western clients came to the capital, Gusinsky would help them navigate the often obscure world of the bureaucracy.⁷ Kraus took Gusinsky to dinner one evening in Washington. She needed some cash afterward and walked with Gusinsky to an automatic teller machine to get the money. Gusinsky was wide-eyed. He had never seen such a thing. The machine was part of an electronic banking network called MOST, which was written on the ATM. Gusinsky adopted the name for his new joint venture and eventually for his Moscow bank. In Russian, the word “most” means bridge. Gusinsky said the new business would be his bridge to the outside. He told Kraus, “For us it will be a hard currency machine.”

Boris Khait, then Gusinsky’s deputy, recalled that APCO asked them to carry out a study of the food market because a midsize American fruit wholesaler wanted to know about the demand for fresh fruit. Gusinsky carried out a market “survey” by sending out students to question foreigners in the city, who, it was thought, would pay in hard currency. They were asked what kinds of fruit they wanted to buy in Moscow. Khait was puzzled to learn that the greatest demand was for something called “kiwi.” Khait had been deputy director of a medical technology institute and considered himself a relatively well educated man. But he had never heard of a kiwi.⁸

Gusinsky took Luzhkov to the United States on a tour arranged by Kraus, his partner in Washington. Luzhkov, who still had crude ideas about economics, wanted to start a huge, centralized food manufacturing business in Moscow. He asked Gusinsky about creating “an immense enterprise that would manufacture everything” the city needed. Gusinsky was skeptical; at this time, Luzhkov was still “a Soviet bureaucrat with no idea about how the market worked—that the main point is to allow everybody to produce everything, and then there will be no problem of food supply.” Luzhkov still thought in terms of massive, centralized, state-run factories, and he persisted. “Do you know anybody in America?” he asked Gusinsky.

The tour was an eye-opening experience for both of them, Kraus recalled. No one was interested in Luzhkov’s plan for a giant centralized food factory in Moscow, but Gusinsky and Luzhkov found themselves flying on private jets. They were featured guests of corporate giants Phillip Morris and ConAgra Foods. They also visited Lehman Brothers on Wall Street. Kraus recalled one remarkable afternoon when, after meeting ConAgra officials in Omaha, Nebraska, the two Russians toured a local supermarket. Luzhkov asked a constant stream of questions and insisted on seeing the back of the store where the meat was cut. “Luzhkov was just blown away,” Kraus recalled of the goods-laden store they inspected. Another time, Kraus was driving them to an appointment and pulled in to a Kentucky Fried Chicken drive-in for lunch. When their order came down a chute and through the car window, the two Russians were amazed. They had never seen such a thing. Gusinsky and Luzhkov were a funny pair, two men not widely known outside the Soviet capital, a hustling cooperative pioneer and a Moscow administrator exploring superprosperous America like virtual time travelers in a strange land. In New York City, they were shown an overstuffed candy store. They insisted that a driver take them to a dozen more stores to satisfy themselves that the first one was not just set up for their visit. Soon they realized there really was one on every corner. Luzhkov lost his luggage and Kraus bought him new clothes. He traveled with two pair of socks, which he washed in the hotel room. Gusinsky absorbed the lessons well and one night was sitting in Kraus’s kitchen, pondering his future. “He drew on a napkin his vision for a conglomerate,” Kraus recalled. “He wanted to talk about everything!”

Back in Moscow, Gusinsky’s faith in political connections proved critical to his next big leap, into construction and real estate. Earlier, in his Metal cooperative, he had built small, stand-alone shell-shaped garages out of corrugated metal, which sprang up around the dreary apartment blocks of Moscow. In the cooperative days, it was enough to make things people wanted and sell them. But now Gusinsky wanted to repair and reconstruct old buildings. Moscow was littered with longforgotten, dilapidated structures, and the lethargic state construction firms did not want to bother with small jobs. Gusinsky realized that he could make a small fortune by fixing up buildings and selling them on Moscow’s increasingly high-priced real estate market, where rents for good offices and luxury apartments were approaching New York and Tokyo levels, pushed up by burgeoning demand among the new rich.

But first Gusinsky had to get a bargain on the old buildings. He needed Luzhkov. As a city official, Luzhkov could, with a stroke of the pen, parcel out city buildings. But Gusinsky knew that Luzhkov had to benefit in some way as a result. This was not a matter of crude bribery. What Luzhkov needed was career-enhancing results. Mikhail Leontiev, a journalist who knew both Luzhkov and Gusinsky at the time and later worked for Gusinsky, told me, “Luzhkov is a workaholic. He likes to have a result. Gusinsky is very energetic too. They complemented each other very well.”

