Turover refused to disclose the names of the security officials in the group plotting to remove Yeltsin from power. But it was clear that they were angling to replace him with Primakov, who as a former spymaster was one of their number. From the start, the group was looking for evidence directly linking Yeltsin to financial corruption; for something that would taint the president irredeemably, overcoming the widespread and age-old Russian view that the country’s problems were due to the poor decisions and corruption of the courtiers, the boyars surrounding the tsar, and not the president himself. ‘Because he’d been praised as the great democrat, no one knew how to get rid of him,’ said Turover. ‘The only clear path was a legal path. It had to be clear to the people that it wasn’t the case that the tsar was good and without fault, while the boyars were the bad guys. When the president is a thief himself, then everything is clear. We needed to have something concrete.’[6]
Turover was the informant who found and then disclosed the material that formed the basis of the case. From his perch overseeing clandestine payments of Soviet-era strategic debt, he had been gathering and sifting kompromat – compromising material – on the inner financing of the Yeltsin regime for years, in the hope that the right moment would come. As a close friend of the former head of the KGB’s black-ops department for financing illicit operations abroad, he’d been a member of the KGB security establishment since the eighties. Turover was the same wisecracking, tough-talking foreign-intelligence officer who had helped Vladimir Putin set up the oil-for-food scheme in St Petersburg in the early nineties – the scheme that created a strategic slush fund for Putin and his allies from the KGB. He’d helped set up other clandestine schemes that he said were to ensure the payment of the strategic debts of the Soviet Union to the so-called ‘friendly firms’, but which were almost certainly also slush funds for the KGB.
Documents show that many of these schemes had run through Banco del Gottardo, a small bank hidden away on the outskirts of Lugano, at which Turover was appointed as an adviser.[7] Banco del Gottardo was chosen, Turover said, because ‘We needed a very small bank with a very dirty reputation.’[8] It had been the overseas arm of Banco Ambrosiano, the Vatican-linked bank that had collapsed in scandal in the eighties, with its chairman Roberto Calvi found dead, hanging from London’s Blackfriars Bridge. Now numerous Russian black-cash financing schemes were run through its accounts, including a web of barter and commodities-export schemes through which billions of dollars had been siphoned.
It was another sign that for all Yeltsin’s attempts at market reform, for all his efforts to build a new Russia out of the rubble of the Soviet collapse, the old ways of the komitetchiki, the KGB men, still prevailed behind the scenes. Although Yeltsin had tried to man the ranks of his government with so-called ‘young reformers’ who sought to liberalise the Russian economy from the control of the state and run the country along the transparent lines dictated by the institutions of the West, the rules of business were still skewed in favour of insiders close to the state, and to the foreign-intelligence community. It was through these schemes that the Yeltsin Family had been compromised, and it was all the more telling that the blow to the freedoms Yeltsin had sought to bring to Russia came from a member of the KGB foreign-intelligence establishment. Yeltsin had been unable to pull either his country or his own family out of the practices of the past.
Banco del Gottardo hosted the accounts of Mabetex, the obscure Swiss company which handled the Kremlin renovation contracts, and this was where the links to Yeltsin and his family appeared. When he’d first uncovered these ties, Turover said he’d initially objected to handling any cash flow related to Yeltsin or his family. ‘But then I stopped, because I decided that all this could come in handy for the future.’[9]
Among the Banco del Gottardo accounts he oversaw, Turover had discovered credit cards for Yeltsin and his family. They’d been issued by the founder of Mabetex, a pugnacious Kosovar Albanian named Behdjet Pacolli, who’d worked in the netherworld of financing and construction for the Soviet regime since the seventies.[10] Pacolli, once an aide to the Yugoslav Communist Party boss, had long been involved in black-cash financing schemes through the sale to the Soviet regime of embargoed dual-use military goods, said Turover.[11] On the face of it, the credit cards looked like an out and out bribe by Pacolli, paid directly into the pockets of Yeltsin and his family, while the fact that they were paid out of a foreign bank account was a direct breach of a law banning Russian officials from holding such accounts. Yeltsin’s daughter Tatyana had spent the most, running up bills worth $200,000 to $300,000 every year.[12] A further $1 million had apparently been spent by Yeltsin during an official visit to Budapest.[13]
By the standards of today’s multi-billion-dollar corruption scandals, the sums are almost laughable. But in those days the equation was absolutely different. The balance of power had already fast been shifting away from the Kremlin to Primakov’s White House. The old guard and the Communists were on the rise. In the aftermath of the financial crash, Yeltsin’s popularity ratings were at an all-time low of 4 per cent. The Communist Party, which still dominated the Duma, scheduled impeachment hearings to put Yeltsin on trial for everything they deemed as sins of his rollercoaster rule: the disastrous war in Chechnya that had taken the lives of so many Russian soldiers, the dissolution of the Soviet Union, and what they claimed was the ‘genocide’ of the Russian population – the market reforms that had led to plummeting living standards and, they believed, to early deaths for millions of Russians. Revelations about the credit cards were intended to be the final straw. ‘Primakov was meant to stand up in the Federation Council and tell the senators the president was a thief,’ said Turover.[14]
The investigation also threatened to draw uncomfortably close to the much bigger sums that had washed through an oil exporter called International Economic Cooperation, or MES, that held accounts in Banco del Gottardo and was inextricably linked with the Kremlin reconstruction contract. MES had been granted contracts from the Russian government to sell more than 8 per cent of the country’s total oil and oil-product exports, its annual turnover nearing $2 billion in 1995.[15] It had been active since 1993, when old-guard members of the Yeltsin government had sought to take back control of the oil trade, reinstating a system of special exporters, known as spetsexportery, through which all oil companies had to sell their oil.[16] It was an insider game that lined the pockets of a small and murky group of traders mostly close to the security services in the Yeltsin administration. MES had initially been created as a means of financing the restoration of the Russian Orthodox Church after decades of destruction and oppression under Soviet rule. But the billions of dollars in crude it was granted by the Russian government, export tariff-free, far surpassed any amount ever spent on the restoration of the Church.
MES was like a souped-up version of the slush funds created through Putin’s oil-for-food scheme. None of its operations were transparent, and the lines between what was strategic and what could be spent on personal needs and bribes had become conveniently blurred. Mostly, it generated black cash used to make sure politics went the way of a faction of security men in the Kremlin supporting Yeltsin. ‘The authorities always needed money. It would seem there is the state budget. But if you need finances to ensure a vote in parliament goes a certain way, you’re not going to get the cash from the state budget,’ Skuratov later told me.[17] MES’s activities were closely tied to Mabetex and the Kremlin reconstruction project. When Pavel Borodin, the Kremlin property department chief, initially asked the government for funding for the Kremlin reconstruction project, he was told the budget had no cash.[18] So he asked for oil contracts to be sold through MES to finance it instead. But the decrees issuing the oil quotas for MES – first for two million tonnes, and then for another 4.5 million tonnes – were all classified.[19] No accounting of how the proceeds were spent was ever published. And then, as if the oil sales through MES had never been granted, the government made an official announcement that it was going to finance the Kremlin reconstruction by raising $312 million in international loans.[20] MES looked to have got away with as much as $1.3 billion in proceeds from the oil sales, and no one could explain where the money had gone.[21]
In the middle of it all was Sergei Pugachev, the Kremlin banker who would later flee to London and then Paris. A tall, gregarious expert in the