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The Globe and Mail
Saturday, May 27, 1995


By Geoffrey York, Moscow Bureau

BY his bloodlines, by the normal rules of genetic programming, Stas Namin should have been a faithful servant of the Communist Party. His grandfather, Anastas Mikoyan, was a member of Stalin's inner circle and a president of the Soviet Union in the Sixties. His great-uncle was the inventor of the MiG fighter jet, one of the most famous weapons in the Soviet military arsenal. As a youth, Stas attended military school and spent seven years training as an army cadet.

So how is it that three decades later he is a pony-tailed businessman with electric guitars, a Mercedes 300 and a Ford Bronco? How did he metamorphose from Communist protege into flamboyant Russian millionaire?

The story of Stas Namin is, in many ways, the story of Russia's New Rich, the emerging class of high-living bankers and entrepreneurs that dominates Moscow's boomtown economy. Some were powerful Communist insiders who profited from the Soviet era. Others were dissident outsiders who rebelled against the system. But for all of them, the great political struggles are over. The important things today are money, entertainment, business deals, nightlife and shopping.

By some estimates, there are 300,000 or more of these New Rich, living a lifestyle of almost surreal wealth. The gap between the rich and poor has become increasingly wide. Today, the income of Russia's wealthiest 10 per cent is about 14 times greater than the income of the poorest 10 per cent. In Moscow, the most affluent group is 60 times richer than the poorest.

Mr. Namin, 43, who describes himself as an "old hippie," enjoys a splendid lifestyle. He spends his, spare time in a $100,000 hot air balloon (he calls it his "Russian Yellow Submarine"). He owns a radio station, a music studio, a magazine, a concert-promotion company, a record company, an outdoor theatre and a restaurant. He dabbles in real estate and retail interests, produces TV shows and is involved in developing a proposed 124-storey office tower in Moscow that would be the tallest building in the world.

Yet his wealth is small compared to others. "I'm not so rich," he says. "I'm rich enough so that I'm not struggling. But if I wanted to make serious money, I should be dishonest. Serious money means billions of dollars."

Nobody should be impressed by his Mercedes, he insists. "A Mercedes is not a fancy car in Moscow any more. It's just a regular car. There are more Mercedes here than anywhere else in the world." He is slightly more proud of his Ford Bronco. "It's just like 0. J. Simpson's, only I have lights on the roof, just for fun."

Until the late Sixties, Mr. Namin followed the straight and narrow path of Communist orthodoxy. Then, while still in his teens, he heard something that changed his life: the banned music of the Beatles and the Rolling Stones.

He dropped out of military school and became obsessed with rock music. In the Seventies he created the first Soviet supergroup. He called it Flowers, but it was nicknamed the Soviet Beatles. The authorities banned it.

In the Eighties, as the climate became slightly more relaxed, he surfaced again as the leader of The Stas Namin Group, which sold millions of records, although the profits were pocketed by the Soviet government. In the glasnost years of the late Eighties, the group toured the world, and hung out with such rock superstars as Keith Richards, Jon Bon Jovi, Frank Zappa and Peter Gabriel. In 1989 he organized a heavy-metal concert at Lenin Stadium in Moscow that was billed as the Soviet Woodstock. Some 200,000 tickets were sold.

Since then he has concentrated on the business side of music and television. it has given him a comfortable income, a luxurious lifestyle and an insider's view of Moscow's business elite. Yet he is embarrassed by what he, sees around him. The lifestyle of the Russian nouveaux riches is often crude and vulgar.

"Business here is in such a primitive state," he says. "The most profitable businesses are the fastest. You just buy for a cheap price and sell it. It's primitive, it's stupid and it's very profitable."

Mr. Namin says he prefers to use his money to create things -- theatres, concerts, beautiful buildings. He has invested heavily in the entertainment sector, including a planned concert venue and nightclub complex in Gorky Park. But he despairs when he looks at the rest of the Russian New Rich. This country is not ready for civilized business, he says. There are no laws, no principles, no traditions. Everywhere else in the world, business is creative. Here, it's nothing except making money."

