Mark Seidenfeld Was Just Another American Cashing in on the Post- Soviet Boom

bY jonAthAn gReen photographY bY CarolYn drake Mark SeiDenfelD was juSt AnotheR AMeRican cashing in on the poSt- Soviet booM. then one bad DeAl in KazakhStAn Sent hiS life into A Spiral of extoRtion, MurdeR, SibeRiAn pRiSon, AnD the Squeaky wheelS of inteRnAtionAl juStiCe in the Age of globAlization. A cautionary tAle. DARK DAYS: Seidenfeld enters the courtroom to await his verdict. Right, the view from Dostyk Street in Almaty, with the Zaliskye Alatau mountains rising behind the Rolex buildings. Photograph: 700 Fast company SeptemberNovember 2007 2007 bY jonAthAn gReen photographY bY CarolYn drake nightmare in booM town As he watched the wind-scarred steppe of the good news to his bosses. And soon he eastern Siberia scroll by the car, Mark would be back to the cozy apartment he Seidenfeld couldn’t resist cracking a grin. shared with his Russian fiancée, Natiya, Last night’s vodka was still bleeding who is eleven years his junior; in two through him, swirling with the high of weeks they’d set off on a lavish vacation yet another triumph. As the newly in Spain. It was December 7, 2005. Life appointed director of mergers and acqui- was good. sitions for Golden Telecom, a U.S. firm Seidenfeld, a native of Brooklyn who based in Moscow, he had been sent along was then 37 years old, had been working with two colleagues to Blagoveshchensk, in the former Soviet states for 12 years. a river port city of 200,000 on the Rus- During that time he had learned an sian/Chinese border, to investigate a $2 important Russian business maxim: “It is million telecom outfit and see if it was better to ask for forgiveness than permis- worth buying. It was a perfunctory trip sion.” Seidenfeld had sailed close to the with a modest return, assuming the deal wind more than once, thrown in among went through at all. But while in town, people who were more gangsters than Seidenfeld had discovered two other com- businessmen. That fact was made plain to panies that might be worth scooping up, him when one of his partners was shot A and now he was looking at a possible $15 dead, point blank, in Moscow in 1997. But million deal. The locals were elated about Seidenfeld himself had managed to the potential cash influx, and that morn- thrive. He might not be bulletproof, but ing Seidenfeld had sat braced against the he was proving clever and tough enough subzero cold in his sheepskin jacket and to stay in the game, and keep winning. chatted with the town’s deputy mayor. As he checked in for the flight to Mos- Now he was heading to the airport to cow, though, something was wrong. The catch a flight home to Moscow and relay woman behind the counter eyed him sus- piciously. Then a Russian police official in a sky-blue greatcoat and a massive Soviet-era cap stepped up and led him away, to a room behind the check-in desk where a plainclothes detective sat wait- ing. Within hours Seidenfeld was locked in a tiny, unheated cell in a detention center just across the Amur River from China. That night, terrified, he shivered under a coarse blanket as the tempera- ture outside dropped to minus 20. At 5- foot-8, with a slight paunch from too many client dinners, he was a soft target for the thugs who surrounded him. His cockiness deserted him. A few days later, Seidenfeld was taken to a holding cell at a local court. There he learned he was being charged with embez- zling $43,000 from a company called BLING IN THE lAnD OF BORAt: luxury brands such as Mercedes, Armani, Ritz-Carlton, and tKLIQUOR have found a ravenous market in Almaty. 702 Fast company November 2007 OPEN FOR BUSINESS: As Kazakhstan’s economy has exploded, Almaty’s drab Soviet-era skyline has been eclipsed by gleaming, mirrored high-rises such as the nurlytau business Center on Al-farabi Street. Arna, in Almaty, Kazakhstan, where he In reality, Kazakhstan has been riding found their economy increasingly con- had been CEO from 2002 to 2004; the a free-market boom of a magnitude few trolled by outsiders (and increasingly suc- Kazakh authorities wanted him back to countries have ever seen, buoyed along cessful) they’ve moved to reclaim it—by face trial. So began a treacherous 19- on its elephantine oil reserves in the Cas- any means necessary. According to Trans- month slog through the morass of the pian Sea—the Tengiz, Kashagan, and parency International, a Berlin-based post-Soviet justice system. Seidenfeld Karachaganak oil fields. Unlike Russia NGO, Kazakhstan rates 111th on the 2006 would face extortion attempts, corrupt and Uzbekistan, which have a history of Transparency International Perceptions cops, fabricated evidence, and the wrath shunning foreign investment, Kazakh- Index. That’s