Journalist David E. Hoffman

DATE February 25, 2002 ACCOUNT NUMBER N/A
TIME 12:00 Noon-1:00 PM AUDIENCE N/A
NETWORK NPR
PROGRAM Fresh Air

Interview: David Hoffman discusses the oligarchs of Russia and
his book "The Oligarchs: Wealth and Power in the New Russia"
TERRY GROSS, host:

This is FRESH AIR. I'm Terry Gross.

My guest David Hoffman writes about what he describes as one of the grandest,
most arduous experiments ever attempted: to transform a vast country in the
grip of failed socialism into an economy of free market capitalism. His new
book is called "The Oligarchs: Wealth and Power in the New Russia." Hoffman
was The Washington Post's Moscow bureau chief in 1995 to 2001. He's now the
foreign editor. His book focuses on six men who became architects and
apostles of Russia's new order: Alexander Smolensky, Boris Berezovsky,
Vladimir Gusinsky, Mikhail Khodorkovsky, Yuri Luzhkov and Anatole Chubais.
Hoffman says these six bought up the Russian mass media, especially
television, and they seized not only factories, but also the assets of the
state itself, including the budget, the law enforcement system and the Kremlin
leadership. They were secretive, deceptive and, at times, ruthlessly violent.

I asked Hoffman about the media mogul in the book, Vladimir Gusinsky. He
founded NTV, which became Russia's largest and most successful private TV
channel.

Mr. DAVID HOFFMAN (Foreign Editor, The Washington Post; Author, "The
Oligarchs"): It was the only independent station outside the control of the
state, and suddenly the state had a crisis, and that was the war in Chechnya.
The first war in Chechnya, which began in late 1994 and went on into early
1995, was broadcast in television news in a way that Russians had never seen
before. You have to understand that the war in Afghanistan did not appear on
Soviet television, but these brave and courageous correspondents for NTV went
down and covered that war from both sides, and it was a brutal war, and the
entire population saw this for the first time on a station that hadn't even
existed.

And you know what happened? Their ratings just went way through the roof.
The ratings went up because people wanted to find out, what was the truth of
the war? And this station, I must say, showed the truth. As the tapes came
in, they just slapped them in the machine and put them on the air. This is
not--we're not talking about sophisticated, slick programming or
documentaries. We're talking about night after night of war reporters.

And in Moscow, which, of course, is sort of the center of the intelligentsia
and I would say probably the most liberal and certainly the most prosperous
city in Russia, NTV's ratings just climbed and climbed and climbed, and it
came at the expense of state television. It demonstrated, actually, that
television was a medium that could be immensely powerful in this new, young
state.

GROSS: How big did Gusinsky's media empire get?

Mr. HOFFMAN: Well, it got pretty big and pretty influential. And one of the
things is this: The big station, the one that Berezovsky had, which dated
from Soviet times, covered the entire country, and it was all--it had
satellites, it was the station you could see anywhere in the former Soviet
Union. Gusinsky created a station from scratch, putting this piece together,
that piece together, creating a regional network, then buying his own
satellites, private satellites outside the control of the state. And one of
the reasons that his media empire became so influential and so big is that it
was good. It was the most professional, it had the freshest and sometimes the
most challenging news. Even the Communists and the Nationalists and all the
parties in Russia wanted to be on that television station, because they knew
that's where the lively discussion was. And the state media, which were still
stale and dull, and some of the others in between, which were partially
state-owned, lost ground.

GROSS: What happened to his media empire last April?

Mr. HOFFMAN: When President Putin came in, Gusinsky had been closely allied
with Mayor Luzhkov of Moscow, and Putin was not fond of him. Putin launched
in the first year in office a campaign against Gusinsky's media empire. He
did things like urge banks to call in his loans, send masked men with guns to
raid his headquarters for documents, to have Gazprom, the state's natural gas
monopoly, twist Gusinsky's arm. And Putin carried out a yearlong campaign to
effectively destroy Gusinsky's media empire, and last April he succeeded.
Gusinsky left the country and had to give up his media empire.

GROSS: And where is he living now?

