#Business #Finance, #Law, #Privatization
Latham & Watkins, American Chamber of Commerce in Moscow (AmCham), U.S.–Russia Business Council (USRBC)
Richard Conn practiced international corporate law for nearly twenty years as an equity partner with the international law firm Latham & Watkins. He founded the firm's Moscow office in 1992 and served as a key advisor to the Presidential Administration of Russian President Boris Yeltsin and as President of the Moscow based Foreign Bar Association. A longstanding past member of the Board of Directors of the U.S.-Russia Business Council and of the International Crisis Group’s International Board of Advisors, he regularly consults with the World Bank, Members of Congress and the National Security Council regarding Russia related issues. He Co-Chaired the U.S.-Russia Business Council and American Chamber of Commerce (Moscow) joint initiative to facilitate Russian accession to WTO.
In 2010, Richard ran for the Deputy Presidency of the World Chess Federation on an international ticket headed by the Twelfth World Champion Anatoly Karpov with the support of the Thirteenth World Champion Garry Kasparov and is an avid chess player.
Latham & Watkins, American Chamber of Commerce in Moscow (AmCham), U.S.–Russia Business Council (USRBC)
Richard Conn practiced international corporate law for nearly twenty years as an equity partner with the international law firm Latham & Watkins. He founded the firm's Moscow office in 1992 and served as a key advisor to the Presidential Administration of Russian President Boris Yeltsin and as President of the Moscow based Foreign Bar Association. A longstanding past member of the Board of Directors of the U.S.-Russia Business Council and of the International Crisis Group’s International Board of Advisors, he regularly consults with the World Bank, Members of Congress and the National Security Council regarding Russia related issues. He Co-Chaired the U.S.-Russia Business Council and American Chamber of Commerce (Moscow) joint initiative to facilitate Russian accession to WTO.
In 2010, Richard ran for the Deputy Presidency of the World Chess Federation on an international ticket headed by the Twelfth World Champion Anatoly Karpov with the support of the Thirteenth World Champion Garry Kasparov and is an avid chess player.
Daniel Satinsky: Well, look, I’d like to begin with when did you first go and why?
Richard Conn: Well, I had learned Russian in college.
Daniel Satinsky: Okay, why?
Richard Conn: And I had done that because I already spoke several languages and wanted a hard one before my brain got fried. I was already a reasonably serious chess player, and I had in my mind that No. 1, I liked Russian literature, and I’d been raised during the Cold War, so I had a fascination with Russia. And also thought well, I’ll maybe eventually get to play some of the top chess players and be able to read the material in Russian, all of which ended up happening. So, those were the reasons I got into it originally.
Daniel Satinsky: Where did you go to university?
Richard Conn: I was at Dartmouth.
Daniel Satinsky: At Dartmouth, okay. So—
Richard Conn: So, I went on a program over to St. Petersburg, at the time Leningrad.
Daniel Satinsky: And so just to follow the chess for a moment, when did you end up playing against Russians in chess?
Richard Conn: You know, I ended up becoming good buddies with Kasparov, and so in ’92, ’93 I played him a couple times. And back in the ‘70s I played David Bronstein a couple, actually, maybe 10 or 15 times.
Are you a chess player at all yourself?
Daniel Satinsky: I’m not. I’m not, no.
Richard Conn: You wouldn’t know who he is, but—
Daniel Satinsky: I don’t know who he is, but—
Richard Conn: David Bronstein was, they say he was one of the strongest grand masters never to become world champion. But when I was in Costa Rica when I was 15, he had visited, and I had played chess against the guy he was going to play, and I was a 15-year-old kid, but I had beaten the guy he was going to play.
Daniel Satinsky: Oh, wow.
Richard Conn: He was playing the champion of Guatemala that day or something. So, the champion was a really nice guy. He introduced me to David. And Bronstein was maybe in his 60s at that time. And he was just—and he didn’t speak Spanish, but he spoke English, and so we chatted a bit. And then what he did was the most amazing thing at that age I’d ever experienced. He invited me into the circle to walk around with him as he played 40 or 50 people, and he would get my input on certain moves, and tell me what he was doing, and it was a dream, an absolute dream. And so that was… And then later we played chess together a few times. He let me have a draw once by saying if you do this you can take this knight, and then you can tell them you drew me. [Laughs.] A really nice guy.
But no, I mean, skipping way, way ahead, when I was in… In Moscow there, I would say the turning point in terms of really getting involved in chess was when I’d been working with the Kremlin, with some of the people there, and they introduced me to Kasparov, and I played at an event where I was one of 10 people playing him, and I lasted the longest, and so Garry and I spoke afterward for quite a bit, and I ended up representing him in a variety of things, and then being in part of his wedding, so we were friends for a while.
And then later, when I had indicated I wanted to help the chess world pro bono, and I had actually connected him and Karpov back together years after their match—a strange story where we met on the street. And Garry suggested I run as the running mate of Karpov to lead the World Chess Federation. And so, we had this worldwide campaign, which was great, great fun, and we were up against Putin and his guy, because it became known that Garry was behind it.
Although actually I did not view this as an anti-Russian campaign at all. Obviously, Karpov was going to be the president, and he’s anything but an anti-Russian. But I did view it as a way to try to bring chess sort of out of the…more mainstream into educating children how to play and out of some of the unsavory things that the World Chess Federation had historically been involved with. So, that’s how all that began and took off. And so through the years I played lots of the top players and am really able to lose to almost anyone.
Daniel Satinsky: But to be able to lose at that level is impressive.
Richard Conn: It’s fun. And the current world champion has allowed me to do commentary on a lot of his games, but that’s a whole different story. So, chess, to me, is a nice hobby. It’s just a hobby for me, but I enjoy it.
Daniel Satinsky: So, professionally you moved there in ’92, is that what you said?
Richard Conn: Yeah, I moved there to open Latham in ’92.
Daniel Satinsky: Right. So, tell me a little bit about Latham and why Latham was opening an office in Moscow.
Richard Conn: Well, to be candid, Latham opened an office in Moscow because I went to the head of the firm and said hey, this guy Boris Yeltsin is just coming into power, you may not know this, but I speak Russian fluently. I told him. Found out that he spoke some Russian, which was a good thing. And at the time we had an office in London. That was our only foreign office. But I basically said look, I think I can probably make some good things happen, we’ll have some clients here maybe in the U.S. who need support over there, Russia’s trying to transition, it seems to me, to a free market democratic structure, I’m sure that there will be some opportunities perhaps to be helpful in that. And basically, I’m crazy enough to do it. So, he was very supportive and let me do it.
Daniel Satinsky: Did you have a wife at that point?
Richard Conn: I did, and I give her points for being willing to leave California and go to Moscow. We took a trip or two for her to see it. And it was an adventure. It was a rough place, a complicated place.
Daniel Satinsky: Yeah, not an easy time in ’92.
Richard Conn: No, and she did not speak any Russian. And we had two kids. We had two young kids about five and seven or something at the time. You know, a lot to take care of in that. But I viewed it—I guess the way I thought of it—and you’ve talked to lots of people, so I’m sure you find as well that there are many other sort of self-selected types who had an idealistic view of what they could accomplish and why to do it—but I had a very conscious sort of period of thinking through the idea that there may not be a lot of equity partners in major law firms who speak fluent Russian, and I just thought that—I wouldn’t say it was an obligation, but I felt that it was the right thing to do to try to be helpful to a Russian government that, at least as I perceived it, was trying to move in a direction that I felt I wanted to support. And so—
Daniel Satinsky: As you were thinking about it, what kind of support did you think you would be able to give to the Russian government? Because usually people do it the opposite way: I’m going to help support my clients or my American companies to find a way. And you are expressing that you thought initially about helping the Russian government. I’m curious about that.
Richard Conn: Of course, as a partner in the firm I had an obligation and a desire for us to make money for the firm, and I did view that as a likely outcome of this. And the firm still has an operation over there, and I think it’s done fine. But no, I can’t say that at the forefront of my mind was gosh, our clients are dying to get our services in Moscow or St. Petersburg. That was an adjunct to it, and of course I took great care to spend a huge amount of my time building a client base and making sure I was doing that part of the job as well.
But in terms of my own personal interest, and what drove me to go there, it really did not have anything to do with the idea that it’s a good business decision for me personally, or that our clients desperately needed that. But the two things tended to go hand-in-hand. Building good relationships in a country generally allows you to function more smoothly. But no, I was running some of the largest litigations of our firm at the time at Latham, and frankly, particularly given the way Russia has gone, it was definitely more in my interest to stay there. I certainly annoyed a couple people by leaving, by going to Russia. It was not a small decision, but I just felt it was the right thing to do. And it’s still why I’m doing some of the projects we just discussed.
Daniel Satinsky: Right. And so, privatization was going on when you arrived there?
