The only men who know how to do business in the CIS
The Moscow Times, July 5, I998
AvtoVAZ Loses Its Only Real Organization
By Yulia Latynina
It has been two months since AvtoVAZ began holding up payments to the federal
budget. Nearly 100,000 automobiles are sit ling on the plant’s lots, more
than 15 percent of the year’s production. The Zhiguli overproduction crisis
began soon after the authorities’ valiant operation to evict organized criminal
groups from the plant’s premises
As of last November, the entire production process at AvtoVAZ was under the
control of bandity. They used to stand at assembly lines, marking with paint
the cars they wanted for themselves. They even supervised the work to ensure
quality, and found parts the factory lacked. Finally, the plant’s managers
took offense at giving the bandity their cut. So, under the pretext of a
wide-scale operation to clean gangsters out of Russia’s automobile industry,
the bandity and anyone caught standing nearby were thrown into jail. Only
afterward did it become clear that handily were not the parasites everyone
thought they were. In the convoluted world of AvtoVAZ economics, they were
the propeller needed to push the plant into making quality car.
As one AvtoVAZ dealer said, “Since the plant didn’t have any headlights,
the quality control department wouldn’t let the cars off the lots. With the
help of our krysha (roof, the Russian word for Mafia), we would find five
sets of headlights and climb the [plant’s] fence. We’d install them, take
the cars through quality control, and then, outside the gates, we’d remove
the lights and take them back over the fence.” In Moscow, the dealers themselves
would then install headlights.
Now tens of thousands of incomplete cars sit on AvtoVAZ lots. There is no
one to carry headlights over the fence. But at least the bandity is gone.
Not only did the bandity handle supplies, they provided protection for the
dealers – a function the state performs in normal economics. Dealers could
be confident the cars they purchased would make it safely and intact to their
final destinations. If some delivery driver decided to cannibalize the Zhiguli
in his care, there were always people to explain to him how deeply he had
erred. Zhiguli deliveries have now become a frightening matter, with half
of them permanently disappearing from the roads.
But most important, bandity made it possible for dealers to buy the cars
they needed. A dealer could stop by a normal office, with white walls and
computers, to place an order. If he ordered 10 five speed, ruby-red Shestyoirkas,
he would get them. And he would get them fast. Now a dealer must wait two
months for delivery. And then he may receive a Shestyoirka and two Pyatyorkas.
He might get stuck with the unpopular Desyatka, something that can be unloaded
only by bribing an AvtoVAZ manager.
Bandity used to take 5 to 10 percent of a car’s sale price for services.
Now Zhiguli prices have fallen by 30 percent in the past six months. But
dealers aren’t buying them because they can’t get the cars they want in a
timely manner. The healthy competition created by the banditry has been replaced
by a lazy corrupt monopoly of AvtoVAZ managers.
I don’t wish to be seen as an advocate of banditsky justice. But AvtoVAZ
was a prominent example that, in Russia’s economy, the criminal element is
a more competitive, and thus a more financially effective, organization.
The state might have helped the bandity become legitimate businessmen. Instead,
the authorities who failed to perform the functions assumed by the bandity
have plucked away AvtoVAZ’s market along with the gangsters, and consigned
the giant carmaker to bankruptcy.
Wednesday, January 13, 1999
Market Mobsters Show Art of Running Russia
By Irina Glushchenko
Have you ever been to Moscow’s “Kashhky Dvor” market where building materials
are sold? It is the largest market in the city, and there you can find anything
from nails to a cast-iron cockerel intended to crown the spire of a new Russian
house. The traders that sell the smaller stuff are spread out in rows of
covered stalls, while the bigger goods are sold in small sheds and pavilions.
These are mostly full of display models, however, and if you want to buy
a particular item you may have to traipse your way across the whole market
to one of dozens of containers where the stocks are kept.
You’re best going there in a car to do your shopping but if you don’t have
transport, you have to use the cars that wait by the market with cardboard
signs in the windows that say “Deliveries.” So that’s where my husband and
I had to go first to arrange something, even before we bought all the bits
and pieces we needed for our home improvements.
“It’s not my turn,” said the first driver we approached, motioning us to
another vehicle. “Leningradsky Prospekt?” we asked the second man, and had
to list the goods that were to be transported. He thought for a minute and
then named his price of 450 rubles. No way, we won’t pay more than 200. “So
go and look for 200,” he said with a smile.
