by John Helmer, Moscow
If Pontius Pilate, Judas Iscariot and Joshua Barabbas had combined to produce the eye-witness book on the life and death of Jesus Christ, whose anniversary falls this month, it wasn’t heard of when it was newsworthy, in the first years of the first century AD; readers have been deterred from looking for it ever since. Religious faith does that sort of thing to eye-witness testimony, documents, financial accounts, court rulings and other forms of evidence.
Likewise, Catherine Belton (lead image, centre) has produced a book with Sergei Pugachev (left), the man who stole more than two billion dollars from the Central Bank of Russia and other banks; was convicted in a British court of trying to hide it; fled to France to escape two years in prison if the English can catch him. Paying to print and market their collaboration is Harper Collins, owned by Rupert Murdoch’s (first right) media holding, News Ltd .
Together, Belton and Pugachev have composed a gospel about the evil that is Russia under President Vladimir Putin, and the virtue they say they believed in when Boris Yeltsin was ruler. “We were sitting in the kitchen of Pugachev’s latest residence, a three-storey townhouse in the well-heeled London area of Chelsea,” Belton begins, introducing the faith the two of them share with Mikhail Khodorkovsky (lead image, extreme right); the ghost of the hanged Boris Berezovsky; Valentin Yumashev, Yeltsin’s son-in-law; and others identified anonymously as the collaborators upon whom Belton relies and whom she requires her co-religionists to accept as gospel too.
Three disciples have sworn their faith publicly so far – Luke Harding of The Guardian; Edward Lucas of The Times, and Oliver Bullough, once a reporter at the BBC. “The most remarkable account so far,” says Harding, “of Putin’s rise from a KGB operative to deadly agent provocateur in the hated west”. “Its only flaw,” Harding mentions, “is a heavy reliance on well-placed anonymous sources. Talking publicly about Kremlin corruption is dangerous, as the polonium fate of Alexander Litvinenko shows. Still, the lack of names can be frustrating.” Frustrating is the word that came to St. Paul’s mind when he was having directional trouble on the road between Jerusalem and Damascus. Inadmissible in a court of law, Pilate would have said. A pack of lies, according to Judas and Barabbas.
“Fact, not fiction,” declared Edward Lucas, an employee on the fiction floor of the same London office building as Harper Collins. “Catherine Belton, for years a Moscow correspondent for the Financial Times, relates it with clarity, detail, insight and bravery.” “The Putin book that we’ve been waiting for,” Bullough said messianically. You won’t be risking perdition yourself if you don’t wait.
The book, published last week, is titled “Putin’s People: How the KGB Took Back Russia and then Took on the West”.
At the start there is a secret tape-recording unpublished until now. Pugachev told Belton it was a Federal Security Service (FSB) record on a disc drive of “every meeting he held in his downtown Moscow office since the end of the nineties.” That’s at least a decade. Pugachev fled Moscow for London early in 2011, following the bankruptcy of his bank, and in fear of arrest on bank fraud and embezzlement charges.
The money trail of Pugachev’s financial operations, first with St. Petersburg shipyards and Russian Navy contracts, then with his bank called Mezhprombank (International Industrial Bank, IIB), and between lenders to the bank, including the Central Bank, transfers to Pugachev’s holding called United Industrial Corporation, and then into thin air, including to several trusts in Auckland, New Zealand, can be followed from this beginning in 2009.
In February 2008, Standard & Poors (S&P), the international corporate rating agency, issued a warning that Mezhprombank was characterized by “the absence of an accurate strategy for attracting finance; an unclear strategy of development, in particular concerning retail business; insufficiently developed systems of risk-management and high level of risks.” S&P said it wasn’t sure what might happen to the bank’s capital if the financial markets turned “adverse”.
Cover stories on Pugachev’s financial operations, June 10, 2010, and November 12, 2014. For the full investigation archive, read this . The archive of the Financial Times cover-up can be followed here . For the court-adjudicated record of Pugachev’s criminal money trail, read this .
In the autumn of 2008, that is exactly what happened. But Pugachev kept borrowing in Moscow and transferring the money through sham loans to offshore entities and to himself. By mid-2010, the Fitch rating agency reported that almost 90% of Mezhprombank’s loans were unsecured, “rais[ing] questions about loan quality and the robustness of underwriting procedures.” Fitch estimated that Pugachev’s bank had less than $97 million in cash, and more than $3.2 billion in liabilities.
