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The financial collapse of Russia
You have never read about it before. Mafia fights for power in Russia
The Greatest Fraud of the Russian State Bank
In August, 1991 certain powers made an attempt to continue the destruction of young Russia after the collapse of the USSR. They used influential criminal groupings for that purpose and tried to seize the most favorable Russian enterprises. They needed much cash to obtain them and bribe the right government officials. Criminals organized a unique system to fake avisos * of the Central Bank of the Russian Federation. They used that system during a massive cash plunder from the Central Bank and gained enormous funds. Later that case was called «a false aviso» **.
Criminals had to develop the newest technical systems to implement the fraud. The technological level of those systems corresponded to the best achievements of the Russian special services. By August, 1992 several billion roubles - in modern prices it was about four hundred billion dollars - were stolen from the Central Bank of the Russian Federation with the help of «false avisos».
Dudaev *** said “he sent various sheets of paper, and in exchange he was brought planes with bags full of money».
Criminal activity reached such a scope that financial payments were almost halted in Russia. Enterprises stopped dead, wage and pension payments were halted. That could stir up mass disturbances among the population, discontent with the government and cause a new disaster – another disintegration of Russia.
The forces that provoked the greatest fraud in the world and the bank system crisis in Russia also counted on that. In this short story I’ll not touch upon the technical details or discuss the equipment of the Central Bank of the Russian Federation. They are still actual.
In September, 1992 my company signed a contract for the delivery of several thousand encryption devices to the Central Bank of the Russian Federation. They were designed to code the Central Bank avisos transferred via open communication channels. The Central Bank administration didn’t trust anybody after the grandiose plunders in Russia. They had a reason for that and ordered my enterprise to produce keys for coding devices. The Central Bank personnel permanently controlled the work.
A key is a digital sequence of 110 decimal signs which is entered into a coding device. Knowing the keys it is possible to decode any coded message.****. Besides, it was important to train about 6000 Central Bank workers to operate the coding devices.
The equipment of the Central Bank with coders began in September, 1992. The Bank workers came to my office accompanied by guards with automatic machine guns. We made digital keys for coding devices under their control, and they took them away to the bank. Then we were left alone …
Russian ministers, in particular the Minister of Internal Affairs of Russia, said later in their interviews that about 10.000 bandits participated in the organization of robberies from the Central Bank of the Russian Federation.
Then the most interesting work began. It turned out that the Central Bank of the Russian Federation violated the law. The state bank was obliged to utilize only the encryption means certificated by the Federal agency for government communication and information. Our coders were designed for coding cable avisos of the Central Bank of the Russian Federation. They were not certificated by the Federal agency for government communication and information. It was a serious violation of the law because a firm but not a specialized state enterprise made the keys for the largest Russian state organization.
The Federal agency for government communication and information was worried that our company could do something wrong and they would bear responsibility for us according to the law. It was easy to understand them. Of course, officially they were right, therefore the Federal agency for government communication and information tried to initiate a criminal case against me concerning the illegal use of coding devices in the Central Bank of the Russian Federation. If we made a mistakes they could report that they had notified about the violation in time and even tried to prevent it.
On the other hand, the Ministry of Security of the Russian Federation ***** watched the criminals attentively and established the guilt of those who initiated the immense plunders in the Central Bank of the Russian Federation. It began to inquire whether I had transferred part of the money received under the contract to the officials of the Central Bank and the Federal agency for government communication and information.
They thought the Central Bank officials had illegally concluded the contract with my enterprise, but the Federal agency for government communication and information obviously hesitated to initiate a criminal case against me. (Complicated relations between the Federal agency for government communication and information and the Ministry of Security of the Russian Federation were well-known.)
Tax inspection at my enterprise was organized to convict me of financial frauds. Bandits were also worried. They felt their enormous profits were in danger and decided to negotiate with me in advance so that I wouldn’t break their "gangster" laws.
We started the production of our encryption devices in such a "friendly" atmosphere. We didn’t have much time. Nobody in the USSR and in Russia had ever manufactured so fast so many encryption devices.
The working day usually began with the arrival of a representative from the Ministry of Security or from the Federal agency for government communication and information. Later on the gangsters came slowly. The tax inspection stayed with us all the time. Sometimes inspectors from the Public Prosecutor Office and the Ministry of Internal Affairs visited us. They were interested only in technical matters and wanted to know how gangsters managed to forge the Central Bank avisos.
After lunch we saw all the "guests" off and could manufacture encryption devices and work out the user manuals for the bank personnel. Everybody got used to the "visitors". Sometimes they even sat in my reception drinking tea and coffee. We even bought sweets and cakes for them. As I remember, they drank much waiting because the talks were too long.
The work normalized when an emergency situation occurred. In spite of the fact that bandits brought bribes up to ten million US dollars, they were in despair - they couldn’t make a deal with me. They threatened us with physical violence and planned to attack the factory, where encryption devices were assembled. It could halt the equipment of the Central Bank with our coding devices. The bandits demanded that I should strictly observe the Russian legislation in the field of encryption equipment manufacture and should stop that amateur performance in democratic Russia.