There are no drivers who are not part of his group – outsiders looking to
make a few dollars like this just aren’t allowed near the place, so we decided
to try the opposite end of the market where we went through the same discussion
with a young, pleasant-looking lad who seemed to be directing loading operations.
He directed us to another driver who seemed willing to haggle a bit. “400
rubies,” he said. “I have to pay my dues, after all.” We eventually agreed
Now we could get on with our shopping, moving from container to container
and leading the porters to our vehicle where everything was loaded or put
on the roof rack. All around us there was hustle and bustle, kebabs sizzled
at food stands, and men with dark glasses and mobile phones moved purposely
between piles of cans of paint, stacks of timber and rows of porcelain toilets.
Life was in full swing.
We finished loading and set off. I remembered the phrase, “I have to pay
my dues, after all,” and although our driver sat impassively behind the wheel
I decided to ask him who he pays. “The mob, of course, the Solntsevo gang.”
“You mean the ones whose boss was just on trial in Switzerland?”
“The very same.” We drove on. I told him I was a little unnerved to hear
that we had just left a bandits’ lair, but the driver saw things in a different
light. “Things are well run there, there’s order, lots of new jobs to go
around. The whole of the southern district earns its livelihood from this
market traders, baggage porters, drivers, snack vendors.”
It transpired that he was one of 35 drivers allowed to work the patch, all
paying $450 a month, which leaves him with up to $3,000 if business is good.
And so long as he pays up at the end of the month, he can choose to work
when he likes.
He began to warm to the conversation. “My buddies fixed me up here after
a business I was in went badly wrong,” he said, pulling out a photograph
of a smashed up, overturned while Volga that he and four friends were travelling
in to Minsk when their business partners ran them off a bridge. Only he survived
He seemed happy with his new job. “Where else can you be your own boss and
earn that sort of money with very little effort? I’ll drop you off now and
that’ll be it for the day, except to go to the bank.”
There is of course an official market management, but they just deal with
the purely technical aspects of running the place, the driver then explained.
All the unofficial proceeds from the drivers, container owners and anyone
else doing business there filter their way up through various people to the
main man at the market, the smoiryashchy, “he who watches over things.” So,
who does he owe?
“He owes everybody.’ ” It sounds like a hard job.” He frowned. “People generally
don’t last long in this position, but there are always new people willing
to do it.” “Why?”
“You don’t know what it means to have a lot of money. I found out the hard
way that I’d rather do without it.” ” So is the stuff sold at the market
“Oh yes. They control that very strictly If you have a complaint about something
you bought and the trader will not replace it then that person is in a whole
lot of trouble. But first they force him to pay up, you know, for breach
of dealer-client trust.”
“And then?” He said nothing. I changed the subject.
“Your friend back there was talking to a policeman.” “It’s Tuesday. On Tuesdays
the cops do the rounds – that’s another hundred bucks, if you please – and
Thursdays it’s the tax inspectorate’s turn. They don’t touch us, because
the mob tells us we have pay up. Basically, the mob is the only people anyone
can do business with in this country,” he said, assuring me that’s the way
it works everywhere, not just at the market.
None of this really came as a big surprise to me, and I have long since
understood that there’s no point moaning and complaining about it. But the
trouble is once there was not just a gap between “honest people” and “bandits”
– these were two entirely different worlds. Now the division is blurred and
it’s hard to separate one group from the other. Things that were once the
subject of criminal features on television and in the newspapers have become
a part of daily life, and bandit jargon is steadily creeping into the language
of political scientists and even theater critics. And sometimes corruption
does seem to be the only rational method in Russia of making decisions.
“So can’t anything be done about all this?” I asked the driver. “Where have
you come from, the moon?” he replied, shaking his head. “Everything takes
its own course – it’s no use you protesting against failing rain, you just
have to know how to use an umbrella,” he concluded as we reached our house.
He unloaded everything and look his 300 rubles, that was his working day,
except for a quick trip to the bank, like he said.
The world as he had painted it to us “, as sleek and streamlined, but we
felt sad nonetheless. Oddly enough, though, it was smotryashchy I felt the
most sorry for.
Irina Glushchenko is a theatre critic and freelance journalist. She
contributed this story to The Moscow Times.