The Man Without a Face: The Unlikely Rise of Vladimir Putin

Ten INSATIABLE GREED

Writing now about Putin’s early years as president, I am struck by how quickly and decisively he acted. Even when I was covering the story in real time, it seemed to move at breakneck speed. Putin changed the country fast, the changes were profound, and they took easily. He seemed instantly to reverse Russia’s historical evolution. And for an excruciatingly long time, no one seemed to notice.

Or almost no one. After the December 2003 parliamentary election, in which Putin’s United Russia took nearly half the seats and the rest were divided among the Communist Party, the absurdist-nationalist and outrageously misnamed Liberal Democratic Party, and a new ultranationalist party called Rodina (Motherland) while all remaining liberals and democrats lost their seats, the Organization for Security and Co-operation in Europe (OSCE) reported: “The… elections… failed to meet many OSCE and Council of Europe commitments, calling into question Russia’s willingness to move towards European standards for democratic elections.” The New York Times reported something entirely different, publishing a condescending but approving editorial titled “Russians Inch Toward Democracy.” The paper of record did not mention international observers’ criticism in its news story the day of the election but published a separate piece on the critics the following day; The Washington Post and The Boston Globe left the critics out of their coverage altogether. The Los Angeles Times went even further: in a mammoth news story, it managed to downplay the OSCE’s conclusion in such a way that it sounded like the opposite of itself. The paper quoted an OSCE official saying the balloting “was well-organized and we have not noted any major irregularities.” The paper also lauded Putin’s now unchallenged control of the Russian parliament as a chance for the president to “push through additional reforms, including cleaning up the entrenched corruption.”

Publications outside the United States were more critical. The day before the election, the National Post of Canada ran a news item that had the whole story right in the headline: “Racists, killers and criminals run for Duma: Parliamentary elections. Two decades after decadent Yeltsin era, corruption plagues Russia.” The Economist declared the death of democracy in Russia in an editorial a month before the election, and then followed the election with a special report that called the new parliament “a democrat’s nightmare” and stressed the ballooning influence of ultranationalists.

But the world’s most influential media, with by far the largest journalist corps in Moscow, were asleep at the wheel. Why? In part, because U.S. politics took precedence. In the fall of 2000, when Putin was nationalizing television, American media were fully focused on the hung Bush–Gore election. I joined the staff of U.S. News & World Report then, and I idled through my first few months on the job: the magazine had no room for Russia.

Once the election story was finally over, American media had to deal with the aftermath of the dot-com bubble, beginning a wave of budget cuts and rollbacks that would last more than a decade. Many media outlets cut back on their foreign coverage, including Russia—and sometimes beginning with Russia. It became a self-perpetuating story: having told their audiences and themselves that Russia was safely entering a period of political and economic stability, American media effectively declared the Russian story dead, cut the resources available to cover it, and thereby killed their ability to report the story. ABC, which had had several dozen staffers occupying an entire building in central Moscow, closed its bureau altogether. Other outlets’ cuts were not as dramatic but just as drastic: entire bureaus were replaced by part-time freelancers. Only a few papers—The New York Times, The Wall Street Journal, and the Los Angeles Times—maintained complete bureaus with full-time reporters and supporting staff.

In June 2001, George W. Bush met Putin for the first time, famously “looked the man in the eye,” and “was able to get a sense of his soul.” Exuberant press reports took little notice of the fact that Putin not only was considerably less enthusiastic about his new friend but actually warned the United States that the period of hostility that began with the NATO bombings of Yugoslavia in 1999 was far from over. Then 9/11 happened, and suddenly the Russian war in Chechnya was recast as part of the Western world’s struggle with Islamic fundamentalist terrorism—against all available evidence, which included, among other things, Putin’s abrogation of an agreement reached under Yeltsin, according to which Russia was to stop selling arms to Iran and selling arms to Arab states to the tune of several billion dollars a year. And by geographic happenstance, major U.S. media started viewing Moscow as not so much the capital of Russia as base camp for reporters traveling to Afghanistan and, later, Iraq. The hunger for war stories was insatiable, and Russia was relegated to the sort of story that reporters did on the run, between truly important assignments. Their dispatches from Russia were articles that could only serve to affirm the existing narrative, shaped by the people who had invented the image of Putin the young, energetic liberal reformer.

That there was not a whole lot to report along this particular story line did not seem to concern most American journalists and editors. They glossed over the nationalization of the media, portrayed the appointment of federal envoys to supervise elected governors as making order out of chaos, completely ignored rollbacks in judicial reform—and increasingly chose to focus on economic topics. Unlike Yeltsin, who seemed always to take two steps forward and one step back on economic reform in a perennial effort to pacify the opposition, Putin filled both his staff’s and the cabinet’s economic arm with avowed liberals. His premier was the former finance minister, an apparatchik steeped in the Soviet bureaucratic tradition but one sincerely committed to building on the reforms actually instituted in the 1990s—and, conveniently for Putin, focused on this task to the exclusion of any other government business. Even before becoming acting president—while he was still merely the anointed successor—Putin had formed a think tank charged with creating a plan for the economic development of Russia, and appointed a liberal economist who had once worked for Sobchak to run it. After the election, the head of the think tank became minister for economic development, a post created especially for him.

Most notably, Putin appointed Andrei Illarionov to be his economic adviser. It was the president-elect’s first appointment, and it was intended as a resonant gesture. Illarionov’s views were well-known: a member of the 1980s St. Petersburg economists’ club, he had evolved into a full-fledged, articulate libertarian. In the United States, he would have been called ultraconservative (and, fittingly, he eventually took a post at the Cato Institute, a libertarian think tank in Washington, D.C.), but in Russia his views landed him on the politically liberal side of the spectrum. Illarionov did not believe in global warming and did believe in the limitless self-regulating potential of free markets. He was also known for his brilliant analytical mind and his testy temperament, which had kept him on the sidelines of most of the key events of the 1990s. His appointment came as a surprise to everyone, including himself.

ON THE AFTERNOON of February 28, 2000, Illarionov was working in his cluttered office at a tiny think tank he ran in Moscow. Located across Moscow’s Staraya Ploshad (Old Square) from the offices of the presidential administration and less than a kilometer from the Kremlin itself, Illarionov’s Institute of Economic Analysis was as far from power as it could get, considering that Illarionov was still on a first-name basis with most people who had been making economic policy for years. Illarionov was occasionally called in to give a lecture to the policymakers—as he had, for example, on the eve of the 1998 default, warning of the looming disaster—but his counsel seemed to be perceived as an academic exercise. Frustration had been his status quo for years: he had the respect of his powerful peers but no influence on them.

