Moguls at the Gates : Part Robin Hood, Part Robber Baron, Russia’s Wild Capitalists Are Skirting The Law, Making Fortunes And, Maybe, Saving The Country

Sergei Shashurin, possibly the richest man in Russia, leans back with a drowsy, contented smile. His leased Yak 40 business jet is winging him from Tatarstan, where he is known as an organized crime kingpin and construction titan, to the Arctic Circle city of Vorkuta, where he has designs on some of Europe’s biggest coal mines.

The six-hour flight stretches long. Shashurin, 36, watches with lofty amusement as his bodyguard, Tolya, and his deputy, Mars, begin setting up for an ex-cons’ card game called rubbish. First, they pull out a few wads of rubles from the black plastic garbage bag Tolya uses to lug them around. Then a fan of $100 bills. Then, seeing a nice still-life taking form, they slap down a couple of Makarov pistols and a bottle of vodka, getting a kick out of their own image. Classic Russian Mafia. “Russian robbers playing with American money,” Shashurin laughs as the game begins.

He has the look of a beefy bully, but his coarse panache is so irresistibly winning that it soon seems unimportant that he got so rich, with a foothold in everything from Amur gold to Sakhalin oil, largely because he was so good at stealing from the Soviet state and parlayed that skill and his contacts into cash as the old system collapsed.

Shashurin tells tales from when he was cooped up in a mental hospital--which he calls a durdom, a loony bin--after one of his many spells of hooliganism. Like McMurphy in “One Flew Over the Cuckoo’s Nest,” Shashurin used to have a tendency to beat up cops. He landed in prison four times and thrice in mental hospitals, where he quickly became the charismatic leader of his fellow inmates.

Once, he recalls, the doctors told him to get the patients to clean up the lakeside hospital’s garbage. “Well,” he says. “You can’t organize idiots. So I told all the crazies there was a wine factory on the other side of the lake, and we had to build a boat to get there and get some wine. They gathered up all the stuff lying around, and the truck, and then asked for days about the boat to the wine factory.”

Overall, Shashurin decides, “It was easier to run things in a durdom than in current-day Russia.”

But what better training?

Amid the chaos and illogic of Russia’s transition from socialism to what is now known here as “wild capitalism,” Shashurin has risen from his underworld roots to become one of the foremost of a new breed of Russian tycoons. From the ruins of the old centralized economy, the new Russian magnates are building empires fueled by their own whirling entrepreneurial energy, founding 50, 100, 200 companies, borrowing money at 200% interest, buying off bureaucrats, importing, exporting, making supplies, workers and deals move.

Like the robber barons of pre-Depression America--the Vanderbilts, Rockefellers, Carnegies--these are big men who get enormously rich by quick and usually somewhat dirty means, then use their money for power, charity and making more money. The difference is that like so much in Russia these days, their empire-building appears to happen on time-lapse film, taking them only two or three years to attain what took a generation or two in America.

As the economy opened up under ex-Soviet President Mikhail S. Gorbachev, a few Mercedes sedans started to appear on Moscow’s streets, where once a boxy Soviet-made Volga was the status symbol of choice. Then more. About a year ago, a sleek gray stretch limousine with regular Moscow plates--not rental, not government--appeared. Mouths gaped and necks craned wherever it slid by.

The moguls had arrived. These days, whatever major Russian city you visit, there always seems to be one limousine floating like a capitalist mirage through the gray Soviet-built poverty--from the grimy Western Siberian miners’ town of Novokuznetsk to the Tatarstan capital of Kazan, where Shashurin drives a spotless white stretch. Moscow media estimate there are now some 15,000 Russians worth more than $1 million--scores of them worth much, much more. When President Clinton talks about aiding Russia through the private sector, these are the business leaders who would be America’s most likely partners.

At first, the public reaction to these new magnates was the predictable result of traditional Russian envy and Communist ideology. People hated them. “Three years ago, the word ‘entrepreneur’ existed only as a word from the criminal code,” says Konstantin Borovoi, himself a millionaire and leader of the popular Economic Freedom Party. “Today, the word ‘entrepreneur’ is accepted absolutely differently by society.”