Richard Conn: Yeah, I guess privatization was going on. I wasn’t involved in privatization. And certainly, day one, when I got on the ground, I wasn’t working in an area even close to that. We had an operation, I think it was at 19 Novy Arbat, which was tied in with the Antimonopoly Committee. The firm had some different ties, and that was the original base, working with a guy named, I think it was, Chernogorodsky, who was the head of the Antimonopoly Committee, so part of our work was helping him with their activities dealing with the Supreme Soviet and the transition that was taking place from the Soviet structures to the new Russia structures.
Daniel Satinsky: So, you were helping drafting laws and regulations?
Richard Conn: Yeah, I did a fair amount of that. We did that. We gave them input. Like I remember the insurance industry came over and crafted a law that was about 12 pages long, 11 pages of which were obligations of the policyholder to the insurance company, and one page was the obligation of the insurance carrier to the policyholder. I remember working with them on the bankruptcy code, which, I’d written a book here on that for lawyers, and so gave input on that, and on countless different pieces of legislation that involved, as I said, I’ll call it the remnants of the Supreme Soviet, because it was all rather gray at that moment.
It was right in the transition, and we still had the Supreme Soviet down the street in what’s called the White House, but we had the Kremlin being occupied by people obviously who were anti the Supreme Soviet. It would be almost as if—it was not so unlike, I guess, the scenario where you had initially, say, a guy like Trump in power who at least I view as quite a corrupt figure, and fighting against the Justice Department. Until he ended up sort of taking that over, there was a conflict there. So, yeah, I never thought we would have examples of this in U.S. history, but we now do, so…
Daniel Satinsky: We’ve had a rich recent history to work with.
Richard Conn: Yeah, different types of philosophies of governance and of ethics. Sorry, I’ve gone on a long time. Go ahead.
Daniel Satinsky: So, at that point the person you were working with was part of the reform wing, right? He was a member of the government, and he was looking for assistance from foreigners about how to form new institutions, new relations?
Richard Conn: Yeah, it’s really hard to define it the way you are. It’s far more vague. I remember the first project I was working on was helping the Hoover Institute get all the records of the KGB. I don’t know if you remember that whole thing. But we got all that stuff. And that had nothing to do with the Antimonopoly Committee. So, the way I would think of it is the Antimonopoly Committee was providing us office space, and we were thanking them by doing pro bono work, but it wasn’t really a close relationship. It was a more formal relationship, and there was a vagueness to all of that. And at the same time, I was beginning to build some client relationships, and getting into the community, and essentially feeling my way around, so—
Daniel Satinsky: How did you do that in those days? How did you build a client base? The community was just under formation at that point, right?
Richard Conn: Yeah, there’s no one thing. I guess one, obviously, we had some organizations that were in town that I became active in. One was I joined the American Embassy Club. You could actually join the embassy, and I could take my kids there to swim on the weekends and stuff like that or rent videotapes. And so, part of it was getting to know the expat community, which could be accessed in part through the embassy, but also because there weren’t any other games in town. You didn’t really have other places for R&R for your family. Even the Slavyanskaya was just sort of getting going, the Radisson. And so we… But also, we had the American Chamber of Commerce, and so I became active in that pretty rapidly.
I had some contacts already. I’d been in Russia many times before through the studies over there. I’d had some small practice involving Russia when I was in California, but very small. And then trying to interact with—taking advantage of opportunities. For example, one of the early opportunities was to become the representative in Moscow of the U.S. Association for Economic Reform in Russia, or something like that it was titled, which Tom Kemp, Jack Kemp’s brother, was the head of. And so, Larry Kudlow was on that, some economist Jude Wanniski or something like that. I would have to look him up. There were various players in that. And it was through that, actually, that I had my first meeting in the Kremlin, where I sat across from Gennady Burbulis, and that’s where the initial contact took place.
The other thing was I hired a gentleman to work with me as an advisor, sort of a consigliere. I had really two of them. One was a young guy who was well connected, very good guy, and another was one of Russia’s leading playwrights, a guy named Alexander Gelman. And I can’t remember how the initial introductions took place, but we hit it off. He understood what I was trying to do. Gelman had tremendous ties throughout the power structures of Russia, and so as we became friends, I would take his advice of what to do, whom to meet with, and I learned that 99% of the success with a meeting is how you prepare it, who’s introducing you, how it’s being set up.
So, that would sometimes lead to client relationships, meeting with banks, meeting with other institutions. Some of it would be meeting different people in government who were playing different roles. And then there was the networking through the—we had sort of a bar association there which I became active in and eventually ended up leading for a couple of those key years. And we had a wonderful camaraderie among the law firms that were on the ground there.
Daniel Satinsky: So, it wasn’t, you weren’t competing with—I mean, you were competing with each other, but it wasn’t antagonistic competition?
Richard Conn: The way I would think of it, and I said it many times in our breakfast meetings, you know, we’d get together quite a bit, usually at the Radisson, I thought of us as one firm in the sense of the work we were doing to help the Russian government eventually. I mean, that was an undercurrent of the organization. That’s why a lot of us were there.
Yes, we competed for clients, but it lets—I mean, you’ve lived it to some degree—but it’s a bit of a frontier mentality. You’re all in there dealing with a lot of complications, and you form very strong friendships. We talked about Randy Bregman. We didn’t know each other that well then, but we knew each other. And I think there’s just an understanding that of course that friendship goes far beyond business, right? And so whether we were talking about how to create opinion letters together, or the standards for that, or I remember conducting discussions of which laws we were going to obey and which ones we were not.
And I know that sounds like a strange thing, but there was a period where orders would come down from a specific government ministry, and during the transitional period you had to decide was that a real thing or was that a Mafia group basically trying to get information on your clients, trying to shake them down. There were all sorts of complications that we lawyers in the West would never have to even consider. If you get an order from the SEC, you comply with it, right? You never think to yourself gosh, I wonder if those guys are being paid off to try to seize bank accounts. But in those days there was a lot of that. And the Russians would educate me and others on these games that were being played, and how to be savvy about those. Sorry for going on so much, but that’s a long answer.
Daniel Satinsky: No, this is great. It’s very interesting. It’s part of the dynamics of that period. And how big an association of lawyers was it at that point?
Richard Conn: I think the early meetings there were maybe a dozen or so of us who were present, and then pretty quickly, though, we’d have a room of 30, 40 people having breakfast, maybe 50 people having breakfast. Because we also would have a representative or two from the accounting firms. We included them in it. You know, the Big Six or Big Eight, depending on when, before they imploded.
So, yeah, there was, at least during the years when I had the privilege of sort of leading the group, we really had a sense of camaraderie. We would actually have meetings where we would talk about the different projects we were doing where the government people would team up, would give thoughts, give suggestions. We were not reviewing one another’s work, but we were not playing the game of trying to—at least I don’t think anyone was—of trying to sort of hide the ball on that. And then the other competition for regular clients, yeah, that of course went on, but it was not what I would describe as cutthroat at all.
Richard Conn: Well, I had learned Russian in college.
Daniel Satinsky: Okay, why?
Richard Conn: And I had done that because I already spoke several languages and wanted a hard one before my brain got fried. I was already a reasonably serious chess player, and I had in my mind that No. 1, I liked Russian literature, and I’d been raised during the Cold War, so I had a fascination with Russia. And also thought well, I’ll maybe eventually get to play some of the top chess players and be able to read the material in Russian, all of which ended up happening. So, those were the reasons I got into it originally.
Daniel Satinsky: Where did you go to university?
Richard Conn: I was at Dartmouth.
Daniel Satinsky: At Dartmouth, okay. So—
Richard Conn: So, I went on a program over to St. Petersburg, at the time Leningrad.
Daniel Satinsky: And so just to follow the chess for a moment, when did you end up playing against Russians in chess?
Richard Conn: You know, I ended up becoming good buddies with Kasparov, and so in ’92, ’93 I played him a couple times. And back in the ‘70s I played David Bronstein a couple, actually, maybe 10 or 15 times.
Are you a chess player at all yourself?
Daniel Satinsky: I’m not. I’m not, no.
Richard Conn: You wouldn’t know who he is, but—
Daniel Satinsky: I don’t know who he is, but—
Richard Conn: David Bronstein was, they say he was one of the strongest grand masters never to become world champion. But when I was in Costa Rica when I was 15, he had visited, and I had played chess against the guy he was going to play, and I was a 15-year-old kid, but I had beaten the guy he was going to play.
Daniel Satinsky: Oh, wow.
Richard Conn: He was playing the champion of Guatemala that day or something. So, the champion was a really nice guy. He introduced me to David. And Bronstein was maybe in his 60s at that time. And he was just—and he didn’t speak Spanish, but he spoke English, and so we chatted a bit. And then what he did was the most amazing thing at that age I’d ever experienced. He invited me into the circle to walk around with him as he played 40 or 50 people, and he would get my input on certain moves, and tell me what he was doing, and it was a dream, an absolute dream. And so that was… And then later we played chess together a few times. He let me have a draw once by saying if you do this you can take this knight, and then you can tell them you drew me. [Laughs.] A really nice guy.