Mr. HOFFMAN: In Greenwich, Connecticut, as far as I know, and in New York.

GROSS: Does he have a lot of money left?

Mr. HOFFMAN: Oh, I think he's doing very well. Gusinsky has part of the
Israeli paper Maariv, he has other investments. I think that he's still
interested in Russia. As you know, one of his TV stations was recently closed
down and many of his staff are still there. He's also backing a magazine in
Russia. I think that we have not heard the last of him.

GROSS: Are any of the other oligarchs that you write about living in exile
from Russia now?

Mr. HOFFMAN: Yes. Boris Berezovsky is living in London, as far as I know,
and Berezovsky was the sort of elder statesman of the oligarchs. He was the
most prominent and, as I said, in many ways, the most public of them all in
the period of the Roaring '90s and he also had a falling-out with Putin.

GROSS: Over?

Mr. HOFFMAN: Well, you remember when the Kursk submarine sank? And
Berezovsky's television station broadcast rather blunt reports raising
questions about whether the government was telling the truth. And also, they
broadcast some tape showing Putin on holiday at the time that the submarine
sank and underscoring the rather slow reaction of the Kremlin and of Putin to
this catastrophe. And Putin got really mad about that and called Berezovsky
into the Kremlin, and Berezovsky says to Putin, `Look, I'm helping you. You
didn't do this. This is open information. I'm trying to help you get through
this.' But Putin wouldn't hear of it, and Putin said, `I want to take this
television station back. I want to have it under my control.' Berezovsky saw
the writing on the wall, he had seen what had happened to Gusinsky, he sold
the television station and got out of the country.

GROSS: Who did he sell it to?

Mr. HOFFMAN: He sold it to another oligarch, who essentially turned it over
to the control of the Kremlin and to--he sold it to an oligarch who had been a
partner of his previously, Bermovich(ph), who was under the influence of the
Kremlin. So by selling it, I don't think Berezovsky made a profit. I think
he actually lost a fair amount of money, but mostly he just wanted to get out.

GROSS: What were some of the financially tricky parts for you of living and
of working in the '90s in Russia during this transitional period from
communism to capitalism?

Mr. HOFFMAN: Well, it was an exciting time. I feel that there's very few
times in your life when someone will give you a ringside seat at a country
completely remaking itself. You know, right before my eyes in sort of fast
forward, I got to watch how Russia was zooming through this history, and
zooming is the only way I know how to describe it. You'd go away for a week
or two and you'd come back and you'd find out a whole new set of events had
occurred. And one of those most interesting to me was the way that the people
regarded their money. You know, Russians were very distrustful of the ruble
and of the whole idea of the money. They kept their money in dollars under
mattresses because they just didn't know when the government was going to come
and screw them, as it had many times before.

So it was interesting for me to watch how attitudes changed and there was a
period there, you know, in 1996 and '97, where Russia had a real boom--had a
stock market boom, the economy started to take off. We now realize some of
the causes were artificial, but what was most interesting was, at the
beginning of 1998, they announced, to signify stability and calm, that they
were going to take the ruble, which was then 6,000 to the dollar, and they
were going to cut the three zeroes off the end of the money. Really they
would have no economic impact, but it's just having 6 instead of 6,000. You
can imagine how this made them feel more secure.

But, of course, the people who were working on this campaign to change the
money were very worried that Russians would panic, they would give up their
rubles, something terrible would happen. And it was supposed to happen on
January 1st, and I have to admit, I also was worried that something terrible
was going to happen. And, you know, what happened was nothing. People took
it in stride. And the next day, the ruble was 6 to the dollar.

Well, this experiment led Chubais and some others to be unnecessarily sanguine
about what they had accomplished because later in that year the ruble crashed
and had to be devalued. But it was a very interesting set of events that
suggest to me that Russians actually are very sensitive--despite 70 years of
socialism, that they are striving and are very sensitive to what a market
economy should be.

GROSS: You describe Chubais, the economic reformer, as the architect of the
largest transfer in history of state-owned assets to private hands. What
system did he come up with for that transfer?

