As things turned out, what with the collapse of prices with the demise of the international diamond cartel, they'd have been better off looting the Hermitage.
From CrimeReads, August 9:
For decades, diamond conglomerates paid the USSR to keep diamonds in the ground. Then, the Cold War ended.
One of the greatest lootings of Mother Russia since the end of the Cold War happened in 1993: a corrupt Russian bureaucrat and his young protégé concocted a scheme to help the Kremlin extort billions from the De Beers diamond cartel while secretly siphoning $180 million in raw diamonds from the Russian State Treasury to purchase luxury properties, cars, and jets around the world. Many Americans, including Hilary Clinton, Al Gore, and the mayor of San Francisco were unwittingly roped into this scheme.
At the time, I was a young, idealist American who had grown up during the Cold War, and with the Soviet Union gone, I was eager to be a bridge between former superpower enemies. I lived in San Francisco and had just earned my MBA—in other words, I was a broke student. My first job was with a new American-Russian joint venture in the diamond business, and I was certain this was my first step to bringing American know-how to Russians.
Instead, I ended up in one of the most significant crimes in the history of the diamond industry: the theft of $180M in diamonds from the Russian Treasury by a company called Golden ADA, headquartered in San Francisco and Moscow. This crime is also a story of a failed Russian-American business venture that was supposed to symbolize, at least on the surface level, the start of a new post-Cold War era—one of friendship and business between former superpower enemies.
The Berlin Wall went down in 1989, and the Soviet Union collapsed in 1991. Opportunities for Americans and Russians to do business together were unlimited in the new Russia. But Golden ADA was a ruse set up by Russians to threaten the De Beers monopoly on world diamond sales.
One of the greatest cons in the history of the world is the notion that diamonds are rare. They’re not rare. In fact, they’re plentiful and abundant, but for the longest time, the supply available on the world market was closely controlled by a South African diamond mining monopoly, the De Beers Group. By keeping the supply low and strictly controlled, they drove up the price and supported an entire worldwide industry mainly based in Antwerp, Tel Aviv, and New York. However, the largest diamond deposits in the world are located deep beneath the cold Siberian tundra. If Russia wanted, it could flood the market with Siberian diamonds, increasing the world’s supply while crashing prices down along with the entire industry.
That was perfect for blackmail. De Beers made deals with successive Kremlin leaders to keep Siberian diamonds in the ground in order to protect the diamond industry. This deal was worth $4 billion annually for the USSR.
But when the Soviet Union collapsed, so did the Russian economy. The new Russia had freedom but was broke. There were shortages, and people were standing in bread lines. Boris Yeltsin, the new president and former party boss who turned into a democracy fighter, needed cash to keep his government from failing. Russian people were angry at the economic situation, and Communists were threatening to return to power.
Fortuitously for Yeltsin, the 5-year agreement with De Beers was coming up for renewal and provided the perfect opportunity for a significant cash injection. Yeltsin thought De Beers had underpaid the USSR and believed he could extract billions more dollars if he had more leverage. To do this, he would have to bluff that Russia would walk away from the deal and sell diamonds to the world market in competition with De Beers. This would frighten them into paying Russia more.
However, no diamond companies in Russia could compete with De Beers, but Evgeny Bychkov (former Soviet technocrat and current Diamonds and Precious Metals Committee Chairman for the Russian Federation) had a quintessential Russian plan: a “Potemkin Village” but for diamonds. A “Potemkin Village” is drawn from Russian history: General Potemkin built the façade of an entire village on a riverbank to deceive Czar Catherine the Great into thinking the Russian countryside was booming as she passes by on her royal riverboat.
Under orders from Prime Minister Viktor Chernomyrdin, Bychkov planned to open a diamond-cutting factory in America where De Beers could not do business due to U.S. anti-trust laws. The Russian Treasury was to provide $500 million in raw diamonds to the factory where they would be cut, polished, and then sold. Bychkov would need to have control over the Russian and American owners of this joint venture and knew someone who could help him carry it out, Andrei Kozlenok. Kozlenok had two Armenian friends who had immigrated to the United States, brothers David and Ashot Shagarian. They would be the American side of the joint venture, and Kozlenok (“A.D.” comes from “Andrei”) would represent the Russian side. Bychkov insisted that owners not have a direct connection to the Russian government since that would run afoul to U.S. laws. They would name it Golden ADA after its founders, and the plan was approved by the Kremlin.
1993 was also the perfect year to start this joint venture, and San Francisco was the ideal place. The newly elected American President Bill Clinton made it his administration’s policy to develop stronger ties to Boris Yelstin’s young government. Clinton had campaigned on pursuing a “peace dividend” from improved superpower relations and seeing the end of mutually assured destruction, critical foreign policy goals. Democratic leaders in San Francisco had provided votes and money for the successful Clinton campaign, so it was only natural for the city to embrace Clinton’s political outreach to Russia. The San Francisco elite—from the mayor, senators, First Lady Hillary Clinton, and Vice President Gore—all welcomed the joint-venture Golden ADA. Culturally, San Francisco was the perfect place since more Russians lived there than any city outside of Russia due to a long history of migration. San Francisco also offered specific business advantages such as closeness to lucrative Asian markets.....