But no, I mean, skipping way, way ahead, when I was in… In Moscow there, I would say the turning point in terms of really getting involved in chess was when I’d been working with the Kremlin, with some of the people there, and they introduced me to Kasparov, and I played at an event where I was one of 10 people playing him, and I lasted the longest, and so Garry and I spoke afterward for quite a bit, and I ended up representing him in a variety of things, and then being in part of his wedding, so we were friends for a while.
And then later, when I had indicated I wanted to help the chess world pro bono, and I had actually connected him and Karpov back together years after their match—a strange story where we met on the street. And Garry suggested I run as the running mate of Karpov to lead the World Chess Federation. And so, we had this worldwide campaign, which was great, great fun, and we were up against Putin and his guy, because it became known that Garry was behind it.
Although actually I did not view this as an anti-Russian campaign at all. Obviously, Karpov was going to be the president, and he’s anything but an anti-Russian. But I did view it as a way to try to bring chess sort of out of the…more mainstream into educating children how to play and out of some of the unsavory things that the World Chess Federation had historically been involved with. So, that’s how all that began and took off. And so through the years I played lots of the top players and am really able to lose to almost anyone.
Daniel Satinsky: But to be able to lose at that level is impressive.
Richard Conn: It’s fun. And the current world champion has allowed me to do commentary on a lot of his games, but that’s a whole different story. So, chess, to me, is a nice hobby. It’s just a hobby for me, but I enjoy it.
Daniel Satinsky: So, professionally you moved there in ’92, is that what you said?
Richard Conn: Yeah, I moved there to open Latham in ’92.
Daniel Satinsky: Right. So, tell me a little bit about Latham and why Latham was opening an office in Moscow.
Richard Conn: Well, to be candid, Latham opened an office in Moscow because I went to the head of the firm and said hey, this guy Boris Yeltsin is just coming into power, you may not know this, but I speak Russian fluently. I told him. Found out that he spoke some Russian, which was a good thing. And at the time we had an office in London. That was our only foreign office. But I basically said look, I think I can probably make some good things happen, we’ll have some clients here maybe in the U.S. who need support over there, Russia’s trying to transition, it seems to me, to a free market democratic structure, I’m sure that there will be some opportunities perhaps to be helpful in that. And basically, I’m crazy enough to do it. So, he was very supportive and let me do it.
Daniel Satinsky: Did you have a wife at that point?
Richard Conn: I did, and I give her points for being willing to leave California and go to Moscow. We took a trip or two for her to see it. And it was an adventure. It was a rough place, a complicated place.
Daniel Satinsky: Yeah, not an easy time in ’92.
Richard Conn: No, and she did not speak any Russian. And we had two kids. We had two young kids about five and seven or something at the time. You know, a lot to take care of in that. But I viewed it—I guess the way I thought of it—and you’ve talked to lots of people, so I’m sure you find as well that there are many other sort of self-selected types who had an idealistic view of what they could accomplish and why to do it—but I had a very conscious sort of period of thinking through the idea that there may not be a lot of equity partners in major law firms who speak fluent Russian, and I just thought that—I wouldn’t say it was an obligation, but I felt that it was the right thing to do to try to be helpful to a Russian government that, at least as I perceived it, was trying to move in a direction that I felt I wanted to support. And so—
Daniel Satinsky: As you were thinking about it, what kind of support did you think you would be able to give to the Russian government? Because usually people do it the opposite way: I’m going to help support my clients or my American companies to find a way. And you are expressing that you thought initially about helping the Russian government. I’m curious about that.
Richard Conn: Of course, as a partner in the firm I had an obligation and a desire for us to make money for the firm, and I did view that as a likely outcome of this. And the firm still has an operation over there, and I think it’s done fine. But no, I can’t say that at the forefront of my mind was gosh, our clients are dying to get our services in Moscow or St. Petersburg. That was an adjunct to it, and of course I took great care to spend a huge amount of my time building a client base and making sure I was doing that part of the job as well.
But in terms of my own personal interest, and what drove me to go there, it really did not have anything to do with the idea that it’s a good business decision for me personally, or that our clients desperately needed that. But the two things tended to go hand-in-hand. Building good relationships in a country generally allows you to function more smoothly. But no, I was running some of the largest litigations of our firm at the time at Latham, and frankly, particularly given the way Russia has gone, it was definitely more in my interest to stay there. I certainly annoyed a couple people by leaving, by going to Russia. It was not a small decision, but I just felt it was the right thing to do. And it’s still why I’m doing some of the projects we just discussed.
Daniel Satinsky: Right. And so, privatization was going on when you arrived there?
Richard Conn: Yeah, I guess privatization was going on. I wasn’t involved in privatization. And certainly, day one, when I got on the ground, I wasn’t working in an area even close to that. We had an operation, I think it was at 19 Novy Arbat, which was tied in with the Antimonopoly Committee. The firm had some different ties, and that was the original base, working with a guy named, I think it was, Chernogorodsky, who was the head of the Antimonopoly Committee, so part of our work was helping him with their activities dealing with the Supreme Soviet and the transition that was taking place from the Soviet structures to the new Russia structures.
Daniel Satinsky: So, you were helping drafting laws and regulations?
Richard Conn: Yeah, I did a fair amount of that. We did that. We gave them input. Like I remember the insurance industry came over and crafted a law that was about 12 pages long, 11 pages of which were obligations of the policyholder to the insurance company, and one page was the obligation of the insurance carrier to the policyholder. I remember working with them on the bankruptcy code, which, I’d written a book here on that for lawyers, and so gave input on that, and on countless different pieces of legislation that involved, as I said, I’ll call it the remnants of the Supreme Soviet, because it was all rather gray at that moment.
It was right in the transition, and we still had the Supreme Soviet down the street in what’s called the White House, but we had the Kremlin being occupied by people obviously who were anti the Supreme Soviet. It would be almost as if—it was not so unlike, I guess, the scenario where you had initially, say, a guy like Trump in power who at least I view as quite a corrupt figure, and fighting against the Justice Department. Until he ended up sort of taking that over, there was a conflict there. So, yeah, I never thought we would have examples of this in U.S. history, but we now do, so…
Daniel Satinsky: We’ve had a rich recent history to work with.
Richard Conn: Yeah, different types of philosophies of governance and of ethics. Sorry, I’ve gone on a long time. Go ahead.
Daniel Satinsky: So, at that point the person you were working with was part of the reform wing, right? He was a member of the government, and he was looking for assistance from foreigners about how to form new institutions, new relations?
Richard Conn: Yeah, it’s really hard to define it the way you are. It’s far more vague. I remember the first project I was working on was helping the Hoover Institute get all the records of the KGB. I don’t know if you remember that whole thing. But we got all that stuff. And that had nothing to do with the Antimonopoly Committee. So, the way I would think of it is the Antimonopoly Committee was providing us office space, and we were thanking them by doing pro bono work, but it wasn’t really a close relationship. It was a more formal relationship, and there was a vagueness to all of that. And at the same time, I was beginning to build some client relationships, and getting into the community, and essentially feeling my way around, so—
Daniel Satinsky: How did you do that in those days? How did you build a client base? The community was just under formation at that point, right?
Richard Conn: Yeah, there’s no one thing. I guess one, obviously, we had some organizations that were in town that I became active in. One was I joined the American Embassy Club. You could actually join the embassy, and I could take my kids there to swim on the weekends and stuff like that or rent videotapes. And so, part of it was getting to know the expat community, which could be accessed in part through the embassy, but also because there weren’t any other games in town. You didn’t really have other places for R&R for your family. Even the Slavyanskaya was just sort of getting going, the Radisson. And so we… But also, we had the American Chamber of Commerce, and so I became active in that pretty rapidly.
I had some contacts already. I’d been in Russia many times before through the studies over there. I’d had some small practice involving Russia when I was in California, but very small. And then trying to interact with—taking advantage of opportunities. For example, one of the early opportunities was to become the representative in Moscow of the U.S. Association for Economic Reform in Russia, or something like that it was titled, which Tom Kemp, Jack Kemp’s brother, was the head of. And so, Larry Kudlow was on that, some economist Jude Wanniski or something like that. I would have to look him up. There were various players in that. And it was through that, actually, that I had my first meeting in the Kremlin, where I sat across from Gennady Burbulis, and that’s where the initial contact took place.
The other thing was I hired a gentleman to work with me as an advisor, sort of a consigliere. I had really two of them. One was a young guy who was well connected, very good guy, and another was one of Russia’s leading playwrights, a guy named Alexander Gelman. And I can’t remember how the initial introductions took place, but we hit it off. He understood what I was trying to do. Gelman had tremendous ties throughout the power structures of Russia, and so as we became friends, I would take his advice of what to do, whom to meet with, and I learned that 99% of the success with a meeting is how you prepare it, who’s introducing you, how it’s being set up.