I remember a factory manager Valery D. came to me late at night and said:
- Bandits threaten me with physical violence. I don’t guarantee your encryption devices will be safe till morning. Take them away urgently.
There was no way out. We made a night quick-march to the factory and managed to transport the encryption devices to a safe place.
As a result of those detective stories I broke my health. In the morning I couldn’t straighten up, my stomach ached and my waist was pierced with an acute pain.
I called my friend Volodya К. He was Y. Andropov’s attending physician before. (Yuri Andropov – the former head of the KGB, later – the General Secretary of the Communist Party of the Soviet Union) I asked what pill I should take to kill the pain.
- Come to me quickly! It’s not a joke! You can kick the bucket with this illness!
He worked at the Medical Center of the General Affairs Department of the President of the Russian Federation in Kuntsevo. What could I do? I went to him. I was quickly registered as a commercial patient. I had a separate room in the hospital so I could instruct the workers on the phone. I was given injections till 12 a.m., took medicine. Once during the acupuncture I was punctured with 30 needles! After 12 a.m. I was back to work and stayed there till 12 p.m. The reception of all the “guests” was postponed till 12 a.m. They didn’t come to "Kremlevka": either they were afraid, or some of them were ashamed to come..
Everything was fine, but once I drove up to the clinic gates at 12 p.m. They didn’t let me in. The guards were mainly retired elderly men who served in the 9th KGB Agency of the USSR before (government safeguard). There was a new businesslike young man among them, dressed in a dark suit. I explained that I was a patient there, but he reasonably replied that patients shouldn’t return to the hospital at 12 p.m. They should be in bed at that time.
He was right. I drove home.
Next morning I came to Volodya К. and asked what had happened and why they didn’t let me in the previous night. He pointed a finger upward and said:
- He arrived yesterday – personally!
At first I didn’t understand him. Volodya explained that the President of Russia B. Yeltsin arrived to the hospital. Therefore the Central Safeguard Agency blocked all the entrances. He couldn’t help me.
That was a blow! The work was in full swing, we didn’t have enough time. Besides “the friends” could halter the company activities in my absence under any pretext.
I asked Volodya what to do. Maybe I should leave the hospital?
He said he had inquired about my condition. If I left I could return again to the hospital, but I could feel even worse.
- So what shall I do? - I asked him.
- Go to Vlad V. He is one of the officials in charge of the President’s medical service. Maybe he can help.
I came to Vlad. He looked exhausted and had a head ache. I asked if he could help me to get a pass for my car, so that they could enter the hospital territory at night. He looked at me sadly and replied:
- I am glad to help you but not now. The Central Safeguard Agency watches all the entrances when B.Yeltsin is here. They aren’t my subordinates.
- What shall I do? - I asked Vlad a foolish question.
-. Walk along the corridor where procedure units are located. B.N. Yeltsin may be there. There are guards there, of course. But if Yeltsin sees you, he’ll remember you and ask you to come up. Tell him about a pass. That’s all I can suggest.
I had to go upstairs where procedure units were situated. I Walked to and fro with an air of a person who cared only about treatment. Vlad had taught me what to do. I hung around in the corridor for an hour, maybe even longer. Then I saw B. Yeltsin leaving one of the units. I tuned to him so that he could see me. He didn’t and went to another procedure unit. I decided to stay there and wait. Maybe I would be luckier next time. In forty minutes B.Yeltsin went out of the unit accompanied by a man. They were going along the corridor, when Yeltsin suddenly noticed me. He waved his hand inviting me to come up. Security guards let me pass.
I approached B.Yeltsin and greeted him. He asked:
- What are you doing here, cryptographer?
B. Yeltsin used my encryption device and I trained him to operate it. Then he started to call me “cryptographer”)
- I fell ill, - I was confused facing the President of Russia.
- Me too, - Yeltsin replied.
- They don’t let me out from the hospital, and I have to work! – I spoke about the painful matter and said by mistake that they didn’t let me out.
- They don’t let me out as well, - B.Yeltsin became serious. – What kind of illness do you have?
I said I had pain in my stomach, the diagnosis was such and such.
- Well, I’ll cure you quickly without any doctors! - B. Yeltsin said. – Come along with me!
We entered his room and he ordered:
- Sit down at the table.
He took two crystal glasses and poured vodka in them.
- Drink one hundred grams of good vodka in the morning with an empty stomach and one hundred grams m in the evening – and your illness will disappear in a few days! – he explained.
We drank one more glass of vodka.
B. Yeltsin asked what I was busy with. I explained I manufactured coders for the Central Bank of the Russian Federation because a great amount of money had been stolen from that bank. B.Yeltsin frowned and poured vodka into our glasses. We drank in silence.