....MUCH MORE
If interested we have on offer:
"Have You Ever Tried to Sell a Diamond?"
Nothing is forever.
Except, maybe, Neil Diamond.
Is the Diamond Cartel Finished?
End of the Oppenheimer Era at DeBeers: Nicky Oppenheimer on What the Family Will Do With the $5.1 Billion
Commodities: Russia's Diamond Hoard Has the Potential to Crush the Diamond Market (or not)
The Next Bauble: Diamond Record Set at Christies Geneva
Paper Diamonds: How Do You Standardize Rocks So They'll Fit Inside An ETF Wrapper?
You Thought the Rio Tinto Red Diamonds Were Baubles, You Dismissed the 118 Carat 'Perfect' Being Auctioned Tomorrow as Crass, Perhaps Monsieur et Madame Would be Interested In...
...The Pink Star
Diamonds: Have You Been Depressed Since DeBeers Was Delisted? Hangdog Since Harry Winston Split? Cheer Up Bunky, There's Always Alrosa
Making OPEC and DeBeers look like glee clubs, the tinsel trade maintains a brutal price discipline that would be the envy of the Sinaloa or the Worldwide Parsley Producers cartels....
"When a Russian President Ended Up Drunk and Disrobed Outside the White House"
From History.com:
Bill Clinton and Boris Yeltsin had a weird relationship. There was the time the Russian president gave the U.S. president a pair of hockey jerseys that said “Yeltsin 96” and “Clinton 96.” There was also the time Clinton doubled over laughing when Yeltsin called the U.S. press “a disaster” at a press conference.
But perhaps the weirdest incident in their professional relationship was when Yeltsin got drunk and wandered into the street in his underwear, trying to get a pizza.
The incident happened during Yeltsin and Clinton’s first meeting in Washington in September 1994. Although there were glancing media reports about it over the years, it wasn’t widely reported on until 2009, when author Taylor Branch published his book The Clinton Tapes, based on his interviews with the president.
“Secret Service agents discovered Yeltsin alone on Pennsylvania Avenue, dead drunk, clad in his underwear, yelling for a taxi,” Branch wrote in his book. “Yeltsin slurred his words in a loud argument with the baffled agents. He did not want to go back into Blair House, where he was staying. He wanted a taxi to go out for pizza.”
When Branch asked Clinton how the situation ended, the president shrugged and said, “Well, he got his pizza.” But the next night, Clinton recalled, Yeltsin tried to do it again.
“Eluding security, he made his way down the back stairs into the Blair House basement, where a building guard mistook him for a drunken intruder,” Branch wrote. “Yeltsin was briefly endangered until converging Russian and American agents sorted out everyone’s affiliation.” Because the guards mistook him for an intruder, “Clinton thought this incident, although contained within Blair House, exposed even greater risk than the pizza quest.”...MORE
"Declassified Documents Concerning Russian President Boris Yeltsin"
No one who was investing in Russia during that time-period has clean hands, no one, including Mr. Browder who hit the newswires earlier today.
Steyer and Summers and The Harvard Boys Do Mother Russia
A bit o'history.
Big money.
And on Chernomyrdin:
It was ten years ago this week that we learned of Viktor's death.
In addition to being a Prime Minister, Chernomyrdin was the head of the Russian national gas company, Gazprom. And in addition to that, he was an internationally-known, albeit decidedly Russian in tone, wordsmith. Via that decade old post:
....UPDATE: Viktor is Dead. From FP's Passport blog, Nov. 4, 2010:
Russia's Yogi Berra
Former Russian Prime Minister Viktor Chernomyrdin passed away on Wednesday morning at the age of 72. Best known in the West for co-chairing the Gore-Chernomyrdin Commission on nuclear safety, which largely failed in its goal of promoting bilateral cooperation between Washington and Moscow, Chernomyrdin presided over an extremely turbulent period of Russian history, including the controversial privatizations of the mid-1990s and the First Chechen War....
...Chernomyrdin is survived by ("approximately") two sons and a wealth of unforgettable lines. Here are a few of the best:
On economic reform: "We wanted better, but it turned out as always."
On his background on energy minister: "I have grown up in the atmosphere of oil and gas."
On dealing with the frequently uncooperative Duma: "Government is not the organ in which one uses his tongue only."
On Russia's unstable party system: "Whatever party we establish, it always turns out to be the Soviet Communist Party."
On his critics: "If your hands are itchy, scratch yourselves in other spots."
On the future: "We will live so well that our children and grandchildren will envy us!"
On Ukraine's Orange Revolution: "American ears are sticking out everywhere."
On his family: "I have approximately two sons."
On political efficiency: "We accomplished all items: from A to B."
On women: "You can't scare a woman with high-heeled shoes."
On language: I can talk to anyone in any language, but I try not to use that instrument."
On the life of the mind: "I am far from thought."...
