PUTIN'S STAMP AND THE $2 MILLION HEIST

How a committee Vladimir Putin ran in the early 1990s became enmeshed in a bribery scandal and a plan to spirit millions of dollars in illicit cash out of Russia.
PUTIN'S STAMP AND THE $2 MILLION HEIST
Aleksei Leonardov was a promising young official in the administration. (RFE)

A middle-aged man in a blue sweater and jeans hurries down a corridor at the Moscow district court in St. Petersburg, heading toward the exit. It is December 2021.

A modest private lawyer now, Aleksei Leonardov was a promising young official in the administration of St. Petersburg Mayor Anatoly Sobchak back in the wild days following the collapse of the Soviet Union. Unlike many of his colleagues from those days, Leonardov did not go on to become president or prime minister of Russia or to head a huge state oil or gas conglomerate.

"What can you tell us about bribery in the Sobchak administration?" a Current Time correspondent asks. "Did you work for the committee that was headed by Vladimir Putin?"

It wasn't the first time this journalist had approached Leonardov with such questions. The lawyer had already blocked him on social media.

Leonardov's legal career began in the early 1990s under St. Petersburg’s External Relations Committee (KVS), which Putin had been handpicked to lead by Sobchak. By the time the young lawyer left the committee, it was ensnared in one of its first bribery scandals under Putin's watch -- one that saw Lenoardov charged with graft linked to a scheme to funnel $2 million in illicit cash out of Russia through a company founded by the committee.

Back at the St. Petersburg courthouse, Leonardov quickly scans a list of questions the correspondent hands him and then tosses it on a bench.

"You've got the wrong guy," he says before turning away and striding out of the building.

This report is the second installment of an investigative project by Current Time and RFE/RL's Russian Service examining the scandals and scams that swirled around Vladimir Putin and his associates during his tenure as a St. Petersburg city official in the 1990s.

Putin, who has been president or prime minister of Russia since 1999, often has strong words for corrupt officials in his public pronouncements. In a 2008 meeting with senior legislators, the president said they should "have their paws cut off." In 2012, he said corrupt officials "need to be hanged," adding, "But that is not our way."

And yet corruption allegations have featured prominently throughout Putin's decades in government. Some of the earliest stem from Putin's term, from 1991 to 1996, as chairman of the St. Petersburg External Relations Committee (KVS), which had the power to negotiate and incentivize lucrative investment and trade deals with foreign partners.

Corruption claims involving Putin himself. (RFE)
Corruption claims involving Putin himself. (RFE)

Corruption claims involving Putin himself, and those closest to him, have never been fully investigated by the Russian authorities.

But in 1992, investigators probing corruption searched the apartment of a young KVS legal consultant -- Aleksei Leonardov. And among other things, according to the case documents, police found a registration database belonging to the KVS and a delegation of authority from Putin made out to Leonardov. In court, a KVS representative argued that nothing illegal had been done.

The court disagreed.

It was a promising start. (RFE)
It was a promising start. (RFE)

A Promising Start

In 1991, the 24-year-old Leonardov graduated from the law school of Leningrad State University and was immediately hired to work for the KVS. It was a promising start -- and many who worked for Putin at the time went on to stellar careers in government or business. Dmitry Medvedev, who also worked as a KVS legal consultant, held Russia's highest office less than 20 years later, as a placeholder president for Putin, and served as prime minister for eight years after that. Some acquired lucrative shares in-state companies, and Putin to this day regularly honors them with state awards.

It was a promising start. (RFE)
It was a promising start. (RFE)

It was a promising start. Less than a year after he got his new job, he was in jail.

Many students from the Leningrad State University law school, where Sobchak taught, hopped on their professor's bandwagon as early as 1989. "He needed to create a team that would follow him and works on his election campaigns," Sobchak's widow, Lyudmila Narusova, recalled in 2008. "His students and graduate students joined and that is how I met them."