So, that would sometimes lead to client relationships, meeting with banks, meeting with other institutions. Some of it would be meeting different people in government who were playing different roles. And then there was the networking through the—we had sort of a bar association there which I became active in and eventually ended up leading for a couple of those key years. And we had a wonderful camaraderie among the law firms that were on the ground there.
Daniel Satinsky: So, it wasn’t, you weren’t competing with—I mean, you were competing with each other, but it wasn’t antagonistic competition?
Richard Conn: The way I would think of it, and I said it many times in our breakfast meetings, you know, we’d get together quite a bit, usually at the Radisson, I thought of us as one firm in the sense of the work we were doing to help the Russian government eventually. I mean, that was an undercurrent of the organization. That’s why a lot of us were there.
Yes, we competed for clients, but it lets—I mean, you’ve lived it to some degree—but it’s a bit of a frontier mentality. You’re all in there dealing with a lot of complications, and you form very strong friendships. We talked about Randy Bregman. We didn’t know each other that well then, but we knew each other. And I think there’s just an understanding that of course that friendship goes far beyond business, right? And so whether we were talking about how to create opinion letters together, or the standards for that, or I remember conducting discussions of which laws we were going to obey and which ones we were not.
And I know that sounds like a strange thing, but there was a period where orders would come down from a specific government ministry, and during the transitional period you had to decide was that a real thing or was that a Mafia group basically trying to get information on your clients, trying to shake them down. There were all sorts of complications that we lawyers in the West would never have to even consider. If you get an order from the SEC, you comply with it, right? You never think to yourself gosh, I wonder if those guys are being paid off to try to seize bank accounts. But in those days there was a lot of that. And the Russians would educate me and others on these games that were being played, and how to be savvy about those. Sorry for going on so much, but that’s a long answer.
Daniel Satinsky: No, this is great. It’s very interesting. It’s part of the dynamics of that period. And how big an association of lawyers was it at that point?
Richard Conn: I think the early meetings there were maybe a dozen or so of us who were present, and then pretty quickly, though, we’d have a room of 30, 40 people having breakfast, maybe 50 people having breakfast. Because we also would have a representative or two from the accounting firms. We included them in it. You know, the Big Six or Big Eight, depending on when, before they imploded.
So, yeah, there was, at least during the years when I had the privilege of sort of leading the group, we really had a sense of camaraderie. We would actually have meetings where we would talk about the different projects we were doing where the government people would team up, would give thoughts, give suggestions. We were not reviewing one another’s work, but we were not playing the game of trying to—at least I don’t think anyone was—of trying to sort of hide the ball on that. And then the other competition for regular clients, yeah, that of course went on, but it was not what I would describe as cutthroat at all.
Daniel Satinsky: Interesting. So, how did 1993 and the constitutional crisis affect you? What were you thinking while that was going on?
Richard Conn: Well, you know, this is during the period when I was working very closely with Burbulis and with…and Burbulis was running the country. So, it had a huge impact in terms of the assignments and the things we were worrying about. There were lots of interesting things we were doing during that time period to deal both with all the transitional issues of taking…of moving from the Soviet Union to the Russian Federation.
As a lawyer, as you know, these things just don’t happen by snapping your fingers. You have real property rights to deal with, you have lots of constitutional issues to deal with, you have tons of transitional issues because again, you’re talking about—we had to understand what the Soviet law was, including all the currency issues, all the different bookkeeping, all the power structure, how local industries worked together, how local governments related to the federal government. We had to be thinking about what kind of constitutional structure eventually might exist, whether it would be modeled on a U.S. model, were we going to have the laws be based on common law concepts, or codification as in Europe.
Daniel Satinsky: Or code, or like…yeah.
Richard Conn: Codes. And then all the political battles going on at that time, which, you know, as I was intimating before, many of which are not known, the fights taking place, which eventually bubbled over into Rutskoi and Khazbulatov getting shelled. [Laughs.] And all of the subterfuges that were happening before that that led to that blowup. And as I said, maybe there will come a time when I can talk more about some of that stuff. But those were some of the most interesting things, I mean, for me by far the most interesting things I will ever have been involved with. So, it had a huge impact in terms of the work I was doing.
In terms of life, yeah, I wanted my family to be safe. I remember machine gun fire outside the apartment. We were living at 99 Leninsky Prospekt at the time, and then we moved out to a community outside of Russia, but I moved them out very rapidly, before we had furniture, and sleeping on mattresses. And I would go in with a driver to get water and other supplies, if you’re talking about the time of the actual gunfire.
But at the same time, we were closing deals. I remember working with Baker McKenzie, with Bill Atkins, who ran the office there, a good buddy years ago, and I remember a conversation along the lines of where should we have the closing. We were representing Citibank in some deal. And we discussed where there were fewer snipers. So, that’s how we chose the location. You know, they had one of their paralegals shot—
Daniel Satinsky: They did?
Richard Conn: Yeah. I think they survived, but I’m not sure. So, you know, this was a complex time. And lots of different power bases. But thank goodness, I would say this, Gennady Burbulis I always found to be a very genuine guy. I took a trip with him back to the U.S. when he was meeting with all the folks here, and he was hailed as the Thomas Jefferson of Russia. And he really was. He was a guy who not only believed in free speech and democracy, and free markets, but was and is a real gentleman and real decent fellow to work with.
Daniel Satinsky: Did you—and you can tell me that I’m asking too many questions about this. Obviously, this is part of what we discussed before. But did you have a sense—well, I have two questions about this. The first question is did you have a sense that you knew that sooner or later the Supreme Soviet was going to have to be abolished and there would be new institutions needed, or were you trying to work around that? Just out of curiosity. If you don’t want to answer that question, then that’s fine.
Richard Conn: I would start by saying in retrospect I can see how fortunate I was to be really centrally involved in so much stuff, but at the time it wasn’t so clear to me. After the first meetings sort of in the Kremlin I didn’t know would there be another one. You just never really quite know what’s going to happen. And its only sort of looking back that I can get some perspective.
I guess the best answer I can give is I did sort of feel that the movement in the country was going to be away from the Soviet structures. I wasn’t spending my time—again, nobody was paying me for this, I was just doing what I thought I should do. I wasn’t working to accomplish that goal, per se. It wasn’t really about that in my mind. It was more about the broader picture transition from a Soviet economy, political structure to something which I did have in mind, which is somewhat of what Gennady and others had in mind, which was a real vibrant free market, democratic country.
And so I was thinking more about what pieces do you need to accomplish that, what laws do you need, and how do we operate and get these orders all in place in light of the fact that you had a Supreme Soviet who was not going to cooperate with all that, because how we began all the process of the ukazy, the orders, the edicts coming down from Yeltsin’s team, which were in my view necessary at that time, even though one can argue there’s a dictatorial aspect to that.
But really what hit me, Daniel, was that during that phase I really felt the limitations of law in the sense that when you’re living in an environment which is sort of a jungle, and there is no order, there are no real courts that function... Yeah, law is important, and we spent a lot of time thinking about what precedents we wanted to set, and how we were going to structure all that, but I have to say I sort of appreciated, back then, that there was a period where we had no choice but to move forward without the, if you would say, the ratification of a legislature.
As an American lawyer, it’s something that makes me really uncomfortable in any normal setting, really uncomfortable. But again, getting to know those guys, the whole team at that time, I felt very comfortable helping them because I knew what we were doing, what laws we were writing, what we were preparing, what the plan was. So, yeah, eliminating the Supreme Soviet I guess I viewed as probably just one of the tiny pieces that would probably transpire.
And there’s a whole story—and again, I’m not going to get into it—but on the four or five questions that were presented to the country, and how we supported that in the campaign and all that, which included the constitution, included these different issues, because we wanted to… I think everyone understood, as you do, the importance of legitimacy. And legitimacy is derived, in my view, from the consent of the population, which, by the way, someone should tell the GOP in the United States that that’s the contract. [Laughs.] That’s how this works.
And I understand that there are plenty of people who prefer to have power regardless of that. That’s the nature of the jungle, if you will. But we were working towards—and in terms of my willingness to help, I was thrilled to help work towards a system where that consensus would be built. And so yeah, I played a role in that whole structure of the five questions, the constitutional framework to get that consensus. And the importance of having a vote on that by the population, having a campaign around that.
And some of that ended up being disclosed, which was an embarrassment to me, because the guys I brought in had promised not to discuss it. And that almost led to a negative American lawyer article about my work, because they called me, and I basically said I really can’t talk about what I’m doing. And this guy, I could tell, was starting to sort of take it as if I were not comfortable discussing it. I mean, for negative reasons.
Daniel Satinsky: Oh, for negative reasons, right.
Richard Conn: And eventually, I think through some other contacts, he was able to get a picture that was far more accurate, that actually we were doing the things that were, at least from my view as an American—and I don’t mean that in terms of American national interests, but someone who values both free markets and certainly a government responsive to the population, a republic or a democratic structure that works. But some of the groups we brought in did not maintain confidentiality, because they were proud of what they were doing. Again, they were helping Russia become what we thought would be a burgeoning democracy. Back in the good old days.