But at four in the afternoon on February 28, less than a month before the presidential election, his phone rang and he was asked to meet with Putin that evening. The meeting lasted three hours. At some point during the meeting, an assistant entered to inform the president-to-be that federal troops had just taken the city of Shatoy in Chechnya. “Putin was so happy,” Illarionov recalled later. “He was gesticulating emotionally, and he was saying, ‘We showed them, we did them in.’ And since I had nothing to lose, I told them everything I thought about the war in Chechnya. I told him I thought Russian troops were committing a crime under his command. And he kept saying that they were all bandits there and that he would rub them out and that he was here to make sure the Russian Federation stayed intact. The words he said to me in private were exactly the same as what he always said on the topic in public: this was his sincere position. And my sincere position was that it was a crime.” The exchange went on for twenty or thirty minutes, growing more heated. The undiplomatic Illarionov knew exactly how these sorts of exchanges always ended: he would never be invited back, and another avenue of potential influence would be closed to him because, as usual, he, with his passionately held views, did not fit in.

And then something remarkable happened. Putin grew quiet for a second, rearranged his facial expression, erasing all passion from it, and said, “This is it. You and I will not be discussing Chechnya.” For the next two hours, the two men talked about the economy—rather, Putin allowed Illarionov to lecture him. In parting, Putin suggested they meet again the following day. Illarionov immediately committed two more faux pas: he said no, and he cited the reason for his refusal—he was committed to celebrating the anniversary of his American wife’s arrival in Russia, which, because she happened to have moved to Moscow in a leap year, could be celebrated only once every four years. Yet rather than take affront at the refusal, or the reason for it, Putin simply suggested a different date to meet. Illarionov lectured him on economics again, and two weeks after the election, on April 12, 2000, he was appointed the new president’s adviser.

Illarionov was very much seduced. For years he had thought that Russian economic reforms were being carried out in a misguided and possibly even harmful manner, but he had been helpless to affect policy. Now he would have unfettered access to the head of state, who seemed genuinely interested in what he had to say—and not at all put off by his communication style. Like most people, when Illarionov encountered traits in others that he himself lacked, he was inclined to interpret them as manifestations of some sort of outstanding ability. Speaking to me eleven years after his appointment, Illarionov insisted that Putin was “an extraordinary person,” and cited as primary evidence his ability to control his emotions. Plenty of evidence to the contrary had accumulated by this point, including several instances of Putin losing his temper in public. But as someone constitutionally incapable of keeping his opinions to himself, Illarionov continued to be impressed by Putin’s ability simply to “turn off” the talk of Chechnya—and even, it seems, by Putin’s flattened affect. At base, Illarionov had a difficult time imagining he might be systematically deceived—which is exactly what allowed him to be deceived for a rather long time.

Illarionov and the other economists in Putin’s inner circle sent a strong signal to the U.S. press by their very presence. But most of all, American journalists seemed to miss the essence of the Putin story because some of their most important sources were missing—or willfully ignoring—the story. Big business was happy with Putin. The economy had been growing steadily since hitting a low point in 1998, when the ruble dropped so far that domestic production, inefficient as it was, finally became profitable. By the early 2000s, oil prices began rising, but not yet so much as to render domestic industry irrelevant (this would happen later). This was starting to yield some handsome results for investors who had entered the Russian market when it hit bottom.

A KEY FIGURE among these investors was William Browder, grandson of a former head of the Communist Party USA, and his Russian wife. Browder was a true ideologue: he had come to Russia to build capitalism. He fervently believed that by making money for his investors, he was creating a bright capitalist future for a country it was his legacy to love.

Browder’s investment strategy was straightforward and effective. He would buy a small but significant stake in a large company, such as the gas monopoly or an oil giant, conduct an investigation that inevitably exposed corporate malfeasance, and then launch a drive to reform the company. Corruption was pervasive and fairly easy to expose. Most large corporations were conglomerates of companies privatized within the last three to five years, with managers working at cross-purposes, often openly hostile to the new owners. So-called red directors had been stealing from their employers under the Soviets and saw no reason to stop; some of the new owners took a rape-and-pillage approach to their property. Browder’s revelations met with various levels of resistance, but more often than not he was able to effect at least some changes. As a result, the value of stocks, which had invariably been purchased at rock-bottom prices, rose exponentially.

The new administration took an active interest in Browder’s investigations. More than a few times his people were summoned to the Kremlin, where their PowerPoint presentations never failed to make an impression. Browder was certain he was on a roll. Every time he was able to secure another court or oversight-agency decision that would force another Russian company to pay a bit more attention to the law, a cheer would roll across the ostentatiously named Hermitage Fund offices. “The esprit de corps was like no other office that you’ve ever had,” he told me wistfully years later, “because it’s very rare that you could make money and do good at the same time.” At its peak, the fund, which had started with $25 million worth of investments, had $4.5 billion invested in the Russian economy, making it the largest foreign investor in the country. Such was the extent of Browder’s faith in his own strategy and in the country that even when Russia’s richest man was arrested—especially when Russia’s richest man was arrested—Browder let out one of his cheers: to him it indicated that the new president would stop at nothing to establish law and order.

THE RICHEST MAN in Russia was on tour. Mikhail Khodorkovsky, born in 1963, shared a key character trait with both Illarionov and Browder, one that made all three men extremely different from Putin and vulnerable to him: their behavior was driven by ideas. Khodorkovsky’s parents, two Moscow engineers who spent their entire careers working at a measuring-instruments factory, had chosen to keep their own political skepticism from their only son. Theirs was a common dilemma: Speak your mind about the Soviet Union and risk making your child miserable with the constant need for doublethink and doublespeak, or aim to raise a contented conformist. The results of their efforts, however, far exceeded their expectations: they managed to rear a fervent Communist and Soviet patriot, a member of a species that had seemed all but extinct. After getting his degree in chemical engineering, Mikhail Khodorkovsky opted to work at the Komsomol committee. He had no hidden agenda, but in the middle to late 1980s this career choice positioned him well to take advantage of quasi-official and often extralegal opportunities to dabble in business. Before he was out of his mid-twenties, Khodorkovsky had tried his hand at trade, importing personal computers to the Soviet Union, and, more significant, at finance, devising ways to squeeze cash out of the Soviet planned-economy noncash behemoth. He served as an economic adviser to Yeltsin’s first government when Russia was still part of the USSR. During the failed August 1991 coup, he was on the barricades in front of the Russian White House, physically helping to defend his government.