Lifestyles of the Rich and Russian

At first, he was angered by the ruthlessness and crudeness of the class of businessmen. "It made me uncomfortable to see it," he says. "But now I understand that this is a different country, the mentality of the people is different. Businessmen here are very cynical. It's not quite the jungle, but it's close to it. How do you make money in this country? You kill somebody, you steal, you bribe."

Only once was he truly shocked by the credible wealth of the New Russians. It after a concert in Moscow by Liza Minnelli, sponsored by Mr. Namin's friend Sergei, a 28-year-old banker. The three of them flew back to New York in Sergei's private jet, dropped off Ms. Minnelli, then flew on to Los Angeles, where Mr. Namin watched in amazement as Sergei rented a Rolls-Royce and drove to an exclusive designer boutique. In a matter of a few hours, he had $'700,000 (U.S.) on clothing, jewelry and watches.

Only a few years ago, Sergei was an ordinary Russian soldier, a veteran of the war in Afghanistan. He made his fortune in just three years in Moscow's corrupt banking system.

Yet none of this is remarkable in the cutthroat world of postcommunist Moscow. In a country in which the average wage is less than $70 a month, the New Rich think nothing of spending $1,000 on a concert ticket or $450 for a bottle of vodka at a nightclub. (All prices are expressed in U.S. dollars, the unofficial currency of Russia's nouveaux riches.)

They spend thousands of dollars on fur coats for their dogs. They read glossy magazines telling them where to buy Italian designer luggage for $12,000. Sample advice from one article: "Travel is a pleasant thing, but it is twice as pleasant with a good suitcase. Anywhere in the world, people in the know will know that you're okay."

A tour of the favourite haunts of the New Russians is a staggering experience. Their glittering nightclubs and exclusive shops are hidden behind a wall of armed guards with two-way radios and concealed security buttons to call for reinforcements if they have to fend off riffraff.

During the day, the nouveaux riches can be found in high-priced shopping malls such as the Sadko Arcade, just a few metres from the Moscow River in the centre of the city. The arcade has fancy restaurants and cafes, replete with high-class hookers. There are designer clothing shops, a Wedgwood china store and a car dealership selling Land Rovers and Maseratis. At the $3 shoeshine stand, a sign proclaims that it uses "only Western- made fragrance-free shoeshine products."

Most amazing of all is a store called Boys and Girls. Here you can buy a plush life-sized stuffed horse for $4,900. Perhaps little Natasha would prefer a limited-edition porcelain doll (with real hair and hand-painted features) for $3,859. Or maybe little Pasha would like a miniature Porsche (powered by a gasoline engine) for $1,500.

"Some people don't pay any attention to the prices," says Elena Somova, the store's manager. "Prestige is absolutely important. The quality here is good." A wealthy man from Siberia marched into the store, she recalls, and spent $7,000 on a miniature gas-powered Mercedes for his kids.

After a hard day of shopping, the New Rich can often be found in the nightclubs and casinos, where admission fees are as much as $120. One of the most exclusive nightspots is the Club Royale, located in the Hippodrome, a beautifully restored 19th-century building near the centre of Moscow. Guests walk through a metal detector that checks for knives or pistols. In a nearby display case, there are gold watches priced at $29,700.

The nightclub has three main rooms: the Chaplin Bar (a cafe with a Charlie Chaplin theme); the disco club (enhanced by a fog machine and a glitter ball); and an upstairs casino, with elaborate frescoes and murals on its walls, and tuxedoed croupiers presiding over the roulette and blackjack tables.

On this night, a jazz trio is playing softly in the casino as the gamblers place their bets. "Our casino has the best security in Moscow," boasts an employee. "Our clients can feel confident here."

He admits that some of the gamblers are organized crime members. "Very few people here are respectable people, like foreigners," he says. "We're under a Chechen roof," he adds, using the common Russian term for a criminal-protection system, in this case provided by a Chechen gang.

Downstairs, in the disco, a fashion show begins. It is after midnight. Late-night fashion shows are currently all the rage. This one features a gypsy singer and models wearing neo-Czarist tasselled dresses and bizarre hats that resemble manhole covers. The models are bumping into one another or losing their hats, but they get a round of applause from the patrons.

Cocaine and heroin are becoming popular among the wealthy clients at clubs like this one. "In a single night, they can spend $2,000 or $3,000 on drugs," says a spokesman for the Interior Ministry's anti-drug department.