Luzhkov desperately wanted to expand Moscow’s overburdened housing supply. Gusinsky and Luzhkov struck a deal: Luzhkov would give Gusinsky the rights to an old building, absolutely free. Gusinsky would then reconstruct the building and give half or even 75 percent of it back to the city. For Gusinsky, it was still enormously profitable to sell the remaining part, and for Luzhkov, who controlled the building permission slips but had no other resources at his disposal, it was an effortless way to gain valuable, freshly repaired housing and office space for the city. Later, the scheme became the backbone of Luzhkov’s method for rapidly increasing residential housing in Moscow; hundreds of thousands of square meters of housing space were built by contractors with similar deals.

Moscow in the early 1990s was just beginning to blossom into the money-soaked, anything-goes Russian boom town that it later became, where corruption was rife and there were no clear boundaries between private and public interests. To get something done in the city, you needed money and influence, guts and bribery, and the whole environment was one of secrecy and deception. Even the smallest city department blithely demanded some kind of bribe or payoff, and big projects were always accompanied by hefty corruption. This was the world in which Gusinsky made his early fortune.

Yuri Schekochikhin, a crusading investigative journalist and democratic reform politician, wrote despairingly that criminal structures were coming to power in the city, taking advantage of the triumph of the reformers in 1990 and 1991. In a lengthy article published in June 1992 in the newspaper Literaturnaya Gazeta, which he entitled simply “Fear,” Scheckochikhin said his sources were so fearful that they insisted on answering questions about Moscow corruption on hastily scribbled bits of paper, which they then burned. The criminal structures “have already divided among themselves the spheres of influence in Moscow,” he wrote. “They have already sold out to each other Moscow’s tasty morsels.”

“Who governs Moscow today?” he asked. “Those who took into their hands Moscow’s assets—its land, its buildings, and whole districts.” Schekochikhin said the real power in the city was reserved not for small businessmen who got started after Communism collapsed nor the “real criminal businesses” that took advantage of “chaos in the country,” but rather a shadowy “third group” close to the city government. He noted how Luzhkov had given a building to Gusinsky’s company, Most. “I have information that Most has bought up virtually for nothing over one hundred buildings in Moscow already and there is no law that can prevent it from doing this,” he wrote, saying that it was not the elected leaders who were running the city but the tycoons close to power. These were the “real masters of Moscow.”⁹

Gusinsky was getting into big money, far more than he had ever known before. Tens of millions of dollars were running through his hands. His life was a blur of long nights and weekends with never a day off.

Danger lurked where money accumulated. When he first started stamping out bracelets, Gusinsky came face-to-face with small-time gangsters. The criminal gangs that had existed below the surface of Soviet life—and under the heel of Soviet authority—became brazen during perestroika, just as the cooperatives blossomed. The bandits would be at the door as soon as they smelled money. At first, Gusinsky simply puffed up and tried to scare them off with the same volcanic anger he had once summoned up as a boy on the courtyard. “You would take something heavy in your hand and scare them away,” he recalled. But soon he was hiring his own security force to keep out the gangsters who demanded money for protection. Gusinsky knew he lived in a lawless vacuum and it was no use turning to the police. He had to make his own rules, since he was probably operating outside the Soviet-era laws that made entrepreneurship a crime. “We had two options,” he said, “to either pay the bandits or to keep the security service on the payroll.” Later, as his businesses grew, especially as he built an empire in construction and banking, Gusinsky kept the bandits at bay with his own thousand-man security service. Bobkov, the former high-ranking KGB general who had been in charge of persecuting dissidents, became a key member of Gusinsky’s corporate high command. Bobkov was described by Gusinsky as an analyst, but he was really concerned with all aspects of Gusinsky’s security. In Gusinsky’s empire, as in others, private in-house security services oversaw many different aspects of defending the company, from bodyguards to “analysis” of competitors to links with the state security organs. Gusinsky was a pioneer in creating these private services, which drew from elite Soviet military units and the KGB. For years, Gusinsky brushed off criticism of his security operation, saying it was necessary to keep out the criminals and guard his construction sites and bank branches. “Bandits, bandits, bandits!” he moaned when I asked him about the dangers he felt. When criticized for Bobkov’s presence in his organization, Gusinsky declared that he would “hire the Devil himself if he could provide us with security.”¹⁰

Gusinsky’s financial center, Most Bank, which began as little more than an accounting department, expanded with the patronage of Luzhkov. The bank snared the city’s main accounts in the early 1990s, a privileged status that allowed Gusinsky to play with municipal deposits, earning handsome profits for himself while he paid a small percentage back to the city. Gusinsky set up his offices in the same high-rise building where Luzhkov administered the city, next door to the Russian White House. Gusinsky’s own automatic teller machines were stationed in the hallways, and the elite in Moscow were using his Most Bank credit cards. As he famously put it at the time, it was possible to make money from thin air.