By the early 1990s, in other words, the former Komsomol functionary had been completely reformed. He and his friend and business partner, a former software engineer named Leonid Nevzlin, authored a book-length capitalist manifesto titled Man with a Ruble. “Lenin aimed to annihilate the wealthy and wealth itself—and created a regime that outlawed the very possibility of becoming wealthy,” they wrote, exposing the ideology Khodorkovsky had once pledged to uphold. “Those who wanted to make more money were equated with common criminals. It is time to stop living according to Lenin! Our guiding light is Profit, acquired in a strictly legal way. Our lord is His Majesty Money, for it is only He who can lead us to wealth as the norm in life. It is time to abandon Utopia and give yourself over to Business, which will make you rich!” By the time the book was published in 1992, Khodorkovsky had his own bank and, like other new entrepreneurs, was buying up privatization vouchers, aiming to take control of several formerly state-owned companies.

In 1995–1996 the Russian government asked the country’s richest men for loans, leveraging controlling shares in Russia’s biggest companies—which, according to the arrangement, they would be keeping once the government, predictably, defaulted on the loans. As a result, Khodorkovsky came into possession of Yukos, a newly created oil conglomerate with reserves among the largest in the world.

His next change of heart came in 1998. The financial crisis that year put Khodorkovsky’s bank out of business. The oil company was in dire straits: the price of oil on the world’s markets was $8 a barrel but Yukos’s outmoded equipment placed the cost of producing one barrel at $12. The company had no cash to pay its hundreds of thousands of employees. “I would go to our oil rigs,” Khodorkovsky wrote more than ten years later, “and people would not even yell at me. They were not going on strike: they were understanding. It’s just that they were fainting from hunger. Especially the young people who had small children and did not have their own vegetable garden. And the hospitals—before then, we used to buy medication, we would send people to be treated elsewhere if they needed it, but now we did not have the money. But the worst thing was these understanding faces. People were just saying, ‘We never expected anything good. We are just grateful you came here to talk to us. We’ll be patient.’”

At the age of thirty-seven, one of Russia’s richest men discovered the concept of social responsibility. In fact, he probably felt he invented it. It turned out that capitalism alone could make people not only rich and happy but also poor, hungry, miserable, and powerless. So Khodorkovsky resolved to build civil society in Russia. “Until that point,” he wrote, “I saw business as a game. It was a game in which you wanted to win but losing was also an option. It was a game in which hundreds of thousands of people came to work in the morning to play with me. And in the evening they would go back to their own lives, which had nothing to do with me.” It was a hugely ambitious goal—but, for one of the handful of men who felt they had created a market economy from scratch, not an absurdly ambitious one.

Khodorkovsky formed a foundation and called it Otkrytaya Rossiya, Open Russia. He funded Internet cafés in the provinces, to get people to learn and to talk to one another. He funded training for journalists all over the country, and he sponsored the most talented television journalists to come study in Moscow for a month. He founded a boarding school for disadvantaged children; following the tragedy in Beslan, several dozen survivors became students there. Before long, he was stepping in where Western foundations and governments were pulling out; Russia was considered a stable democracy now, after all. Some said he was funding more than half of all the nongovernmental organizations in Russia; some said he was funding 80 percent of them. In 2003, Yukos pledged to give $100 million over ten years to the Russian State University for the Humanities, the best liberal arts school in the country—the first time a private company in Russia had contributed a significant amount of money to an educational institution.

Khodorkovsky also became preoccupied with the idea of transforming his company into a properly managed, transparently governed corporation. He hired McKinsey & Company, the global management consulting giant, to reform the management structure, and PricewaterhouseCoopers, another world giant, to create the accounting structure from scratch. “Before Pricewaterhouse came along, all the Yukos accountants knew how to do was stomp their feet and steal a bit at a time,” Khodorkovsky’s former tax lawyer told me. “They had to be taught everything.” His partners grumbled—Khodorkovsky’s efforts seemed to be misplaced—but he was determined to turn Yukos into the first Russian multinational corporation. To this end, he hired a Washington, D.C.–based public relations firm. “We would set up five interviews in New York, and we would spend the day going from interview to interview,” the consultant who worked with him remembered. “Not many CEOs would spend this kind of time. We got a Fortune cover story. He was a poster boy for what people hoped would happen in Russia.” The capitalization of Yukos grew exponentially, owing only in part to the growing price of oil, in part to newly modernized drilling and refining systems, which drastically reduced the cost of production, and in part to the new transparency. Khodorkovsky was the richest man in Russia, clearly on his way to becoming the richest man in the world.

On July 2, 2003, Platon Lebedev, the chairman of the board of Yukos’s parent company, Group Menatep, was arrested. Several weeks later, Yukos’s head of security, a former KGB officer, was behind bars. Khodorkovsky himself was told by those in the know and those who could simply follow the obvious logic of events that he, too, would be arrested soon. Someone even wrote up a prescription for Khodorkovsky of things to do to avoid arrest; the document, commissioned by one of his public-relations people, was never seen by Khodorkovsky because another of his publicity men ripped it up in outrage. In any case, it was obvious what Khodorkovsky should do: leave the country. His partner and coauthor with him of Man with a Ruble, Leonid Nevzlin, did just that: he moved to Israel. Khodorkovsky went to the United States briefly but returned—and went on tour.

There was a talk Khodorkovsky had been giving for a bit over a year at this point. I had heard it once when he addressed a group of young writers, assembled at his request. The point of the speech was that Russia should join the modern world: stop running its companies like medieval fiefdoms at best and prisons at worst; transform its economy into one based on the export of knowledge and expertise rather than oil and gas; value its smart, educated people—like us writers—and pay them well. Khodorkovsky was not a great public speaker: he tended to be stiff, and his voice was soft and incongruously high for a man of his height, his looks, and his wealth. But he had the force of conviction and the weight of his reputation on his side; people generally wanted to know what he wanted to say to them.

So instead of leaving the country or genuflecting before Putin—for this was precisely the advice the ripped-up paper had contained—Khodorkovsky decided to create his own lecture circuit. He hired Marina Litvinovich, Putin’s former image-maker, to coach him on public speaking. She told him he had a way of belaboring an idea even after the audience had come over to his side, and this caused him to lose his tempo. Khodorkovsky, a few assistants, and eight bodyguards commenced several months of living out of a chartered jet. He went around the country speaking to students, workers, even military recruits on one occasion (though that engagement seems to have been an organizers’ error). Litvinovich sat in the front row with a letter-size piece of paper with the word “Tempo” written on it; whenever Russia’s richest man perseverated, she held up the sign for him to see.