Press them as you will, Russia’s millionaires balk at talking about the mechanics of how they got their money. But it is an open secret that the fortunes being made now in Russia spring mainly from the gap between state-owned property and the new free market. Resources and most factories remain in the purview of the government, meaning that the officials who control them--but do not own them--are by and large happy to sell cheap in exchange for under-the-table money. Bribed factory directors can also write off materials that have supposedly been damaged, stolen or otherwise lost but have really been sold on the side.

Karl Marx comes in handy here. Russians often quote his dictum about the dialectic of capitalism: that a nation-state has to go through a primitive stage of “the accumulation of capital.” For post-Communist Russia, that amounts to a crazy race for money in a country that is still short on true private ownership of land and factories.

Borovoi claims the Russian economy is so riddled by corruption that it must actually be bought from bureaucrats. He believes that 90% of Russia’s richest people are not businessmen but the officials who take their bribes. Compared to those corrupt officials, the new robber barons look somewhat heroic. They aren’t only skimming the cream from the Russian economy; they run real companies, companies that do plenty of money shuffling but that also create jobs and are beginning to invest in production.

After Russia works its way through this ugly stage of primitive capitalism, Borovoi says, the next phase will be in the hands of the tycoons. Virtually no major politician, including President Boris N. Yeltsin, is free of the Communist taint, whether on his resume or simply in his outlook. In contrast, the new millionaires are exciting figures, vectors toward the future, free of the contamination of the past because they never bought in to the system. Although they prey on the vulnerable points of the transition economy, they appear to run their businesses with the discipline and order that Russians have hungered for ever since the reforms began.

Yes, they may steal from the state, but most Russians are sure that whatever money is funneled away would never have reached them anyway. In any case, stealing from the state is a popular tradition in Communist countries and, further back, the Russian peasant’s small revenge on his rich master.

“Looking at the history of development of market countries, you can recall more criminal phenomena,” says Borovoi. “When, for example, to colonize a territory you had to not only give a bribe to a bureaucrat but destroy people. So in that sense, we’re more moral.”

COMING TO POWER

Kirsan Ilyumzhinov, the new president of the Russian republic of Kalmykia, glides up to his inauguration in his nine-yard black Lincoln limo. He emerges--slight and skinny, decked in a double-breasted suit that hangs on him--to cheers from a crowd of several thousand.

“Kirsan! Kirsan!” many chant, something near worship in their almond eyes.

His smile bares a charming overbite. His hand rises gracefully in greeting. As he turns, the wind from the steppes ruffles the hair that straggles over his collar in back. He is 31 years old and seems utterly serene, a chess wizard turned millionaire turned president.

On April 11, Ilyumzhinov won a landslide victory to become Kalmykia’s first democratically elected president--in fact, its first president of any kind. With one of Russia’s poorer economies and only 330,000 citizens split between Russians and the Kalmyk descendants of Mongol hordes, Kalmykia never much needed a president before. A spreading grassland stretching northeast from the Caspian Sea, Kalmykia has almost 10 times as many sheep as people. An attempt at presidential elections last year failed for lack of interest.

This year was different. In a unique campaign that some see as a harbinger of the coming shape of Russian politics, Ilyumzhinov used his privately earned millions to wallop his two opponents, a former Communist Party official and an Afghanistan War hero. In the free-for-all of a Russian political system largely unfettered by regulation, he promised every family $100 if they would support him. He subsidized bread and milk with his own money for a month, and promised to turn Kalmykia into a nearly tax-free haven. (He later stepped back from his $100 pledge, saying it would encourage laziness, but has kept most of the rest, or moved in that direction.) He canvassed the countryside in his limousine and used state-of-the-art public relations. His campaign posters proclaimed that “A rich president means power that can’t be bought.” Others phrased it differently: If he’s stolen enough by now, maybe he won’t steal from the people while he’s in power.

