What’s more, demand for personal computers was about to go through the roof. These weren’t being made in the USSR, so we arranged for people to bring them back from abroad when they went on official business trips. We bought the computers from them, reprogrammed them with Russian keyboards and Russian software, and sold them on for a profit. By late 1988, we’d accumulated some substantial cash reserves that were sitting unused, just in time for Gorbachev’s announcement that, after 72 years of banning private capital, the Kremlin was going to allow private banks to be formed. It was a massive change and we weren’t going to miss the chance.
Looking back, I don’t think the men who were introducing all those reforms understood that they were sealing the fate of Soviet communism. They were permitting an element of free enterprise because they needed to kick start the moribund economy. Capitalist aspiration, the urge to work hard and get rich, is, in my view, an instinct in the human brain. The communists had repressed it for seven decades, and now they let people see that it was possible again. Russians, I thought, weren’t going to be satisfied until the whole nation had returned to free-market capitalism. People wanted to work hard and improve the quality of their lives, which they hadn’t been able to do under Soviet rule. They wanted the freedom to start their own businesses, feed their families and achieve a level of prosperity that had eluded them for so long.
By the end of the 1980s, our little computer cooperative had 150 employees and around 5,000 people contributing to its research and development. These were brilliant, sparky youngsters, mainly students and recent graduates, who were coming to me every day with ideas for new projects. We were desperate to develop the ground-breaking innovations they came up with, but we didn’t have the funds. In a free, democratic society, we would have tapped up investors, explained the potential of our new projects and everyone would have benefited. But in those days, the only source of money was the official state banks. Loans were available only to state industries as part of the State Loan Plan.
Someone must have been watching over me, because out of nowhere an angel appeared: the remarkable Mrs Krushinskaya, manager of the state bank branch where we had our account. For some reason, she took it upon herself to help us. She took me aside and said, ‘Look, I’ve heard you’re after a loan. And maybe you’ve heard that the government has just authorised the creation of independent banks. Well, if you were to go out and create a bank like that, I might be able to give you a loan as an official banking institution…’ She gave me the number of a contact at head office and suggested I try my luck. I met the man in question, Viktor Bukato, who told me, much to my surprise, that he would provide the recommendation needed to get our charter written. ‘What would you like your bank to be called?’ he asked me. It really was as easy as that.
Within a month, we had set up the KIB NTP Bank (later called the Menatep Bank), one of the first private Russian banks since 1917, with an authorised capital of 100,000 roubles and an approved credit line. It was the start of a new world. Finally, we could expand into new areas, develop new IT solutions and kick start the projects we’d been sitting on for a year or more. We bought a company car and moved into bigger premises. I started wearing a suit and a tie, and all at once we started to look like a grownup business.
The loan money and the excitement of owning our own bank went slightly to our heads. We branched out into some wacky projects, including the import of Napoleon brandy, but we weren’t much good at anything other than our core speciality. Computers and IT remained our mainstay, especially when we discovered a way for our clients to buy and sell them in hard currency, i.e. using stable foreign currencies rather than roubles. At that time, the rouble was non-convertible – you couldn’t use it for purchases outside of Russia – so there was a premium attached to being able to trade in dollars and other foreign denominations. We were eventually earning so much hard currency that I was summoned to see the state bank chairman, Viktor Gerashchenko, who wanted to know how we did it. I explained it all to him and he looked through the regulations, hoping to catch us out, but in the end he had to admit we hadn’t broken any rules.
An interview during the peak of my business years
We were pretty good at exploiting any opportunities that the rules allowed. Because there had never been any private enterprise in the Soviet Union, people just accepted that it wasn’t a possibility: the guiding principle of Soviet law was, ‘everything which is not authorised is forbidden’. But Gorbachev’s new spirit of enterprise flipped that to, ‘everything which is not forbidden is allowed’. We took him at his word.
We moved into so many fields of IT supply and cornered so many markets that several government departments, including the Soviet Committee for Science and Technology, took an interest in us as an example of the success of the new economic policies. It was while we were working for them that the Moscow mafia took an interest in us.
Organised criminal gangs had always existed, but they became much more powerful in the perestroika era. It was a time when businesses were turned over by the mafia as a matter of course. In our case, contact came from the Izmailovo crime syndicate, who invited me for a ‘friendly chat’ and offered us ‘protection’ from their own henchmen. As you can imagine, I was on my best behaviour. I conversed politely and respectfully, and agreed that we would be in touch.
When I got back, I wrote to the local KGB department (back then, it was the KGB that took the lead in the fight against organised crime), where we had good contacts – they were responsible for the Mendeleev Chemical Technology Institute, where I had been a student, our office was on their territory and, what’s more, we had plenty of defence industry clients, so they paid attention to us. That was the last we heard from the Izmailovo mob. Years later, I learned that the boss of the Organised Crime Unit of the regional KGB had a quiet word with the mafia and told them that our contracts with official government departments meant we were off limits. That’s how things worked in those days. There were endless reports of premises being blown up and entrepreneurs having their throats cut, but I never had a problem. Perhaps I should have been more worried. On a few occasions, I was warned there was a contract out on me so I hired a couple of bodyguards, but I never paid for ‘protection’. I told my staff that I didn’t want any security briefings so that I could try to remain oblivious. I didn’t want to live in fear.
My son Pavel was born while my first wife and I were still students. We were very young, times were hard and the marriage didn’t last. The fact is that I met someone else. It happened while I was doing my stint as Komsomol deputy secretary at the Mendeleev Chemical Technology Institute. I was 23, Inna was just 17 and she was pretty wary of this cocky fellow with big ambitions; but I knew from the very first moment that I loved her and wanted to be with her for the rest of my life. I moved out of my family apartment and slept in my car until Inna took pity on me. We are now in our fourth decade of married life together, with a grownup daughter and twin boys. In my business life, I always felt I was in control, but I learned that love is a lot less predictable.
At first, Inna and I lived in rented flats with two small rooms and second-hand furniture, plus chairs and a table that I borrowed from the office. The business climate was cutthroat. It is no exaggeration to say that I had enemies and could have been killed, and Inna was also at risk. But she stayed with me, stayed cheerful, supportive and endlessly beautiful; I can’t thank her enough for all she has done for me.