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Fair exchange is no robbery

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Marina Salye, who died in 2012, was the author of the 1992 Salye report revealing corruption by Vladimir Putin and his officials in St Petersburg City Hall. What happened to that report? 

Anastasia Kirilenko
22 April 2013

The main characteristic of Russian journalism, which both mirrors the public mood and distinguishes it from Western mentality, is fatalism. Russian journalists regularly conclude that the perpetrators of high-profile crimes, financial abuses or murders will never be found and columns with the message that the truth will never emerge are a more popular and better paid genre than investigative journalism. 

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Marina Salye's 1992 inquiry into the 'oil for food' programme and other initiatives of Vladimir Putin, then chair of St Petersburg's Foreign Relations Committee, found that the shady dealings resulted in losses of 100 million USD to the city. Photo: RIA Novosti/Alexandr Makarov

This is a convenient philosophy in a world where the murder of journalists or legal proceedings against them, are a reality. Many media outlets no longer have an investigations section, which makes that kind of work quite difficult. This is not team work, as it should be, but the enthusiasm of dedicated individuals, who are regarded as out of their minds. Investigative journalists are not given much encouragement.

The work of Marina Salye shows how important investigative journalism can be in Russia. Her report was written some time ago, in 1992, but it will remain topical until at least 2018 because the subject of the enquiry, Vladimir Putin, is the elected omni-president of Russia until that time. 

The wild 90s

At the beginning of the 1990s, during the transition to a market economy, Russia had a food shortage crisis and St Petersburg was no exception. On 12 June 1991 Anatoly Sobchak was elected mayor of St Petersburg and he appointed Vladimir Putin to chair his Foreign Relations Committee.

'In 1992-3 a municipal casino was opened; it was controlled by Putin, and its revenues were supposed to be going to ‘poor people’.'

The solutions dreamed up by the Mayor’s Office, with the personal involvement of Vladimir Putin, to solve the city’s problems were very original. There was, for instance, the idea of prospecting for ‘red mercury’, a non-existent substance, which according to Putin was to be sold to the West with the resulting revenues being used to address the city’s food problems. In 1992-3 a municipal casino was opened; it was controlled by Putin, and its revenues were supposed to be going to ‘poor people’. The problem was, as Putin subsequently admitted, that the casino made illegal payments in cash, so the mayor’s office was powerless to do anything, and couldn’t collect the taxes. So the poor and the hungry once more remained just that. This is not idle chatter, but simply what could be gleaned from the official publications and documents, though the phrase current at the time ‘gangland St Petersburg’ is a very precise description of what was going on there. What was at issue was the role of Putin and his officials.

Oil for food

From 1990 the programme ‘oil for food’ i.e. bartering natural resources in return for food products was being discussed by local politicians. At that time Anatoly Chubais was working for the city authorities and the contents of a letter to him are interesting: apparently, the ‘bronze casting has been dispatched abroad, but the bananas, which are due in exchange, have not yet arrived.’ Chubais supported the idea of barter from an ideological viewpoint, but then he went to Moscow and his activities disappear from view.

At the end of 1991 and beginning of 1992, Vladimir Putin became involved in  food barter: he managed to get Prime Minister Yegor Gaidar to grant him the exclusive right to issue so-called export licences (under the Soviet system foreign trade was very tightly controlled), which enabled him to export hundreds of tonnes of oil products and rare metals.

Putin only received such permission after the customs had held up the first vessel ‘Cosmonaut Vladimir Komarov’ with its load, and bearing papers issued personally by Putin.  It was on 15 January 1991. A month later the problem had been solved, Gaidar’s back-dated permission received and the process got under way.

According to one of the high-ranking witnesses, part of the proceeds stayed in accounts in the Austrian bank Kredinanstalt. Putin liked skiing in Austria at the time.

Putin on the carpet

Marina Salye led an anti-corruption enquiry, as a result of which she recommended to the mayor, Anatoly Sobchak, that he should dismiss Vladimir Putin.  She also submitted information to the office of the Prosecutor General, and to the Presidential Administration of Boris Yeltsin. Her investigations showed that Putin and his deputy had signed documents allowing the export of hundreds of thousands of tonnes of natural resources free, gratis and for nothing. Financial losses, according to conservative estimates, amounted to some 100 million USD (a huge sum at that time).

Salye's 'investigations showed that Putin and his deputy had signed documents allowing the export of hundreds of thousands of tonnes of natural resources free, gratis and for nothing.'

Salye’s heroic efforts managed to get the matter investigated, though not publicly: the Chief Government Inspectorate carried out some checks for the Presidential Administration. Witnesses remember that Putin was very nervous when a team of more than 30 inspectors turned up, as he was when summoned to Moscow by Yeltsin, for a carpeting. These days Yuri Boldyrev, Chief Government Inspector at the time, recommends that this affair should be consigned to oblivion. Not hard to guess why. During the course of his investigation he probably realised what Putin was capable of. But he did let slip that ‘some fairly serious misdemeanours’ had been discovered. He also hinted that both Vladimir Putin and his long-time friend Aleksey Kudrin had had a chance to destroy the documents turned up during the checks. Unsurprisingly, when Radio Liberty later became involved, the response they received from the Presidential Administration was that ‘these documents are no longer kept in the archive.’