Over the weekend of October 18, 2003, the Khodorkovsky team was in Saratov, a city on the Volga River. It snowed and, unusual for that time of year, the snow stayed on the ground. For some reason no one quite understood or at least no one articulated, the entire group went outside and wandered in the vast white expanse. They then returned to their hotel, Khodorkovsky abruptly bade everyone good night and disappeared, and the rest of the group got quickly and morbidly drunk. The next morning Khodorkovsky told Litvinovich to return to Moscow: she had not seen her three-year-old son in weeks, and Khodorkovsky could manage the next destination without her.

The phone calls came in the dark predawn hours of October 25: Khodorkovsky had been arrested at the Novosibirsk airport at eight in the morning, five in Moscow. So that’s why he sent me home, thought Litvinovich. Anton Drel, Khodorkovsky’s personal lawyer, got a cryptic message through a third party: “Mr. Khodorkovsky requested that you be informed that he has been arrested. He said you would know what to do.” Typical Khodorkovsky, thought Drel, who had no idea what to do. In the late morning, he received another phone call: “This is Mikhail Khodorkovsky. Would it be convenient for you to come to the prosecutor general’s office now?” he asked with trademark formality; he had already been transported to Moscow. Several hours later, Khodorkovsky was indicted on six charges, including fraud and tax evasion.

EIGHTEEN MONTHS LATER, Khodorkovsky would be found guilty not on six but on seven counts and sentenced to nine years in a prison colony. Long before that sentence was up, he would be indicted on a new set of charges and then sentenced again, this time to fourteen years behind bars. Lebedev, the former chairman of his board, would stand trial alongside Khodorkovsky both times. Other Yukos affiliates, including the former head of security, lawyers, and a variety of managers not only at Yukos but at several subsidiaries, would face other charges and similarly harsh sentences; dozens of others would flee the country. Eventually, even Amnesty International, openly reluctant at first to take on the case of a billionaire, would declare Khodorkovsky and Lebedev prisoners of conscience. No one—not even his jailers, it seemed—would doubt, after a certain point, that he was unfairly imprisoned, but even eight years after his arrest no one would be quite certain what exactly Khodorkovsky had done that had cost him his freedom and his fortune.

Khodorkovsky himself and many of his staff believed that he was being punished for speaking out about corruption. In February 2003, Putin had gathered Russia’s wealthiest businessmen for a rare discussion that was open to the media. Khodorkovsky arrived with a PowerPoint presentation that consisted of eight simple slides containing facts that all of those present certainly knew and just as certainly tried to pretend they did not know. Slide six was titled “Corruption Costs the Russian Economy over $30 Billion a Year” and cited four different studies that had arrived at more or less the same figure. Slide eight was titled “The Shaping of a New Generation” and contained a chart comparing three different institutions of higher learning: one that graduated oil-industry managers, one that trained tax inspectors, and one that prepared civil servants. Competition to get into the last college reached almost eleven persons per spot, aspiring tax inspectors had to beat out as many as four competitors, while future oil-industry managers had to fight fewer than two other people—even though official starting salaries in the oil industry were two to three times those in the government sector. These, Khodorkovsky indicated, were just the official figures; high school students were making their career plans counting on income from corruption.

When he was speaking, Khodorkovsky also mentioned the recent merger of the state-owned oil giant Rosneft with a smaller, privately held oil company. “Everyone thinks the deal had, shall we say, a second layer,” said Khodorkovsky, alluding to the glaringly high price Rosneft had paid. “The president of Rosneft is here—perhaps he’d like to comment.” The president of Rosneft did not care to comment, and this looked very much like an embarrassing and public admission of guilt.

The person who responded to Khodorkovsky was Putin himself. He got the same smirk on his face with which, at the press conference a few months earlier, he had suggested that the French journalist be castrated—the facial expression that indicated he was having difficulty containing his anger. “Some companies, including Yukos, have extraordinary reserves. The question is: How did the company get them?” he asked, shifting in his chair to raise his right shoulder in a gesture that made him seem bigger and smiling a thuggish smile that made it plain this was a threat, not a question. “And your company had its own issues with taxes. To give the Yukos leadership its due, it found a way to settle everything and take care of all its problems with the state. But maybe this is the reason there is such competition to get into the tax academy?” In other words, Putin accused Khodorkovsky of having bribed tax inspectors and threatened a takeover of his company.

Then there was the school of thought that the reason for Khodorkovsky’s trouble was politics: he meddled too much. He made donations to political parties, including the Communists. Immediately following Lebedev’s arrest in July, Khodorkovsky asked Prime Minister Kasyanov, with whom he had a distant but genial relationship, to find out what had happened. “It took three or four attempts,” Kasyanov told me. “Putin kept saying that the prosecutor’s office knew what it was doing. But finally he told me that Yukos had been financing political parties, not just the [small liberal parties], which Putin had given him permission to finance, but also the Communists, which he did not allow him to fund.” Eight years later, Nevzlin—the Yukos partner who left the country—maintained that the company’s donations to the Communist Party had “of course” been cleared by the Kremlin. Some people in Khodorkovsky’s circle took to calling the party-financing situation “the double-cross cross,” believing Khodorkovsky had been set up by someone close enough to Putin to tell Khodorkovsky—falsely—that his funding the Communists had been cleared. All these discussions were taking place in the lead-up to the December 2003 parliamentary election—the one after which The New York Times reported that Russia was “inching toward democracy.”

A third group of observers had the simplest of all explanations for Khodorkovsky’s fate. “He did not go to prison for tax evasion or stealing oil, for God’s sake,” Illarionov said to me seven and a half years after the arrest. “He went to prison because he was—and remains—an independent human being. Because he refused to bend. Because he remained a free man. This state punishes people for being independent.”

But in October 2003, when news of the arrest broke, its darkly absurd nature was far from obvious to everyone. William Browder, for one, applauded the arrest. In an op-ed piece published in the English-language daily The Moscow Times and distributed to investors, he wrote, “We should… fully support [Putin] in his task of taking back control of the country from the oligarchs.”

ON NOVEMBER 13, 2005, Browder was returning to Moscow from London. He had been living in Russia for nine years, and though he spoke no Russian, he felt as much at home in Moscow as anyone could. His money guaranteed a level of comfort familiar to the very wealthy in oil-producing countries: he traveled on a luxurious separate track from the moment he landed in Moscow, where he would be whisked through airport formalities and picked up by his driver, a former police officer who retained his badge, which made him king on the lawless roads of Moscow. But this time Browder found himself stuck in the airport’s VIP lounge: his passport was apparently held up at the border. A couple of hours later, he landed in the detention area of the airport, a blank room with cold plastic chairs and several other detainees, each a prisoner of his own uncertain fate. Fifteen hours after arriving, Browder was put on a flight back to London: his Russian visa had been revoked.

