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Russia

How Yeltsin lost $1bn in diamonds

Boris Yeltsin with the Queen in Moscow, 1994. Tim Graham Picture Library/Getty Images

When communism collapsed, Andrei Kozlenok “was tasked with selling Russia’s diamonds to the highest bidder”, says Giles Whittell in From Russia with Diamonds, a two-part Tortoise podcast. His company in San Francisco, Golden ADA, received large shipments of state-owned Russian diamonds, as well as emeralds, rubies and Tsarist gold coins, from treasury vaults beneath Moscow. His job was to flog them and return the proceeds to the Russian government.

But Kozlenok’s wild spending habits meant little made its way back to the motherland. He bought Picassos, mansions in California and Bermuda, a private jet and a military helicopter so vast that when it landed on the roof of the company’s office, the downdraft blew out the ground-floor doors. He also threw a Gatsby-style party attended by “all of San Francisco”, including Nancy Pelosi.

At a time when the Russian economy was on its knees, “some say more than a billion dollars was spent or lost in all”. The Russian police went after Kozlenok, with the help of the FBI, and traced the racket back to President Yeltsin’s inner circle. The official in charge of the investigation, Victor Zhirov, was later attacked “savagely” in the stairwell of his apartment.

There’s little doubt that Kozlenok – who somewhat bizarrely denies the whole story in an interview with Tortoise – is a “crook” and possibly a fantasist, but his tale illustrates how Russia’s natural resources were “looted” by opportunists in the 1990s. It is, in many ways, “the origin story of Vladimir Putin’s kleptocracy”.

Listen to the podcast here.