Putin himself had studied economic law under Sobchak at Leningrad State University in the 1970s before embarking on his career in the KGB.H

 Joint ventures were involved in importing consumer goods.  (RFE)
Joint ventures were involved in importing consumer goods. (RFE)

Whether Leonardov was among those who worked for Sobchak at that stage, and whether he joined Medvedev in hanging up grainy posters of the future mayor during those early campaigns, are unknowns. But when he was hired by the mayor's administration in 1991, he consulted on commercial law, which was one of Sobchak's main courses at the university. Specifically, Leonardov was assigned to register "joint ventures," as companies with foreign investment were called under measures adopted in the final years of the Soviet Union.

In the summer of 1991, the KVS was created, with Putin as its head, to facilitate the registration of joint ventures in Leningrad -- the start of a push to increase their number in the city, whose name was changed back to St. Petersburg that September.

To register a joint venture in those days, you needed a written request from the foreign partner, a copy of the founding documents, and confirmations from the foreign partner's bank and the commercial registry of their home country. The fee was $200.

By the end of 1991, nearly 300 joint ventures had been registered in St. Petersburg, according to a KVS report that RFE/RL acquired from the state archives, with average foreign ownership of 60 percent. In 1993, there were more than 3,000, but they accounted for less than 2 percent of the businesses in the city, the local newspaper Nevskoye vremya reported.

"Joint ventures have not fulfilled our hopes for a broad exchange of advanced technologies and know-how or the organization of modern businesses based on Western models," the paper wrote.

For the most part, joint ventures were involved in importing consumer goods -- and some of them were involved in fraud.V

Sklyarov's mission now was to create a joint venture with a U.S.-registered firm(RFE)
Sklyarov's mission now was to create a joint venture with a U.S.-registered firm(RFE)

'A Rare Scoundrel'

Sometime in 1991, a 50-year-old native of the nearby city of Vyborg named Vadim Sklyarov showed up at the offices of the KVS on Antonenko Lane.

"He was a very talented man," wrote investigative journalist and author Andrei Konstantinov in his 2000 book Fraudulent Petersburg, "and also a rare scoundrel."

Sklyarov had four criminal convictions in the Soviet era, including one in Kyiv for theft. According to the newspaper Sankt-Peterburgskiye vedomosti, Sklyarov was wanted by police and creditors in the Latvian capital, Riga, when he arrived in St. Petersburg.

Sklyarov's mission now was to create a joint venture with a U.S.-registered firm called Elegant Systems. The company had been founded in 1990 by Eli Lisnyansky, a native of Latvia. As Lisnyansky later testified, Sklyarov -- without his knowledge -- used letterhead from Elegant Systems to register a joint venture called Elegant Systems Russia with the KVS.

He then signed contracts with two organizations to provide them with consumer goods worth 285 million rubles, the equivalent of around $2 million at the time. The money was transferred to a St. Petersburg company called Raduga -- which was ultimately controlled by Putin's committee.

Raduga was supposed to convert the rubles into hard currency, which Sklyarov planned to transfer to accounts in Switzerland and Finland, according to investigators looking into whether Sklyarov ever intended to use the funds to purchase the promised goods.

It remains unclear how Sklyarov planned to carry out these transactions legally because Russia’s central bank had already banned such hard-currency transfers.

In 1995, he was detained in Riga. (RFE)
In 1995, he was detained in Riga. (RFE)

A Delegation Of Authority From Putin

After the St. Petersburg police filed a criminal fraud case against Sklyarov, Raduga's bank accounts were frozen. Sklyarov was released pending trial after pledging not to leave the city -- a pledge he promptly broke. In 1995, he was detained in Riga under an old warrant, and he died there in 1996, under circumstances that remain unclear.

The whole chain of events, however, might never have happened if the St. Petersburg External Relations Committee had not fraudulently registered the Elegant Systems Russia joint venture. The company, after all, had no authorized capital and no official stamp -- just the letterhead of the American "partner." But it was registered for a bribe of $400 and 10,000 rubles, the equivalent of 10 average monthly salaries in 1991, according to journalist Konstantinov and newspaper accounts from the time.