What did it take to survive? As he looked out from his high-rise office at the sprawling city below him, Gusinsky pondered his success. You had to have some kind of inner drive, some kind of inner fuel that forced people like him to want to be first. It was a very small group of people, willing to take risks, desperate to succeed.

In contrast to the gray, obedient Soviet-era press, brash new publications sprang up, such as the newspaper Kommersant, which became the bible of the early cooperative movement. The editor, Vladimir Yakovlev, recruited young reporters who were open-minded about a whole new language of commerce, capitalism, and money, a vocabulary that simply did not exist in the staid world of Soviet journalism. One of this generation was Mikhail Leontiev, who was a friend of the early cooperative businessmen. He got his start with the first issue of Kommersant in 1989. Leontiev later moved on to another prominent reform paper, Nezavisimaya Gazeta, which had been created by the democratic reformers who triumphed in Moscow city politics. The name meant “independent newspaper.” The office was spread out on an old factory floor, and it attracted many of the most talented journalists of the day with the idea that it would remain truly independent.

But Leontiev felt dissatisfied. The salaries at the newspaper, while larger than others, were still relatively paltry. And as time went by, the paper’s early romanticism was dulled somewhat by immutable laws of market economics: a newspaper that lost money inevitably faced commercial pressures. “We had to buy newsprint at market prices,” Leontiev told me. “There was very little advertising, naturally. And the main source of money was sponsors.” Leontiev began to quarrel with Vitaly Tretyakov, the editor of Nezavisimaya Gazeta, saying that “it was unfair to drag money from sponsors and consider ourselves independent.” Leontiev added, “It was mainly I who found sponsors. Not all of them were honest people, and we had to take it into account. We made them feel happy for giving us the money. This was the system.”¹²

Soon Leontiev and other journalists were thinking of leaving Nezavisimaya Gazeta and creating their own paper. Their idealism was tempered by the reality that they needed to find an owner, rather than beg for periodic injections of cash from publicity hungry sponsors. They knew that a Moscow banker would have his own desires and demands, but it seemed far more comfortable to have a single, known investor than to constantly search for, and pander to, outside sponsors. Leontiev met Gusinsky in the cooperative movement and introduced Gusinsky to his circle of friends. He quit Nezavisimaya Gazeta and began to press Gusinsky to bankroll a new paper. “You could become a media magnate yourself,” Leontiev told Gusinsky, and they talked about the project for months, starting in 1992, the first year of post-Soviet Russia.

Leontiev recalled that Gusinsky was entranced with the idea from the start. “He is a very ambitious person. I think that I hit the bull’s-eye. He may have thought about it before. I don’t claim I gave him this idea, but I was pressing on him to make the decision. The idea was to create a professional paper. At that time, bankers had a great deal of very cheap money. It didn’t cost anything. It was impossible to find a liquid use for it. At that time, everybody began to support different papers.”

Sergei Zverev, a bearded, sandy-haired, hardened political operative who worked for Gusinsky through much of the 1990s, recalled that Gusinsky had been upset by newspapers criticizing his business activities in the city.¹³ Gusinsky soon grasped that he could protect and defend himself and his public image. Leontiev agreed. “Volodya cared about this image very much,” and it would be enhanced as the publisher of a reputable paper.

Gusinsky told me he listened to Leontiev’s proposal from a different perspective. The truth was that he hardly understood the ideals and romantic notions of journalists like Leontiev and Dobrodeyev, people who saw their mission as leading society. “I did not perceive mass media as mass media. I could not even understand what it was,” Gusinsky told me. Rather, Gusinsky was searching for a tool for influence and power. He had played the game, like all the businessmen of his generation, by paying bribes when necessary, deploying his security service when called for, and flattering top politicians with his plans and ambitions. But Gusinsky said the pettiness of the influencepeddling game sometimes left him feeling empty; bribery was a dead end because ultimately anyone with enough money could pay a larger bribe. The increasingly costly and intense competition to buy influence seemed to be outrunning itself.