behind Colombia, Libya and of a Kazakh tycoon. It was a nightmare stan embraced it early on, and U.S. firms Syria. “Foreign investment in virtually all scenario come to life—and a stark exam- promptly saddled up for a new gold rush sectors is restricted by exclusive barriers,” ple of the perils of frontier capitalism. in the wild, wild east, with oil companies says a report from the Heritage Founda- such as Chevron carrying the flag. After tion’s Index of Economic Freedom. “Gov- azakhstan was once the boneyard Big Oil came power giant AES, which ernment policy actively favors domestic of the Soviet Union. Its sprawling alone invested more than $200 million, businesses, and the weak rule of law allows plains were home to Stalin’s labor and about 100 other companies: Citi- for significant corruption and insecure Kcamps and later became the group, Hewlett Packard, Nestle, Philip property rights.” According to the report principal nuclear test-site for the Soviets. Morris, Proctor & Gamble. Some $46 bil- “Doing Business in Kazakhstan,” pro- In 1991, with the collapse of communism, lion of foreign investment has since been duced by the U.S. Commercial Service in Kazakhstan was last of the Soviet states sunk into the republic, including about Almaty, there are “frequent harassments to declare independence. The country $12.5 billion from the United States, mak- by local and national ‘financial police’ and has rarely made the news since—unless ing this country Kazakhstan’s biggest for- other taxation authorities through gener- you count the movie Borat, which lam- eign investor. ally intrusive inspections. Quite often, pooned the place as an inbred, anti-Semitic, For a while, the U.S. presence in these cases with the tax authorities lead to goat-herding backwater where the town Kazakhstan was a win-win for both coun- criminal charges by local governmental rapist is just another lovable rogue. tries. But times change. As the Kazakhs officials as a pressure tactic.” November 2007 Fast company 703 Amid this freeform culture of corruption, foreign investors—especially those on the ground—have been forced to walk an increasingly vague and hazardous line. For many, however, the money is simply too big to walk away from. And anyone expecting Washington to step in to referee is missing a larger reality. Our perceived strategic interests—not only Kazakhstan’s oil reserves but also its geo- graphic position between China, Russia, and the Middle East—have drawn the U.S. government into its own set of compro- mises. We need Kazakhstan, the official line runs, and the country’s current AFTER HOURS: flush with cash, Almaty enjoys a regime—like those in Saudi Arabia, Paki- thriving nightlife. this page, a chauffeur outside a thai restaurant called thai. opposite page, an stan, and any number of other dodgy invite-only party at the club euphoria. strategic partners—has proven “coopera- tive” on issues such as terrorism and nuclear weapons. In other words, in order to cement its government has refused to declassify in Arna. “If I didn’t, they said I would be influence in Kazakhstan, Washington documents the defense says would estab- held indefinitely,” Seidenfeld says. “But I has been forced into a delicate balancing lish the connection, despite pressure just didn’t have that sort of money.” A lesser act that requires tacit approval, or at least from the judge. offer of $3 million came through a few some tolerance, of systemic corruption. months later. Then the price dropped to $1 Witness the case of James Giffen, once an s the months passed after his million. Seidenfeld didn’t have the cash. advisor to Kazakhstan’s President arrest, Seidenfeld came to the He remained in jail. Nursultan Nazarbayev and the former creeping realization that he’d After eleven months in Siberia, Seiden- CEO of Mercator, a small New York–based Abeen hung out to dry. The U.S. feld was loaded aboard a prison train in merchant bank. Giffen, who was the State Department had done next to noth- October 2006 to be extradited from Russia model for the “Mr. Kazakhstan” charac- ing to get him sprung. Weighed against to Kazakhstan. For 32 days he was stuffed ter in the film Syriana, was due in Man- Washington’s other regional priorities, a into a boxcar with one toilet for 60 con- hattan’s Federal District Court last month small-time telecom executive, American or victs, in a 3½-by-7-foot cell. Natiya doggedly to face charges of money laundering, not, didn’t add up to much. As one local followed the train on its 3,000-mile jour- wire fraud, and breaching the Foreign businessman told me, he was “a ney, intercepting it each day as it stopped Corrupt Practices Act.

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