Russia and It’s Soviet Union Empire collapsed with virtually no super rich and just five or ten years later had a class of Oligarchs, many of them Russian Jews, snapping up old failed state owned industries. It has always been a particularly curious murky area of finance of where their seed money came from? Looking at the information coming out of the Madoff scandal where money running up to 50 billion dollars just simply disappeared without much corresponding trade activity and matching the chronologies of events there may be a possible link. Larry Kudlow on CNBC was talking about the Russian Mob being involved. Did he mean the oligarch industrial gangsters of Russia? Vladamir Putin also seems to have had a source of funding probably pilfered state gold reserves or the state reserves of Cognac held by the KGB? Russia boom in oligarchs and power brokers all had secret sources of seed capital. Over the 20 years Madoff was operating his scam, Russia was re-emerging from communist suppression. The same is also true in the eastern European satellite states.
Of course it is possible Madoff scam money could have gone virtually anywhere into any booming economy around the world, Maybe even Argentina or Brazil? The Madoff Money trail eventually may prove simple bad management but that does not explain losses that could top 50 billion dollars. Madoff may have even funded the Putin Regime for all we know. That could be a form of treason. Russian oligarchs could buy multi billion dollar industries for just a few million dollars when they did so. The time was right in a country that was completely busted . US banks were busy at the same time lending money to condo flippers and to sub prime mortgage recipients to generate big initiation fees. The risk in investing in Russia after the collapse of communism was considered far too risky for major commercial banks.
Someone made a lot of risky loans to the Russian Oligarchs to get them started. Bernie Madoff scam coincidently collapses as the fortunes of the Oligarchs in Russia begins to wane. Brazil seemed to have a lot of American and Chinese financial lending backing their economic development. Argentina was not a major developing story where 50 billion dollars would have made much of a difference. China’s international investments are better documented but The Russian Oligarchs original funding is still a big mystery. Some may have had relatives that immigrated from the Soviet Union and raised cash overseas having built businesses there a good number of years before communism collapsed. That is one theory but it still seems that Oligarch’s grabbed the assets they did with sufficient seed capital to gain sufficient control of assets Russia still has no identified rule of law in property ownership other than the well known big cash payments requirements.
Maybe the entire Madoff Ponzi Scheme is just a front to cover up what really happened to all the missing money. If it is so then there could even be more recourse for investors to get money back if property ownership in Russia could be asserted.. That is not too likely with a lack of documentation for ownership of papers like deeds which are not readily availble for Russian real assets. The problem in Russia is that at the point of the collapse of the soviet union virtually all real assets belonged , in deed, to the Kremlin including the smallest apartment and the largest factory or coal mine. Russian Oligarchs had to assert their property rights with a virtual private army of sorts which gave them a mobster like appearance. Having lots of people on a payroll was a great way to retain ownership . Initially that took a lot of seed capital. The sad thing about Russia after the collapse of the soviet union is that our own CIA did not take much of an interest in buying up Russian assets the way the Oligarchs did for next to nothing. The problem with the CIA was they thought that was out of the boundary of their service potential. The United States at one point could have owned most of Russia’s biggest industries outright had that been their goal. Instead it was left to oligarchs. Maybe the Oligarchs were CIA funded but then the CIA still begs for financing from the general fund so it seems very unlikely that they were beneficiaries of the great wealth of Russia that could have been bought for next to nothing at the time of the collapse. Madoff may have no liquidity in the USA but elsewhere he might even have substantial cash flow. Russia? Does Madoff Speak Russian or have Russian Friends or business partners?
This is entirely speculation and conjecture with a bit of coincidence. Madoff’s black box investment firm is a great suspect for all sorts of possible uses of money. The secret of investing in places like Russia, China or Mexico is having a foreign national on site partner. In Mexico it is pretty much the law that American firms need to have local re-incorporation as a Mexican national company. In the US a number of foreign companies operating here also take on local equity shareholders which is why there is something more American about some American subsidiaries of foreign national firms. The US is one of the most open countries on earth to foreign investment. In Mexico you will notice that Kimberly Clark is a separate Mexican corporation where Mexican nationals own a joint or majority stake in the company as one example. At least that is the way it used to be before NAFTA but then old business partners would have to be bought out after NAFTA?