Mr. HOFFMAN: Well, you have to remember that when the Soviet Union collapsed
so quickly and so suddenly, all these state-owned enterprises--big oil
refineries, some as big as American oil companies--were up for grabs, and
there was a big question about who would control them, who would own them.
And, of course, many of them had directors and guys from the Soviet era that
had run them that were trying to take control. And Chubais decided that the
best way to get this property into private hands was to do it by issuing a
piece of paper that was called a voucher. And this voucher had a face value
that would entitle each person in the country to get a little bit of property.
You could then take the voucher and turn it in for shares of stock in a
company, you could sell it for cash, with the idea being that the property
would be given to all 140 million people in the country.

Now it didn't work out that way completely because there were many problems
with it, but it was an effort to take that property, which suddenly had been
in the hands of the Soviet state and was now up for grabs and give it to as
many people as possible. What happened, of course, was that the oligarchs and
the tycoons got a big chunk of it themselves, and it didn't wind up in the
hands of a 140 million people.

GROSS: How did they get the big chunk?

Mr. HOFFMAN: They got it because they could buy up and accumulate these
vouchers, they could go to board meetings when the decisions about shares were
being made, they could create phony companies and use money from offshore
funds to try and buy up parts of the companies, they could merge with others.
So they used a lot of shady schemes to try and consolidate their hold. And in
the mid-'90s there was a period called loans for shares, and it was 1995, was
a set of auctions of the very biggest, richest companies, and these auctions
were rigged, and these auctions allowed the tycoons to get some of the very
biggest companies that they have today.

GROSS: As you say in your book, Chubais initially thought that, you know, the
free market would work things out. If a good person bought the factory, a
good businessperson bought the factory, it would succeed, and if not, it would
fail, someone else would come along and buy it, and the marketplace would
handle it. But as you say, there weren't key institutions that kind of
regulate a marketplace. Capitalism wasn't in place, there was no system,
there were no controls and the economy was just out of control.

Mr. HOFFMAN: Terry, you know, at the very beginning, when Yeltsin and
Chubais and Gaidar were putting this together, you have to remember that the
entire formative experience of their lives was that state power was too
strong. The entire Soviet experience led them to believe the state had
overweening power against enterprises, individuals. So when they got a chance
to sort of free things up, they decided, and I think implicitly, `Let's go for
maximum freedom first.' I like to say this was like a boxing ring, you know,
and they decided, `Let's let the boxers loose on each other, and, you know,
the boxers will come up with the rules later on.' They had to move quickly.
They believed they had to move very quickly. They decided to let free markets
loose without rules at the beginning. And it shaped all the years that
followed, because this great struggle to develop rules that govern all mature
market economies took a lot of time, and even today is incomplete.

I'll give you a really good example of this. When they first allowed stock
shares, securities, to be bought and sold, which came out of the period when
they created those vouchers I mentioned, they triggered a whole group of
pyramid schemes, of rip-offs schemes, where people were just creating pyramids
and offering 1,000 percent returns and get-rich-quick schemes. And they were
stunned that this is what happened, because they thought people were going to
create mutual funds. And instead, the pyramids got out of control. And it
was only after a lot of the population lost their money in these pyramids that
they decided to create a Securities and Exchange Commission to regulate
securities, to create the rules of a market economy. That happened only after
the mistakes.

GROSS: My guest is David Hoffman, and he was The Washington Post Moscow
bureau chief from 1995 to 2001. He's now the paper's foreign editor. His new
book is called "The Oligarchs: Wealth and Power in the New Russia." Let's
take a short break here and then we'll talk some more. This is FRESH AIR.

(Soundbite of music)

GROSS: My guest is David Hoffman. His new book is called "The Oligarchs:
Wealth and Power in the New Russia." He's the former Moscow bureau chief for
The Washington Post and current foreign editor.

Is the fact that there really wasn't any economic system in place responsible,
in part, for the amount of bribery and economic corruption that grew with the
end of the Soviet communist system?

