What happened to the people who made the most resonant decisions in August 1998?

Monday, August 17, 1998, went down in modern Russian history as a black day: the government and the Central Bank announced a default on government securities and at the same time refused to maintain a stable exchange rate of the national currency - the so-called currency corridor, the upper limit of which was 6 rubles per dollar. The ruble exchange rate immediately fell by one and a half times (and as the crisis developed, it fell by more than four times). The fulfillment of obligations to non-residents on loans, transactions on the derivatives market and collateral transactions was suspended for 90 days. Trade in GKO-OFZ ceased. The largest private banks stopped servicing deposits. The international payment system Visa recommended that foreign banks stop issuing cash using cards from Russian banks.

According to calculations made by the Moscow Banking Union in 1998, the total losses of the Russian economy from the August crisis amounted to $96 billion, of which $33 billion came from the corporate sector, $19 billion from individuals, and $45 billion from commercial banks. What happened after this with the main characters of the August drama is in the Forbes photo gallery.

*TASS/ Sergey Bobylev*
Sergey Kiriyenko

**Who was he in August 1998** : Prime Minister of Russia

**How he lived on** : Kiriyenko was dismissed on August 23, 1998, along with the entire cabinet of ministers (Boris Yeltsin did not sign his personal resignation letter on August 16). He was offered to head successively Transneft, Sberbank, Vnesheconombank and the Security Council, but Kiriyenko, who worked in the White House for only four months, rejected all offers. He created the political movement "New Force", which was registered by the Ministry of Justice in December 1998, and a year later he took second place in the elections for the mayor of Moscow with 11.25% of the votes (Yuri Luzhkov was once again elected mayor with 69.89% of the votes ).

At the same time, Kiriyenko participated in the Duma elections as the leader of the party list of the Union of Right Forces, so after losing to Luzhkov, he headed the parliamentary faction of the Union of Right Forces. In May 2000, when Vladimir Putin was elected president for the first time, Kiriyenko was appointed his plenipotentiary representative in the Volga Federal District. He worked in this post until November 2005, and then became the head of the Federal Atomic Energy Agency (Rosatom). In 2008, the agency was transformed into a state corporation, which Kiriyenko has led to this day. The former prime minister, who declared default in August 1998, earned 69.53 million rubles in 2014.

**Quote** *: “What is happening today is more from the field of psychology than finance” (Kommersant, 08/14/1998)*

*RIA Novosti*
Sergey Dubinin

**Who was he in August 1998:** Chairman of the Bank of Russia

**How he lived further** : On September 7, 1998, Dubinin submitted his resignation from the post of chairman of the Central Bank (Yeltsin stated that “this should have been done a long time ago”). For him, this was already his second resignation due to the financial crisis - the first time he was fired from the post of Minister of Finance after Black Tuesday, the collapse of the ruble exchange rate on October 11, 1994. As then, Dubinin was not left without work for long. If in 1994, already in November, he became vice-president of the Imperial Bank for servicing Gazprom, then this time on September 24, 1998 he became deputy chairman of the board of Gazprombank, and on October 2 took up the duties of deputy chairman of the board of Gazprom (oversaw the work with securities and banks).

And in 2001, Dubinin moved to RAO UES. There he first dealt with investment issues and then was responsible for financial policy. In 2008, one of those responsible for the devaluation of the ruble joined the board of directors of VTB Capital CJSC, and in 2011 he took the position of chairman of the supervisory board of VTB Bank.

**Quote:** “ I have something of a reproach to international financial organizations. Look at the small economy of Greece - and how much money was poured into it in a situation similar to ours. If they had given us hundreds of billions then, like Greece, we would not have allowed the crisis” *(Kommersant, 08/17/2013).*

*RIA Novosti*
Mikhail Zadornov

**Who was in August 1998** : Minister of Finance of Russia

**How he lived further:** after the resignation of the Kiriyenko government, Zadornov remained and. O. Minister of Finance, and on September 25, 1998 he was reappointed to a ministerial post in the cabinet of Yevgeny Primakov. He resigned from this position in September 1999, when there was a change of prime ministers and “successors” in the government (Primakov was replaced by Sergei Stepashin, and he, in turn, by Vladimir Putin). He ran for the State Duma from the Yabloko party and until 2005 headed the subcommittee on monetary policy.