Daniel Satinsky: The groups you brought in, these are foreign groups that were assisting you as consultants?
Richard Conn: Yeah, one was very public. I can mention it because they went very public with it. So, you would Google it, it was called First Tuesday. It was a group that helped with the campaign.
Daniel Satinsky: First Tuesday, huh? Okay. Maybe I’ll…I want to ask you this question and then I’ll tell you again what my context for it is. How important were foreigners within that process? Let me give you my background and then you answer—
Richard Conn: Yeah, but I get the question. I mean, I think foreigners were extremely important at that time, not just Americans, although I think Americans played a special role because they were viewed differently. But there were also plenty of Europeans there, there were folks from Asia there. One, foreigners were trusted more than Russians. And let me explain that. I think people knew, certainly if I was talking with them in a confidential meeting, that I was not part of some Russian group trying to overthrow the government, or some Mafia group trying to get some advantage here. They could not have that same level of confidence, at this time period, in talking really among one another. There was a tremendous amount of distrust.
And I think Americans, and certainly the groups that I dealt with there, they were proper in being viewed this way, were people of great integrity. They were people who were there to help. Now I’m sure we had also folks who were representative of different governmental agencies who may have also been there to help but also had other agendas.
And the information and advice we were giving I think was very helpful to them. We were also involved in IMF funding, all sorts of different major economic programs that helped the country to form and to be successful. And then we were also vital in terms of helping bring business into the country because, as you know, if you’re a company trying to go into a new environment you need hotels you can stay in, and you need telecom, but you need professionals on the ground who can lead you through in terms of doing deals. So, there were all those elements together that made it, I think, very, very important for people to be there.
And again, there are plenty of folks who also, in my view, spent a lot of time and energy helping Russia in all sorts of ways during that time period, working, whether in privatization—although there are some stories there that may not be quite so perfect. And some people who ended up getting hoisted on a petard, maybe of their own creation. The guy I knew reasonably well named Jonathan Hay who ran the Harvard program. I had a great opinion of Jonathan back in the day, and he did a lot to help. It saddened me to read the stories, years later, about what happened to him. And I suspect where there’s smoke there may be some fire. But at the same time, I don’t know what he did exactly, but I give him high points for what he was doing when I knew him.
He in fact asked me to replace him when he was going to leave in ’95, because he was running the Harvard program. They were working more with Ordzhonikidze and his guys sort of in the ministry, I guess you’d say, of justice—well, not justice, more…yeah, I guess it’s like a justice department, to some degree. But also, they were helping, as was I, and Richard Bernard, another great guy, putting together the equivalent of the Securities Exchange. We did a lot of work on that. So, this is not to, in any way, excuse conduct that—and again, I’m not an expert on what all the accusations were against him and his wife—but I can tell you he made a major contribution back then. Now, he also, because of the scandal, harmed us tremendously, because, as I was saying, its reputation and our ability to work honestly over there, and ethically, that gave us really the power base to be helpful.
Daniel Satinsky: So, there’s a—I’m going to follow that up a little bit—so there’s a kind of a narrative about this period that shock therapy and Sachs, and HIID, and Hay and Shleifer and all, that they didn’t understand Russia, and that they drove the process too fast or too hard of privatization. There’s another narrative that, well, they were right, and the Russians didn’t properly implement what it is they were recommending.
But it seems to me—and I want to get your view on this—that neither one of those is really correct, but that the process was driven by Chubais and Gaidar, Chubais who described himself as a kamikaze, knowing that he had to break up this system of state ownership. And that the Americans didn’t form Chubais’ ideas, they only helped implement the goals that were really Russian goals, that the process was driven by Russians and the internal Russian conflicts, and Americans played a complementary role to the extent that their skills assisted Russians to do what they wanted to do anyway. Is that…what do you think about these various narratives?
Richard Conn: Probably where I can add the most value in terms of what actually happened, and who was doing what, rather than sort of blaming, in a sense, because there’s credit and blame to go around in lots of different areas there. I guess my initial reactions would be... First I would say although I knew Maxim Boycko, who ran privatization, and we had some dealings together, I—and I don’t know quite why—I was not involved in privatization. Although I would hear about the voucher program, there were other teams that were doing that. Other people were involved. Maybe you’ve run across them. But it wasn’t what I or Latham was doing.
And Chubais, although we met many times, I was not working for him and didn’t have any projects with him. In fact, I’m not even sure he would remember me, because we didn’t really interact. I met him mainly through Burbulis and through other people. The same with Gaidar when he was alive. We didn’t really…it wasn’t my focus. I was really so—and I was fortunate to be working with Burbulis. And that was a lot right there. Because I also had to drive the kids to school.
My general flavor, though, I would give to you is that people should be really hesitant about criticizing anyone who’s involved in this period. This was a total mess. I mean, the shop stores were empty. I mean, you would drive down the streets and it was just empty. And I remember thinking—again, it’s very clear in my mind—that we were living during a period, particularly in ’92, ’93, where no one knew who was in charge. No one knew really whom to go to do things. And gradually sort of an order developed out of it.
But at first it was much more of this, again, this jungle flavor. A powerful oligarch type would emerge because he was aggressive, or he was doing this or that, and we law firms, Western law firms, were sort of on the sidelines of those major battles taking place where aggressiveness was being rewarded. Plus, you had the financial insecurity coming from—I think it was two times I would wake up in the morning and find that the currency was gone. They replaced the currency. And fortunately, we were Westerners with dollars, so that was a good thing if you were spending dollars, but a horrible thing for the entire country. How would you like to wake up and be told, you know, that thousand dollars in the bank you have is now worth one dollar, congratulations, we’re giving you a new bill. You can turn in your old ones or burn them.
So, I think…my impression was one, that the Westerners I had contact with—and although I’ve gotten to know Jeffrey Sachs years later through some other friends, I did not know him back then, but I have no doubt that he was trying his hardest, but here’s a guy flying in, right, landing and trying to be helpful. It’s hard to understand all the intricacies.
There’s a major element people often forget, which is both under the Soviet structure and under the current Putin regime—not to get too much into current stuff—but the lines between government and business were either very vague or nonexistent. To give an example, in today’s Russia and in the Soviet period Bill Gates would both be prime minister and the head of Microsoft. So, if you suddenly change the governmental structure and you have sort of this revolution that was transpiring where Gorbachev was exiting, and Yeltsin had been elected, you still had, No. 1, plenty of recidivist organizations that were still trying to maintain power. That was both on the political level, but also, as I’m saying, tied to many major business interests.
So, you were not dealing with what you would have from the U.S. or Western European mindset of a line between the two, so that you could wake up one day and say okay, you’re still Coca-Cola, go do your thing, but we now have a communist government in Washington. That’s not what it was. It was the Coca-Cola guys were part of the government. And so that’s how—and again, I don’t mean Coca-Cola particularly in Russia, because they had Westerners running it then, but…
So, trying to do a transition was extremely difficult because you were not going to get the cooperation of the quote “owners” of all industry in Russia, because the owners were the government. I mean, that’s it, it was the government, and the government was a Soviet mindset government. These guys had all sorts of power structures supporting them. They had at the time still, the KGB supporting them, and the KGB was tied into business, and was running companies, much like you see now in Putin’s Russia. So, to understand the flavor of it, and what was happening, you can’t underestimate the challenge that the Russian government, Yeltsin, Burbulis, those guys had in trying to fight against all of this that’s surrounding them. There’s this image that people I think incorrectly have, you know, the Kremlin is all powerful, you issue an order or whatever. Far from that. Russia, with its 11 time zones, who knows what they’re going to do in one of the oblasts*. It just doesn’t work that way.
And so I think had I been asked at the time about whether privatization was the right way to go I probably would have said sure, that you had to break down the ownership structure, and you had to start to create some property rights that individuals would have and that the citizens would have. Shock therapy, you know, was there a way to do it slower or with different steps? I’ll be candid. I’ve never done an analysis of it, and I wouldn’t want to speculate if there was a smoother way to do it.
But I can tell you it was a holy mess in ’92, and particularly in ’93 as well. And so no matter what had transpired, no matter what Yeltsin’s team had tried, I’m sure there would be plenty of room for criticism. But I think they genuinely were trying to do the right thing, at least how I think of the right thing, which is to create an environment where people had rights protected, so we had legal structures like courts, and then had private property. And again, I keep saying, don’t misunderstand or underestimate the challenge of transitioning from a nation-state that had no property rights to one that does. That is a massive undertaking. And I don’t know if there’s a clean way to do that. So, that’s a long answer.
Richard Conn: Well, you know, this is during the period when I was working very closely with Burbulis and with…and Burbulis was running the country. So, it had a huge impact in terms of the assignments and the things we were worrying about. There were lots of interesting things we were doing during that time period to deal both with all the transitional issues of taking…of moving from the Soviet Union to the Russian Federation.