When the votes were counted, Ilyumzhinov had 66%. The apparatchik had less than 2%, and the war hero garnered 29%. Kalmykia may be small and backward, but it suddenly seemed poised to blaze the way for other parts of Russia because of the dynamic young man leading it. Even the remote villagers of the steppe had spoken out for change, the kind of change that a wealthy man could bring.

“They caught the American dream,” Sergei Uyedzhinov, a reporter who covered the campaign for Kalmyk Radio, says of his fellow Kalmyks. “They thought that if he could make billions for himself, then so much the more so for his republic. He told them: ‘I need nothing, I have money coming out of my ears. If God gave me talent and a mind, why not use them for my people?’ He told people that and they believed him.”

The people of Kalmykia did not care that Ilyumzhinov had been publicly accused of having brokered a deal in 1991 to sell $3 million of Kalmyk oil, but never delivering the money to Kalmykia. His accusers say he also took cheap government loans meant to help Kalmykia and instead lent the money out again to commercial banks at high interest. Ilyumzhinov denies all wrongdoing. Neither did voters give a fig that his whole fortune was a little shady, from its sources--mainly commodities exchanges, textiles, restaurants, hotels and mass media, he says--to the fact that he amassed it in just three years. It is an amorphous sum that Ilyumzhinov refuses to put a number on but that others say amounts to an empire that takes in a total of $500 million a year.

“People say, ‘If you’re rich, you must have stolen it all,’ ” says veterinarian Dolgan Guduia as he waits in the inauguration crowd for Ilyumzhinov. “I say, if he’s rich, let him be. That’s better than the equal poverty we were all raised in.”

On this inauguration night, fireworks burst over Elista’s square and women of all ages and sizes dance sinuous Kalmyk dances. When so much of the old life is being swept away, a visionary has appeared who seems to know the road to a golden future, and proves it with his own example, with the car he drives and the suits he wears.

In the central Rus Hotel, diners guzzle vodka, provoke drunken scuffles and force down inedible chicken as they have for decades. The rooms are the tiny Spartan boxes of all Soviet hotels--stained wallpaper, cot-sized beds, cockroaches, broken televisions, non-existent shower curtains. But downstairs, in the lobby, where once you might have seen quotations from Lenin on the walls, you now see this: “In order to live well, you have to earn money” and “Only in abundance can people be raised right.--Kirsan Ilyumzhinov.”

WALKING THE LINE

There is an American saying that always gets a laugh from Russian tycoons. It goes something like: By the time you reach your third million, you can earn the rest by honest means. Vasily Shatalov is not on his third million yet. And no matter how he tries, no matter how honest he is at heart, he is tainted by a view accepted as gospel here: that no millionaire can have made his money without breaking the law. No matter how big he gets, Shatalov must always fear a summons from the police as deeply as a call from the tax inspector.

He is 24 years old and committed to building a new Russia, but somehow looks like a 40ish businessman from New Jersey. He sports a green-gray suit by hot Moscow designer Valentin Yudashkin and sings along with Russian pop songs on the radio, breaking in with commentary and an occasional curse when a puttering Lada blocks his Volvo’s progress through the defense industry town of Izhevsk, home of the Kalashnikov assault rifle. He stops at the bank, where he is greeted warmly and highly praised by the director, and at the City Council, where he charms the secretaries.

That evening, he is in jail.

Technically, Shatalov is accused of extortion by the editor of a local newspaper, his mother, Maria Shatalova, explains. The newspaper is in the process of being privatized, and the editor appears to be accusing Shatalov of trying to grab control of it. But in fact, she says, it is all a question of envy. “People just want to break him,” she says. “If a person rises a little bit, they have to rub his face in the mud. So that no one ever sticks his head up. A person comes along and manages to grow so far in a couple of years, and they accuse you of being a member of the Masonic mafia,” she says.

Shatalova, a chemist, and her husband, a former factory director who also spent a few nights in jail in his time when he ran afoul of his Soviet bosses, are off to the dachas of local deputies to pull them from their weekend gardening and into the campaign for Vasily’s release. He can only be held for three days without full charges being brought, but they are understandably frightened at the thought of what can happen to their son in prison, where he lacks the usual brawny shield of his two bodyguards.