The newspapers Kommersant and Sankt-Peterburgskiye vedomosti both reported at the time that it was Leonardov who accepted the bribe from Sklyarov. (Sankt-Peterburgskiye vedomosti, however, printed his name as "L. Nardov.")

According to Sankt-Peterburgskiye vedomosti, shortly after Leonardov began working for the KVS, its chairman -- Putin -- empowered him to sign the registration documents necessary for joint ventures to operate in the city. He was also in charge of maintaining the database of potential investors that had contacted the committee.

Both the investor database and the document delegating authority to Leonardov were seized when police searched his apartment in November 1992, the paper reported. Investigators also found letters from city prosecutors addressed to Sobchak demanding that he revoke the registrations of several joint ventures.

The newspaper also reported a curious detail: At the time of the search, Leonardov was no longer formally employed by the KVS -- but he did seem to be carrying out the instructions of its leadership.

Leonardov was arrested on November 18, 1992, and sent to St. Petersburg's Kresty pretrial prison, according to a source with access to the city's criminal records.

Current Time searched court archives but found no information indicating whether he was ever tried or convicted. However, a leaked database of credit histories says, without specifics about the crime, that Leonardov was convicted sometime before 2003.

City criminal records show that she was held in a pretrial jail. (RFE)
City criminal records show that she was held in a pretrial jail. (RFE)

Newspaper accounts from the time named Tatyana Gruzinskaya, an economist with the Leontief Center think tank and an acquaintance of Leonardov's, as the possible intermediary for the purported bribe. The Leontief Center was located in the same building, on Antonenko Lane, in central St. Petersburg, as the KVS offices. The credit-records database says that Gruzinskaya had a criminal conviction sometime before 2003, and city criminal records show that she was held in a pretrial jail for women in 1992.

Current Time telephoned Gruzinskaya for comment, but she hung up upon hearing the reporter's question.

Leonardov is described in the leaked documents. (RFE)
Leonardov is described in the leaked documents. (RFE)

Not An Isolated Incident?

According to leaked criminal-report files from the St. Petersburg branch of the Interior Ministry's Organized Crime Department, authorities believed the Sklyarov case was far from the only bribe that could be tied to Leonardov and Gruzinskaya.

"Leonardov and Gruzinskaya extorted and received bribes for the smooth processing of documents concerning foreign economic activities," one of the files said. "The sums of the bribes ranged from $300 to $500."

Leonardov is described in the leaked documents as "a leading specialist" for the KVS, while Gruzinskaya is listed as working for an unspecified "planning committee."

Sankt-Petersburgskiye vedomosti also reported that multiple bribes were involved. Noting that the KVS's database of registration requests was seized when Leonardov's home was searched, it said that an unspecified number of the requests were accompanied by a notation in pencil that said simply, "Rush."

"The firms that had this notation were registered in one or two days," the paper reported, "while on average it took more than a month to get registered."

In the database of registration requests there was also a place for "remarks" in which the names of officials handling the particular case were noted, often accompanied by mysterious notations such as "meat-packing plant," "cottages," and "computers." The only official that the paper named was a senior Sobchak aide, Yury Shutov, who later became a fervent critic of both the mayor and Putin.

Vladimir Putin (left) walking with his St. Petersburg city hall colleague Yury Shutov, who accused the future Russian president of corruption, in the early 1990s. (Yury Shutov Memorial Society) (RFE)
Vladimir Putin (left) walking with his St. Petersburg city hall colleague Yury Shutov, who accused the future Russian president of corruption, in the early 1990s. (Yury Shutov Memorial Society) (RFE)

The archive of the St. Petersburg City Court contains information about one more case connected with Elegant Systems Russia. On December 15, 1992, the court heard prosecutors allege that the firm had been registered illegally.