- You see, we are here at the hospital now and they are happy about it over there. They’re robbing Russia.
With those words he poured vodka into our glasses again.
- I know about that grand fraud epopee. Likely, these are the acquaintances who are stealing money. I’ve been reported about it. They say they are doing their best to prevent the thefts. But what are their efforts applied to and where are they applied? They don’t even know.
We drank some more. B.Yeltsin asked me:
- Does anybody help you?
- In fact, no. We handle it ourselves, - I replied.
- Good. Then you’ll do everything correctly, - B. Yeltsin noticed. – You mentioned they didn’t let you out, - his voice sharply raised, and I regretted I had come to him.
Who knows how the President of Russia will react to my words! His authority is enormous!
After a short pause B.Yeltsin rose from the table and went to another room. I understood he went to call somebody on the phone. I only heard him say:
- Klepov can pass everywhere.
There was a pause, a specific curse, and at last he said:
- Why should the President of Russia work instead of you? Find out yourselves!
In a minute B.Yeltsin returned to the room and said:
- Your problem is solved. Work quitly. Come if something goes wrong, I’ll help.
Vlad came into the room together with a nurse. Probably they had already called him and he thought the audience should be stopped at once. He scolded me strictly for I interfering with B.Yeltsin’’s treatment and began to show me the door. B.Yeltsin had to take his medicine. I quickly left.
The company courier came to me in the afternoon and brought a pass for the 24 hour admission to the Kremlin. I called Vlad and asked whether I was allowed to drive to the hospital with that pass. He said:
- No, but your visit to B.Yeltsin made so much noise! I’ll manage everything myself and make a pass for you quickly.
Next day employees from the Central Safeguard Agency and Federal agency for government communication and information came to my office and began to install the government telecommunication. My various "visitors" were very much concerned about it and somehow disappeared together with the tax inspection. Anyway it had fined the company for buying too much tea and coffee and "unreasonably” including the expenses in the first cost.
At the beginning of December, 1992 the Chairman of Board of the Central Bank of the Russian Federation V.V. Gerashchenko reported to the VII-th Congress of People's Deputies of the Russian Federation: «The settlement-cash centers are equipped with encryption devices. It will allow to minimize the risk of fraud when aviso payments are processed via telegraph».
By that time all settlement-cash centers of the Central Bank of the Russian Federation (nearly 2000) had been equipped with our encryption devices. 6000 Central Bank employees were trained to operate them. A unique cryptographic signature developed by our company was put on each aviso transferred via telegraph communication channels of the Central Bank. It reliably protected them from fraud. Up till now there are no analogues of a digital signature like this anywhere in the world.
Our cryptographic coding system has been maintained in the Central Bank of the Russian Federation for sixteen years already. Nobody has managed to crack it. Of course nearly 6000 Central Bank employees fulfilled the most essential job protecting the Central Bank avisos. They coded a great number of avisos every day using our encryption devices. Their selfless labor saved Russia from break up into many parts.
In his interview to the newspaper “Nezavisimaya gazeta” Rashid Nurgaliyev, the Minister of Interior of the Russian Federation, said the damage deterred by false avisos was worth trillions of roubles (approximately $20 000.000.000)
Information slavery of people is the catalyst of any information crisis. Some people earn tremendous amounts of money falsifying information in such a way that the others consider it to be genuine. The latter suffer great financial losses since they can’t distinguish false information from the authentic.
890 banks and 1547 enterprises participated in the fraud. Here is the dynamics of US dollar rate growth in 1992:
01.07.92 $1 = 125 roubles
01.08.92 $1 = 161 roubles (monthly growth – 29%)
01.09.92 $1 = 205 roubles (+ 27%)
01.10.92 $1 = 254 roubles (+24%)
01.11.92 $1 = 398 roubles (+57%)
01.12.92 $1 = 447 roubles (+12%)
Shock therapy started in Russia on January 2nd, 1992.
Consumer prices increased threefold. State property cost approximately $400 billion and $20 billion were stolen. It was 5% of the total sum of the Russian state property.
On December 1st, 1992 encryption devices were installed on all Central Bank communication lines. Thefts from the Central Bank were stopped.
On December 2nd, 1992 dollar started to fall.
02.12.92 $1 = 417 roubles (-7 % per day!)
31.12.92 $1 = 415 roubles
* Avisos are financial documents of the Central Bank of the Russian Federation. They are sent by telegraph to the Central Bank branches. Money is received from the Bank according to avisos. The Central Bank of the Russian Federation is a state bank that executes payments in all commercial banks.)
** False avisos are fake Central Bank documents swindlers made at the beginning of the 1990-s. Criminals could easily “throw” them into the bank system of Russia.
*** Dzhokhar Dudayev was the first President of the Chechen Republic. He was killed on April 21, 1996.
**** According to some information, the bandits offered the bank workers more than $100.000 for a key.
***** Russian security service, it was called KGB before.