Starting during the financial crisis of 2008, the Central Bank bailed out Pugachev’s bank with loans amounting to 56% of the Central Bank’s entire loan book. This stopped in May 2009, when the Central Bank required Pugachev to put up his shipyard assets to collateralize the previously unsecured loans. A Central Bank audit revealed that less than 6% of Mezhprombank’s lending was to entities outside Pugachev’s influence or control. Officials inside Mezhprombank revealed the bank was lending to hundreds of Russian companies, and the funds transferred to parent entities registered in the British Virgin Islands, Liechtenstein, Switzerland, and elsewhere. The business was so preoccupying, Pugachev, a senator representing the Republic of Tuva, didn’t have time left over: he set the chamber record  for non-attendance.
Two Financial Times reporters, Belton and Neil Buckley, and their editor Lionel Barber (right), protected Pugachev in London, endorsing his claim that Mezhprombank was the innocent victim of “a Kremlin campaign to seize the controlling stakes he held in Russia’s two biggest and most modern shipyards at a knockdown price. The businessman is preparing to present evidence in a London court that he said will prove the bankruptcy was part of a state ‘raid’ on his empire, as he seeks to fend off a freezing order on his international assets issued in July by Russia’s Deposit Insurance Agency.”
When the UK High Court began its investigation and first ruled on Pugachev’s evidence in October 2014, it issued a 60-paragraph judgement that he was a liar.
By the time Pugachev reached London, Central Bank auditors and the Deposit Insurance Agency (DIA) estimated the deficiency in his bank’s books amounted to Rb70.1 billion (then $2.3 billion). Rb32 billion of that ($1.05 billion) had been loaned by the Central Bank. In the subsequent Russian, UK and Swiss court records, about $700 million in US-denominated cash was traced into Pugachev front companies, trusts and bank accounts. There were Euro-denominated transfers in parallel. The assets identified by the DIA to the London courts as under Pugachev’s control in mid-2014 were valued at £1.17 billion ($1.93 billion). He was indicted in a Moscow court in 2014 an international arrest warrant issued. After a week of hearings of Pugachev’s evidence in his defence in the High Court in December 2016, this judgement was issued on February 2, 2016, by Justice Dame Vivien Rose. He was a serial liar in business, a perjurer in court, Rose ruled. She sentenced him to two years’ imprisonment.
The explanation, according to Belton, is zoological. “In the UK courts Pugachev had been a fish totally out of water, incapable of operating according to their unfamiliar rules and procedures.” The fault was Russian. “He was too accustomed to the backroom deals of his Kremlin past…Convinced of the righteousness of his position, that he was the victim of the latest Kremlin asset grab, he believed himself above the regulations of the British courts.”
Over seven preceding years Pugachev himself, Mezhprombank, Belton, Buckley and Barber were asked to explain the lies of omission and commission in their public and published claims. “Is there any part of this record which you wish to correct in light of the evidence accepted by the British courts?” Belton responded: “I’d be glad to answer. That’s no problem at all. I just still have a few more meetings today and will write back later.” Buckley said: “Catherine is our expert on this, so I’ll leave it to her to answer.” She provided this list of her FT publications. Pugachev, his bank managers, and Barber refused to answer.
Belton’s book is their reply. The tape-recording with which she begins isn’t from the FSB. It was Pugachev’s tapes of his own meetings stored
and edited for insurance later. In a conversation  with Valentin Yumashev, (right) President Yelstin’s son-in-law and chief of staff, Belton reports Pugachev as saying of Putin and his people “they are mutants. They are a mixture of homo-sovieticus with the wild capitalists of the last twenty years. They have stolen so much to fill their pockets.”
Yumashev agreed. “I think it is terrible thing. Some of my friends working in the Kremlin now say – with absolute sincerity – how great it is they can get so rich there. In the nineties, this was unacceptable. You either had to go into business or work for the country.”
Between themselves Pugachev and Yumashev agreed that the rot which had set in started and continues with Putin. “For me,” Pugachev spoke into his recorder, “my whole life, the truth was equivalent to freedom. I earned money not for riches, but for freedom.” What follows in Belton’s book is the allegation that the evidence Pugachev stole $2 billion was fabricated by Putin in revenge. “The security men [Pugachev and Yumashev] brought to power were to stop at nothing to prolong their rule beyond the bounds of anything they’d [Pugachev and Yumashev] thought possible. ‘We should have spoken to him [Putin] more’, sighed Yumashev. ‘Of course,’ said Pugachev. ‘but there wasn’t any time.’”
It is from this start that the book commences its history of Putin. It’s a history without context in politics, geography, international relations, or capital flows. There is no cold war; no US; no NATO; the Soviet Union had no enemies, nor Russia; there are no hostile intelligence agencies; no international competition for markets or money; no trade or propaganda wars; no international terrorism; no country bombings; no sanctions; no proxy wars — not before Yeltsin came to power in 1991, nor during the decade of his rule, nor since Putin became president. There are no forces of state in the story — only forces of evil.