Surely this was a massive misunderstanding. Browder called the cabinet ministers and the Kremlin staffers who had liked his PowerPoint presentations so much. They were vague, evasive, noncommittal. After several phone calls, it began to sink in that his visa issues would not be resolved anytime soon. For all his faith in Putin’s best intentions, one thing Browder knew for certain was that no business should be left unattended in Russia. He began moving his operation to London. The analysts moved; the fund divested itself of $4.5 billion worth of stock in Russian companies, without anyone’s seeming to notice. By the end of the summer of 2006, the Hermitage Fund’s Russian companies were empty shells with a small office in Moscow occasionally visited by the company’s secretary.

She was there, along with a staff member visiting from London, when twenty-five tax police officers descended on the office and turned it upside down. Soon the same number of officers, led by the same colonel who had run the first raid, appeared at the offices of the Hermitage Fund’s law firm, apparently looking for stamps, seals, and certificates for three holding companies through which the Hermitage Fund had managed its investments. When a lawyer objected that they lacked the appropriate search warrants, he was taken to a conference room and beaten there.

Four months later, Browder was notified of multimillion-dollar judgments against his companies issued by a court in St. Petersburg. Put on notice by his visa annulment, frightened by the tax police raids, he was now downright terrified by a sequence of events for which there could no be reasonable explanation. Why would the tax police need registration papers, seals, and stamps for empty shell companies? How could there be judgments against these companies if their representatives had not even known of any lawsuits or court hearings? Browder asked his Moscow lawyers to investigate.

It was not a lawyer but a young accountant who, after more than a year of sleuthing, finally reconstructed an absurd, barely believable, but nonetheless logical sequence of events. The three empty shell companies, Sergei Magnitsky discovered, had been re-registered in the names of other people, all of them convicted felons. Then the companies had been sued by other companies, which produced contracts supposedly showing that the stolen companies owed them money. Three different courts in three different Russian cities held speedy hearings and issued judgments against Browder’s former companies totaling a billion dollars, which just happened to be exactly the amount of profit the three companies had reported in the previous tax year. Then the companies’ new owners filed claims with the tax authority, requesting a refund of all the taxes they had paid: they appeared to qualify for it because, on paper, the companies no longer had a profit. The refunds, totaling $230 million, were processed in a single day in December 2007; they were transferred to the companies’ new owners and disappeared from the Russian banking system.

It appeared Magnitsky had uncovered an embezzlement scheme that involved the tax authority as well as the courts in at least three cities: had the judges not been in on the deal, they would hardly have rubber-stamped judgments with such ease and speed. Nor would the tax authority have processed the refund so fast—or at all, considering that Browder’s lawyers had already filed six different complaints alleging the theft of his companies—had the entire scheme not been orchestrated at or near the top of the agency.

Browder, ever the ideologue, saw an opening. By now he believed that his own banishment from Russia had come from the very top: even if he still did not know the exact reason, he could believe that someone whose toes he had stepped on could have conspired to convince the president or someone very close to him that Browder was an undesirable. But now Browder had a chance to save Russia all over again. “There is no way the president of the country could allow $230 million of the country’s money to be stolen,” he reasoned. “I mean, the tax crime is so cynical. If you made a move about it, people would say it’s just too far-fetched. We expected SWAT teams and helicopters to swoop down from the sky and get all the bad guys.”

Magnitsky wrote fifteen different complaints aimed at exposing the embezzlement and starting an investigation. But instead of SWAT teams swooping down from the sky, criminal probes came raining down on lawyers Browder had engaged. Seven attorneys at four different law firms received notice that they were being investigated on various criminal charges. At this point Browder knew enough to offer all of his lawyers refuge in Great Britain. “You know, I was trained as a financial analyst,” he told me a couple of years later, in part by way of explaining how difficult the process had been for him, in part by way of justifying why it took him so long to realize the full gravity of the situation. “I wasn’t a soldier. I wasn’t trained that people would be putting their lives at risk. And I went to every single one of our lawyers and I said, ‘I am truly sorry that this has happened. It was not my intention to have put you in physical harm and it is not my intention to leave you in physical harm and I want you to leave Russia at my expense, and come to London at my expense, and stay in London at my expense.’ It wasn’t an easy conversation to have with any of these guys. They were all in their forties, at the top of their careers, some of them didn’t speak a word of English. And I was asking them to give up their lives, their professions, their whole community, to go into exile at a moment’s notice to protect themselves from danger.”

Six of the seven lawyers accepted Browder’s offer and moved to London. The one who refused was Sergei Magnitsky, the accountant, at thirty-six the youngest of the group—which was how Browder explained his refusal to himself: “Sergei was from a generation who thought that Russia was changing. There was a new Russia, maybe an imperfect Russia, but a getting-better Russia. The basic fundamental principles of law and justice existed—that was his premise. He said, ‘This is not 1937. I’ve done nothing wrong and I know the law. There’s no legal means that they could come and arrest me.’”

On November 24, 2008, Sergei Magnitsky was arrested in connection with the very embezzlement scheme he had tried to expose. Like his client three years earlier, he was certain at first that it was a misunderstanding that would soon be cleared up with the help of his lawyers. At his first court hearing, he argued he should be released, among other reasons, because his young son was ill with the flu; he was clearly certain his ordeal would be over in a matter of days. Not only was he not released, however, but the conditions in which he was held deteriorated steadily as he was shuttled back and forth between two Moscow jails. He was not allowed to see his wife or mother. His became ill and was consistently denied the medical care he required. On November 16, 2009, Sergei Magnitsky died in prison at the age of thirty-seven.

After his death, the prison released to his family his notebooks, in which Magnitsky had meticulously copied every complaint, appeal, and request he wrote: once he realized that his arrest was no misunderstanding, he had waged a fierce one-sided battle, writing 450 documents in his 358 days in jail. He created an encyclopedia of the abuse he had suffered. He described the overcrowded cells in which he was reduced to eating and writing while sitting on his cot. In one of the cells, the glass in the windowpanes was missing and temperatures inside hovered around freezing. In another, the toilet—or, rather, the hole in the floor that served as the toilet—overflowed, flooding the room with sewage. He described being systematically denied hot meals and, often, any food at all for days on end. Most egregiously, he was denied medical attention even as his chronic abdominal pain grew so severe he could not sleep, even as he wrote letters documenting his symptoms and spelling out his legal rights regarding health care. He died of peritonitis.