Mr. HOFFMAN: No, that's absolutely true. Corruption has been a feature of
Russian life for centuries. But at the end of the Soviet system, the new laws
and the new rules were just coming into play. But what came into play faster
and with much greater force was this onrushing capitalism. So you can imagine
these oligarchs and tycoons buy up factories, they get in disputes, they get
in arguments, `This one's mine, that one's yours.' And how do they settle
those? There's no courts to settle them in yet. So they begin to settle them
by not only on simple methods like fighting it out on the street, but of more
sophisticated methods. They start to buy the police forces. They start to
buy the security forces. They start to fight each other with the tools of the
state. They privatized the state this way. Then you can see what developed
was money ruled the state; not state ruling the money.

GROSS: Well, you make an interesting point in the book. You basically say,
`If laws are unenforceable or non-existent, then just about anyone can be
found at fault.' And what's the connection between that and bribery?

Mr. HOFFMAN: Well, the connection is that bribery stems from when someone
has arbitrary power. Right? So if anybody can be found at fault then anybody
can be charged, so the way out of it is to bribe yourself out of it. And in
all societies where you find that there's arbitrary and authoritarian power,
it's much more likely, if you can't appeal to a court to settle the dispute,
if you don't feel that there's a rule of law or a process, that you're just
going to arbitrarily find your exit door.

GROSS: What's an example of a law that was unenforceable or arbitrary and
bribery was the way around it and bribery became really commonplace in that
area?

Mr. HOFFMAN: Well, there were, for example, customs duties and rules about
what you could import and export. But at the time, if you remember, the price
of oil in Russia was not completely free to global prices. So inside the
country, oil was much cheaper than abroad. So if you could get a truckload or
even a trainload of oil from someplace in Russia to Lestonia, you can make
make a fortune. And there are guys who made a fortune. To get that train
across the border, you had to pay somebody because you didn't want to pay
those customs duties. And, of course, then once you made your profit on
selling the oil, there was a big demand in the earlier years for computers,
which Russia had a lot fewer of them, the Soviet Union had very few of. So
you bought some computers and you had to bring them back in. And again, you
had to pay a bribe to the customs inspector to get them back in. And this
became one of the major areas of bribery.

GROSS: Did you ever have to bribe people during your daily life in Russia?

Mr. HOFFMAN: It's very, very common in Moscow in the time I was there
whenever a traffic policeman stopped you, he expected not to give you a
ticket, but for you to pay him a small fee. Call it a bribe; yes, it was a
bribe. And I often paid it. It was a lot easier than going down to the
police station.

GROSS: And what would have happened if you didn't pay?

Mr. HOFFMAN: If you didn't pay, generally they would take your license away
and give you a little ticket, and you would have to take that ticket and maybe
weeks or months later, come down to the police station and try and get your
license back. The formal system was very bureaucratic, very Soviet, full of
stamps and papers. But the easier system was simply to pay the guy on the
street.

Also, another thing is that the traffic cops made up the rules as they went
along. One time I was making a left turn--Right?--from a left turn lane and
the guy pulled me over. Now he can say that I had broken the law in some
obscure way, and maybe he was right, but he did it mostly because he wanted to
be paid. You know, there was an old joke in Moscow that when you rolled down
the window, the traffic cop would say, `Hello, my name is Ivan, father of
three,' and put out his hand.

GROSS: And what did you think of the media? You know, the independent
stations that you were describing that were controlled by one of the oligarchs
you write about, what did you think of their media coverage?

Mr. HOFFMAN: You have to understand in a very early phase like this, the
government was chaotic, politics was chaotic, everything about the new Russia
at that time was very uncertain. So at one level, I admire some of these
journalists who--I think they were courageous. I think some of them were
doing things that they had no experience for, they had no training for.

On the other hand, you have to remember that the Soviet-era media didn't go
away. It wasn't like everybody just disappeared and a new crew came in. The
same people were working. So this transition to--this gradual shift from a
media environment where the state was in control, told you what to say, to a
free society where you were free to criticize was very painful; it took a lot
time.