All that is chronicled in Belton’s book turns out to have been Putin’s doing. And yet, as intimately as Pugachev claims to have known him for twenty years, Belton reports no process of Putin’s mind in making policy decisions; he is presented without character. Pugachev and Belton make two exceptions for this: “Putin has a problem with envy”, they claim to have learned. Also, he has no taste, Pugachev says he learned from Putin’s first wife, Lyudmila Putina. After returning from a long day at the office, Putin would put on his slippers and from his sofa watch soap operas on television.
The Belton-Pugachev story is one of those, too. It takes place inside a hermetically sealed Russian world in which, according to a KGB defector to the US whom Belton quotes without identifying his story or motive, “everyone is for sale”. That Belton managed to save herself from that fate isn’t claimed, nor explained. Her book, she says in an acknowledgement, was paid for in part by the Financial Times, and by what she calls “a deal with William Collins in the UK and Farrar Straus & Giroux in the US.”
In this everyone-for-sale world she reports discovering that Pugachev was the original financier of Putin in his St Petersburg rise; and at the same time of the Yeltsin family in Moscow. He then became the one man standing in the way of Yevgeny Primakov and Yury Luzhkov who, with support from the communists, plotted “a state coup” – Pugachev’s term — to replace Yeltsin and his supporters in the late 1990s. Pugachev also protected Yeltsin, Yumashev and their family from corruption traps. “‘You need to understand that the Yeltsin family were normal people,” Pugachev told Belton. “ ‘This was nothing compared to the corruption you see today. My idea was not to let it all collapse. ‘”
And so in Pugachev’s history, he was the persuader who elevated Putin to the prime ministry when Yeltsin was tempted by other candidates; and from there to Putin’s succession to the presidency over the fierce opposition of Anatoly Chubais. Then it was Pugachev who uncovered evidence that Putin had been involved in the Russian apartment building explosions of September 1999  which galvanized Putin’s bid to take power from Yeltsin . To advance Putin, Belton claims Pugachev covered up for that; and later for Putin’s involvement in the lethal rescue attempts of hostages at the Moscow Dubrovka theatre in October 2002 , and the Beslan (Ossetia) school siege of September 2004 .
“If this really was the deadly secret behind Putin’s rise,” Belton reports, “it was the first chilling indication of how far the KGB men were willing to go.” Belton doesn’t exactly say Putin was responsible for the mayhem and murder; she lets Pugachev’s innuendo say it for them both. For corroboration she adds that “one of the first chinks in the Kremlin’s version has recently appeared. A former Kremlin official has claimed he heard [Nikolai] Patrushev [FSB Director, 1999-2008] directly speak about what happened.”
Pugachev also claims credit for protecting Putin from his wife. When Lyudmila Putina told her husband that she was opposed to his running for a second term as president in 2004 and threatened to divorce him, Pugachev says he was her trusted confidant and persuaded her to drop her objections.
In 2004 and 2005, Pugachev claims to have been hard at work defending Mikhail Khodorkovsky and his Yukos oil group from the takeover of his assets by Rosneft and Igor Sechin. He tried, Belton reports him as saying, “to bring an end to the era when oligarchs of the Yeltsin years believed they controlled the Kremlin by giving ‘donations’ to Kremlin officials…’I was just trying to make sure this didn’t happen. The rules had to have changed”, he said.”
The rise which followed of Putin’s St. Petersburg business allies – Gennady Timchenko, Yury Kovalchuk, Arkady Rotenberg – began with money and favour Pugachev now says he provided. “But all the while, Pugachev says now, he was worried about the statist direction things were heading in, about the clampdown on freedom, about the events that had cemented Putin’s grip on power. Though he says he frequently raised these concerns, he chose not to do anything about them, saying that he believed he could more influence from the inside than by objecting and stepping away. He thought he could better act as a brake on the more authoritarian tendencies of Putin.”
Once Pugachev was in exile, he and Belton now tell the story, Putin was liberated to hatch plans to seize Crimea; shoot down Malaysia Airlines MH17; send assassins to London to kill their critics. According to Belton, Putin first learned how to do that thirty years earlier, when he was a KGB agent in Dresden, East Germany. There his top-secret mission (unrevealed until now) was to assist the Red Army Faction of West Germany. Belton’s source for this one is a “first-hand account” of “a former member of the far-left Red Army Faction who claimed to have met him [Putin] in Dresden”; Belton footnotes the source as having been interviewed in March 2018.