As a lawyer, as you know, these things just don’t happen by snapping your fingers. You have real property rights to deal with, you have lots of constitutional issues to deal with, you have tons of transitional issues because again, you’re talking about—we had to understand what the Soviet law was, including all the currency issues, all the different bookkeeping, all the power structure, how local industries worked together, how local governments related to the federal government. We had to be thinking about what kind of constitutional structure eventually might exist, whether it would be modeled on a U.S. model, were we going to have the laws be based on common law concepts, or codification as in Europe.
Daniel Satinsky: Or code, or like…yeah.
Richard Conn: Codes. And then all the political battles going on at that time, which, you know, as I was intimating before, many of which are not known, the fights taking place, which eventually bubbled over into Rutskoi and Khazbulatov getting shelled. [Laughs.] And all of the subterfuges that were happening before that that led to that blowup. And as I said, maybe there will come a time when I can talk more about some of that stuff. But those were some of the most interesting things, I mean, for me by far the most interesting things I will ever have been involved with. So, it had a huge impact in terms of the work I was doing.
In terms of life, yeah, I wanted my family to be safe. I remember machine gun fire outside the apartment. We were living at 99 Leninsky Prospekt at the time, and then we moved out to a community outside of Russia, but I moved them out very rapidly, before we had furniture, and sleeping on mattresses. And I would go in with a driver to get water and other supplies, if you’re talking about the time of the actual gunfire.
But at the same time, we were closing deals. I remember working with Baker McKenzie, with Bill Atkins, who ran the office there, a good buddy years ago, and I remember a conversation along the lines of where should we have the closing. We were representing Citibank in some deal. And we discussed where there were fewer snipers. So, that’s how we chose the location. You know, they had one of their paralegals shot—
Daniel Satinsky: They did?
Richard Conn: Yeah. I think they survived, but I’m not sure. So, you know, this was a complex time. And lots of different power bases. But thank goodness, I would say this, Gennady Burbulis I always found to be a very genuine guy. I took a trip with him back to the U.S. when he was meeting with all the folks here, and he was hailed as the Thomas Jefferson of Russia. And he really was. He was a guy who not only believed in free speech and democracy, and free markets, but was and is a real gentleman and real decent fellow to work with.
Daniel Satinsky: Did you—and you can tell me that I’m asking too many questions about this. Obviously, this is part of what we discussed before. But did you have a sense—well, I have two questions about this. The first question is did you have a sense that you knew that sooner or later the Supreme Soviet was going to have to be abolished and there would be new institutions needed, or were you trying to work around that? Just out of curiosity. If you don’t want to answer that question, then that’s fine.
Richard Conn: I would start by saying in retrospect I can see how fortunate I was to be really centrally involved in so much stuff, but at the time it wasn’t so clear to me. After the first meetings sort of in the Kremlin I didn’t know would there be another one. You just never really quite know what’s going to happen. And its only sort of looking back that I can get some perspective.
I guess the best answer I can give is I did sort of feel that the movement in the country was going to be away from the Soviet structures. I wasn’t spending my time—again, nobody was paying me for this, I was just doing what I thought I should do. I wasn’t working to accomplish that goal, per se. It wasn’t really about that in my mind. It was more about the broader picture transition from a Soviet economy, political structure to something which I did have in mind, which is somewhat of what Gennady and others had in mind, which was a real vibrant free market, democratic country.
And so I was thinking more about what pieces do you need to accomplish that, what laws do you need, and how do we operate and get these orders all in place in light of the fact that you had a Supreme Soviet who was not going to cooperate with all that, because how we began all the process of the ukazy, the orders, the edicts coming down from Yeltsin’s team, which were in my view necessary at that time, even though one can argue there’s a dictatorial aspect to that.
But really what hit me, Daniel, was that during that phase I really felt the limitations of law in the sense that when you’re living in an environment which is sort of a jungle, and there is no order, there are no real courts that function... Yeah, law is important, and we spent a lot of time thinking about what precedents we wanted to set, and how we were going to structure all that, but I have to say I sort of appreciated, back then, that there was a period where we had no choice but to move forward without the, if you would say, the ratification of a legislature.
As an American lawyer, it’s something that makes me really uncomfortable in any normal setting, really uncomfortable. But again, getting to know those guys, the whole team at that time, I felt very comfortable helping them because I knew what we were doing, what laws we were writing, what we were preparing, what the plan was. So, yeah, eliminating the Supreme Soviet I guess I viewed as probably just one of the tiny pieces that would probably transpire.
And there’s a whole story—and again, I’m not going to get into it—but on the four or five questions that were presented to the country, and how we supported that in the campaign and all that, which included the constitution, included these different issues, because we wanted to… I think everyone understood, as you do, the importance of legitimacy. And legitimacy is derived, in my view, from the consent of the population, which, by the way, someone should tell the GOP in the United States that that’s the contract. [Laughs.] That’s how this works.
And I understand that there are plenty of people who prefer to have power regardless of that. That’s the nature of the jungle, if you will. But we were working towards—and in terms of my willingness to help, I was thrilled to help work towards a system where that consensus would be built. And so yeah, I played a role in that whole structure of the five questions, the constitutional framework to get that consensus. And the importance of having a vote on that by the population, having a campaign around that.
And some of that ended up being disclosed, which was an embarrassment to me, because the guys I brought in had promised not to discuss it. And that almost led to a negative American lawyer article about my work, because they called me, and I basically said I really can’t talk about what I’m doing. And this guy, I could tell, was starting to sort of take it as if I were not comfortable discussing it. I mean, for negative reasons.
Daniel Satinsky: Oh, for negative reasons, right.
Richard Conn: And eventually, I think through some other contacts, he was able to get a picture that was far more accurate, that actually we were doing the things that were, at least from my view as an American—and I don’t mean that in terms of American national interests, but someone who values both free markets and certainly a government responsive to the population, a republic or a democratic structure that works. But some of the groups we brought in did not maintain confidentiality, because they were proud of what they were doing. Again, they were helping Russia become what we thought would be a burgeoning democracy. Back in the good old days.
Daniel Satinsky: The groups you brought in, these are foreign groups that were assisting you as consultants?
Richard Conn: Yeah, one was very public. I can mention it because they went very public with it. So, you would Google it, it was called First Tuesday. It was a group that helped with the campaign.
Daniel Satinsky: First Tuesday, huh? Okay. Maybe I’ll…I want to ask you this question and then I’ll tell you again what my context for it is. How important were foreigners within that process? Let me give you my background and then you answer—
Richard Conn: Yeah, but I get the question. I mean, I think foreigners were extremely important at that time, not just Americans, although I think Americans played a special role because they were viewed differently. But there were also plenty of Europeans there, there were folks from Asia there. One, foreigners were trusted more than Russians. And let me explain that. I think people knew, certainly if I was talking with them in a confidential meeting, that I was not part of some Russian group trying to overthrow the government, or some Mafia group trying to get some advantage here. They could not have that same level of confidence, at this time period, in talking really among one another. There was a tremendous amount of distrust.
And I think Americans, and certainly the groups that I dealt with there, they were proper in being viewed this way, were people of great integrity. They were people who were there to help. Now I’m sure we had also folks who were representative of different governmental agencies who may have also been there to help but also had other agendas.
And the information and advice we were giving I think was very helpful to them. We were also involved in IMF funding, all sorts of different major economic programs that helped the country to form and to be successful. And then we were also vital in terms of helping bring business into the country because, as you know, if you’re a company trying to go into a new environment you need hotels you can stay in, and you need telecom, but you need professionals on the ground who can lead you through in terms of doing deals. So, there were all those elements together that made it, I think, very, very important for people to be there.
And again, there are plenty of folks who also, in my view, spent a lot of time and energy helping Russia in all sorts of ways during that time period, working, whether in privatization—although there are some stories there that may not be quite so perfect. And some people who ended up getting hoisted on a petard, maybe of their own creation. The guy I knew reasonably well named Jonathan Hay who ran the Harvard program. I had a great opinion of Jonathan back in the day, and he did a lot to help. It saddened me to read the stories, years later, about what happened to him. And I suspect where there’s smoke there may be some fire. But at the same time, I don’t know what he did exactly, but I give him high points for what he was doing when I knew him.
He in fact asked me to replace him when he was going to leave in ’95, because he was running the Harvard program. They were working more with Ordzhonikidze and his guys sort of in the ministry, I guess you’d say, of justice—well, not justice, more…yeah, I guess it’s like a justice department, to some degree. But also, they were helping, as was I, and Richard Bernard, another great guy, putting together the equivalent of the Securities Exchange. We did a lot of work on that. So, this is not to, in any way, excuse conduct that—and again, I’m not an expert on what all the accusations were against him and his wife—but I can tell you he made a major contribution back then. Now, he also, because of the scandal, harmed us tremendously, because, as I was saying, its reputation and our ability to work honestly over there, and ethically, that gave us really the power base to be helpful.
