Putin’s People. Catherine Belton

provided financing to Timchenko.[82]

      All the while, Putin assisted, issuing the licences allowing Timchenko to use the oil-storage facilities at Traber’s sea port, and helping facilitate supply arrangements between Timchenko’s Kirishineftekhimexport and Kumarin’s PTK.[83] Kumarin, meanwhile, joined the board of both outfits’ supplier, the Kirishi oil refinery.[84]

      ‘It was all very well organised,’ said Maxim Freidzon, co-owner of another oil trader in the city. ‘Putin and his guys ensured support from City Hall. Because of his KGB past, he could help with the logistical organisation. It was all one team.’[85]

      The alliance that was forged then took KGB traditions from before the Soviet collapse and put them to a still more commercial use. ‘As far as I remember, the symbiosis between the bandits and the KGB had always existed,’ said Freidzon. ‘The KGB had worked with the bandits in the currency markets and in prostitution rings. They were sources of information. It was a natural symbiosis: neither of them had any moral limits. The bandits were like the infantry for them. They would take all the risks.’[86]

      Putin’s interest in St Petersburg’s sea port and oil terminal often seemed more direct than that of a state official responsible for the city’s share. The alliance he built with Ilya Traber and his men troubled even visiting businessmen. When one was brought in to help arrange financing for the port, he was whisked from the city’s Pulkovo airport straight to Traber’s lair in an armoured car, accompanied by police and Traber’s guards. On arrival at the high-gated compound in a back street, he was escorted past armed guards and snarling German shepherds. After passing through several rooms adorned with icons, he arrived at an inner chamber where Traber was waiting, wearing a tracksuit bottom and slippers, a thick chain with a huge gold cross around his neck – the uniform of the city’s bandits. The businessman was left in no doubt about whom he was meeting. ‘It was like in the movies,’ he said. ‘My heart stopped when I saw him.’[87]

      The scene was far from what he had expected when he was invited by an official from City Hall to assist with financing the port. But after a tense discussion with Traber, he received the nod of approval. The next day he was taken to more salubrious surroundings: the downtown law offices of one of Traber’s business partners, Boris Sharikov, on one of St Petersburg’s most picturesque canals. Also at the meeting was a former KGB officer who’d become another of Traber’s partners, as well as Putin and the City Hall property chief Mikhail Manevich, and a smooth-talking thirtysomething named Dmitry Skigin, who the businessman was to learn owned the port jointly with Traber. Skigin was the acceptable face of the port, a mild-mannered geek, fluent in the language of international finance, a disciplined businessman who went mountain climbing in his spare time and spoke English and French. His father Eduard was close to Putin, according to Monaco intelligence.[88] But according to two of Skigin’s former business partners, he was also a front for another St Petersburg crime boss, a pugnacious former boxer named Sergei Vasilyev, with whom Traber had agreed a fragile peace for joint control of the port, and later for its oil terminal.[89]

      The alliance St Petersburg’s administration forged with the Tambov group became embedded deep in the city’s infrastructure. With the help of Putin’s men in City Hall, the sea port become a major hub for smuggling drugs from Colombia into Western Europe, former senior KGB officer Yury Shvets later testified to a London court. One of Putin’s closest allies in the St Petersburg security services, Viktor Ivanov, had assisted the Tambov group in taking over the sea port, while Putin provided protection from the mayor’s office, he said.[90] (Ivanov strenuously denied the claim, but other signs emerged that the St Petersburg port was a vital channel for drug trafficking.[91])

      Control of the port became so strategic that when, in 1997, the Property Department chief Mikhail Manevich sought to return the voting rights City Hall had lost to its 29 per cent stake during its privatisation, he was shot dead by a sniper as he drove to work.[92]

      ‘Manevich was pushing for it all to be returned to the state,’ said a former Traber associate. ‘The leverage that he had was that he could refuse to extend the licence for the long-term rent of the port including the oil terminal. And for this he paid with his life.’[93] Vyacheslav Shevchenko, a former member of the St Petersburg parliament and a close Manevich ally, reportedly testified to the police murder inquiry that in the final days of his life Manevich had been deeply troubled by the situation at the port: ‘On his request, I went twice to the port and spoke with the head of the port. I made a proposal that the English insurance company Lloyds should come to analyse the port’s financial situation. A week later, two of Traber’s bandits visited me and told me if I went to the port again my head would be cut off with an axe.’[94]

      Traber refused to comment for this book, saying the allegations were ‘fantasy and slander’.[95] Just three months after Manevich’s murder, the port’s shareholders agreed to extend a new long-term management contract for the port to a new Traber company, OBIP, owned by a Liechtenstein foundation called Nasdor Incorporated.[96] Later, the only person who ever dared to speak out publicly about the looting of the Baltic Sea Fleet was the city’s mayor at the time it occurred, Anatoly Sobchak. Long after he had stepped down he wrote a newspaper article in which, for the first and only time, he publicly criticised the actions of the city’s post-Soviet KGB. ‘The prosecutors, the FSB and the policemen who took part in this should be charged with abusing their position and for causing the country enormous loss.’ he wrote.[97] Four months later he was dead. ‘I fear this was what cost Sobchak his life,’ said an associate of Kharchenko.[98]

      In the eyes of Putin’s KGB allies, the alliances they forged then were necessary as the only way to restore some degree of control in the chaos of the Soviet collapse. The organised-crime groups were the infantrymen they needed to help control the masses, the men on the street – as well as in the prisons, according to one of Putin’s associates then. This was a typical KGB practice, forged in the Soviet past, when Putin for instance had run illegals through East Germany. ‘They worked with people. This is what they did,’ said a former KGB officer who worked with them. ‘Imagine you need to calm down a bunch of alpha males. If you can’t shoot them, this is terribly difficult work.’[99] But the argument that they needed to do this if they were to bring order was only a self-justification behind the power grab. The oil-for-food scheme had also been set up ostensibly to save the city – whether to bring in food or to pay down debts. But all it had achieved was to create a network of black cash to preserve the power and the networks of the KGB.

      In the skein of these relationships, another thread led to one of the structures set up for the Communist Party’s ‘invisible economy’ in the final days of its rule. This was Bank Rossiya, a small St Petersburg bank which was one more key intermediary in some of the oil-for-food barter deals. Like many of the institutions and firms set up by the Party in the dying days of the regime, when the August 1991 putsch failed and the Soviet Communist Party was banned, control of Bank Rossiya passed noiselessly into the hands of representatives of the KGB. Its new shareholders included a senior KGB officer and two KGB-connected physicists who specialised in rare-earth metals, materials so rare, and so strategic, that trade in them could only be handled by members of the KGB.

       Spy

      When the senior KGB officer Vladimir Yakunin returned to Leningrad in February 1991, a year after Putin, from a posting undercover at the United Nations in New York, he was shocked by the conditions that greeted him. He had come from a comfortable residence in New York to the grime of a working-class area of Leningrad, where the street lamps rarely shone and his wife would return home from the shops in tears because the only thing on the shelves was pickled cucumbers. ‘In essence, the country that had sent me to work abroad, and in which I grew up and where my children were born, had ceased to exist,’ he said. ‘So too had the values – the social and moral values – which were the fundamental basis for any society. The entire country had descended into a certain darkness.’

      It seemed to him that everything he’d once believed in had collapsed: ‘We were brought up in the spirit of loyalty to the Party and to the people. We really did believe we were doing something useful for our country and for our people.’ But like many in the foreign-intelligence