Browder and his investment fund staff were finally fated to become soldiers. They launched a highly visible, vocal, and effective campaign they called Justice for Sergei Magnitsky. They collected copious evidence against the people who had been connected to the jailing and torture of their colleague and against those involved in the embezzlement scheme he had uncovered. Within a few months, bills that would require visa bans and freeze any local assets of these officials were pending in the U.S. Congress, the European Parliament, and parliaments of European Union member states.

BY THIS TIME, the dominant Russia story had finally changed in the U.S. media. It had taken most of Putin’s second term in office to transform the narrative: “emerging democracy” slowly gave way to “authoritarian tendencies,” which gradually yielded to a picture of what had become for all intents a criminal tyranny. Back in 2003, when Khodorkovsky attempted to talk to Putin about corruption, the global organization Transparency International ranked Russia as more corrupt than 64 percent of the world’s countries: in its annual rating it looked slightly more corrupt than Mozambique and marginally less corrupt than Algeria. In its 2010 report, the organization showed Russia as more corrupt than 86 percent of the world: it now fit in between Papua New Guinea and Tajikistan.

Russia finally lost its bona fides in the eyes of international business and media. Browder was spending his time criticizing the Russian regime not only in the world’s parliaments but also at forums such as the annual big-business gathering in Davos, Switzerland. Andrei Illarionov had resigned his post. “Everyone had their own turning point,” he explained to me. “Mine was Beslan. That was when I realized it was a modus operandi. There was the real possibility of saving lives, and he [Putin] opted instead for the killing of innocent people, the killing of the hostages. I mean, I was at work, and I could watch and listen, and I could see it all clearly close up. I could see that if the standoff continued for at least a few more hours, lives would be saved, all of them or most of them. There would be no attack and the children and their parents and their teachers would be saved. And if this was the case, then there could be only one explanation for storming the school building when they did. It all became clear to me that day, September 3, 2004.”

Illarionov resigned his position as sherpa—Putin’s personal representative—to the Group of Eight; winning Russia’s full membership in the G8 had been one of Illarionov’s main accomplishments. “Being an adviser is one thing,” he explained. “Being an adviser is being an adviser: it’s an important post, but it’s not the same thing as personally representing someone. And I told my employer that under the circumstances I could no longer function as his personal representative.”

Six months later, Illarionov resigned his job as the president’s adviser as well. “It had just become ridiculous. No one was heeding my advice on the economy or on anything else. The train of the Russian state was moving full speed ahead on a completely different set of rails.” He proceeded to write a series of scathing articles defining this “different set of rails.” Russia, he wrote, had become the opposite of a liberal economy: an unfree, warmongering state ruled by a corporate group. Like Browder, Illarionov became a tireless and vocal roaming critic of the Putin regime.

Mikhail Kasyanov, the prime minister, had also left. His turning point came when Khodorkovsky was arrested. “There had been signs before,” he told me. “There was the television takeover and the handling of the theater hostage crisis—these were all signs—but I did not think this was a plan. I thought these were mistakes that could be corrected. And I kept thinking this way right up until the point when Lebedev and Khodorkovsky were arrested. This was when I realized these were not accidental mistakes—this was policy, this was his general understanding of life.”

Kasyanov had conscientiously observed Putin’s request that he stay “off his turf”— meaning out of politics—so conscientiously, in fact, that he had willfully blinded himself to the political life of the country. So, in the summer of 2003, when Putin told him that the prosecution of Lebedev and Khodorkovsky was their punishment for donating funds to the Communist Party, Kasyanov was shocked. “I could not believe something that was legal required special permission from the Kremlin.” The conflict between Putin and his premier quickly became public: Kasyanov openly criticized the arrests, calling them an unwarranted and extreme measure. It was clear Putin would not keep this outspoken premier around for his second term, but the president’s patience seemed to run out early: in February 2004, a month before the election, he fired his cabinet.

After firing Kasyanov, Putin planned to keep him on in a less public position. He made him three job offers, each more insistent than the last: there was the option of heading the security council or running a new state-affiliated bank venture, an offer Putin made twice. When Kasyanov finally said no, his former employer’s tone turned from seductive to menacing. “I was already at the door when he said, ‘Mikhail Mikhailovich, if you ever have a problem with the tax police, you may ask for help, but make sure you come to me personally.” Kasyanov interpreted Putin’s parting words as both a threat and an offer to keep a door open. Tax trouble duly began: Kasyanov’s consulting company, which he formed right after losing his job, was audited. Kasyanov chose not to seek help, which meant not only that the tax audit dragged on for two years (the two sides finally managed to settle on an extremely minor violation, improperly entering in the books a box of writing paper), but also that Kasyanov became persona non grata in Russian politics. In the years following his firing, he tried to run for office and register a political party—reportedly even managing to collect the absurdly high number of signatures required—but his papers were consistently turned away by the registration authorities. With no access to television or large newspapers, Kasyanov went from mainstream to marginal as fast as any politician ever had.

The Khodorkovsky case came to trial in mid-2004 and dragged on for ten months, despite the fact that nearly all motions by the defense were denied, drastically cutting the number of witnesses and cross-examinations at Moscow’s Basmanny Court. As the verdict neared, Igor Shuvalov, a lawyer and a newly prominent assistant to Putin, said, “The Yukos case was a show trial intended as an example for other companies using various schemes for minimizing their tax burden. If it hadn’t been Yukos, it would have been another company.” Even the Moscow press corps, used to writing about some of the most cynical politicians on the planet, were shocked by the open use of Stalin-era language to mean more or less exactly what Stalin had meant: that the courts existed to do the bidding of the head of state and dole out punishment as he saw fit to those he saw fit to punish.

In fact, only two of the seven charges against Khodorkovsky concerned alleged tax evasion, and what happened in the Moscow court was more show than trial. The defense called few of its witnesses—not only because the court turned down so many of its motions but also because the prosecution’s case seemed so flimsy it hardly warranted a full-force defense, especially since testifying for the defense seemed to incur considerable risk. Ten Yukos affiliates, including two lawyers—both of them women—had already been arrested, and nine more evaded arrest by fleeing the country; soon these numbers would seem quite small, as dozens of people would be in prison and hundreds on the run.

