The takeover was a major success for the businessmen, of course, but what about the state? Neither Sosnin nor Fedulev had development in mind for these enterprises. The provincial officials carried the two speculators shoulder high, not asking what they were planning to do with the factories, just anticipating their share of the proceeds. Corruption was attaining new heights. The two companions left nobody disappointed. They shared what they had stolen, because these were people they could not afford to disappoint.
And then came the moment to divide the spoils between themselves: Which goodies should each of them receive? The earlier pattern was repeated. Shortly thereafter, Andrey Sosnin died from a gunshot wound. Another criminal case was opened on November 22, 1996—No. 474802 this time—and the main suspect was again Fedulev and… and nothing.
It’s not much good having connections if they don’t work when you need them. By the time Sosnin was murdered, Fedulev’s police friends were among the more prosperous of Yekaterinburg’s citizens. Everyone could see that the richer they became, the more successful their patron, Fedulev, was in business. Case No. 474802 was closed. It was not even archived; it was simply forgotten.
LIQUOR WARS
Besides the Urals factories of which, by the end of the 1990s, Fedulev had seized control, he had achieved something even more significant. Yekaterinburg is primarily Uralmash, the most important institution in the Urals. Not Uralmash the vast machine-tool factory but the Uralmash crime syndicate, the largest Mafia grouping in Russia, a detachment many thousands strong with a strict hierarchy and representatives at every level of the state. It is one thing to bribe officials and bump off your partners but quite another matter to come to terms with the crime bosses of Uralmash. In 1997, Fedulev pulled that off, too. He joined forces with Uralmash to complete the buy up of the shares of the Tavda Hydrolytic Factory. The transaction made a lot of sense for Fedulev, who was leading a life of luxury and found himself short of cash for gambling on the stock market. Uralmash had money, it had the Trough bank. The only real surprise is that the bank’s managers decided to do business with Fedulev, knowing the kind of maverick he was.
The reason why Fedulev and the Uralmash bosses were so interested in hydrolytic factories is that they produce spirit, from which Palenka vodka is made. There is tremendous demand for spirit in Russia, and it costs next to nothing to produce. Owning a spirit-producing facility is the perfect way to make fantastic profits in return for a minuscule investment, and the profits are in ready cash, don’t involve credit, don’t go through the banks, and are invisible to the Tax Inspectorate.
Accordingly, Fedulev and the Uralmash bosses bought 97 percent of the shares of the Tavda factory. They then proceeded to asset-strip it in a fairly standard way: both partners set up firms, assets were transferred away from the factory to those firms, the shares were divided, and the firms were then either wound up or took over the manufacturing activity. It became clear that the hydrolytic plant as such no longer existed.
Soon after the deal was completed, Fedulev broke the initial agreement on the proportions due and did not even allow Uralmash representation on the new board of directors, which he packed with his appointees.
Why? He wanted to be the first among the first and needed to shake off all partners, even the highly influential Uralmash. Incredibly enough, he got away with it. The Uralmash bosses did not shoot him, as might reasonably have been expected, but simply slunk off.
The reason for their leniency was simple. When the Tavda factory was taken over, Fedulev enjoyed more than just links with the police. He was, to all intents and purposes, in charge of the provincial police force. He had excellent personal relations with Governor Rossel. It was Pashka who decided on the most senior police appointments, choosing, for example, who would head the provincial UBOP agency, the top anticrime official whose job was to combat Fedulev himself and organized crime in general. That person turned out to be Rudenko. And Pashka had Nikolai Ovchinnikov appointed chief of police for Yekaterinburg.
The Uralmash bosses were made from the same mold, however, and they had ties of their own to pit against those of Fedulev. The day eventually came for them to lock horns, when a Uralmash squad arrived at the Tavda factory and took the property back by force of arms. Fedulev responded in full measure. A special rapid-reaction police unit was deployed, and the state’s police paramilitaries were ready to use force as well.
But against whom? It turned out that it was against other police paramilitaries. Those going head to head in the fight at the Tavda factory were not so much the heavies of the Fedulev and Uralmash gangs but the forces of the people behind them. On Fedulev’s side were Rudenko and Ovchinnikov with one unit of armed police. On the other side were Uralmash, supported by the head of the entire provincial police force, General Kraev, and the police under his command. In other words, those on either side of an armed standoff over the illegal division of the province’s property were the police forces at the disposal of those whose task it was to maintain the rule of law.
How did the Ministry of Internal Affairs in Moscow react? The agency presented the matter as a conflict within the police force in Yekaterinburg, as a personality clash between Kraev, on the one hand, and Rudenko and Ovchinnikov, on the other. Kraev and Rudenko were removed from their posts. Kraev was publicly accused of having close links with the Uralmash crime syndicate (although his career later led to deputy director of the Russian prison system), while Rudenko was declared to have been the victim of an irreconcilable power struggle against the most serious criminal group in the Urals. As the wronged party, he was transferred to Moscow, where the minister of internal affairs, Vladimir Rushailo, had him appointed director for UBOP in Moscow Province. Since then, that agency, under Rudenko’s direction, has been causing alarm bells to ring in the capital.
Back in Yekaterinburg, meanwhile, there were vacancies to be filled in the wake of Rudenko’s departure. The staffing of the Urals UBOP was arranged personally by Fedulev. Rudenko’s replacement as director was Yury Skvortsov, not only Rudenko’s right-hand man but someone to whom all of Fedulev’s affairs had been confided over many years. As Skvortsov’s first deputy, Fedulev appointed a certain Andrey Taranov. In the Urals, he was believed to be the protector (or “roof”) within the police force of Oleg Fleganov, the region’s leading supplier of wines and spirits. Fleganov was key to the marketing of bootleg vodka, since most of it was sold through his retail network. The other deputy whom Fedulev chose for Skvortsov was Vladimir Putyaikin. His task was to purge the ranks of the police throughout the province. He began by forcing out anybody who still had anything to say against the Mafia and anybody who refused to work under the tutelage of Fedulev.
The servile Putyaikin set to work with a will. We shall give just a single example of how he went about it. On one occasion Skvortsov demanded documentary evidence from Putyaikin regarding who in the police was working against Fedulev. Putyaikin had no such documents. That night he took home a young member of the UBOP team, got him drunk, and demanded that he should immediately denounce any of his colleagues who were opposed to Fedulev and his stooges in the police. The young officer refused to be an informer, whereupon Putyaikin appears to have bullied him into shooting himself with his service revolver.