The irony of all this is that among Russian businessmen, and certainly among the bigger ones, Shatalov is a virtual paragon of purity. As he figures it, at 24, he is a tycoon-in-training. He has realistic plans to become the local Rupert Murdoch, with a cable television network that features Western movies and one regional newspaper already in hand. He is worth well over $1 million and rakes in 1 million rubles--about $1,000--a day, but if he had yielded to repeated proposals from racketeers and mafiosi to work with them, he could be pulling in 1 million rubles an hour instead, he says.

Shatalov admits that he launched his career in 1989 with a couple of hundred dollars by paying a bribe to the residence committee of an apartment building for access to a hall. Then he rented a VCR and opened a video salon to show pirated Western flicks. Soon, he branched into cable television, beat out competitors and started to make a real income. Now, along with TV and his newspaper, he pulls in big money by buying food--legally--selling it through privatized stores he owns. He is opening three restaurants.

These days, he says freely, he often falsifies income reports to get out of paying Russia’s outrageous taxes--20% VAT and 32% on profits. And of course, without bribes, nothing gets done. “I think to steal from the government is sacred,” he says. “Of course, I evade taxes. If I showed all my income I would pay 80% in taxes. I think it’s holy to steal from the state because I get nothing in return.”

Shatalov makes this admission in front of two police officers who have accompanied him from jail to allow him to give an interview. They don’t even blink.

Among his claims to rectitude, Shatalov has a truly amazing one: He has actually managed to make his million without ever letting organized crime get its hooks into him. First, he resisted the local racketeers who wanted a piece of his video business in 1990. As his riches increased, so did their demands. They began following his wife, and once shot at Shatalov himself, he says. Unnerved, he turned to some contacts in the police.

“We worked out a plan and these people were put in prison,” he says. “I’m surprised to this day that they didn’t kill me. But they were all distracted by a fight between two gangs; otherwise we could never have done it. When they threatened me, I got it on tape and gave it to the prosecutor. We got them on Article 148, racketeering.”

Shatalov was lucky. “Every Russian businessman has to go through this,” he says. But his advantage was in choosing a base in Izhevsk, nearly 700 miles east of the Russian capital, where he has more freedom. “In Moscow, I could never have gotten anywhere without the mafia. The Moscow mafia is too tough. I could never have crushed them with the help of the police.”

Now, it is the police who are after him. All lawbreakers one way or another, each of Russia’s magnates is as vulnerable as Shatalov. Borovoi’s party has a special unit to defend businessmen in legal trouble.

Shatalov is released after three days in jail, but the investigation will hang over his head for months. “Our rules are wolves’ rules,” he says. Some like to compare current-day Russia to the Wild West or the Prohibition era, but, in fact, “What we have here, you never went through.”

MILLIONAIRE MORALITY

Unlike Vasily Shatalov, Sergei Shashurin doesn’t have to worry about the Russian mafia. For a long time, he was the mafia in Kazan--a bona-fide criminal leader--and those ties remain. Now, he is accepted as a legitimate businessman, but he still admits easily to “stealing”--although only from the state. You could say that was how he got his start in business.

When he was a boy of 8, he stole watermelons to buy himself and his friends soccer balls and hockey sticks. When he was in his early twenties and serving time in a prison camp, he began to amass his fortune by subverting construction truck drivers: In exchange for his supplies of home-brew, they brought loads of concrete to the site he was overseeing as a paid prison laborer.

In the old, state-controlled Soviet economy, with its rigid and ineffective supply system, it was Shashurin’s very shadiness, his willingness to break rules, that made him so effective. “In 1985, I was richer than anyone,” he recalls. “I gathered money from everyone. If the Finance Ministry couldn’t find tiles and Gosstroy (the state construction company) had them, I got them. I had to help everyone out. In Russia, gold is all over the place; you just have to pick it up.”

In 1991, when Tatarstan, an oil-rich industrial republic of 3.6 million, was pressing for more independence from Moscow and chafing under a near-blockade by the Kremlin, Shashurin paid huge bribes to factory directors in other regions to supply Tatarstan’s hurting industry.