Daniel Satinsky: So, there’s a—I’m going to follow that up a little bit—so there’s a kind of a narrative about this period that shock therapy and Sachs, and HIID, and Hay and Shleifer and all, that they didn’t understand Russia, and that they drove the process too fast or too hard of privatization. There’s another narrative that, well, they were right, and the Russians didn’t properly implement what it is they were recommending.
But it seems to me—and I want to get your view on this—that neither one of those is really correct, but that the process was driven by Chubais and Gaidar, Chubais who described himself as a kamikaze, knowing that he had to break up this system of state ownership. And that the Americans didn’t form Chubais’ ideas, they only helped implement the goals that were really Russian goals, that the process was driven by Russians and the internal Russian conflicts, and Americans played a complementary role to the extent that their skills assisted Russians to do what they wanted to do anyway. Is that…what do you think about these various narratives?
Richard Conn: Probably where I can add the most value in terms of what actually happened, and who was doing what, rather than sort of blaming, in a sense, because there’s credit and blame to go around in lots of different areas there. I guess my initial reactions would be... First I would say although I knew Maxim Boycko, who ran privatization, and we had some dealings together, I—and I don’t know quite why—I was not involved in privatization. Although I would hear about the voucher program, there were other teams that were doing that. Other people were involved. Maybe you’ve run across them. But it wasn’t what I or Latham was doing.
And Chubais, although we met many times, I was not working for him and didn’t have any projects with him. In fact, I’m not even sure he would remember me, because we didn’t really interact. I met him mainly through Burbulis and through other people. The same with Gaidar when he was alive. We didn’t really…it wasn’t my focus. I was really so—and I was fortunate to be working with Burbulis. And that was a lot right there. Because I also had to drive the kids to school.
My general flavor, though, I would give to you is that people should be really hesitant about criticizing anyone who’s involved in this period. This was a total mess. I mean, the shop stores were empty. I mean, you would drive down the streets and it was just empty. And I remember thinking—again, it’s very clear in my mind—that we were living during a period, particularly in ’92, ’93, where no one knew who was in charge. No one knew really whom to go to do things. And gradually sort of an order developed out of it.
But at first it was much more of this, again, this jungle flavor. A powerful oligarch type would emerge because he was aggressive, or he was doing this or that, and we law firms, Western law firms, were sort of on the sidelines of those major battles taking place where aggressiveness was being rewarded. Plus, you had the financial insecurity coming from—I think it was two times I would wake up in the morning and find that the currency was gone. They replaced the currency. And fortunately, we were Westerners with dollars, so that was a good thing if you were spending dollars, but a horrible thing for the entire country. How would you like to wake up and be told, you know, that thousand dollars in the bank you have is now worth one dollar, congratulations, we’re giving you a new bill. You can turn in your old ones or burn them.
So, I think…my impression was one, that the Westerners I had contact with—and although I’ve gotten to know Jeffrey Sachs years later through some other friends, I did not know him back then, but I have no doubt that he was trying his hardest, but here’s a guy flying in, right, landing and trying to be helpful. It’s hard to understand all the intricacies.
There’s a major element people often forget, which is both under the Soviet structure and under the current Putin regime—not to get too much into current stuff—but the lines between government and business were either very vague or nonexistent. To give an example, in today’s Russia and in the Soviet period Bill Gates would both be prime minister and the head of Microsoft. So, if you suddenly change the governmental structure and you have sort of this revolution that was transpiring where Gorbachev was exiting, and Yeltsin had been elected, you still had, No. 1, plenty of recidivist organizations that were still trying to maintain power. That was both on the political level, but also, as I’m saying, tied to many major business interests.
So, you were not dealing with what you would have from the U.S. or Western European mindset of a line between the two, so that you could wake up one day and say okay, you’re still Coca-Cola, go do your thing, but we now have a communist government in Washington. That’s not what it was. It was the Coca-Cola guys were part of the government. And so that’s how—and again, I don’t mean Coca-Cola particularly in Russia, because they had Westerners running it then, but…
So, trying to do a transition was extremely difficult because you were not going to get the cooperation of the quote “owners” of all industry in Russia, because the owners were the government. I mean, that’s it, it was the government, and the government was a Soviet mindset government. These guys had all sorts of power structures supporting them. They had at the time still, the KGB supporting them, and the KGB was tied into business, and was running companies, much like you see now in Putin’s Russia. So, to understand the flavor of it, and what was happening, you can’t underestimate the challenge that the Russian government, Yeltsin, Burbulis, those guys had in trying to fight against all of this that’s surrounding them. There’s this image that people I think incorrectly have, you know, the Kremlin is all powerful, you issue an order or whatever. Far from that. Russia, with its 11 time zones, who knows what they’re going to do in one of the oblasts*. It just doesn’t work that way.
And so I think had I been asked at the time about whether privatization was the right way to go I probably would have said sure, that you had to break down the ownership structure, and you had to start to create some property rights that individuals would have and that the citizens would have. Shock therapy, you know, was there a way to do it slower or with different steps? I’ll be candid. I’ve never done an analysis of it, and I wouldn’t want to speculate if there was a smoother way to do it.
But I can tell you it was a holy mess in ’92, and particularly in ’93 as well. And so no matter what had transpired, no matter what Yeltsin’s team had tried, I’m sure there would be plenty of room for criticism. But I think they genuinely were trying to do the right thing, at least how I think of the right thing, which is to create an environment where people had rights protected, so we had legal structures like courts, and then had private property. And again, I keep saying, don’t misunderstand or underestimate the challenge of transitioning from a nation-state that had no property rights to one that does. That is a massive undertaking. And I don’t know if there’s a clean way to do that. So, that’s a long answer.
Daniel Satinsky: Okay. And so, as we move forward, were you still involved with the Kremlin then later in ’95, ’96 as the presidential campaign developed?
Richard Conn: Yeah, in some ways. I remember going to the—in fact Rolling Stone wrote an article about the night I took this Rolling Stone reporter or guy—he’s not a reporter, he’s a freelancer, P.J. O’Rourke, who’s a great writer, and I brought him to Yeltsin’s campaign headquarters that night, and we had a really fun evening. A lot of laughs. I was involved in some ways, but not in the same way as I was during the years when Burbulis was still in there doing his stuff.
I mean, there were other projects. I did projects for the World Bank. I think they’d asked me to help coordinate the legislative activities between the legislative branch and the executive branch, essentially, which was downright amusing because I can still remember having a couple interviews with guys from the KGB from the FAPSI* division who could not possibly ever believe that I was not an agent trying to do something bad. And I was trying to help them figure out how you actually run a legislative process and coordinate that.
And again, remember this is a time where they had…that didn’t exist. In the old Soviet structure, you just would circulate something, and you would do something called vizirovat*. You would sign off on it and it was much more of a feudal system in terms of how you would run the different ministries together. And we had to break that into something that was more sensitive to the legislative function of elected officials. So, yeah, a lot less as time went on. And then obviously Putin and his guys were not interested in what I had to sell, so it was a different dynamic.
Daniel Satinsky: But that’s when, already then, another five years, four or five years.
Richard Conn: Yeah. But I had moved back in ’95, though I was still active and flying in a huge amount.
Daniel Satinsky: You moved back to the States in ’95?
Richard Conn: Yeah, I moved back to the States. The kids were getting to an age I felt it was important for them to be back. And also, Daniel, I thought we had—I don’t mean to make it sound the wrong way—I thought the job was done, not by me in particular, but by all of us, and by the government, of course, and all the people who were working on it. I was very optimistic. The investment banks were in. We had a lot of the economy going. And I actually was absolutely shocked years later to see that although we’d given them this—or working with them—had this wonderful infrastructure in place not, you know, unfortunately essentially the FSB forces came back in and took control of industry and, you know, that’s life.
Daniel Satinsky: So, that’s interesting, though, in ’95 there’s a great deal of optimism that institutional structures had been established, and Russia was on its way to being integrated into world institutions, world economy.
Richard Conn: Oh, yeah, yeah. I mean, I used to—I’m doing it today—but I would always speak in terms of “we” when I was working with them, because I really did think of this as a project which, you know, where we were working together with Western nations to accomplish very much common goals.
Daniel Satinsky: Right. So, who—and the “we” in Russia obviously wasn’t everybody.
Richard Conn: No.
Daniel Satinsky: It was—who was—how would you define the “we” in Russia?
Richard Conn: Well, you know, there were various people working in this direction. I remember obviously there was Makarov, there was Gaidar, there was…who was the guy? His name slips my mind. He ended up being the UN, ambassador to the UN. A very nice gentleman. Spoke English well.
Daniel Satinsky: Lukin?
