MADDOW-SHO-01
which the president says the US will act on Russia "at a time and place of
our own choosing." Vladimir Putin destroyed his political opponent and
seized his oil company, which was eventually absorbed by the Kremlin oil
company, Rosneft, and the close relationship between Putin, Rosneft, and
ExxonMobil`s Rex Tillerson. Steve Coll, author of "Private Empire,"
talked with Rachel Maddow about how ExxonMobil wields its power around the
world and what that means for the possibility that its CEO, Rex Tillerson,
will be the secretary of state under Donald Trump, and about how the
priority for Exxon is stability to prevent interference with oil
operations, even when that means the stability of a dictatorship opposed by
the U.S.>
Tillerson; ExxonMobil; Business; Policies>
RACHEL MADDOW, MSNBC HOST: Happy Thursday. Thanks for being with us. Thanks for joining us for the hour.
All right. Here`s a story. Do you remember 1999 New Year`s Eve? When the 1900s turned into the 2000s and we went from December `99 to January `00. There was a big freak-out in this country and a lot of countries around the world about the Y2K problem.
Remember that? Computers and all sort of electronics kept dates in this format and we were all very, very worried -- in the format of, you know, two digits for the day, two digits for the month, two digits for the year, and we`re all very worried that when those electronics of all kinds over the world flipped over from 99 being the last two digits to that next number and that looked like it might be 00, we thought, how are the electronics, how are the computers going to deal with that?
Maybe all the lights will go out. Maybe toasters will start, you know, talking. Maybe airplanes will fall out of the sky. It was -- it was a strange almost distraction.
I mean, I`m not saying it wasn`t a real concern. But the flipping of a calendar into a new millennium was a heck of a milestone to live through. You thought it would have been an occasion for a lot of awe and wonder, maybe even spiritual if not just numerological reflection.
But mostly we were just really freaked out about Y2K. That was kind of the experience of December 31st, 1999.
But it`s interesting. One very large country where they didn`t end up freaking out all that much about Y2K on December 31st, `99, while America and the rest of the world was worried about that problem, one place this they ended up not all distracted by that problem, they ended up not freaking out about that as the clock ticked toward midnight, was Russia. Because Russia was distracted by something else on December 31st, 1999, they had something else totally crazy happen to them at the turn of the millennium.
New Year`s Eve is a huge holiday in Russia. It`s a huge party there. Everybody that day was gearing up for the celebration even bigger than usual because it was `99, but then shock and surprise, with no warning, at noon on New Year`s Eve, 1999 in Russia, their president got on TV, it was a surprise broadcast, and he said good-bye. He said good-bye. I`m quitting effective immediately.
Boris Yeltsin randomly quit as president of Russia on New Year`s Eve, 1999. It was a total shock. I mean, that said, Russia had been through a lot of shocks at that point, 1989, of course, the Berlin Wall fell, 1991, the Soviet Union collapsed. That year 1991, Boris Yeltsin had been elected president of Russia.
Before that, all soviet leaders had just been picked by the communist party. They had just been chosen internally by the party up to and including Mikhail Gorbachev. But when the Soviet Union collapsed in `91, Yeltsin was the first democratically elected leader of the new Russia after the end of the Soviet Union.
And Yeltsin was a fascinating I think sort of frequently underestimated figure. In the West, I think we disproportionately remember him for being publicly drunk especially at inappropriate times. But he was a formidable person. He was occasionally brilliant, he could be very cunning. He could be incredibly intimidating and he really was the first democratically elected leader of Russia.
And that made him the first Russian leader to have the problem that democratically elected leaders have all over the world, which is if you get elected democratically, one you`re elected, you have to get re-elected.
So, Yeltsin got elected in 1991. 1996 he was up for re-election. This is a new problem for a Russian, right?
But it turned out his re-election was really something to worry about. The country was kind of a mess, the government was broke. Yeltsin was broke in terms of the assets and money he need to mount his re-election campaign.
And by `96, by the time he was running for re-election, there was this ongoing process of the former Soviet Union selling off what had been government-owned enterprises. They were deep into the process of privatizing what had been a totally state-run economy. But in order to finance his re-election in 1996, which he was very worried about, Yeltsin came up with a particularly terrible scheme, for turning this ongoing dodgy privatization process into something that would specifically result in him getting cash for his re-election effort.