Pugachev is the source for almost every chapter of the Putin story Belton tells. To her, he made available a selection of appointment books and diaries, his telephone call logs and surveillance tapes. His interviews with her began in 2014 and as his house guest, they stretched to January 2019.
Belton claims corroboration of what Pugachev says by citing other sources; almost all of whom, like the Red Army Faction man, are anonymous. They are tagged in the footnotes as “former partner of Timchenko”; “former Western intelligence source”; “former senior KGB officer”; “senior Russian banker with ties to the security services”; “former senior Western banker”; “former Putin associate”; “Ozero dacha neighbour”; “former senior KGB officer close to Putin”; “a tycoon close to [Roman] Abramovich”; “a person close to Sechin”.
To Harding of The Guardian, this anonymous sourcing was “frustrating”. Since he’s a committed believer in what the sources allege, Harding failed to notice that they are anonymous because they are all runaways from Russia or from criminal prosecution in other states. Not because they believe, as Pugachev insists, the Russian intelligence services are plotting to kill them. If Belton’s sources claim to be still “close” to Putin, they realize they risk being identified by US Treasury agents as Putin “cronies”. If that, or if they express support for the incorporation of Crimea, they are at risk of being sanctioned by the US. (The one Russian source Belton identifies by name as both “close” to Putin and supportive of his policies, including Crimea, is Vladimir Yakunin; he was sanctioned by the US in March 2014.) If on the other hand, the anonymous tale-tellers are wanted in Russia for embezzlement, fraud, bank robbery, their anonymity in Belton’s story avoids the risk they run of being tracked down abroad and their assets frozen. Belton conceals their motive for telling their tales to her.
“Catherine Belton has pulled away the curtain on two decades of hidden financial networks and lucrative secret deals, exposing the inner workings of Putin & Co. in remarkable and disturbing detail. A real eye-opener.” That’s David Hoffman (right), a Washington Post reporter who was once in Moscow. According to Belton on her last page, Hoffman vetted each chapter in advance. He was also her “inspiration and the model for the art of narrative non-fiction.” In the spelling of that last word the Murdoch-paid editors didn’t spot the typo.
Pugachev ends the book as a geopolitical strategist. He sees the wars Russia is now fighting in the Ukraine, Syria, Libya and Venezuela as the extension of Putin’s personal ambition to enrich himself. “The Russian economy was now on a war footing, with everything subsumed to the Kremlin’s will, said Pugachev: ‘Now there is only Putin and his lieutenants who carry out his orders. All cash generated is put on the balance of Putin. The country is in a state of war.’” That’s not war between Russia, the US, and NATO. It’s war between Putin and honest, free-market, freedom-dedicated businessmen like Pugachev. “’Big business cannot live as before. It has to live under military rules.’”
A New York Times promotion at Pugachev’s home in Nice, May 20, 2016 . Pugachev was reported to be reserving “his most valuable remaining asset is a cache of documents and other evidence assembled in preparation for a showdown with Russia in an arbitration process in The Hague. There, he hopes to demonstrate that Russia violated an investment treaty with France by expropriating properties he owned worth at least $12 billion, and to win compensation for his alleged losses.” The claim has come to nothing. An international banker says the litigation was intended by Pugachev to stave off his creditors.
Belton and Pugachev conclude their book in sorrow. “For Pugachev, his manoeuvring and manipulation to help propel Putin to power twenty years ago are now a constant source of remorse and regret. ‘I’ve learned an important lesson,’ he said when we talked at his home in France amid the latest legal onslaught against him. ‘And that is, power is sacred. When you believe the people are stupid, and that if you don’t act they will vote in the Communists, that was a big mistake. We all thought the people weren’t ready, and we would install Putin. But power comes from God.”
Religious tracts populated as this one is with the other side — Satan, the Anti-Christ, devils, demons, and evil spirits — are commonplace. The Harper Collins office at Murdoch’s building at 1 Tower Bridge Street, like its neighbours on the Thames River bank, the British Secret Intelligence Service and the Financial Times, when Belton was employed there, are full of them; that is, of people who believe in the work of the devil, and who are paid to persuade other people to believe the same. On the sourcing of St. Matthew (aka the Evangelist), they believe that when Jesus Christ was prepping the twelve men he had recruited for the messianic job, he reportedly “gave them power against unclean spirits, to cast them out, and to heal all manner of sickness and all manner of disease.”
Those who pay or take the money as a condition for performing this job are either preachers of the true gospel or devils doing Satan’s work. You aren’t required to be on the Christian side or on Satan’s to exorcise Belton’s message and cast Pugachev out.