Bovt on Shvartsman

Writing in the Moscow Times, columnist Georgy Bovt takes on the Shvartsman affair:

The recent interview in Kommersant with Oleg Shvartsman, head of the little-known FinansGroup, caused quite a storm.

Shvartsman said the firm operated on behalf of the siloviki headed up by Kremlin deputy chief of staff Igor Sechin. This group conducts “velvet reprivatization,” which means raiding oligarchs’ assets with the goal of expropriating them. Among those mentioned as FinansGroup partners were a Russian venture capital company and Israeli finance group Tamir Fishman, both of which are involved in major projects involving an enormous amount of money.

Following the article’s publication, the Tamir Fishman group and military brass immediately suspended relations with FinansGroup. Shvartsman responded quickly by saying that Kommersant had gotten it wrong and that the editing of his interview led to some distortion of the facts. People who saw him before his public refutation on an Ekho Moskvy radio show said he looked nervous and frightened and arrived at the station carrying a prepared text.

The picture Shvartsman painted of shady dealings underscores the current trend among Russian business to have a “patron” in the security services protecting their interests. And for their part, the security services feel they have control over the country’s economy. Even if Shvartsman threw a single party for siloviki veterans and invited General Valentin Varennikov, a former Soviet deputy defense minister who is famous for his role in the putsch attempt against Gorbachev in 1991, he would have bragging rights to say, “I have influential friends at the upper levels of the security services.”

You can develop informal but good connections from these kinds of meetings, which sometimes lead to business deals worth billions of dollars. Russian businesses of every stripe now look for “protection” from the security services, which in turn are also looking to provide their own form of “services” to various commercial clients.

But what motivated Shvartsman to say these things in the first place? He’s not such a fool as to drop Sechin’s name and the names of various people close to the Kremlin without a definite purpose in mind.

One possible explanation is that Shvartsman was trying to inflate his own importance in the hopes of landing a major contract. That might be the case, but in today’s Russia, the opposite rule usually applies: The more secrecy is maintained, the easier it is to strike a deal.

Another possible scenario: Executives within a major conglomerate hire an operative like Shvartsman to gather a packet of the company’s shares and securities, and then turn a profit with them by using various illegal transactions. In order to carry out his task, the operative is given access to all of the company’s deepest financial secrets. He becomes privy to information so sensitive, that were it divulged, it could destroy the reputations or the fortunes of those who hired him.

At the same time, the operative keeps a low profile and is not known to anyone outside his immediate circle. Once he completes his task, if he and the inside information he holds somehow becomes a liability to those who hired him, he is at risk of falling victim to an “unfortunate accident.” His name would appear publicly only once — in the crime section of the paper or in the obituaries.

According to this logic, Shvartsman gave the interview to avoid any “unpleasantness” in the future. Or else he simply wanted to extricate himself safely from the deal, which was either nearing its end or had gone sour for some reason.

These are just some of the possible explanations, however, and they are purely hypothetical. So much of Russian business and politics is bizarre and unexplainable, and the Shvartsman affair is just one more manifestation of this.

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