And the scheme was basically an auction scheme. Through this auction scheme, banks would loan the Yeltsin government money, cash, and as collateral for the loan, what the government put up was big stakes in big government-run businesses. And then when the government didn`t pay back the loans -- the government didn`t pay back the loans -- the bank got these big stakes in government-run businesses, really, really big stakes, and multibillion dollar companies.
And the way it went down is legendary. It basically changed the course of modern history, because not only was t a terrible plan to give away these national assets that rightfully belonged to all the people of Russia, not only a bad process, by the time it got to the 1996 re-election effort and Yeltsin trying to get cash and trying to get re-elected and all this stuff, by that point, it wasn`t just a bad process, it was a totally rigged process.
The guys who ran the banks in Russia rigged the process, so these state- owned properties came up for auction, the banks who were running the auction arranged things so that miraculously they themselves won all the bidding. You know, they`re competitors who also wanted to bid on something just didn`t have their bids accepted or they got lost in the mail.
So, the banks themselves are running the auctions. They win the bidding themselves and boy, did they get great deals. Like, a company like Yukos, which is a big Russian oil company. It was auctioned off for something like $350 million through one of these rigged auctions. Within two years of it being sold for $350 million in 1994, by 1996, two years later, it was worth $9 billion.
So think about that. You`re running a bank. You can scare up a loan to yourself to buy an asset like that. Within two years, you can pay back the loan to yourself and pocket over $8 billion in profit.
That`s more than a nice deal. That is a crime on a history changing scale. That`s how we got the Russian oligarchs, right?
And it happened with oil, it happened with gas, it happened with nickel, it happened with copper, it happened with platinum. It happened with all the giant Russian-state-owned properties, you know, to suck all the natural wealth of Russia out of the grounds, out of the mountains, right? It belongs to the people of Russia and it`s just going to the pockets of this very few people.
All that stuff, all the assets of the Russian people out the window, sold on a fraction of a penny on the dollar to these handful of guys who were connected and who rigged the system so they could buy everything for cheap. And heading into the 1996 reelection effort for Boris Yeltsin, he did get the cash he needed for his government which was not that much in the grand scheme of things, but he was able to spend money the way he wanted to, to get himself re-elected in 1996.
It`s kind of a pyrrhic victory. I mean, in part because the privatization, particularly the luridly corrupt privatization that he oversaw obviously just gutted his own country.
And then, the universe has a way of the taking care of these things. So, right after he got re-elected, Yeltsin had a massive heart surgery. He spent most of his second term in office in and out of the hospital. He was increasingly rarely seen.
When he was seen, he was thought to be increasingly erratic. There were increasingly worries about the drunk Boris problem.
And then surprise, New Year`s Eve 1999. Americans are all worried about Y2K and Russians are worried about, do we still have a democracy?
Yes, New Year`s Eve 1999, Yeltsin surprised everybody. He just poofed. Noon, got on TV and quit. And Russians were absolutely bewildered by this. This was their first democratically elected president.
But Yeltsin had a plan for his succession. He announced that he wanted his prime minister to take over. And that happened.
And now, those of us who follow, you know, world affairs and world history, we don`t have to worry about learning or memorizing a succession of Russian names, of all the Russian leaders that have come to power since the collapse of the Soviet Union because there isn`t a big, long list. There was just Boris Yeltsin, and then there was the next guy he picked to go after him, his prime minister, to whom he handed over power after he surprisingly stepped down on Y2K, his prime minister was that sad-faced little devil, Vladimir Putin.
Vladimir Putin had been prime minister under Yeltsin from `99 to 2000, and then on Y2K, Yeltsin poofed, Vladimir Putin became president. He was president from 2000 to 2008, and then from 2008 to 2012, he went back to being prime minister. And then in 2012, he came back to being president. He`s been president since then and he`s going to run for re-election as president in 2018.
I mean, this is Russia`s post -- this is it. This is Russia`s post-Soviet leadership. It has been 25 years, but that`s all you have to remember. Yeltsin for a hot minute and it ended weird, and now, Putin forever. That`s it.
But it`s interesting. Putin very clearly learned from some of Yeltsin`s experience. He decided that he didn`t need to cook up some complicated scheme where banks got involved as auctioneers and bidders and favored rich guys got good deals in state-run business so he could get kickback cash from them, he learned from what happened to Yeltsin and decided it didn`t have to be nearly as complicated as that. He decided that he would cut out all the middlemen.
And what Putin is believed to have done since he`s been in power is he`s just taken for himself secretly but he`s just taken for himself ownership stakes, big ownership stakes in all of Russia`s partially state-owned companies, all these massive former Soviet enterprises. They`re some of the biggest individual companies on earth that control in some cases they have almost monopoly control over some of the elements that we use for things on earth. And they`re huge companies.