Since July 2005, Zadornov has held the position of President and Chairman of the Board of VTB24. Zadornov is one of the highest paid top managers in Russia. His remuneration in 2014 was $15 million.

**Quote** : “In my opinion, the elections of 1996 and the events of 1998-1999 showed that the political system created by that time in Russia worked in a situation of deep political and economic crisis” (Kommersant-Dengi, *08/18/2008).*

*Roman Shelomentsev for Forbes*
Vladimir Potanin

**Who was in August 1998** : President and Chairman of the Board of the Interros holding company

**How I lived next:** unlike other large commercial banks, Oneximbank, controlled at the time of the default by the Interros group, had a relatively small retail business. Those who suffered from his financial problems were primarily foreign creditors, from whom the bank of Potanin and his then partner Mikhail Prokhorov took foreign currency loans (including to complete the buyout of Norilsk Nickel from the state).

But by stopping payments to foreigners, Interros carried out perhaps the most successful transformation of the banking business in that period. In September 1998, Interros bought the small but financially wealthy Nezavisimost bank and renamed it Rosbank. By October 1, 1998, Interros raised the authorized capital of this bank to $30 million - and by the spring of 2004, Rosbank became the tenth Russian bank in terms of assets on the list. Before the crisis, Oneximbank ranked sixth in this indicator. Analysts interviewed by Vedomosti at that time said that “Rosbank turned out to be the most successful of all bridge banks, since the transfer of business from Onexim occurred with virtually no losses. Interros Bridge Bank even retained servicing of Russian customs accounts - for Onexim "Before the crisis, it was one of the main clients. And in 2011, Rosbank was absorbed by the French bank Société Générale.

President of the Interros holding Vladimir Potanin has been No. 1 in the Russian Forbes ranking since this year. The basis of his fortune is a 30.3% stake in MMC Norilsk Nickel, the largest producer of nickel and palladium in the world. In 1999, Potanin established a charitable foundation that spends about $10 million a year on education, culture and sports. In 2013, the entrepreneur joined the Giving Pledge movement, founded by Bill Gates and Warren Buffett and uniting businessmen who decided to spend the majority of their wealth on charity.

Quote: “ We met (the crisis) completely unprepared. The actions of both the authorities and business were chaotic, nervous in nature. There was no preparation, no experience, no recipes on how to fight. They worked on the principle of “save yourself who can.” And in such a scenario, much more shocks: people were more nervous and businesses suffered greater losses. And so they approached the crisis in a weakened state, and came out in a very shabby state" ( Vedomosti, September 7, 2009).

*Dmitry Ternovoy for Forbes*
Boris Ivanishvili

**Who was he in August 1998:** Member of the Board of Directors of Rossiysky Credit Bank

**How he lived on** : during the August crisis, Russian Credit, owned by Ivanishvili, like many large private banks, stopped payments to clients. The bank came under the control of the Agency for the Restructuring of Credit Institutions in October 1999 with debts of about $1 billion. By this time, the best assets, along with the branch network, one of the most developed at that time in Russia, were transferred to another Ivanishvili bank - Impexbank. In February 2006, the billionaire sold Impex to Raiffeisenbank for $550 million.

Since then, Ivanishvili has gradually divested himself of his remaining Russian assets and, in 2011, announced the creation of an opposition party in his native Georgia. A year later, his Georgian Dream won the parliamentary elections, and the billionaire himself became prime minister, the first person in the state. A year later, in November 2013, fulfilling his promise, he left politics, leaving a team of like-minded people in the government. The current President of Georgia, Giorgi Margvelashvili, is a protege of a billionaire.

**Quote** : “On the eve of the announcement of default, we, the owners of the largest banks, were warned about this. I was categorically against declaring a default, but everyone reassured me, and the head of the Central Bank, Sergei Dubinin, promised that if the bank needed a loan, the bank would receive it. A default is declared, and investors rush to take their money. We honestly gave out $180 million to everyone who wanted it within two weeks. When the money ran out, I reminded Dubinin of his promise, but he didn’t give the loan” (03/7/2005, Vedomosti).

