Fear haunts Russia's super-rich

BORIS wears a sweaty green T-shirt and works in a shabby office with peeling walls and medieval toilet facilities. But appearances can be deceptive in post-communist Russia. Behind the metal door in his office, computers and other expensive equipment have been installed; and Boris owns four flats, five cars, two country cottages and a yacht.

He is one of the new class of rich Russians who, far from needing foreign humanitarian aid, are much wealthier than the average person in the West.

Boris, 40, and two partners who used to work together in a state enterprise connected with the country's space research programme, are making their fortunes by helping the Russian food industry to achieve Western standards. The one-year-old company, which employs 60 staff, has made some of its money by introducing new flavourings for soft drinks.

The firm, which is officially registered, says that it pays its taxes to the state (at a relatively low rate for Russia of 47 per cent because there are allowances for the food industry) and does not break the law.

Its scruffy office in a pleasant suburb of Moscow buzzes with excitement. 'In the West, businessmen have photographs of their loved ones on their desks, which shows that the family is present even at work,' says one of Boris's partners. 'Here we take our work home and talk about it all the time because we are so happy to be free at last to have our own venture and earn money.'

Being an honest businessman, however, is not easy. Boris is constantly short of ready cash because it is difficult to obtain a bank loan in Russia. Worse, though, is the fear that the mafiosi may break into the office and strip him and his partners of their hard-earned assets.

Boris has already had several visits from the racketeers. On one occasion, seven armed men forced the firm's guards to face the wall and demanded money. He had to give a mafia boss three cars worth a total dollars 25,000. 'It was a one-off payment,' he says, adding that he no longer employs any guards because he believed they tipped off the racketeers.

He is so afraid that he will not allow his real name to be published. He has registered his property under the names of different members of his family and friends, and he has not dared to show off his 9-metre yacht. 'She's moored on the Moscow reservoir,' he says glumly. 'I haven't been out in her once.'

He says he is not super-rich, only middle-class, but admits that his flats, dachas, yacht and cars - including one Chevrolet, one BMW and one Mazda - must be worth about dollars 1m. Boris and his wife Natasha live in one of the flats; outside it looks typically Soviet, but inside it is decorated with carpets on the floors and walls.

One of the other flats has been given to the couple's daughter Katya, who is lucky to live separately in a country where most young people are forced to stay with their parents at least until they are married and often for many years after that. This young woman, wearing a diamond bracelet, dropped in on her parents to extract 5,000 roubles (dollars 5) pocket money to go to the theatre; a pensioner in Russia may receive as little as 10,000 roubles a month.

No records are kept of the number of rich people who live in the new Russia. For one thing, many of the country's wealthiest citizens have decided to live abroad. And fear of the mafia, or the taxman, or both, means that few of the well-off at home are prepared to talk to outsiders.

Irina Khakamada, however, is not afraid to give her real name. She, too, is wealthy but does not want to become so rich that she cannot sleep at night. As a half-Russian, half-Japanese entrepreneur, a member of the board of the Russian Commodities Exchange and a leader of Russia's new Economic Freedom Party, she wears Christian Dior spectacles and a green and black spotted silk outfit by the famous Russian designer Slava Zaitsev. However, she owns only one three-room flat on Leningradsky Prospekt in Moscow. Although she has a disposable income of about 200,000 roubles (dollars 200) a month, this does not tell the whole story, because she also has a lot of shares and other investments.

Ms Khakamada, 38, studied economics at Moscow University, and taught for eight years in a technical high school before setting up a co- operative business that trades in computer software. This was the springboard for her career.

Since she became involved in politics, she has been taking part in Boris Yeltsin's assembly and helping to draw up a new Russian constitution. She plans to stand for parliament when elections are held. A taxpayer and respecter of the law, she believes that Russia's reforms have reached the point where they are irreversible, and that it is possible to become rich honestly. But she adds: 'To be super- rich, you have to be involved in machinations. I am against that on principle. I am not greedy. I don't want the really big money that brings with it big headaches.'

Ms Khakamada, who refuses to be protected by bodyguards but who is driven about in company cars - a modest Lada for everyday business and a fancy Citroen if she needs to make an impression at a reception - has not redecorated her flat, now privatised but where she has lived for many years, because she says Russian workmen are too slap-dash to meet her high standards. And for the same reason, she has not followed the nouveaux riches in having a dacha built in the countryside.

Instead she spends her money on her son, on healthy food from the markets and hard-currency shops, on employing a cleaning woman at home (on a monthly salary of 10,000 roubles) and on her image.

She relieves stress by attending an aerobics club and, although she goes abroad regularly on business, she prefers to take her holidays in Russia. 'I cannot relax in a foreign environment,' she says. 'Dmitri (her husband, also a businessmen) and I always take our holidays separately. We need to rest from each other.'

Ms Khakamada believes that it is not enough to earn a good living, but that she also has a duty to help those less fortunate than herself. She gives about 10 per cent of her income to charity, and is particulary interested in helping Russian women, who are bearing the brunt of unemployment, to start up in business.

The state, however, gives the rich no incentive to help the poor. Income tax is levied at 40 per cent, profit tax on firms at up to 70 per cent, and those who donate money to good causes receive no tax breaks. It will take time for the new wealth of post- communist Russia to filter down from the thin upper-crust to the great mass struggling to survive.

(Photograph omitted)

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