And if you hold a stake not in just one or two but all of them, and your equity stake mysteriously gets a little bit larger every year that you stay in power and you stay in power for 10, 12, 13, 14, 15, 16, how long is this going to go on, how many years, you know, that starts to add up over time. Officially, being president of Russia pays $136,000 a year. That`s considerably less than a half of what the American president gets paid for a salary.
But unofficially, being president of Russia pays very, very, very well. Let me put it this way. You know that clothing company Zara? Yeah, me neither. But there`s a clothing company called Zara. It is closely held by a Spanish guy who`s considered to be maybe this generation`s world retail genius. Apparently part of the magic is not that he owns the whole company but he owns it all the way down the supply chains.
I don`t necessarily understand all that stuff but that`s made him, Zara clothing company, that`s made him according to Forbes annual ranking, that`s made him the second richest man on earth. The Zara guy worth $67 billion.
Warren Buffett is close. He`s considered to be the greatest investing genius on earth. He`s like $61 billion.
Carlos Slim, the Mexican billionaire who concerned telecom in his country, he`s worth about $50 billion.
Forbes says the richest billionaire on earth officially is Bill Gates. He pips all of those guys with a net worth of $75 billion.
But U.S. intelligence agencies now say as best they can tell, Bill Gates is actually way behind as is the Zara guy and Warren Buffett and Carlos Slim and all the rest of them. They`re way behind.
U.S. intelligence agencies have now started to count up all of Vladimir Putin`s secretly held assets, and they say they believe that Vladimir Putin is clearly, by far, the richest man on the face of the earth, with assets totaling, in their estimation, $85 billion.
I have no idea if Yeltsin saw this coming, but when he handed off power to his little prime minister in that surprise TV announcement on New Year`s Eve 1999, what he was doing there was laying the groundwork, making it possible for this one man to amass the greatest fortune in humankind.
And the reason U.S. intelligence agencies have that number now, the reason they`re working on tracking his secret assets, the reason they`ve come up with that $85 billion number is because NBC News reports that they`re basically doing contingency planning for a financial attack on him. They`re basically doing contingency planning for how the United States government might retaliate against Russia in a way that actually hurts, for their attacks on the U.S. elections.
NBC reported last night that intelligence agencies concluded it wasn`t just generic action of the Russian government to target the U.S. election. NBC News reports it was an action that was directed, even micro managed by Putin himself, up to and including him personally directing how hacked material from Democrats would be leak or otherwise used. So, yes, if you`re trying to figure out how to retaliate not with just another country messing with your election, but an individual person, an individual foreign leader messing with your election, you might want to hit him where it might hurt him, you might want to hit him in the money.
And so, it would help to know where his money is and how much of it there is. And so, that`s why we`ve now got that number. That`s why we`ve now got a new entry for the richest man on earth.
Beyond the question of retaliation, beyond knowing that his unimaginable fortune is what the U.S. government might go after if they try to hit Putin, that unimaginable fortune is also just an incredible testament to how well he`s used the power of political office to siphon money out of his own country and into his own pocket. I mean, if you want to know why he`s held on to political power for so long, obviously part of the incentive here is that he`s figured out a way to turn high political office, political control, he`s figured out a way to turn that into a fire hose of money directed at himself.
He has made himself literally the richest man on the face of the earth and it is his hold on political office that has allowed him to do that. And that is an art. That is what we call the art of kleptocracy -- using political power, using high political office to steal, to get money, to get resources, to get assets, to get control of remunerative things, to get business advantages that you could not get if you didn`t have political power. Kleptocracy. Pause.
Did you see today that they formally announced the latest cabinet pick for the incoming administration? We`ve been told this pick was coming, but now we have the official announcement that the nominee to run the Department of the Interior which controls a lot of national assets like, you know, oil and gas on federal lands and stuff, the pick will be this man. He`s a first term congressman from Montana.
We previously had been told that the pick for this job was likely to be Cathy McMorris-Rodgers, longtime political leader in the House who has had some subject area of expertise in this matter. But instead, it`s not going to be her. It`s going to be this relatively unknown guy from Montana.
He was reportedly chosen for the job because Donald Trump`s son, Donald Jr., likes him. They`ve gone hunting together. Don Jr. likes him so that`s why we`re getting him as secretary of the interior.
