Whatever Happened To Those Vouchers?
What a difference a decade makes.
It was 10 years ago Wednesday that Boris Yeltsin put his presidential pen to paper to officially create the controversial privatization voucher, a check representing a fraction of the nations estimated value that eventually would be distributed to every man, woman and child in the country.
The plan was the brainchild of Anatoly Chubais, who had joined "shock-therapy" architect Yegor Gaidars government as head of the State Property Committee in January 1992.
The idea was simple: quickly transfer control of large sections of the economy to private hands, initiating an irreversible process that would be legally, economically and politically unassailable by those who disapproved of privatization, namely communists.
But amassing vouchers in order to acquire enterprises and assets, by whatever means, quickly became a national sport at which a small minority excelled, contributing to an unprecedented rise in criminal activity and laying the foundation for the rise of todays tycoons.
Each "privatization check" had a face value of 10,000 rubles (about $40 on the black market), a figure Chubais derived from dividing the estimated value of all state property (150 billion rubles), by the population of roughly 150 million.
Chubais believed the real value of a single voucher was between 150,000 and 200,000 rubles. He assured the populace that they would be able to trade a single voucher for the equivalent of two Volga sedans, the most expensive car in the country at the time.
Those promises never came true. And Chubais, who was later widely viewed as the "father of the oligarchs," is still resented by many Russians who accuse of him of stealing state property and of selling his motherland for nothing.
Ironically, Chubais, who continues to have a measure of control over the public as the head of Unified Energy Systems, is still reaping the dividends of the voucher program.
Together with 2 million other people, Chubais invested his voucher in the First Voucher Fund, which was founded Sept. 30, 1992, by a group of individuals. That voucher is now bringing Chubais and other investors a dollar and a half a year.
"Chubais still remains our shareholder and receives dividends on his voucher, like all our existing shareholders," said Andrei Uspensky, general director with PioGlobal asset management in Russia, which owns a controlling 50 percent plus one stake in the First Voucher Fund, now called the PioGlobal Investment Fund.
PioGlobal is a subsidiary of the U.S. PioGlobal Group, one of the largest pension and mutual fund managers in America. Unlike former foreign rivals Credit Suisse and Templeton, it decided not to start its business in Russia from scratch, entering the market by acquiring First Voucher Fund, one of the largest at the time, in May 1995. Now, according to Uspensky, the fund has roughly $100 million in assets.
The fund first paid a symbolic dividend to its shareholders in 1994, but not again until 2000 because the company was struggling, said Uspensky. "We paid $5.7 million in dividends in 2000, and about $3 million in 2001," he said. "Of course, $1.50 per person is not enough to buy two Volgas, as Chubais promised, but if one remembers how much vouchers were worth when they were first invested, it would be hard to expect a larger payback."
No one is really sure how much Chubais made on the voucher program, but a handful of entrepreneurs made a killing.
Aluminum king Oleg Deripaska, while still a student at Moscow State University, could be seen shivering in the cold near the entrance to the Sayansk aluminum plant in Siberia in early 1993 as he bought vouchers from employees, according to Dengi magazine.
Two years later Deripaska was running the company.
Kakha Bendukidze, who now controls United Heavy Machineries, or OMZ, transported in the trunk of his car the 130,000 vouchers he traded for 18 percent of the company at the end of 1992, the magazine reported.
OMZ now has annual revenues of several billion dollars.
Among the biggest beneficiaries of the voucher program were Alfa Group chief Mikhail Fridman; Interros Vladimir Potanin; Surgutneftegaz CEO Vladimir Bogdanov; Renaissance Capital founder and current NTV head Boris Jordan; and, of course, Boris Berezovsky and Vladimir Gusinsky, Russias two most famous "oligarchs in exile."
Berezovsky reportedly made part of his fortune on a scam to lure vouchers into a fund to finance a project to create the "peoples car," which his All-Russia Automobile Alliance, or AVVA, orchestrated. The car was never built and the fund eventually disappeared.
Now eight major Russian industrial holdings, whose birth certificates are the voucher, account for more than 50 percent of gross domestic product.
According to Dmitry Vasilyev, former head of stock market watchdog the Federal Securities Commission and one of the main organizers of voucher auctions, of the 150 million vouchers, 25 percent were invested in investment funds, 25 percent were sold and eventually accumulated by institutional investors, and the rest were either traded by their owners for stakes in state enterprises where they worked, or sold at closed auctions for shares in other enterprises,
"In all, 95 to 96 percent of all vouchers found their intended use, which is a very good result," Vasilyev wrote in the book, "Privatization: Russian Style," which he co-authored with Chubais and three others, for an unheard of total of $450,000 in honorarium before the book was even published.
Prosecutors looked into allegations that the fee was a bribe for rigging a 1997 auction for 25 percent of state telecoms holding Svyazinvest, but the case was eventually dropped in 1998. But it cost several of the books co-authors their government posts.
According to the book, as a result of the voucher program, 70 percent of state property went into private hands and more than 40 million Russians became shareholders.
Svetlana Makovetskaya is one of the ordinary Russians who took advantage of her familys vouchers, trading them for Gazprom shares that eventually allowed her to fund and financially support the Agency of Support for Small and Medium-Sized Enterprises in Perm.
"It was one of the last auctions in which we could use our vouchers, so I was very nervous because the price was going up and down," Makovetskaya recalled. "But in the end, I think we made a good investment, which also allowed me to buy half of my flat," she said Wednesday.
By Victoria Lavrentieva
Staff Writer Moscow Times 15 august 2002