These days, he sees himself as a Robin Hood who gives so much to charity that he ends up in the black on his moral balance sheet. Although he is Russian Orthodox Christian, he has financed the restoration of a dozen mosques in Tatarstan, the northernmost outpost of Islam, and is building the hockey arena he could never have as a kid. His wife, Lyuba, who oversees his charity, says he gave 30 million rubles in 1992--about $300,000 then--largely to help children’s causes.

“My conscience is clean because I’ve kept the commandments of the Bible,” he says. “Don’t kill, don’t rape. . . . I’ve stolen but not from private people, only from the government, and what I stole I immediately gave to the people and didn’t keep for myself. I violate the law for the sake of redistribution.”

Shatalov, too, runs a charity foundation in Izhevsk, and is deeply convinced of money’s karmic qualities. “Money earned at the expense of someone else’s pain can only bring grief,” he says. “The richer I get, the more superstitious I get.”

Ilyumzhinov is known for aiding everything from destitute old women in Moscow to sports teams in Kalmykia. As president, he plans to rebuild the republic stadium with his own money because the state budget cannot afford it. “I have never counted my capital,” he tells reporters when asked repeatedly how much he is worth. “All that I have, I give to people. I keep not a kopeck for myself.” He admits to no underhanded earnings, contending that “all my activity, all my life is in the light. The KGB, Security Ministry and police have checked my work and listened to my phone conversations and found nothing.” He ascribes his success both to his skill as a businessman--he compares it to Leonardo Da Vinci’s artistic talent--and to divine approval of his generosity. “The more I give, the more I get,” he says.

Some see this charity as guilt money, but Borovoi argues that Russian millionaires are so generous because “they were raised in the old society, in Communist morality, Christian morality,” both of which emphasize sharing the wealth. Their donations are even more impressive given that Russia has yet to make charity tax-deductible.

Ask people in the central department store of Kazan about Shashurin, and you get answers like this: “The government lacks power, but he, at least, is a real force,” says Ferdauz Khafizova, a 42-year-old cashier. And so what if he has criminal leanings? “The police themselves are all criminals.”

For Homo sovieticus, stealing from the state did not really constitute stealing. Most everybody did it, from chocolate factory workers smuggling home sugar to office workers taking paper and light bulbs. Shashurin makes no effort to hide his checkered past, but right and wrong have gone so topsy-turvy that no one seems able to work up any outrage against him. If he has stolen from the people, it is not clear how. And weren’t some of the most honorable heroes of Soviet and Russian history sent to prison and exile?

Khafizova saw Shashurin recently when he came in to make a donation to the hospital where she was recuperating from an operation. “I trust him,” she says. “He doesn’t use his money just to hang around in restaurants. The criminal world is not all bad people. I trust them more. It’s the people who toady up to the government who are the real criminals.”

Shashurin even has the grudging approval of his republic’s top leaders. Shashurin offers “a good opportunity for Tatarstan to show itself and gather capital,” says Vice President Vasily Likhachev. Likhachev may subscribe to one of Shashurin’s key concepts on what the Russian economy needs now: “The point,” Shashurin says, “is not whether someone steals money but that he invests it.”

Shashurin is investing $5 million in a factory to make dishware for a country that has lately discovered microwave ovens and is now putting them out by the millions. He is eager to show off the new site, but for contrast, he first stops at the old Victory of Labor Factory, a 92-year-old monster on the banks of the Volga River that has long produced laboratory glassware. He tut-tuts as he strolls through workshops that resemble hellish medieval forges. Workers sweltering in the heat blow molten glass into beakers by hand and stretch out glass tubing on the factory floor.

A short walk away, Shashurin poses heroically on the foundations of what will be his own factory in partnership with the old plant’s management. Still a skeleton with only its steel girders erected, it will have triple the capacity of the old dinosaur and employ 500 people.

The factory is not only good for Russia’s plummeting production. It is Shashurin’s justification. “If I steal, at least I leave it all in Russia for the people,” he says. Corrupt officials and directors “leave it all in a bank in Switzerland. You tell me, which are the mafiosi?”