Donald Jr. famously will also be running his family`s business empire along with his younger brother while his father retains his ownership stake in the company but busies himself with being president. We keep being told that the president-elect handing day-to-day control of his businesses to his sons, that will put some sort of cushion, some sort of distance between the running of his business and the running of our government, but one of the sons who is running the business is also apparently picking the cabinet.
And it goes both ways. I mean, imagine you`re a fair to middling real estate company that has real global ambitions, what would you give, how much value would it be to your company to have one of your high profile executives take a personal meeting with the CEOs of Apple, Google, Facebook, Amazon, Intel, Cisco, Microsoft, IBM, Oracle, should I go on?
I mean, think about that. If you`re in your meeting, would a meeting like that be of value to your business, an ambitious American company? Would it value you to have face time with all of these companies?
After sitting in this week on a transition meeting with the heads of all of those companies and more, Donald Trump Jr. tweeted afterwards, quote, "Honored to have sat in on this meeting. The most impressive group of minds I`ve seen assembled."
The new president is inviting multiple executives from his company to sit in on top level government meetings, including with all of these CEOs. He`s also reportedly having his business executives pick members of his cabinet.
Today was the day the president-elect was to give a major press conference detailing how he would stop what is now an ongoing process of him using the presidency to benefit his family business, you know, leveraging his political office to enrich himself and his family. Today was the day we were supposed to get a big press conference to hear about his big plan to stop doing that, which he`s already doing.
That press conference, that announcement was canceled several days ago. It`s now been rescheduled for the 15th of never. They keep telling us it`s going to happen, but there`s no new date for any kind of announcement. Mostly what we`ve been getting from the president-elect now is just repeated insistences that he doesn`t have to separate himself from his business at all. But, I mean, come on.
Kleptocracy is hard to spell. And the United States is not Russia. The U.S. government certainly is not Russia. There`s no Putin here. There`s not just one man in charge.
Even if you`ve got a president who can`t bring himself to stop trying to cash in on his office for himself and his family, right, even if you got that craziness going on at the top, it could be a source of comfort that, you know, in our system, the U.S. government`s a big thing. Maybe the professionalism, the experience, the subject matter skill of the people working around the president -- I mean, we`re in uncharted territory here, but maybe that, the people around him, that could be a kind of mitigating force for professionalism and civic responsibility and just experience and gravitas and heft for the new government.
In addition to the new cabinet secretary who was reportedly chosen by Donald Jr., today, the transition announced that another FOX News commentator will be a deputy national security adviser, that`s her on the left. It was reported that another FOX News commentator is now the leading contender to be the White House press secretary. It was also reported that another cable news commentator, someone who recently worked at CNBC, is in line to chair the council on economic advisers.
And today, they decided to add some new heft to their -- the transition team with this person who you might recognize from season one of "The Apprentice". She`s a reality TV show person. They added her to the team.
We`ve also got a formal announcement now that the man in charge of the design and manufacture of nuclear weapons, the management of our nation`s nuclear stockpile, the oversight of our nation`s national laboratories and the cleanup of nuclear contamination nationwide, that will be this guy, because -- why not?
I said a minute ago that it was a relief to not have to remember the names of a lot of different Russian leaders after the collapse of the Soviet Union because it was just Yeltsin, and now Putin permanently. But under Putin, we`ve also not had to memorize and familiarize ourselves with a lot of different lower level people in the Russian government, because as Putin has looted his country for 16 years and counting now, as he has used the power of his political office to yank the guts out of his country and make himself the richest man on earth, he has also systematically miniaturized or just disappeared all other potential locuses of power in his country.
I mean, there used to be under the Soviets a Western Kremlinology where everybody studied all the personalities and proclivities of everybody in all the top levels of government to figure out who really held power and what the Soviets were going to do next. That`s now vestigial art. You don`t have to do Kremlinology under Putin, it doesn`t matter. Nobody matters but him, it`s just him.
And that is worth keeping in mind as the Obama administration runs out of time to strike back at Russia and Putin before Obama leaves office. It`s also worth keeping in mind as a private business moves into the White House and starts conducting its business on the letterhead of the United States of America.
Steve Coll is here tonight. We`ve got a big show. Stay with us.
(COMMERCIAL BREAK)
MADDOW: So we have a lot to get to here tonight. Steve Coll, one of our nation`s capital G, capital J great journalists will be here shortly for the interview. This has been required reading for everybody interested in and concerned about the incoming administration`s new cabinet.