*TASS/ Mikhail Fomichev*
Alexander Smolensky

**Who was in August 1998:** Chairman of the Board of Directors of the Management Company of the SBS-AGRO Banking Group, Chairman of the Board of SBS-Agro Bank

**How he lived further:** simultaneously with Ivanishvili’s Roscred, in October 1999, SBS-Agro was also transferred under the management of ARKO. But the agency decided not to restructure the Smolensky Bank, but to liquidate it. Smolensky, like other large bankers, also found a bridge bank, into which, after the crisis, the best assets flowed - "1st OVK." But in July 2003, the entire financial business of Smolensky - the UWC banking group, the processing company STB-Card, the collection company Inkahran - was bought out by Vladimir Potanin's Interros group .

In the spring of 2004, Smolensky finally left the banking business, transferring his last bank, Stolichnoye Credit Partnership, to his nephew Alexei Grigoriev, chairman of the bank’s board of directors. In September 2004, a former banker who created one of the first Russian processing companies opened a store selling silver products in the center of Moscow. In March 2006, the Vagrius publishing house released the political thriller “Hostage,” written by Smolensky and his former PR man Eduard Krasnyansky. And in 2012, the businessman began actively selling real estate in Moscow - in particular, the for sale for € 173 million. Alexander House business center on Bolshaya Yakimanka, where the campaign headquarters of presidential candidate Vladimir Putin was located in 2000, was put up

**Quote** *: “A terrible dream. There were two ways - to become a billionaire and the one that turned out in the end” (SmartMoney,* *08/18/2008).*

*TASS/ Alexander Danylyushin*
Vladimir Gusinsky

**Who was he in August 1998** : President of Most Bank

**How he lived next:** Vladimir Gusinsky, whose fortune was estimated by Forbes at $400 million in 1997, has not been included in the ranking of the richest people since then. Most Bank did not survive the crisis - its license was revoked in 2001. In June 2000, the banker-media magnate was arrested on charges of fraud on an especially large scale as part of the Media Most case, released on his own recognizance and went to Spain, where he received citizenship. He also lost his main asset - the NTV television channel.

Gusinsky lives alternately in Spain, Israel, and visits the USA and Great Britain. In March 2012, he sold his last media asset, the satellite TV channel RTVi, to the former general director of the Zvezda channel, Ruslan Sokolov. The status for 2013 is unknown. According to Forbes, Gusinsky is the beneficiary of the American New Media Distribution Company, which sells TV series and manages other assets in the television business.

*RIA Novosti*
Vladimir Vinogradov

**Who was in August 1998:** Chairman of the Board of the Moscow Innovative Commercial Bank (Inkombank)

**How he lived next:** in October 1998, he resigned from the post of president of Inkombank. Soon after this, the Central Bank revoked the license of Inkombank, and it was declared bankrupt in 2000. One of Inkombank's assets - the painting "Black Square" by Malevich - was bought for 32 million by Vladimir Potanin , and then donated to the Hermitage.

After this, Vinogradov switched to the leasing business - perhaps because of all the pre-crisis projects of Inkom, only the leasing direction remained viable. In January 1999, Vinogradov headed Gosinkor-Leasing, and in August of the same year he created the Industrial Leasing Systems company and headed S.A. Leasing, which was historically associated with the Siberian Aluminum group. In addition, since March 1999, Vinogradov was on the board of directors of the Southern Trade Bank (Rostov-on-Don), where most of the members of the board of directors and management were his colleagues at Inkom.

After the August crisis, one of the most famous bankers of the 1990s suffered a heart attack and several strokes. The latter turned out to be fatal for him - Vinogradov died in June 2008.

Sergey Kiriyenko

Sergey Dubinin

Mikhail Zadornov

Vladimir Potanin

Boris Ivanishvili

Alexander Smolensky

Vladimir Gusinsky

Vladimir Vinogradov

Heroes of Default: 17 Years Later