And let me give you an example. In the 1996 election when Yeltsin was running
against the Communists, a lot of the journalists believed that this was a very
black-and-white case, and they threw their enthusiastic support behind
Yeltsin. They wrote pro-Yeltsin articles. And, of course, some of them were
paid to do this, but many of them just did it voluntarily. Now the Russian
media has a disease. It's infected with something called compromat.
Compromat is faked material, faked documents, smear material, the kind of
thing that you would use in the media to hurt an enemy. And one of the big
problems after the Soviet Union collapsed then the new Russia was the
proliferation of this compromat. And this was very tricky stuff because you
can't always tell if it's real or not. If somebody wants to smear you, they
make this up.

So in Yeltsin's election campaign, of all places--I mean, we're talking about
the president in his election campaign, they prepared what essentially was
compromat. It was an article that would be published in a newspaper saying
that the Communist Party was going to do all these terrible thing is they won.
But let me explain what happened. The article was published in a major
newspaper. Remember, it was a so-called leak. It was published in the paper.
And guess what? The next day, President Yeltsin has an interview with a top
television anchor. And, of course, the first thing out of his mouth is, `Did
you see that article in the newspapers showing what the Communists would do?'
Well, the whole thing was a plant. The whole thing was a set-up. The
journalists were complicit in this, and they did it willingly.

GROSS: What's President Putin's relationship now with the oligarchs?

Mr. HOFFMAN: Putin decided to change the players, but some of the oligarchs
he's allowed to stay. He basically made a deal with those who would stay. He
said, `You stay out of Kremlin politics and you can keep your winnings. You
can keep the big oil refineries and the metals and all the big things you got
in the '90s, but don't tell me what to do anymore.' So I think there's an
uneasy coexistence. I think that the businessmen themselves realize that the
state could come after them at any time. And I think that Putin in his own
mind is happy to have some of these businessmen, but is very resentful and
hostile to the idea that they should interfere with his decisions and with the
Kremlin.

GROSS: Well, I want to thank you very much for talking with us.

Mr. HOFFMAN: Well, it's my pleasure. Thanks for having me.

GROSS: David Hoffman is the author of "The Oligarchs: Wealth and Power in
the New Russia." He's the foreign editor of The Washington Post, and is the
paper's former Moscow bureau chief.

I'm Terry Gross, and this is FRESH AIR.

(Soundbite of music)

Unidentified Man: (Singing in Russian)

(Announcements)

(Soundbite of "Looney Tunes" theme music)

GROSS: Coming up, we remember the great animator and director Chuck Jones,
who helped bring Daffy Duck and Porky Pig to life and created Road Runner and
Wile E. Coyote. He died Friday at the age of 89.

Also, language commentator Geoff Nunberg talks about plagiarism in light of
revelations that two popular historians appropriated passages for their books.

(Soundbite of "Looney Tunes" music and sound effects)

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Profile: Prominent historians accused of plagiarizing work
TERRY GROSS, host:

This is FRESH AIR. I'm Terry Gross.

Last month it was revealed that the popular historians Stephen Ambrose and
Doris Kearns Goodwin had both used numerous passages from other historians'
works without putting them in quotations. Our linguist, Geoff Nunberg, has
been looking at the latest spate of plagiarism scandals, and has just one
question: Why do writers bother to do it?

GEOFF NUNBERG reporting:

The striking thing about plagiarism is how rarely anybody has anything
original to say about it. Including that, let me hasten to add. At least
that's pretty much the point that Thomas Mallon makes in his classic history
of plagiarism called "Stolen Words," New York, Ticknor & Fields, 1989.
There's a remarkable sameness about these literary scandals going back to the
18th century. The indignant accusations, the protestations of innocent error
and above all the puzzling gratuitousness of the crime. I'm not talking now
about a student who goes on the Internet to buy a term paper for a course he
hasn't attended all semester. That may be reprehensible, but it isn't
mysterious.

But why do competent and successful writers stoop to copying unattributed
passages from other published works, often works that are well-known enough so
that detection is pretty likely? And why are the passages they steal so often
banal and unnecessary? The answer's different for different writers. Why did
Samuel Taylor Coleridge appropriate numerous passages of German philosophy in
his "Biographia Literaria," most of them digressions that add very little to
the work? Biographers have suggested that Coleridge did it because he was
blocked or depressed or had a self-destructive impulse.