Bribery “is humiliating for me,” Gusinsky told me. “It means that either I am doing something that I cannot spell out in public—that I’m a rascal—or that money is being extorted from me by force. In which case, it means I am afraid, that’s why I buy him.”

“I gave bribes, no secret. To live in Russia, to live in the Soviet Union, and not to give bribes is absurd. But I was trying to do it as seldom as possible.” Gusinsky wondered, instead of endlessly competing to buy influence, was there a way to exert greater, more systematic power? And then it dawned on him. “A newspaper!”

“When I started the newspaper, I will say it directly as it was: it was nothing but an instrument of influence,” Gusinsky said. “One hundred percent—influence over officials and over society. I was creating the newspaper exactly for this aim.” He added, “If an official turned bad, I would attack him with a newspaper and tell the truth that he demanded money, extorted it, or accepted conditions dishonestly.”

Leontiev had no illusions. Gusinsky, he realized, was “trying to develop a system of promoting himself, of self-defense through the press.” Gusinsky hired professional lobbyists such as Zverev. “The main aim for Russian public relations was not about creating an opinion about a firm in society,” said Leontiev. “The society plays a secondary role here. The main thing is those who make decisions: the power structures, the Kremlin, and the cabinet. The aim was to get this or that signature.”

When Gusinsky’s newspaper Sevodnya appeared in February 1993, it was a respected liberal organ that soon attracted many of Moscow’s most talented journalists. It was born out of an inchoate and incompatible mix of the journalists’ ideals and Gusinsky’s desire for power and influence. “If anybody tells you that we clearly understood what we were doing, it was not so,” recalled Zverev. Originally, Gusinsky and two partners, one of whom was Smolensky, invested $6 million. But the partners dropped out; they could not take the heat when the newspaper came under fire or went on the offensive. Gusinsky acknowledged that it was often a difficult choice for him too, because there were so many people who could be wounded by a newspaper article. Despite the torrent of complaints and competing pressures, “I stayed on, deciding: let me try.”

Sevodnya had a small circulation, forty thousand copies, was entirely in Moscow, and ran little advertising, but it earned a niche among Moscow’s elite. Gusinsky ran the newspaper as a hobby. One day, Leontiev asked him to appoint a manager, since no one seemed to be running the paper. Gusinsky didn’t want to bother wasting a good manager on the newspaper. In other businesses, Gusinsky explained, a good manager could earn $100 million a year. “If I ask him to work with the paper, he will only be able to cover its losses, which are $6 million. For me, it is better if he earns the $100 million and I give $6 million to you, and keep $94 million!”

Despite Gusinsky’s ambivalence about the newspaper, it was the seed of what would become his grandest project. When Sevodnya began publishing, a group of disgruntled journalists at the state-run Ostankino television station took notice. Until then, no one had associated Gusinsky with the news media. But his new paper was smart, progressive, and privately owned. It was a signpost. They followed it.

Kiselyov had once been a Persian translator with the Soviet Army in Afghanistan and later taught Persian at the KGB academy. He was unhappy there and jumped at a chance to start a journalism career at Radio Moscow’s Persian-language service. Later he moved to television, and in the first days after the collapse of the Soviet Union in January 1992, he went on the air at the state-run Ostankino channel with a new weekly analytical program, Itogi, or summing up, which quickly became a success, driven by Kiselyov’s authoritative personal style.¹⁴

But as 1992 wore on and Yeltsin came under increasing fire from parliament, Kiselyov noticed that the Kremlin was hankering to impose more control on Ostankino to bolster Yeltsin’s position. Igor Malashenko, who had once worked for Gorbachev’s press service and later became director of Ostankino, abruptly resigned, complaining about growing political pressures. Through a series of ominous personnel shifts, Kiselyov felt a chill through the hallways—and feared that soon he would be asked to take direct orders from Yeltsin’s henchmen. “I sensed that the clouds were becoming darker and darker,” he recalled.¹⁵

Kiselyov knew that Gusinsky had invested big money in a daily newspaper and wondered whether he would consider bankrolling a television show. Kiselyov talked over the situation with Dobrodeyev, who was producer of Itogi, and suggested they approach Gusinsky together. Kiselyov telephoned an old friend, Zverev, who had begun working for Gusinsky’s companies.

Zverev was immediately enthusiastic. The call from Kiselyov came in the morning, and a meeting was arranged to take place later in the day. Kiselyov and Dobrodeyev took the elevator to the offices of Gusinsky’s companies, the Most Group, on the twenty-first floor of the high-rise building where Luzhkov’s offices were also located. Dobrodeyev recalled that the offices of the Most Group looked “extremely serious.”