Finding itself in the middle of a Kafkaesque trial, the defense adopted a pointedly understated style. In his final arguments, Genrikh Padva, Khodorkovsky’s lead attorney and possibly the country’s most famous defense lawyer, sounded more like a schoolteacher than the passionate participant in a judicial contest. Over the course of three days of hearings, Padva read his arguments, methodically listing all of the prosecution’s errors, aiming to show that the prosecutors failed to supply any documents even proving that the defendants were in any way involved with some of the companies listed in the charges, much less actually guilty of the crimes. “And I won’t even mention the fact that the charges are filed in accordance with laws that went into effect years after these supposed deeds took place,” was a typical Padva aside. His tone conveyed that he entertained no illusions about his ability to convince the judges of anything, but in the interests of history and future appeals to international judicial bodies, he needed to get all his arguments on record. The judges, three overweight women around forty, each sporting a shiny helmet of combed-back hair, sat still, their lips pursed in identical demonstrations of displeasure. Their demeanor seemed meant to say: The decision has long been made, and your insistence on procedure and proper discussion is an offensive waste of everyone’s time.

Khodorkovsky and Lebedev were each sentenced to nine years in a prison colony; three months later, an appeals court cut a year off the sentences. The men were shipped off to different colonies, each as faraway and difficult to get to as a colony could be. To visit their client, Khodorkovsky’s lawyers had to travel nine hours by plane and another fifteen hours by train. Russian law mandated placing convicts in prisons within easy travel distance of their homes—so the law had to be changed, retroactively, to accommodate the Khodorkovsky case.

For six months following his arrest, Khodorkovsky tried to run his company from jail. Finally realizing this was untenable, he signed his shares over to Nevzlin, the partner who had moved to Israel. But the company, bombarded with tax liens and lawsuits, its assets inside Russia long since seized by the state, was cracking. Within a year of Khodorkovsky’s arrest, Russia’s largest and most successful oil company, which had once paid 5 percent of all the taxes collected by the federal government, was facing bankruptcy proceedings. Its most attractive asset, a company called Yuganskneftegaz, owner of some of Europe’s largest oil reserves, was up for auction. The state gas monopoly, now run by Putin’s former deputy in St. Petersburg, looked poised to win the auction. To prevent the deal, Yukos’s lawyers filed for bankruptcy in a Texas court and then sought a staying order on the sale of the company there; Gazprom, the Russian company, certainly was not going to listen to an American court on this matter, but it so happened it planned to buy Yuganskneftegaz with funds borrowed from American and West European banks. The financing was pulled and it looked, briefly, like the takeover might be temporarily averted—when a newly registered company called Baikalfinansgrup appeared out of nowhere to register for the auction. Journalists immediately descended on its registration address in Tver, a godforsaken town about three hours outside Moscow; it turned out to be a small building that was used as a legal address by 150 companies, none of which appeared to have any physical assets.

Nor did Baikalfinansgrup have financial assets. According to its registration documents, filed two weeks before the auction, its capitalization was ten thousand rubles, or roughly $300. But somehow the state-owned oil company Rosneft—the one whose president had declined to respond to Khodorkovsky’s questions about perceived corruption a year earlier—lent the unheard-of company more than $9 billion to buy Yuganskneftegaz; this was less than half the company’s estimated worth at the time. The auction, held on December 19, 2004, lasted all of two minutes.

Speaking in Germany two days after the auction, Putin bristled at the suggestion that Yukos assets had been bought by an unknown entity. “I know the stockholders of the company, and they are individuals,” he said. “They are individuals who have been working in the energy sector for a long time.” Another two days later, Rosneft, the state oil company, bought Baikalfinansgrup, taking control of the Yukos assets—but also ensuring that it could never be sued for having purchased it in the course of a rigged auction.

It had been just over a year since Khodorkovsky’s arrest, and it was now clear Russia had passed two milestones. With the country’s former richest man behind bars indefinitely, no one, not even the rich and powerful, could afford free agency. And with the assets of the country’s largest private company hijacked in broad daylight, Putin had claimed his place as the godfather of a mafia clan ruling the country. Like all mafia bosses, he barely distinguished between his personal property, the property of his clan, and the property of those beholden to his clan. Like all mafia bosses, he amassed wealth by outright robberies, as with Yukos, by collecting so-called dues and by placing his cronies wherever there was money or assets to be siphoned off. By the end of 2007, at least one Russian political expert—someone believed to have access to the Kremlin—estimated Putin’s personal net worth at $40 billion.

THE $40 BILLION FIGURE can be neither confirmed nor disproved, but there was one story I was able to report in detail. It shed light not only on the scale of Putin’s personal fortune but also on the mechanics of amassing it. It took my good reportorial luck and one very brave man to tell it.

In the early 1990s, Sergei Kolesnikov had been one of hundreds of Soviet scientists turned Russian entrepreneurs. A Ph.D. in biophysics, he started out manufacturing medical equipment and then began importing it. During the Sobchak administration, he formed a joint venture with the city and created a successful business outfitting St. Petersburg’s clinics and hospitals. After Sobchak was voted out of office, he bought out the city’s share and took the company private, staying in the same line of business.

As soon as Putin was elected president, Kolesnikov was contacted by an old business associate from his St. Petersburg days. He outlined a scheme: some of Russia’s wealthiest men would donate significant sums of money earmarked toward purchasing medical equipment for Russian facilities. Kolesnikov would use his expertise to procure the equipment at significant volume discounts. The difference between the list price of equipment, which would be reported to the donor, and actual money spent had to be no less than 35 percent; if Kolesnikov obtained an even greater discount, he could keep the difference as profit. The 35 percent had to be deposited in a bank account set up in Western Europe and would later be used to invest in the Russian economy.

Kolesnikov had no qualms about agreeing to the scheme. Like Browder, he thought he was living well while doing good for Russia: the much-needed medical equipment was an unquestionable good; on top of that, his new partners would be investing large amounts of money into the Russian economy. Sure, they were skimming off the top—more than a third of the money donated—but they were investing it in Russia, not lining their own pockets. And also, “we knew this was not money made by backbreaking labor. You can’t come by that kind of money honestly.”

The first donor was Roman Abramovich, a secretive Russian oligarch, and future owner of the Chelsea Football Club. He donated $203 million, of which about $140 million bought equipment for the Military Medical Academy in St. Petersburg (run by Putin’s friend the minister of health, who had once helped ferry Sobchak out of the prosecutor’s office and out of Russia) and over $60 million stayed in a European bank account. His donation was followed by a number of smaller ones. By 2005, about $200 million had accumulated in this bank account. Kolesnikov and his two partners—one had started out with him in St. Petersburg and the other had brought him into this new line of business—formed a new company called Rosinvest, a wholly owned subsidiary of a Swiss company, which did business through a third company, also Swiss, ownership of which was fixed in bearer shares. In other words, whoever was in physical possession of the papers was the legal owner. Each of the three men got 2 percent of the shares; the remaining 94 percent was handed over to Putin himself.

