An even more telltale document was found in Nikolai Kruchina’s apartment. When investigators arrived after he had plunged to his death, they found a file lying on his desk. Inside were documents that pointed to a potentially vast network of proxies managing funds for the regime.[27] One of the documents they reportedly found had spaces left blank for the name, Party number and signature of the Party member signing up to become a trusted proxy, a doverennoye litso, or custodian of the Party’s funds and property.
‘I _________ CPSU member since _____, Party number _____, with the following confirm my conscious and voluntary decision to become a trusted custodian of the Party and to carry out the tasks set for me by the Party at any post in any situation, without disclosing my membership of the institute of trusted custodians.
I pledge to preserve and carefully deploy in the interests of the Party the financial and material resources entrusted to me, and I guarantee the return of these resources at the first demand. Everything I earn as a result of economic activities with the Party’s funds I recognise as the Party’s property, and guarantee its transfer at any time and any place.
I pledge to observe the strict confidentiality of this information, and to carry out the orders of the Party, given to me by the individuals authorised to do so.
Signature of CPSU member _________________
Signature of the person taking on the duty _______________’[28]
The prosecutors scrambled to unravel what this document might mean. Few of the Party leadership and other members of the Party elite they questioned would reveal anything. Most claimed that they had been unaware of any such schemes. But the prosecutors’ team struck lucky when they came across Leonid Veselovsky, a former colonel in the foreign-intelligence directorate of the KGB. Fearing a wave of repressions, Veselovsky spoke openly of how he’d been one of a number of top KGB foreign-intelligence operatives drafted in to help manage and hide the Party’s property and wealth.[29] The foreign-intelligence officers were brought in for their knowledge of how Western financial systems worked. They reported to Kruchina, the property department chief, as well as to Vladimir Kryuchkov, the KGB chief, and Filip Bobkov, then the first deputy head of the KGB, and Vladimir Ivashko, the treasurer of the Central Committee.
Veselovsky, a specialist in international economics, had been transferred from his post in Portugal in November 1990 to work on the plan to create an ‘invisible economy’ for the Party’s wealth. It was he who proposed the system of ‘trusted custodians’, or doverenniye litsa, who would hold and manage funds on the Party’s behalf. He’d prepared a series of notes for Kruchina with proposals for disguising the Party funds to protect them from confiscation. These included investing them in charitable or social funds, or anonymously in stocks and shares. The process was to be led by the KGB.
‘On the one hand this will ensure a stable income independent of the future position of the Party. And on the other, these shares can be sold at any moment through stock exchanges and then transferred to other spheres to disguise the Party’s participation while retaining control,’ he wrote. ‘In order to conduct such measures there needs to be an urgent selection of trusted custodians who can carry out separate points of the programme. It could be possible to create a system of secret Party members who will ensure the Party’s existence under any conditions of these extreme times.’[30]
In another note, he suggested the creation of a network of companies and joint ventures, including brokerages and trading firms, in tax havens such as Switzerland, where the shareholders would be the ‘trusted custodians’.[31]
Just as the Stasi had begun preparing, transferring funds into a network of front companies before the fall, the KGB was readying the Party for regime change, fully aware that its monopoly on power was becoming ever more precarious. To some operatives of the foreign-intelligence network drafted in to work on the scheme, when they received the orders from Kryuchkov to start creating private companies it was a clear signal that the game was up for the Communist regime. ‘As soon as this happened, I understood it was the end,’ said Yury Shvets, a senior officer in the KGB’s Washington station until 1987.[32]
But when, after the botched coup attempt of August 1991, the Soviet Communist Party was suddenly no more, it was not at all clear what had happened to the structures created to preserve its wealth, or who was in charge of them. For the Russian prosecutors investigating, the documents left behind in the archives and in Kruchina’s flat provided only the faint outlines of the network. The figures and cogs in the schemes, the trusted proxies, the doverenniye litsa managing the funds, the network of companies, joint ventures and brokerages were hidden.[33] When later questioned about the documents, former members of the Politburo insisted that the collapse had come so swiftly and unexpectedly that no one had had time to implement Ivashko’s plans for the ‘invisible economy’.[34] But the prosecutors found plenty of signs that the project had been at least partially activated, and was long under way – and that it appeared to be led by the foreign-intelligence arm of the KGB.
Veselovsky’s career was just one indication. Two weeks before the August coup attempt he had resigned his position and headed for Switzerland, where he took up a post at a trading firm named Seabeco that was the epitome of a KGB-backed ‘friendly firm’,[35] and that had sold vast amounts of raw materials from the Soviet Union. It was headed by a Soviet émigré named Boris Birshtein, who in the seventies had gone first to Israel and then to Canada, where he set up a string of joint ventures, including one with a leading light of Soviet foreign intelligence.[36] The KGB appeared to have its fingerprints all over Seabeco’s rise. ‘None of this could have happened without the patronage of the KGB,’ said Shvets.
When questioned, former KGB chief Vladimir Kryuchkov admitted that the trading firm had been created as a channel for the Communist Party’s funds. But he insisted again that the plans had never been implemented – there’d been no time before the collapse of the regime.[37] But telltale signs emerged of Seabeco’s continued association with the KGB. A taped telephone conversation between a Seabeco associate and a Russian foreign-intelligence chief was leaked, in which the two men openly discussed the trading network they’d set up.[38] This Seabeco associate, Dmitry Yakubovsky, went public with claims that Seabeco had received tens of millions of dollars to finance KGB operations in Europe.[39]
Any remaining chance the prosecutors might have of following the money trail, however, seemed to evaporate completely when Veselovsky disappeared from his post in Switzerland without a trace. Without adequate funding and only a scanty paper trail, the prosecutors soon ran into a brick wall. Inside Russia, they’d been able to trace the transfer of billions of roubles from Kruchina’s property department to more than a hundred Party firms and commercial banks.[40] But their attempts to recover any of it were simply stonewalled.[41]
The new Yeltsin government seemed to have little interest in finding any of the funds amid the chaos of the Soviet collapse. For one brief moment that seemed to change, when Yegor Gaidar, Yeltsin’s round-faced new reformist prime minister, announced with great fanfare that the government had hired Kroll, a top international investigations firm, to hunt down the Party cash. But, a $1.5 million contract and a year scouring the globe for the missing Party funds later, Kroll appeared to have made even less progress than the prosecutors had. Apparently, there was nothing to report. ‘They didn’t find anything,’ said Pyotr Aven, the government minister whose initiative it was to bring in Kroll in the first place. ‘They found nothing more than the accounts of a handful of top-level bureaucrats. They had no more than half a million dollars on the accounts.’[42]
The problem was, it seemed, that the government did not want the funds to be found. The reason Kroll came back largely empty-handed was that it received no assistance from the Russian government at all. The firm had been blocked from working with the Russian prosecutors. ‘The Russian government was not interested in us finding anything, so we did not,’ said Tommy Helsby, a former Kroll chairman who worked on the probe.[43] ‘All the government wanted to do was use our name in a press conference.’ It only wanted to give the impression