Putin’s behaviour while the checks were being carried out was very different from his account to the St Petersburg Legislative Assembly the year before. At that time the gist of his response was ‘Yes, I’m guilty, but in Russia everyone’s on the take.’ Be that as it may, the affair was hushed up.  Otherwise Putin’s career clearly would not have been quite so brilliant.  Or could it be that his previous career in the KGB made it all possible? Putin was initially considered a ‘dummy candidate’ who could be controlled.

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President Vladimir Putin at a ceremony unveiling a plaque honouring former mayor of St Petersburg Anatoly Sobchak in 2002. In spite of Marina Salye's recommendation that Putin be sacked for corruption, Sobchak stood by his protege. Photo (cc) kremlin.ru 

In 2000, when Boris Yeltsin appointed Putin (at the time Prime Minister) as his heir, Marina Salye decided to remind society of her report. She gave interviews to the press and published an article ‘Putin, president of a corrupt oligarchy’. But soon after that, when Putin was elected president, Salye abruptly moved to a remote village deep in the Pskov countryside, cutting off all contact with journalists.

For 10 years she lived an isolated life, but in 2010 she agreed to be interviewed by me for Radio Liberty. We then published the most revealing documents of the Salye report.

Timchenko

Documents from the inspection may have been destroyed, but we still have the Salye report. The export licences, the very existence of which is denied outright by Putin, grant permission for the export of oil and bear the name of the enterprise Kirishineftekhimexport, where Putin’s friend Gennady Timchenko was working at the time. Today he is an oligarch and one of the richest Russians, with dual citizenship, the co-owner of the biggest oil trader, Gunvor. His previous enterprise was exporting oil that had been refined at Kirishi Refinery near Petersburg. Oil was supplied by Surgutneftegaz, in the far north, who, in turn, received their supplies from Kogalym in the Khanty-Mansiisk district of Siberia. The mayor of this northern town was Sergey Sobyanin, who subsequently rose with breathtaking speed to attain the post of Mayor of Moscow in 2010.

'In 2000, when Boris Yeltsin appointed Putin (at the time Prime Minister) as his heir, Marina Salye decided to remind society of her report. She gave interviews to the press and published an article ‘Putin, president of a corrupt oligarchy’.' 

The information from Radio Liberty meant that Timchenko had to defend himself in an interview with other media outlets – had he, or had he not, been part of the infamous barter. He currently lives in Switzerland and the fact that he gave an interview at all was a considerable success, because before that he had categorically refused all requests. He said that things were not as described, but the documents don’t bear out what he says. In today’s Russia there is no government body that would put questions to Timchenko (or Putin) based on those documents.

At the end of 2011 Putin personally criticised Radio Liberty in one of his interviews. At approximately the same time he gave his first ever (somewhat hesitant) explanation of the friendship between him and Gennady Timchenko in response to a question from the writer Zakhar Prilepin.

Radio Liberty

At the beginning of 2012 Radio Liberty received two warnings from the government (a media outlet can be closed down after a third warning). The station’s new director, the well-known journalist Masha Gessen, had a meeting with Putin, then announced that content would have to be ‘normalised’ and in future the topics should be less controversial.

'Some people I interviewed, Salye and other deputies from the Legislative Assembly, are no longer afraid. Other witnesses are still nervous.' 

Dmitry Peskov, Putin’s press secretary, has stated that the Salye report was ‘old hat’ and ‘had on more than one occasion been discredited’ during the course of the ‘many checks.’

What I remember most of all, however, is the comment from a blogger to the effect that ‘the Putin regime is on the skids if they’ve started talking about Salye.’  There were thousands of comments and millions of hits on the interview. It’s one thing to know that Putin is a bad democrat, but quite another to start thinking about what he’s capable of. Perhaps the blogger had confused the reason for the investigation? I for one knew that the regime had nothing to do with it.  In 2008 when I first telephoned Salye, it was not on the skids, and nor was it in 2010. Russian journalists gave some column space to the question ‘to whose advantage would it be to start dragging this up again now?’ and someone telephoned me at Radio Liberty to say it looked like an order from higher up. There was a considerable fuss with the foreign press trying to find Salye.

A risky business

Some people I interviewed, Salye and other deputies from the Legislative Assembly, are no longer afraid. Other witnesses are still nervous. Yury Boldyrev tried to persuade me that no one is interested in Salye so there was no point in discussing the matter.  Another, talking through clenched teeth, hinted that the deaths of journalists and members of the opposition had not been due to natural causes.  That was the Petersburg representative of the Presidential Administration, Fyodor Shkrudnev. Others didn’t say everything they knew, of course, but hinted mysteriously that the early pages of the Putin biography were still awaiting serious study.

We’re all human and it’s quite natural to be afraid. But justiying fear by saying that we’ll never get to the real truth or that this truth is uninteresting is doubly pusillanimous and cowardly.  Russians must shake off their fatalism and say to themselves that we have a duty to do something.  This is true of journalists too.

PS.

openDemocracy Russia will be running two roundtables at the Perugia Journalism Festival in Perugia, Italy on 26/27 April. For more details, visit: journalismfestival.com. 

Anastasia Kirilenko will be taking part in the panel discussion on Russia’s Investigative journalism.


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