SAVING RUSSIA

It is midnight in Vorkuta, the late spring snowdrifts towering whitely in the silent street. Inside the city’s overheated main hotel, Shashurin, Tolya and Mars are staying in a shabby suite that Yeltsin recently occupied.

It feels like a good time to talk about saving Russia--saving it from the chaos and insurrection Shashurin believes will come if Russians remain sunk in the post-Communist poverty he blames on corruption and incompetence. Snuggled in bed in his blue-and-white-striped paratrooper’s jersey, Shashurin is going on his fifth cup of coffee--he doesn’t drink alcohol--and his mind is racing.

He thinks with a sweep as broad as his vast country. “I’m planning the greatest theft of all time: I’m going to steal Russia,” he says. “My dream is to build not a concern but a conglomerate all the way to Sakhalin.”

In terms of his personal fortune, which he estimates very roughly at $20 million, he may not be the very richest man in Russia. But Vladimir Zarkin, director of Tatarstan’s biggest commercial bank, says that although Shashurin may not have the most money sitting in the bank, he has the most financial clout. “In terms of scale, there is no one who can touch him in the Commonwealth of Independent States,” Zarkin says.

Shashurin envisions a giant holding company that would restore some of the ties Russia lost when vertical control crumbled. He wants to link the coal miners of Vorkuta with the metalworkers of Cherepovets and the agricultural regions of Tatarstan to create a megalith that would allow supplies to stay constant and prices to stay low. The miners would give coal to metalworkers to make tractors and warehouses for produce from Tatarstan that they would then receive in guaranteed, cheap shipments.

As he sees it, the Russian economy is a disaster largely because it is being raped by a layer of about 1 million bureaucrats interested in nothing but stuffing their own pockets, particularly by selling resources to the West. They must be cut out of the business cycle, he says, cheerfully adding a proposal for how they could make amends: “I’d send them all to Siberia to dig as much gold as it takes to replace the money they stole.”

He wants raw materials sold to the West only for rubles, arguing that if Western firms had to buy rubles to get Russia’s resources, the demand for the faltering ruble would rise in currency markets. He wants a massive push to build warehousing to save the one-third of Russia’s agricultural produce lost in storage and transport. He wants a whole set of economic rings to relink Russia, including one connecting Far East fishermen to the Siberian mink farms that consume fish as feed. Legally, there is nothing blocking his plans; it is mainly a matter of getting management and workers on board. With virtually all of Russian industry monopolized one way or another, antitrust laws present no serious obstacle.

It is heartening to hear his ebullience, so different from most politicians’ whines. His china-blue eyes brighten as he talks about his country’s potential. “We’re rich, the richest country, richer than the United Arab Emirates,” he says. “We have to inspire people. Without people’s initiative, we can’t get anywhere. We need something like what America did 200 years ago, when it said to people, ‘Go and take 70 acres of land, and the only condition is that in two years you give a harvest.’ ”

It becomes clearer what he is doing in Vorkuta. The frozen city’s mines are being privatized, and the workers will receive a still-undetermined percentage of cheap shares in the new companies as their due. Shashurin appears to want the miners’ unions to claim more of the coal and fixed assets for themselves, laying the groundwork for future deals with them. At least, that is what it looks like. He never really says. He says he is there to “feel out the situation.”

Vorkuta’s miners by and large do not know Shashurin or his firm, but they know they want to become the owners of the pits where they toil, and respond well to his capitalist version of the old Bolshevik calls to seize their property.

He goes on local television asking miners for support, saying, “I want to explain: Guys, you should be masters, you should know what’s done with your coal.” He argues that the government should have rights to maybe a quarter of the coal, but not to the lion’s share anymore. “Take what you have into your own hands,” he says. “Become real masters, and you’ll see the results of your work.”

TYCOON’S REVOLUTION

Kirsan Ilyumzhinov has already passed Shashurin’s stage of working out a program to save Russia. He is now turning his vision into practice. Kalmykia, he says, will be the testing ground for all the reforms Russia should undertake. And he has already accomplished something astounding: He has made Kalmykia the first Russian region to truly get rid of the Soviet system of power.