On the weekends, it is time to get serious about hobbies. Many of the New Rich have purchased private airplanes for $60,000 or more. Russia already has about 10,000 private airplane owners, according to the Russian National Aeroclub. Its director, Albert Nazarov, says the plane owners like the convenience of quick travel and the pleasure of piloting their own aircraft. "For them, time is expensive," he says. "But it's also a great way to turn off your brain from some unpleasant things in your bank. You can completely get away from your problems."

IN exclusive rural districts such as Zhukovka, huge, new fortress-like dachas are springing up. The highway to Zhukovka, frequently used by President Boris Yeltsin and other members of the political and business elite to reach their country retreats, is tightly guarded by Russian police stationed at key intersections. Convoys of black limousines whiz along the highway, their blue lights flashing.

At one intersection near Zhukovka, an outdoor market sells suckling pig, beef, tongue, smoked chicken and imported fruit. A cafe is offering imported beer and a commercial bank has just opened its doors. Nearby, a man who identifies himself as Sergei is selling exotic animals from his car. The New Russians, always searching for the latest status symbol, are willing to spend $6,000 for a chimpanzee or $3,000 for a cockatoo.

"Many people are building new dachas here and they need more than just furniture," Sergei says. "They're building swimming pools for their crocodiles. Lately they've been placing orders for leopards or tigers. For them, it is not much money. They buy an animal instead of one more diamond ring."

On this day, he has two parrots in his car. Sometimes there is a monkey. The other animals are available on demand. Someone orders them, he delivers.

Pythons and boa constrictors are popular items. "Up to three metres, they're not dangerous," he says. "Over four metres, they can strangle you"

Sergei charges about $5,000 for a leopard and $10,000 for a tiger. "There is a trend now to buy angry animals with good protective qualities," he explains. It's very fashionable to buy dogs that have been bred with wolves."

Even endangered species can be bought. Sergei says he has good contacts in Africa and Latin America. "Practically everything is possible, if you have money."

Just a few hundred metres away from Sergei's exotic animals, a massive four-storey dacha is under construction. The owner is Alexander Konyaev, a 38-year-old entrepreneur who runs a trucking company. The dacha features a 45-square- metre indoor swimming pool, four-car garage, jacuzzi, sauna, fireplace, skylight, maid's quarters and winter garden, all topped by a tall tower overlooking the Russian countryside. Its value is estimated at more than $1-million.

Eleven years ago, W. Konyaev was studying at a KGB academy. His father and three brothers were all employees or students in the intelligence agency. Then his mother was jailed for "speculation." She had been caught selling clothing on a Moscow street. All members of the family lost their positions in the KGB. Mr. Konyaev went to work as a street cleaner.

Gradually, he wangled his way into business, buying and selling imported cars. Today he is the head of a transportation firm with 60 employees and $500,000 in annual revenue.

His dacha is just one manifestation of his wealth. He owns four cars, including a Mercedes 200 and an Audi 200. He travels throughout Europe and owns a condo at a beach club in Spain. "This is beyond my greatest hopes when I started," he admits. "I couldn't even have dreamed of this."

Yet there is a dark underside to his success. While he has got along so far with a 12 man security team he knows he can't entirely escape the crime and corruption that stains everyone in Moscow.

"You have to hide your money from the state and from the racketeers." he says. "Everything needs a bribe -- getting licences, reducing taxes or customs duties. Our taxes, theoretically, are up to 80 per cent. It would be impossible to operate a business with that."

Even worse than the corruption, he says, is the bitter resentment and hostility he feels from many ordinary Russians.

"There is a certain mentality that anyone who drives a Mercedes must be mafia. Sometimes I can feel it, from the way they look at me when I'm buying something or getting into my car. Some of my old colleagues ask me how I did it. I can feel, between the lines, that they think I'm stealing something."

The resentment and jealousy has deeply shaken his loyalty to his homeland. He has already decided to buy a home in Belgium send his 12-year-old daughter to a school there. He says his family will feel comfortable and less isolated from the of society in a Western European country.

As for the fabulous wealth of the richest the New Russians, he is convinced it will crumble. "They could lose it all in moment. Real money can only be made operations that are close to illegal. But the closer you are to illegal, the closer you are to collapse."