In Zverev’s office, Kiselyov presented his idea. He wanted to find an independent financier for his program Itogi. They would leave state-run Ostankino. They wanted journalistic freedom and they wanted to make more money as well. “Journalists were living almost in poverty, including myself,” Kiselyov recalled. “We wanted to go independent because we wanted to produce what we really wanted to produce. We wanted to attract new, young, talented people, offer them good money for the job, and earn something for ourselves.”

Surprisingly, Zverev jumped out of his chair and hustled down to Gusinsky’s office. He returned a few minutes later and invited the astonished Kiselyov and Dobrodeyev to see Gusinsky—immediately.

They walked down the hallway to Gusinsky’s office, which, although it had a fabulous view, was furnished rather darkly. Gusinsky was no longer the skinny boy who slipped his friends into the Lenkom theater. He had put on some weight, and he wore aviatorstyle glasses and a rumpled white shirt and tie. But his face retained an extraordinary ability to reflect his boundless, ever-changing emotions. His eyebrows rose and fell, and his sentences burst out as soon as a thought occurred to him. When Kiselyov walked in, Gusinsky was enormously excited. He had never met Kiselyov before but admired the newsman greatly. Gusinsky was little known in public, but Kiselyov was a household name, the Russian Walter Cronkite.

“Imagine!” Gusinsky recalled. “Kiselyov in the flesh, at my office. How can this be? This is Kiselyov himself. As if we were sitting here and Margaret Thatcher walked through the door. God Almighty! It’s like this!”

Kiselyov and Dobrodeyev laid out their plan, asking Gusinsky if he could finance the production of Itogi. But Gusinsky’s brain was already in overdrive. Yes, he said immediately, he would finance their show, but why stop there? “This is a small project,” he said. “I think the big project is to start an independent television company, broadcasting twenty-four hours a day; that’s what I am really thinking of.”

The guests were speechless. No such independent television existed in the new Russia, only state television inherited from the Soviet Union. Kiselyov reminded Gusinsky that a channel would require a frequency to broadcast on—and they had none. But Gusinsky was way ahead of them. He quickly pointed out the sorry state of Channel 4, a government station that was a dumping ground for unwanted programming by the two main state channels, Ostankino and Russian Television, which had Channel 1 and Channel 2, respectively. Channel 4 was a disaster; no one watched it or cared about it, and Gusinsky was already plotting to lobby the Kremlin for a decree signed by President Boris Yeltsin giving him Channel 4.

Within a few hours, Kiselyov, Dobrodeyev, and Gusinsky were surrounded by lawyers and financial experts, and they were deep into planning their new project. Such were the times that dreams were unlimited and enthusiasm contagious. “Gusinsky was a very dynamic person; he moved very rapidly across his huge office,” Dobrodeyev recalled. “The whole situation was in keeping with the times in Russia, when things appeared out of nothing, and it happened very, very rapidly. Grandiose projects appeared. Banks appeared. A television company appeared. The negotiations weren’t long. We are going to create television. Money wasn’t a problem. Other resources, connections—not a problem! Back then, the will, the desire, the drive solved absolutely everything.”

Dobrodeyev recalled that he had no idea whether the new television channel could succeed commercially. “I think most people had great doubts about the commercial side of the matter,” he said. “It was a matter of status. The best years of very many newspapers, really good newspapers, of various television programs, were precisely those years when the owners treated them as if they were standing next to a masterpiece. It was like, ‘And I have a newspaper. I have a good newspaper.’”

Gusinsky approached Malashenko about being manager of the new channel. Malashenko recalled that Gusinsky treated his newspaper as just a hobby. “It was a status symbol.... So very quickly I realized that for him a TV company would be another—how to say it—architectural detail, an ornament on his façade.” Nonetheless, Malashenko agreed to become the new boss of the Gusinsky channel. Malashenko had his own reasons: he was humiliated when he resigned from Ostankino. He wanted to get back at his tormentors by starting a rival independent channel. “I wanted revenge,” he remembered.¹⁶

Gusinsky also had a score to settle. He had an ongoing personal feud with Mikhail Poltoranin, the press minister in Yeltsin’s government, whom Gusinsky regarded as an anti-Semite. Poltoranin had insulted Gusinsky at some point in recent years, and “I had a strong desire to have a fight with him,” Gusinsky recalled. “I even drove to his office twice especially to run into him and punch him in the nose.” Starting a television station outside the control of the state was sweet revenge, Gusinsky felt, but that was not all. “I just wanted to be number one,” he recalled of his early enthusiasm for television. “I think I started it because I had to be the first, because no one else had his own television channel, and I would have one.”

