Gorbachev goes broke

Russia's financial crisis claimed its most famous scalp when Mikhail Gorbachev, the last leader of the Soviet Union, announced that he wa...

Russia8217;s financial crisis claimed its most famous scalp when Mikhail Gorbachev, the last leader of the Soviet Union, announced that he was flat broke. The man honoured throughout the western world for his role in freeing Eastern Europe from Communism found honour was without profit in his own country when the Russian bank in which he had stashed his 50,000 pounds of savings went bust with the collapse of the rouble.

quot;All my money is gone,quot; he told Germany8217;s Bunte magazine in an interview. Gorbachev, bundled out of office by President Boris Yeltsin and the Russian parliament seven years ago as the USSR disintegrated, never reconciled himself to the lack of gratitude from his countrymen for his role in freeing Eastern Europe from totalitarian Communism and introducing democracy, the free market and McDonalds hamburgers to Russia.

But he was always thought to have handled his personal financial affairs shrewdly, exploiting his status abroad to win hefty book advances, lecture fees and lucrativepersonal appearances.

He is known to have a large country house outside Moscow, but lives and acts without the gross ostentation of the small class of super-rich New Russians whose emergence he unwittingly enabled.

quot;You know, I8217;m not really as rich as many in the West think,quot; he told Bunte. quot;The new rich here in Moscow often spend more in one night than I earn in a whole year.quot; Some of his money was invested in his own charitable foundation. Thanks to the collapse of the bank, he said, staff at the foundation had not been paid for several months.

The former Soviet president is hoping to restore his fortunes by writing a new book in time to mark the tenth anniversary of German reunification in October. The 300-page book, entitled Thoughts of the Past and the Future, has, however, been released in Russia. There were signs that all was not well with the Gorbachev finances earlier this year when he appeared in an American television commercial for Pizza Hut, playing himself in an argumentbetween Russian pizza-eaters about the virtues of consumer capitalism. Shortly afterwards, Pizza Hut, alarmed by the collapse of the rouble, pulled out of Moscow.

The shock waves from the August crash are still shaking the foundations of Russia8217;s new elite. The Russian interior minister, Sergei Stepashin, said that theft or blunders within the central bank up to August could have cost the country billions.

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Since the crash, the bank has been under investigation by a group from the interior ministry, the federal security service and the general prosecutor8217;s office. A parallel probe is under way by the country8217;s main state auditors and a western accountancy firm is about to be chosen to audit the bank8217;s books for 1998.

The Observer News Service