But you could hardly claim that Stephen Ambrose suffers from writer's block,
and there's no evidence that he's self-destructive. In part, his plagiarism
seems to be simply a sign of arrogance, a sense that his vast popular audience
would neither know nor care if he steals the words of some obscure academic
historian. But in Ambrose's case, the deficiency is as much aesthetic as
moral. Take this sentence from Ambrose's recent best-seller the "Wild Blue,"
one of many that came almost verbatim from a book by the historian Thomas
Childers: `Up, up, up he went until he got above the clouds; B-24s,
glittering like mica were popping up out of the clouds.' You wonder why an
author would want to pass that bit off as his own. Not just purple writing,
but somebody else's shade of purple. It's the sign of a writer who's deaf to
his own voice and, in fact, of a writer who doesn't really care whether he has
a voice at all.

In Doris Kearns Goodwin's case, though, the plagiarisms are more puzzling.
Not just because she's a better writer than Ambrose, but because the passages
she stole are so pedestrian that it's a mystery that anybody would bother to
lift them. Here's one of a number of sentences from Goodwin's 1987 book "The
Fitzgeralds and the Kennedys" that were lifted more or less verbatim from Lynn
McTaggart's 1983 biography of Kathleen Kennedy: `Hardly a day passed without
a newspaper photograph of little Teddy taking a snapshot with his camera held
upside down or the five Kennedy children lined up on a train or a bus.' Why
would anybody bother to steal that sentence? Goodwin's explanation was that
the borrowing wasn't intentional. She said she had taken notes in longhand
when she was preparing the book, then lost track of which bits she had written
herself.

That appeal to muddled note taking is a familiar motif in these affairs. It's
the same explanation that Alex Haley gave when it turned out that his book
"Roots" included numerous passages from Harold Courlander's novel "The
African," and in fact, it's the defense that Coleridge's nephew Henry offered
for his uncle's literary derelictions. He explained that Coleridge was a very
sloppy note taker who mixed his own thoughts with the thoughts of others,
which he later failed to recognize as such.

But this sort of explanation is hard to credit, particularly in Goodwin's
case. Suppose you were taking notes in longhand from a biography and you ran
across a sentence like, `Hardly a day passed without a photograph of little
Teddy taking a snapshot with his Brownie held upside down.' You wouldn't
write that down word for word. You'd put down something like, `Page 25,
frequent pics of Ted with upside-down Brownie.' And it strains credulity to
imagine that Goodwin could have written down 40 or 50 such sentences verbatim
and then forgotten that they weren't her own.

But then, why did Goodwin do it? Actually, my own suspicion is that it may
very well have been inadvertent, at least on her part. It's easier to believe
that one of her research assistants copied some of the sentences from the
McTaggart book in the course of summarizing it, and that Goodwin just dumped
the assistant's summaries into her book without checking them against the
source.

Whatever the truth is, though, we can't let Goodwin off the hook. It may be
that authors like Goodwin and Ambrose have become less like writers and more
like managers, coordinating the activity of their staffs. But as other recent
events have reminded us, CEOs are still responsible for everything that goes
on on their watch. Not long ago, the American Historian Association dropped
the clause in its statement on plagiarism that said that there had to be an
intent to deceive. As an official of the association explained, it's
plagiarism, whether you intend to do so or not. And we haven't yet gotten to
the point where we'll allow our authors to claim credit for the words of paid
researchers or ghostwriters or speechwriters the way we allow Jack Welch or
George W. Bush to do. In the end, that's all an author is, after all,
somebody whose words we pay to read.

GROSS: Geoff Nunberg is a linguist at the Center for the Study of Language
and Information at Stanford, and the author of the new book "The Way We Talk
Now."

Coming up, we remember one of the geniuses behind Looney Tunes cartoons, Chuck
Jones. He died Friday. This is FRESH AIR.

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