Treasure Islands - Nicholas Shaxson [84]
Gaydamak had left the Soviet Union as a twenty-year-old in 1972, moving first to Israel, then to France, where he built up a translation business, mostly servicing Soviet trade delegations. “‘Translator’ means go-between,” he explained. “If you are active in electronics, your position in the business world is usually with people in electronics. If you are a banker, you have relationships with bankers . . . but when you are a translator—a go-between—you know everybody.”
In those early post-Soviet days Angola’s leaders still looked to Russia as their big-power patron, but they had lost their bearings in a fast-changing Moscow. “I began to be an intermediary,” he explained. “Russia was changing so quickly, everything was new: you should know where to go, how to go, how to organize. I was the so-called organizer of everything.” Gaydamak became Angola’s trusted man in Moscow. He knew that the big money lies in the “elsewhere” zone between jurisdictions, and in this context he gave me what must be one of the most “offshore” quotes of all time.
“In the so-called market economies, with all the regulations, the taxation, the legislation about working conditions, there is no way to make money,” he said. “It is only in countries like Russia, during the period of redistribution of wealth—and it is not yet finished—when you can get a result. So that is Russian money. Russian money is clean money, explainable money. How can you make $50 million in France today? How? Explain to me!”
In other words, because Russian and international law is so full of holes, the money “redistributed” to a small oligarchy must be clean.
Some have compared the vast upward redistribution of wealth in Russia after the fall of the Soviet Union to the era of the robber barons in the United States in the nineteenth century. But there is a crucial difference. The U.S. robber barons didn’t have a huge offshore network in which to hide their money. In spite of their many abuses, they concentrated on domestic investment. While they fleeced unwary investors and subverted the political process, they also built the country’s industrial prosperity. In time, the state was able to rein in their worst excesses.
But in the case of countries like Angola and Russia, the money simply disappeared offshore forever. African governments have grown weaker and more dependent on aid from the very states that are also strengthening the offshore system. It was Africa’s curse for her countries to gain independence at precisely the time that the purpose-built offshore warehouse for leaders’ loot properly started to emerge. For many of these countries, “independence” really meant independence for African rulers from bothersome societies. In a sense independence was a pyrrhic victory: The colonial powers departed but quietly left the financial mechanisms for exploitation in place.
After the Cold War, Angola was in debt to Russia for about $6 billion, and in 1996 Gaydamak inserted himself into a deal to restructure the debt. The debt was shaved down to $1.5 billion and sliced into thirty-one promissory notes that Angola would pay back in oil, via a private company called Abalone, set up by Gaydamak and his business partner Pierre Falcone, with a UBS account in Geneva.18 UBS was uncomfortable about the arrangements. “Any possible mention of one of the representatives of one or other of the parties,” an internal UBS memo said, “in a newspaper article, even if a posteriori this is judged to be unfounded or indeed libellous, would not prevent, in the first instance, a Swiss or particularly Genevan judge taking an interest in the people mentioned.”19 But the deal went ahead.
Unfortunately for Gaydamak, a Swiss judge intervened in February 2001, after Angola had paid off just over half the promissory notes. The judge had found vast, mysterious flows of money out of Abalone, including over $60 million to accounts in