Within days of taking office, Ilyumzhinov closed down Kalmykia’s KGB. He fired the entire 40-man Cabinet and appointed only five ministers to replace it. And he sent a proposal to Moscow offering to give up all federal subsidies in exchange for the right to set his own taxes. He invited the Dalai Lama to take political refuge in Kalmykia, Europe’s only Buddhist republic, and promised to build him a great center of Buddhist spirituality. He even invited Michael Jackson to put on a show in Elista, the capital.

A few days later, he persuaded the 130-member Parliament of Kalmykia to voluntarily disband and allow elections to a new, streamlined 25-member chamber. He is charismatic enough to persuade the skeptical, but he also makes no attempt to hide the fact that he is simply buying people off, promising them better positions and help in getting started in business. He liquidated the unwieldy soviets--or councils--at all other levels as well, sweeping away the Bolshevik tradition of oversized panels forever paralyzed in pointless debate.

Ilyumzhinov also got rid of almost all of his political opposition using much the same approach: He offered rival parties special bank credits and aid if they would cease political activity and turn themselves into companies instead. All but the hard-core Communists reportedly agreed.

“I’m not a Communist, I’m not a democrat, I’m a capitalist,” he says. “A new class of people has come to power, people who understand that no one can help you but you, yourself. Now this will be not the republic of Kalmykia but the firm of Kalmykia.”

Yeltsin appeared uncertain at first about how to take Ilyumzhinov. He failed to send a representative to the inauguration and, when asked at a news conference what he thought of the young millionaire, said only, “This has to be looked into.” Soon afterward, however, Ilyumzhinov reported that he had talked for an hour with Yeltsin and that the Russian president welcomes his ideas.

That may be, but some of Yeltsin’s allies remain openly doubtful about men who can spend their way into power. “In my opinion,” says liberal Russian deputy Viktor Sheinis, “the danger exists that people with big money--and apparently these people already exist--can buy votes.”

Which may not necessarily be bad, but in the context of Russia’s general confusion is understandably scary. Part of the problem, writes Yelena Yakovleva of the daily Izvestia, is that candidates are not required to open their financial records to public scrutiny. “The lack of supervision over the income of capitalist presidents threatens us with the ascension to power of the mafia and the use of official position to smother competitors,” she says.

If Russia wants such a scrutinizing mechanism, it had better act fast. Although not yet set, elections are expected by next spring, and, says Borovoi of the Economic Freedom Party: “There’s no doubt that this money will play an enormous role in the coming elections.” Russian moguls will carry a natural appeal because of the strict rule they advocate. They uniformly back running a country, republic or city with the firm hand and tough criteria of a business. Besides Ilyumzhinov, several are already politically prominent, from eye surgeon Svyatoslav Fyodorov to wheeler-dealer Mikhail Bocharov, both members of the Russian Congress of People’s Deputies. Borovoi has expressed interest in becoming Moscow’s mayor and could aim higher.

Vasily Shatalov has no plans to enter politics, he says. Even at 24, he has too many shady areas in his past, including a commitment to cooperate with the KGB he signed when he was younger. He also is too prone to shoot off at the mouth. Criticizing Yeltsin and the Russian laws that discourage legitimate business, he adds: “You can’t expect anything else when the man in power is an alcoholic who drinks his fill and then signs whatever is in front of him.”

(Shashurin has a similar tendency. Asked if he plans to meet with Yeltsin, he replies: “What would I say to him? ‘Come on, Borka, quit drinking and get to work!?’ ” He says he told Vice President Alexander Rutskoi: “How much can you steal? Take a break!”)

But Shatalov is ready to become a kingmaker with his newspaper, and Shashurin dabbles deeply in politics, meeting frequently with Rutskoi. “There will be quite a few Ross Perots,” Borovoi says. “If, before, it was considered cynical to use money for political advantage, now it is considered normal.”

“I think we’re one step ahead of Russia now,” says Slava Namruyev, owner of Kalmykia’s commercial television channel. “Because the next thing that will happen there is election of a businessman as president.”