Richard Conn: No, it wasn’t Lukin. It was…he died of a heart attack just a few years ago. We’ll look up his name. I don’t remember it now. [Editorial: Vitaly Churkin]. You know, Chubais, to a certain degree, I think was, although I’ve always had…there’s complex feelings I have about the role he plays because I think he’s, you know, he’s not as committed to one direction versus another. And then, let’s see, I think Yeltsin himself was very much committed to this. I think in a way Gorbachev was. I only met with him once, but he is not the person that the West, that the media perceives him to be. He sort of went kicking and screaming. But he certainly had, I think, instincts that were closer to sort of the way Yeltsin and his team were thinking rather than the Soviets, at the end of the day.
Let’s see, of the business community, the Western business community had gotten stronger over there and was definitely involved, and I think generally very supportive of this direction, and helpful in terms of it. The IMF was very useful and helpful, although I disagreed with Fischer a few times on the direction of how they wanted to control capital. It didn’t make a lot of sense to me. And then in terms of the development of market forces they were trying to sort of restrict movement of capital at a time when we needed to allow it to move freely, just so they could be sure their loans would be paid. It was a little complicated dance there.
Daniel Satinsky: Oh, okay, so they didn’t want the money going to Cyprus?
Richard Conn: It wasn’t about Cyprus. And actually, one of my criticisms was they didn’t watch the money very carefully that they’d given. But that’s, again, part of the challenge in that environment. No, it was more that they wanted all sorts of capital restrictions and movement of capital laws were in place. And the reason for that was yes, they wanted to keep an eye on being able to be repaid their loans. And that’s a valid concern. But there was also a valid concern that if you want an economy to function, and you want to have a free market functioning, you need to allow movement of capital. And that was the balance that I was concerned with.
In fact, a buddy of mine, Scott Antel, who was one of the leaders at Arthur Andersen at the time, we would sort of battle over that, and then with Gerashchenko, the head of the Central Bank, we would have similar philosophical discussions on one or two occasions. So, in terms of other people, you know, it…you know, I think Maxim Boycko was working hard to move in that direction. I mentioned Jonathan Hay was, I think, doing, in my view at the time—though again, I’m still surprised by it all—he was doing a super job. I mentioned Richard Bernard. Many of the other heads of firms over there I think deserve a lot of credit for what happened there. And then I think the constitutional court, when it was formed, did a good job. And then society itself. I got to know, obviously, various folks through Alexander Gelman. The intellectual community was supporting it.
There was a flavor during that time that you were living in Hemingway’s Paris, because you’d be out there in spring in Moscow in ’93, for example, and there was just tremendous optimism, because we had the free press. My son was one of the first paperboys in Russia. He was five years old and he was delivering papers in our little community we were living in. And you really felt that we had turned the page. Yeltsin was allowing criticism of political figures. Remember we had all that, the Kukly*, that TV show where they would have—
Daniel Satinsky: Oh, yeah. I remember that.
Richard Conn: —characters. I also want to give credit to the media. I met with, I think, the head of Moscow News, I guess it was, Moskovskiye Novosti, I guess it was, and they were obviously doing their job as well fulfilling the role of a free press.
Richard Conn: Yeah, in some ways. I remember going to the—in fact Rolling Stone wrote an article about the night I took this Rolling Stone reporter or guy—he’s not a reporter, he’s a freelancer, P.J. O’Rourke, who’s a great writer, and I brought him to Yeltsin’s campaign headquarters that night, and we had a really fun evening. A lot of laughs. I was involved in some ways, but not in the same way as I was during the years when Burbulis was still in there doing his stuff.
I mean, there were other projects. I did projects for the World Bank. I think they’d asked me to help coordinate the legislative activities between the legislative branch and the executive branch, essentially, which was downright amusing because I can still remember having a couple interviews with guys from the KGB from the FAPSI* division who could not possibly ever believe that I was not an agent trying to do something bad. And I was trying to help them figure out how you actually run a legislative process and coordinate that.
And again, remember this is a time where they had…that didn’t exist. In the old Soviet structure, you just would circulate something, and you would do something called vizirovat*. You would sign off on it and it was much more of a feudal system in terms of how you would run the different ministries together. And we had to break that into something that was more sensitive to the legislative function of elected officials. So, yeah, a lot less as time went on. And then obviously Putin and his guys were not interested in what I had to sell, so it was a different dynamic.
Daniel Satinsky: But that’s when, already then, another five years, four or five years.
Richard Conn: Yeah. But I had moved back in ’95, though I was still active and flying in a huge amount.
Daniel Satinsky: You moved back to the States in ’95?
Richard Conn: Yeah, I moved back to the States. The kids were getting to an age I felt it was important for them to be back. And also, Daniel, I thought we had—I don’t mean to make it sound the wrong way—I thought the job was done, not by me in particular, but by all of us, and by the government, of course, and all the people who were working on it. I was very optimistic. The investment banks were in. We had a lot of the economy going. And I actually was absolutely shocked years later to see that although we’d given them this—or working with them—had this wonderful infrastructure in place not, you know, unfortunately essentially the FSB forces came back in and took control of industry and, you know, that’s life.
Daniel Satinsky: So, that’s interesting, though, in ’95 there’s a great deal of optimism that institutional structures had been established, and Russia was on its way to being integrated into world institutions, world economy.
Richard Conn: Oh, yeah, yeah. I mean, I used to—I’m doing it today—but I would always speak in terms of “we” when I was working with them, because I really did think of this as a project which, you know, where we were working together with Western nations to accomplish very much common goals.
Daniel Satinsky: Right. So, who—and the “we” in Russia obviously wasn’t everybody.
Richard Conn: No.
Daniel Satinsky: It was—who was—how would you define the “we” in Russia?
Richard Conn: Well, you know, there were various people working in this direction. I remember obviously there was Makarov, there was Gaidar, there was…who was the guy? His name slips my mind. He ended up being the UN, ambassador to the UN. A very nice gentleman. Spoke English well.
Daniel Satinsky: Lukin?
Richard Conn: No, it wasn’t Lukin. It was…he died of a heart attack just a few years ago. We’ll look up his name. I don’t remember it now. [Editorial: Vitaly Churkin]. You know, Chubais, to a certain degree, I think was, although I’ve always had…there’s complex feelings I have about the role he plays because I think he’s, you know, he’s not as committed to one direction versus another. And then, let’s see, I think Yeltsin himself was very much committed to this. I think in a way Gorbachev was. I only met with him once, but he is not the person that the West, that the media perceives him to be. He sort of went kicking and screaming. But he certainly had, I think, instincts that were closer to sort of the way Yeltsin and his team were thinking rather than the Soviets, at the end of the day.
Let’s see, of the business community, the Western business community had gotten stronger over there and was definitely involved, and I think generally very supportive of this direction, and helpful in terms of it. The IMF was very useful and helpful, although I disagreed with Fischer a few times on the direction of how they wanted to control capital. It didn’t make a lot of sense to me. And then in terms of the development of market forces they were trying to sort of restrict movement of capital at a time when we needed to allow it to move freely, just so they could be sure their loans would be paid. It was a little complicated dance there.
Daniel Satinsky: Oh, okay, so they didn’t want the money going to Cyprus?
Richard Conn: It wasn’t about Cyprus. And actually, one of my criticisms was they didn’t watch the money very carefully that they’d given. But that’s, again, part of the challenge in that environment. No, it was more that they wanted all sorts of capital restrictions and movement of capital laws were in place. And the reason for that was yes, they wanted to keep an eye on being able to be repaid their loans. And that’s a valid concern. But there was also a valid concern that if you want an economy to function, and you want to have a free market functioning, you need to allow movement of capital. And that was the balance that I was concerned with.
In fact, a buddy of mine, Scott Antel, who was one of the leaders at Arthur Andersen at the time, we would sort of battle over that, and then with Gerashchenko, the head of the Central Bank, we would have similar philosophical discussions on one or two occasions. So, in terms of other people, you know, it…you know, I think Maxim Boycko was working hard to move in that direction. I mentioned Jonathan Hay was, I think, doing, in my view at the time—though again, I’m still surprised by it all—he was doing a super job. I mentioned Richard Bernard. Many of the other heads of firms over there I think deserve a lot of credit for what happened there. And then I think the constitutional court, when it was formed, did a good job. And then society itself. I got to know, obviously, various folks through Alexander Gelman. The intellectual community was supporting it.
There was a flavor during that time that you were living in Hemingway’s Paris, because you’d be out there in spring in Moscow in ’93, for example, and there was just tremendous optimism, because we had the free press. My son was one of the first paperboys in Russia. He was five years old and he was delivering papers in our little community we were living in. And you really felt that we had turned the page. Yeltsin was allowing criticism of political figures. Remember we had all that, the Kukly*, that TV show where they would have—
Daniel Satinsky: Oh, yeah. I remember that.
Richard Conn: —characters. I also want to give credit to the media. I met with, I think, the head of Moscow News, I guess it was, Moskovskiye Novosti, I guess it was, and they were obviously doing their job as well fulfilling the role of a free press.
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