And this is brand-new, actually. We`ve just in the last couple minutes gotten in tape of President Obama speaking directly, I think pretty much for the first time, about what he`s planning to do with Russia trying to disrupt and influence our elections. He`s just made these remarks. We`ve just gotten the tape in house. I`ll have it for you when we come back.
Stay with us.
(COMMERCIAL BREAK)
MADDOW: OK. Here is that breaking news I just referenced. We`ve got the tape in now.
President Obama`s just done an interview, just made new remarks about the Russian government trying to disrupt our election hacking into the servers of political campaigns and we`ve only got a little piece of it.
This is the president speaking with NPR. You`ll hear it here. He says the U.S. will take action, quote, "at a time and place of our choosing." We don`t have a longer snippet from the interview yet, but we do have this. Check it out.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I think there is no doubt that when any foreign government tries to impact the integrity of our elections, that we need to take action, and we will, at a time and place of our own choosing. Some of it may be explicit and publicized, some of it may not be. But Mr. Putin is well aware of my feelings about this because I spoke to him directly about it.
(END VIDEO CLIP)
MADDOW: That`s all we`ve got so far. That`s all they`ve put out. But that full interview set to air tomorrow morning on NPR`s "Morning Edition."
I should also tell you that tomorrow afternoon, President Obama is going to hold his final end of the year news conference. That`s at 2:15 Eastern tomorrow.
Whether or not you usually pay attention to presidential press conferences, the end of the year one is usually the good one. It`s usually long. He usually takes questions on everything and anything.
But both of those things are going to happen tomorrow. That interview on NPR where he talks about what we`re going to do to Russia over this election thing and that press conference where he will take questions from the press corps at the White House. So, expect the president to be making a ton of news tomorrow.
All right. Much more ahead tonight. Stay with us.
(COMMERCIAL BREAK)
MADDOW: This is Mikhail Khodorkovsky. He was once Russia`s richest man. At one point, he`s believed to be worth about $15 billion. In 2003, he was listed as one of the ten most powerful billionaires in the world by Forbes.
But then that same year in 2003, he got himself arrested.
(BEGIN VIDEO CLIP)
TV ANCHOR: The richest man in Russia, one of the richest men in the world, is behind bars tonight. Mikhail Khodorkovsky, the head of Russia`s largest oil company, was arrested when one of his jets stopped in Siberia today. He`s accused of fraud and tax evasion. Khodorkovsky is considered a political opponent of Russian President Vladimir Putin.
(END VIDEO CLIP)
MADDOW: As a political opponent of Vladimir Putin, Mikhail Khodorkovsky decided to put his money to work for what he wanted in this country, put his money to work against the man who had him arrested on that Siberian tarmac. He decided to use his vast fortune to fund and lead an opposition effort against Vladimir Putin, to try to topple Putin.
And so, predictably, Putin had him arrested again, put him back in jail. Then Putin ripped his guts out financially speaking.
(BEGIN VIDEO CLIP)
REPORTER: With a blow of the gavel, a Russian auctioneer succeeded on Sunday in dismembering Russia`s foremost private oil company. The auction of the Yukos oil corporation`s biggest subsidiary, a key oil producer, is being seen as one of the most significant steps backwards in Russia`s 12- year chaotic march towards capitalism.
UNIDENTIFIED MALE: People are scared. They`re scared this is not just Yukos. This is other companies. They`re scared that property rights are flimsy in Russia.
REPORTER: Russian President Vladimir Putin has cracked down on freedom of the press and eliminated many local elections and now he`s staring down some of the country`s biggest private businesses. Top of his list is Mikhail Khodorkovsky, Russia`s richest man and the founder of Yukos. He`s been in jail for a year on tax fraud charges. And Yukos has been stopped with its own $28 billion tax bill.
Analysts say the auction was ordered to clip Khodorkovsky`s wings. But in a strange twist, it was won by an unknown company. Following weeks of speculation that the Kremlin-controlled Gazprom, the world`s largest natural gas company, would walk away the winner.
(END VIDEO CLIP)
MADDOW: OK. Vladimir Putin arrested this billionaire who had dared oppose him. Then he seized the oil company that made that guy so rich. Seized Yukos oil. They took Yukos and said, "You`re owned by a criminal, we`re taking you."
They took it and they basically pretend sold it to an unknown oil company. Who is this company that`s buying it?
Days later, the Kremlin-owned oil government Rosneft got it for 100 rubles, which is approximately $29 at the time. That`s how much they got the oil company for.