The Looting of Russia
An FBI agent and an honest Moscow cop stop the plundering of the national treasury
The proud owners of the new company were conspicuous in tuxedos: a Russian named Andrei Kozlenok and his two Armenian partners, the brothers Ashot and David Shagirian. The building itself was impressive: a four-story structure with black granite columns and a luminous glass-block facade. But it was the operation inside that people came to see. Behind bulletproof glass labored some of Russia's finest diamond cutters and polishers, using state-of-the-art equipment from New York's diamond district. As armed guards stood by, employees gained access to the gems after passing their hands across a palm-print reader. High-tech vaults, luxurious offices, and an exhibition room added to the dazzling effect.
A slender, elegant fellow in his early 30s, Kozlenok sported a $50,000 watch and handled himself with poise. The tall young Russian had arrived only months before from Moscow, boasting of connections to high-ranking officials and wielding an apparently bottomless checking account. Kozlenok had a degree in management, and back home he had peddled cognac, tires, and fine Ukrainian marble, offered security escorts to foreign businessmen, and set up a series of moneymaking ventures with the Moscow police department. One business, an export company that sent gas masks to Kuwait, had come under scrutiny because it had hired top police officials, and some of its funds had mysteriously disappeared.
But in San Francisco, the future looked bright for Andrei Kozlenok. He had arrived with signed contracts guaranteeing that Golden ADA would be supplied with Russian diamonds, and he had found in the Shagirians good partners who spoke fluent English and brought local contacts to the enterprise. So valued were the two Armenians that Kozlenok offered each a 20 percent stake in the company, with Kozlenok owning the rest. From the initials of their first names--Andrei, David, and Ashot--came the ADA in the company's name.
At the reception, Kozlenok said that he had branch offices in Antwerp--center of the international diamond trade--and in Moscow, where the Russians controlled one quarter of the world's diamond production. His mission, Kozlenok declared to associates, was to punch a giant hole in the De Beers diamond cartel. The South African concern has long controlled the production and distribution of diamonds worldwide, limiting availability of the stones and, critics say, keeping their price artificially high. Since the 1950s, when huge diamond deposits were found in Siberia, Moscow had played along, contracting to sell nearly all its gems to De Beers. But now, diamond rich and cash poor, Russia wanted more control.
By the time Kozlenok arrived in California, Moscow's negotiations over a new deal with De Beers had bogged down, and growing numbers of Russian diamonds were being dumped on the open market. Golden ADA placed the Russians outside the major diamond centers of London, Antwerp, and New York, while offering access to the world's largest diamond market--the United States. Sources say that De Beers officials watched the new firm with growing anxiety. Already, Australia had pulled out of the cartel, and vast numbers of diamonds were finding their way out of Angola. If the Russians were to bolt too, prices on the worldwide diamond market would probably plunge. De Beers hired private investigators to report on Golden ADA and warned the cartel's buyers about likely Russian dumping. But the diamond cartel needn't have worried. As it turned out, the men behind Golden ADA were after something other than market share. Russian bureaucrats call it "the Closet." It is the handful of underground repositories that hold the national treasury of the Russian Federation and, before that, the Soviet Union. One site, say officials, lies at a secret location deep in the Ural Mountains. Another stockpile sits 30 feet below the streets of Moscow. Hallway after hallway is lined with vaults; inside each, bags stuffed with diamonds sit on shelves reaching to the ceiling.