The Looting of Russia
An FBI agent and an honest Moscow cop stop the plundering of the national treasury
Unlike Fort Knox, which holds only gold bullion, the Russian depositories contain treasure of every sort: vast stores of diamonds, emeralds, and other gems; of silver, platinum, and more than 140 tons of gold. Rare coins and jewelry, too. Its exact worth, say Russian officials, is a state secret.
Even in the chaotic bureaucracy that rules Russia today, one cannot remove such treasure without approval from top officials. And the man with the key was a tough, shrewd bureaucrat named Yevgeni Bychkov, who just happened to be the mentor of Kozlenok. "Bychkov and Kozlenok were like father and son," says Jack Immendorf, who was then a top adviser to San Francisco's mayor and who would later be tapped to serve as CEO of Golden ADA. Bychkov had known President Yeltsin since the 1960s, when Yeltsin served as party boss in the Sverdlovsk region and where Bychkov later ran a smelting plant. In 1985, Bychkov, then 51, followed Yeltsin to Moscow and became head of the State Treasury, overseeing not only the depositories but also the mining and processing of gems and precious metals. According to the Russian press, Bychkov and his aides were repeatedly investigated for wrongdoing; twice he lost his job for apparent misconduct, including the 1990 loss of $22 million in expected revenues from secret diamond sales. But Bychkov survived and, after the fall of the Soviet Union, Yeltsin made him chairman of the Russian Federation's new Committee on Precious Metals and Gems, with a rank equivalent to minister.
In 1992, Bychkov's agency proposed a bold plan to escape De Beers's control: Moscow would set up a diamond center in the United States and ship the firm--Golden ADA--a half-billion dollars of goods from the State Treasury. The treasure would be collateral to obtain a line of credit from the Bank of America--enough capital to finance the firm's entry into the world diamond trade. But even Bychkov could not single-handedly authorize the transfer of so much national treasure. He obtained the agreement of the state budget director, officials from the foreign trade and customs bureaus and, ultimately, Finance Minister Boris Fyodorov, one of Yeltsin's top "reformers." That spring, Bychkov opened the Closet and began shipping its contents overseas.
In San Francisco, Kozlenok and his men soon were opening pouch after pouch of polished Siberian diamonds. There were thousands of the stones--26,000 carats in all--enough to fetch nearly $20 million on the market. But diamonds were only part of the treasure. Crates arrived packed with fine silver: antique plates, tableware, and rare coins. Other boxes held assorted gems--amethysts, topaz, emeralds--some the size of a man's fist. Still other crates held antique artwork: Faberge-like eggs studded with gems; an angel with diamonds in its open hands; intricately carved elephants of ivory. There was jewelry of every sort: hundreds of rings and earrings, bracelets, brooches, and necklaces. And then there was the gold.
The gold arrived not by the pound but by the ton. And it came not in bricks or ingots but in coins. Out of the Russian treasury came thousands of collector's gold coins--francs from pre-revolutionary France, hundred-year-old English pounds and American dollars, and coins from Czarist Russia bearing the image of Peter the Great. Remarkably, Bychkov and company were just getting started.