The newly formed company had sixteen different investment projects, mostly in industrial production; they were well chosen, naturally afforded a variety of tax and legal benefits, and brought a handsome profit—94 percent of which belonged to Putin. All along, there was also what Kolesnikov thought of as a small personal project of Putin’s, a house on the Black Sea budgeted at $16 million. “But things kept getting added,” Kolesnikov told me. “An elevator to the beach, a marina, a separate high-voltage line, a separate gas pipeline, three new motorways that led directly to the palace, and three helicopter pads. The building itself was changing, too: an amphitheater was added, then a winter theater. And then it all had to be decorated too: furniture, artwork, silverware. It’s all very expensive!” Kolesnikov traveled to the Black Sea coast twice a year to monitor the project; last time he was there, in the spring of 2009, what had been a house had become twenty buildings, and the total budget had long since passed the billion-dollar mark.

Something else had happened a few months earlier. In the aftermath of the world financial crisis, Kolesnikov’s partner informed him that Rosinvest would no longer be making investments: its only purpose now was the completion of the Black Sea palace. Kolesnikov, who had not exactly been a stickler for legalities but had been very proud of his work and sincerely convinced that he was creating wealth for his country, was deeply offended. He fled Russia, taking the company’s documentation with him, and paid a Washington law firm a considerable sum of money to review the papers and verify his story. And then he went public with the story of what became known as Putin’s Palace. But the story, while it attracted a fair amount of attention when I wrote about it in Russia, drew little reaction from the government: first Putin’s press secretary dismissed it as rubbish and then, when copies of some building contracts were published by Nevaya Gazeta, the Kremlin confirmed that the Black Sea project existed.

IT WOULD BE fair to assume that the palace scheme was just one of many similar schemes for squeezing wealth out of Russia. The question is: What is the nature, the motivating principle, behind these schemes? In other words, the question is, once again: Who is Mr. Putin?

There is the story of Putin the bureaucrat who did not take bribes—a key narrative that explains Boris Berezovsky’s attraction to him, which, in turn, was key to making Putin president. Berezovsky’s right-hand man, Yuli Dubov, who had long since become one of the London exiles, told me one of the most striking of the upstanding-Putin stories. Once, in the early 1990s, Dubov was having trouble with some of the documentation for the car service station Berezovsky was opening in St. Petersburg. He needed Putin to make a phone call to facilitate the process, and to this end he scheduled lunch with him. Dubov arrived at city hall early, as, uncharacteristically, did Putin. As they both waited for their appointed time to be able to leave for lunch, Dubov broached the subject of the phone call. Putin immediately took care of the matter, but then refused to go to lunch: “Either you have me help you with your business, or you take me to lunch,” Dubov remembered him saying. This was clearly not just a bureaucrat who did not take bribes: this was a bureaucrat whose entire identity rested on his incorruptibility.

And then there was the Putin on whose guard $100 million worth of contracts evaporated, as Marina Salye documented. The remarkable part of this story is not the occurrence of theft—it is abundantly clear that some theft occurred absolutely everywhere in Russia in those days and in similar situations, which was the reason Salye’s revelations never gained momentum—but that all the funds appear to have been stolen. I suspect that if Putin had shaved off only 5, 10, 20, even 30 percent, he would not have created an enemy for life, as he did with Salye—just as Kolesnikov would not have waged his campaign had the palace stayed merely a very expensive side project.

But it is as if Putin could not resist taking it all. And I think this is literally true. On several occasions, at least one of them embarrassingly public, Putin has acted like a person afflicted with kleptomania. In June 2005, while hosting a group of American businessmen in St. Petersburg, Putin pocketed the 124-diamond Super Bowl ring of New England Patriots owner Robert Kraft. He had asked to see it, tried it on, allegedly said, “I could kill someone with this,” then stuck it in his pocket and left the room abruptly. After a flurry of articles in the U.S. press, Kraft announced a few days later that the ring had been a gift—preventing an uncomfortable situation from spiraling out of control.

In September 2005, Putin was a special guest at New York’s Solomon R. Guggenheim Museum. At one point his hosts brought out a conversation piece that another Russian guest must have given the museum: a glass replica of a Kalashnikov automatic weapon filled with vodka. This gaudy souvenir costs about $300 in Moscow. Putin nodded to one of his bodyguards, who took the glass Kalashnikov and carried it out of the room, leaving the hosts speechless.

Putin’s extraordinary relationship to material wealth was evident when he was a college student, if not earlier. When he accepted the car his parents won in a lottery, though the prize could have been used to greatly improve the family’s living conditions, or when he spent almost all the money he made over the summer to buy himself an outrageously expensive coat—and bought a cake for his mother—he was acting in ways highly unusual and borderline unacceptable for a young man of his generation and social group. Ostentatious displays of wealth could easily have derailed his plans for a KGB career, and he knew this. The story told by the former West German radical—of Putin demanding gifts while in Dresden—completes the picture. For a man who had staked most of his social capital on conforming to the norm, this was particularly remarkable behavior: it seems he really could not help himself.

The correct term is probably not the popularly known kleptomania, which refers to a pathological desire to possess things for which one has little use, but the more exotic pleonexia, the insatiable desire to have what rightfully belongs to others. If Putin suffers this irrepressible urge, this helps explain his apparent split personality: he compensates for his compulsion by creating the identity of an honest and incorruptible civil servant.

Andrei Illarionov discovered this less than a month after becoming Putin’s economic adviser: just days after his inauguration, Putin signed a decree consolidating 70 percent of the country’s alcohol manufacturers in a single company and appointing a close St. Petersburg associate to run it. At the time, oil prices had not yet taken off and alcohol was arguably the country’s most lucrative business. As Illarionov found out, no one on the new president’s economic team had been consulted about or even informed of the decision. Over the next few months, Illarionov would grow accustomed to this: Putin continued to talk a good economic line to the public and the media, and continued to appear to listen to his sterling team of liberal advisers, while consistently broadsiding them with decisions that consolidated all of the country’s resources in the hands of his cronies.

Is this what happened with Khodorkovsky? Did Putin have him arrested because he wanted to take possession of his company rather than for reasons of political and personal competition? Not exactly. He put Khodorkovsky behind bars for the same reason that he abolished elections or had Litvinenko killed: in his continuing attempt to turn the country into a supersize model of the KGB, there can be no room for dissidents or even for independent actors. But then, independent actors are inconvenient in part because they refuse to accept the rules of the mafia. And once Khodorkovsky was behind bars, the opportunity to rob him presented itself. In seizing this opportunity, Putin, as usual, failed to distinguish between himself and the state he ruled. Greed may not be his main instinct, but it is the one he can never resist.