"The External Relations Committee did not require from V.I. Sklyarov all the documents necessary for registering a firm that was fully owned by a foreign investor," the court archive reads. "In the prosecutor's opinion, the illegal registration of the firm Elegant Sistems-Rasha [sic] made it possible for V.I. Sklyarov to later commit a crime."

According to the records, a representative of Putin's committee, whose name was not indicated, insisted that no laws were violated and that the committee was not required to confirm the information Sklyarov provided.

The court disagreed and ruled that Elegant Systems Russia had been registered illegally. By that time, Leonardov had been in custody for a month and Gruzinskaya for a week, according to city criminal records.

The last ingredient in Sklyarov's machinations was Raduga, which was categorized as a small state enterprise (MGP). (RFE)
The last ingredient in Sklyarov's machinations was Raduga, which was categorized as a small state enterprise (MGP). (RFE)

A Subsidiary Of Putin's Committee

Sklyarov wired the money he had received under the multimillion-ruble consumer-goods contracts to an MGP with that name. Current Time found five MGPs called Raduga in the database of St. Petersburg's Registration Chamber. But only one of them held its accounts in St. Petersburg Innovation Bank -- the bank named in the Kommersant article on the case.

According to the law at the time, an MGP could only be registered on the instructions of the head of an existing state company and could employ no more than 20 people. Sklyarov's Raduga was created by Intourist-Leningrad, part of the Soviet state tourism giant, and registered at No. 11 St. Isaac's Square, close to the iconic cathedral and about a five-minute walk from the KVS offices.

Intourist-Leningrad's legal department at the time was headed by Tamara Gavrilova, who had studied in Putin's class at Leningrad State University. In the summer of 1991, Sobchak ordered that Intourist-Leningrad be transformed into a joint stock company. The working group assembled to evaluate Intourist-Leningrad's property included Sobchak aide Anatoly Chubais; the head of the city property committee, Aleksandr Utevsky; and a staff member from the KVS, Kirill Boldovsky.

"Control over the implementation of this decision is placed with the acting head of the External Relations Committee V. V. Putin," Sobchak's order read.

On November 29, 1991, two weeks before Sklyarov used a bribe to get his sketchy company registered, Sobchak ordered the transformation of Intourist-Leningrad into the tourism firm Sankt-Peterburg, the sole founder of which was the KVS.The new firm, formally owned by St. Petersburg city hall, was also registered at No. 11 St. Isaac's Square, the same address as Raduga. In the early 1990s, several joint ventures were registered at the same address, the most well-known of which was the Russian branch of Dresdner Bank, which served the businesses of Putin's close friend Gennady Timchenko, who is now one of the richest people in Russia.

The new firm, formally owned by St. Petersburg city hall, was also registered at No. 11 St. Isaac's Square, the same address as Raduga. In the early 1990s, several joint ventures were registered at the same address, the most well-known of which was the Russian branch of Dresdner Bank, which served the businesses of Putin's close friend Gennady Timchenko, who is now one of the richest people in Russia.

The new joint stock company was supposed to "fulfill the management function with regard to enterprises of the Soviet state company Intourist-Leningrad on the territory of St. Petersburg." Sobchak also ordered Putin to oversee the implementation of this instruction.

Svetlana Ilina (Polish National Police) (RFE)
Svetlana Ilina (Polish National Police) (RFE)

In 1993, Putin's classmate Gavrilova joined the staff of the KVS.

Sklyarov used Raduga, a company that was essentially a subsidiary of Putin's committee, to handle money transfers under the murky consumer-goods contracts worth around $2 million.

The director of Raduga was Svetlana Ilina, a native of Makhachkala in Daghestan and an opera singer by training. A friend who knew Ilina at the time and who spoke to Current Time on condition of anonymity said Ilina was also involved in importing cars, although she could not recall whether that activity was connected with Raduga. She said she last saw Ilina in 1992.