Gusinsky was also thinking about money. In the United States, someone had mentioned to him that a minute of advertising on television sold for millions of dollars. “I seized the meaning,” he recalled. “Here it is, the gold mine, yet again. I understood that it was 100 percent possible to make money.”

The first year was exhilarating. Malashenko hastily drew up a plan which predicted they would need $30 million for the first fifteen months, and Gusinsky found the money with other investors, including Smolensky. They bought cameras, equipment, and office space, and they kept a wary eye on the news. Russia was heading into a mammoth political crisis, a face-off between Yeltsin and hard-liners in parliament. They were not yet on the air, but building a new, private channel was exciting. “It was a great time,” Kiselyov recalled later. “We were doing something for ourselves, we had complete freedom, we traveled a lot, and we felt that we were doing something significant, probably the most significant project of our lives.” When Kiselyov and Dobrodeyev left Ostankino, they took dozens of the best television people with them to the new, private channel, including announcers Tatyana Mitkova and Mikhail Osokin.

The Gusinsky high command could not decide what to call the new channel. Malashenko suggested NTV for Novoe Televidenie, or New Television. The others winced. It sounded awful, they thought. Then someone said, how about Nezavisimoe Televidenie, or Independent Television. No, that didn’t work either. According to Malashenko, they decided to call it NTV and leave it at that. There was no official name, but Malashenko thought up a slogan. In Soviet times, he had spent years studying the United States and was fond of an old Strategic Air Command slogan: “Peace Is Our Profession.” He adapted it to NTV: “News Is Our Profession.”

NTV went on the air October 10, 1993, a week after the confrontation between Yeltsin and parliament turned violent. At first, the nascent station had only an hour a day of programming on a weak St. Petersburg channel. In the midst of Yeltsin’s war with parliament, which was unfolding virtually across the street from Gusinsky’s offices in the mayor’s building, Malashenko sat in his car, a battered old Moskvich, and used his mobile telephone to try and make appointments in Cannes, where the television film and miniseries market was opening. As televisions screens flickered around the globe with the scenes of tanks bombarding the White House, Malashenko was trying to shout over the din, persuading people that a new television station in Russia wanted to buy their films. He then flew to Cannes and frantically tried to buy more programming. “People didn’t want to sell,” he recalled. “It was incredible to believe that a guy would come from Moscow, where parliament is being shelled, to buy movies.”

For six months, Zverev lobbied for a decree from the Kremlin that would give NTV the cherished Channel 4 airtime. Zverev argued that an independent channel would be a valuable source of support for Yeltsin, but he was lobbying for an idea that no one could grasp. “Nobody understood what independent, private television would be like,” Zverev recalled of his difficult and exhausting effort to win the presidential decree. Someone was blocking it, and Zverev could not figure out who. Once, by chance, he took Kiselyov to see Yeltsin’s tennis coach, Shamil Tarpischev, a member of the president’s inner circle, who had an office in the Kremlin. Zverev discovered the source of his troubles: Tarpischev was blocking the decree because he wanted Channel 4 to be a sports channel. Zverev persuaded him that NTV would broadcast sports, and his resistance ended.¹⁷ Yeltsin signed the decree in December, and in January, NTV went on the air six hours a day, starting at 6 P.M.

Malashenko was still harried: he had managed to buy only two weeks’ worth of programming. As tapes arrived in Russia, they were immediately dubbed and thrown on the air. It was chaos, but they were having the time of their lives.

The highest aspirations of the new television pioneers was to exist beyond the grip of the state, to produce what they called “normal” television. One of them had suggested half-jokingly that NTV should stand for “Normalnoye Televidenie.” Gusinsky loved movies, especially those from the West, and dreamed simply of a television channel broadcasting movies and news bulletins.

Gusinsky had started his newspaper with the idea of broadening his influence. Later he would relentlessly use his television channel as a political tool as well, and it would lead to endless troubles. But at the outset, the participants told me, they had not fully understood the risks. They had not even dreamed, back then, of turning their channel against Yeltsin, a friend and guarantor of the free press, whose own signature on the decree had given them the right to broadcast.

Gusinsky was now more than just a Moscow businessman who had connections. With NTV television and the newspaper Sevodnya, he had become a pillar of the new Russia.

His rivals had already begun plotting how to tear him down.