SHVARTSMAN’S DESCRIPTION OF SILOVIKI BUSINESS PRACTICES – TRUTH OR FICTION?

The interview that Finansgroup head Oleg Shvartsman gave to Kommersant, which the newspaper published in its November 30 issue, has elicited a storm of reaction – almost eclipsing the December 2 parliamentary elections. Shvartsman claimed in the interview that his $3.2 billion fund management company manages the assets of “certain political figures,” some through the use of offshore companies, and maintains relations with members of the presidential administration and the Federal Security Service (FSB) and Foreign Intelligence Service (SVR). Shvartsman also said his company, with the backing of the state, is involved in what he called a “velvet re-privatization” of assets first privatized in the 1990s. Shvartsman claimed that this task – which, he said, employs “voluntary-coercive instruments” and veterans of the Interior Ministry’s anti-organized crime and anti-economic crime departments – was assigned to him by “the power bloc [silovy blok]” headed by deputy Kremlin chief of staff Igor Sechin (see EDM, November 30).

In the wake of the interview, the European Bank for Reconstruction and Development (EBRD), the state Russian Venture Company, and Israel’s Tamir Fishman Group said they would not go ahead with a proposed venture fund that was to be managed by FinansTrust, a subsidiary of Finansgroup. FinansTrust won a tender organized by the Economic Development and Trade Ministry in May to manage the Tamir Fishman Russian Venture Capital Fund. The EBRD and its Russian and Israeli partners said the decision to pull out of the fund followed “statements by a minority shareholder in the fund’s management company” – a reference to Shvartsman’s interview (Reuters, December 4). The CEO of Tamir Fishman, Eldad Tamir, told the Moscow Times his company did not want “to be engaged in any way, form, or sort, in any part of politics.” Former Soviet deputy defense minister Valentin Varennikov, whom Shvartsman claimed was his channel to Sechin, denied Shvartsman’s claims and told Izvestiya that Shvartsman was a “rogue of the highest order.” Kremlin spokesman Dmitry Peskov, meanwhile, dismissed the article as a “fake” (Moscow Times, December 5).

Shvartsman, for his part, said in an interview with Ekho Moskvy radio on December 4 that Kommersant had edited the interview in a “literary” manner, resulting in a “skewed” version of what he had told the newspaper. Kommersant replied that it had run the edited version of the interview by Shvartsman prior to publication (Kommersant, December 5). The newspaper also announced that in order to defend its reputation, it plans to sue Shvartsman.

In the wake of Oleg Shvartsman’s interview with Kommersant, there has been much discussion about whether it was connected to an internecine power struggle reportedly going on within the siloviki camp, with some observers suggesting the interview was part of an effort to discredit Sechin by a rival group that includes Federal Narcotics Control Service (FSKN) head Viktor Cherkesov and Presidential Security Service chief Viktor Zolotov (EDM, November 2, 5).

However, the Sturm und Drang that has followed the interview’s publication has somewhat obscured the question of whether Shvartsman’s depiction of the way the Kremlin siloviki do business is accurate or not. A number of Russian observers have indicated that Shvartsman’s description is indeed accurate.

The day after Kommersant published the interview, Mikhail Delyagin, an economist and the director of Moscow’s Institute of Globalization Problems, told Russky Zhurnal that there can be no doubt that Shvartsman’s description “represents the facts” (Russ.ru, December 1). Likewise, Anatoly Chubais, the architect of Russia’s controversial 1990s privatization scheme who currently heads United Energy Systems (UES), Russia’s electricity monopoly, said: “Intentionally or not, Mr. Shvartsman told the truth. Truth about unavoidable diseases of such social and political systems as ‘sovereign democracy’” (Reuters, December 4). Oleg Kiselyov, a member of the board of directors of the Russian Union of Industrialists and Entrepreneurs, the lobbying group for Russian big business, said of the Shvartsman interview: “My impression of the publication is two-fold. Yes, it is disgusting, nasty, revolting, but it’s the truth. And I cannot but be happy that it was spoken about publicly” (Izbrannoe.ru, November 30).