Russian media reported that Rubezh might have been secretly run by Putin. (RFE)
Russian media reported that Rubezh might have been secretly run by Putin. (RFE)

Epilogue

After Aleksei Leonardov got out of prison in 1993, he resumed his legal practice. In 1997, he worked for half a year at a state firm called Rubezh which was created under Sobchak to sell off goods seized by customs officials. In the early 2000s, Russian media reported that Rubezh might have been secretly run by Putin, but this was never confirmed: The source of the information was a purported "dossier on Putin" compiled by the Federal Security Service (FSB), which Putin headed in 1998-99.

In the early 2000s, Leonardov and Gruzinskaya participated in a legal dispute among business entities fighting over the Leningrad House of Youths (LDM). They represented the co-owner of one of the companies connected with LDM, an Italian named Giuseppe Colombo. The long litigation ended in May 2007. Three months later, police raided the LDM, investigating the suspicion that the building was controlled by the so-called Tambov organized crime group -- a prominent player in the Russian "mafia" world. At the same time, the authorities detained the Tambov group's leader, Vladimir Barsukov (aka Vladimir Kumarin), a notorious crime boss who was known at the time as "Petersburg's night governor." The LDM did not figure in any of the cases against him.

Aleksei Leonardov, seen here in an undated photo, declined to answer questions about bribery in Vladimir Putin's External Relations Committee in St. Petersburg in the 1990s. "You’ve got the wrong guy," he said. (Social media) (RFE)
Aleksei Leonardov, seen here in an undated photo, declined to answer questions about bribery in Vladimir Putin's External Relations Committee in St. Petersburg in the 1990s. "You’ve got the wrong guy," he said. (Social media) (RFE)

Leonardov's name also cropped up in the press in the 2000s, when he was accused by a competitor of conducting a hostile takeover of the Dynamo clothing factory. Writing about the case, the newspaper Versia v Pitere described Leonardov as "a very remarkable personality."

Current Time was unable to clarify the outcome of the dispute.

Leonardov's putative co-conspirator, Tatyana Gruzinskaya, finished her career in state organizations in the health-care sector. She is now retired. She and Leonardov are still connected on social media.

Putin's law-school classmate, Tamara Gavrilova, who was the head of the legal department of Intourist-Leningrad, worked until 1996 for Putin's KVS and then moved to Moscow. In 2003, she was named to the board of directors of the television network NTV, which had recently been taken over by the state-controlled natural-gas giant Gazprom, and soon became the second-most-powerful person at NTV, the daily Komsomolskaya pravda reported in 2004.

Tamara Gavrilova (right), a Russian television executive who worked under Vladimir Putin at the St. Petersburg External Relations Committee, receives a state award at the Kremlin in 2011. (Ntv.ru) (RFE)
Tamara Gavrilova (right), a Russian television executive who worked under Vladimir Putin at the St. Petersburg External Relations Committee, receives a state award at the Kremlin in 2011. (Ntv.ru) (RFE)

Svetlana Lovinger, the former Raduga director, lived briefly in St. Petersburg after returning from Poland and then moved to the southern city of Krasnodar, where she worked for a company that helped Russians get permanent residence in Poland. She soon found herself in court again.

In her most recent run-in with the law, she was sentenced to 5 1/2 years in prison in 2013 after being convicted of signing contracts worth several thousand dollars to supply Brazilian soybeans to several firms in Krasnodar. Instead, she bought herself a $3,000 laptop, household appliances, jewelry, and nearly 30 different French perfumes, according to the verdict in the case.

During the trial, Lovinger claimed that her phone had been illegally monitored by the FSB and Russia's military intelligence agency, known as the GRU.

After her release, she appeared on social media with another surname, Orlova. She declined to speak with Current Time and blocked the reporter who tried to interview her.

In 1992, the Interior Ministry counted 88 bribery cases in St. Petersburg, a number a municipal prosecutor described as "laughable" for a city of that size. Seven of those cases involved people who worked in the mayor's office. In one of those cases, Leonardov ended up in prison.

It's unclear what happened to the other six. (AA/RFE)

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