First of all, full disclosure: I know Jonathan Hay, Dima Vasiliev, Ruslan Orekhov, and even Jonathan's crazy lawyer Sokin. And most of them are exactly as described in the article. David McClintick has done a masterful job of reporting their foibles, mannerisms, and essence. And although I haven't read the depositions, every single word of his article is not only incredibly plausible, but rings true. But you can be right on all the facts and still miss the real history that was played out. Usually only nerds care about historiographical missteps--and I admit I'm a nerd. But first Vasiliev's fall, and now Summers's resignation has actually made the misreading of history a lot more obvious. Jonathan and Shleifer have a lot to answer for.
So I have every reason to believe that the facts of the article didn't lie. Jonathan certainly never evinced any uncertainty as to whether it was inappropriate, not to say wrong, for Elizabeth Hebert to be leading the first registered mutual fund in Russia. As the article clearly describes, Vasiliev was incredibly relieved to have a personal connection to Elizabeth through Jonathan--it was a chain of trust that gave him som assurance that the first mutual fund would not go up in flames of some sort of financial or legal scandal. The article cannot quite convey how every single Russian or Russian-associated business entity at the time was at the very least perfectly willing to engage in bribery to achieve its ends, and at the very worst involved in casual murder and every other felony in between. In that environment, Dima was not only pleased, he was overjoyed to register Pallada first.
Vasiliv, ever the incorruptible (one of the perhaps as many as 3 Russian officials I personally would have been willing to vouch were not on the take) was not and would never have contemplated benefiting from any of this himself. But Jonathan, as nested in the inner circle of the highest ranking Russian policymakers as he was, would not, in Dima's eyes, have been subject to that discipline. And in fact that is precisely WHY Jonathan was so valuable to Dima. Jonathan could spend AID dollars getting a decent office with modern furnishings and competent staff--one of the very legitimate uses of American assistance. Vasiliev couldn't. He had to work in the drafty (but extremely prestigious) offices right around the corner from Red Square, and minutes from the President's administration where his friend Orekhov worked, with staff whom he either could not retain if they were competent because he couldn't pay them more than a civil service pittance, or staff who could not be fired who were simply too incompetent to do anything more than get visitors tea. So Dima kept sending Jonathan the real work that needed to get done, first in privatization, then in the setting up of the securities market. And Jonathan could arrange for conveniences like a mutual fund led by his girlfriend, whom Dima trusted simply on the grounds that if Jonathan was hanging out with her, well, she must be be a revolutionary of the Russian transition as well.
This is what the author left out. It wasn't in his remit, I guess, to really understand what was going on in the policy circles of the Russian government, and how precarious it all seemed. How the whole transition seemed to hang by a hair, and if they didn't hit the milestones like slalom skiers slamming into the gates as they come down the slope, well, they were going to lose the race. And how people like Jonathan, who earned their trust, and could understand what needed to be done politically as well as policy-wise--were far more valuable than the millions of dollars foreign governments and multilateral agencies were willing to hand over to him. For there were assistance dollars that were being spent on studies and technical assistance to people who could never change regardless of how many workshops and conferences they attended, and it used to really infuriate the reformers. Perhaps less Dima than most, because I got the sense he was a real ascetic, but there were plenty of good men and women of the Russian transition who felt more than a little jealous and resentful of the fact that there were literally hundreds of foreign consultants tooling around Moscow, ostensibly helping Russian reform, who could afford to go to the emerging decent restaurants while they had to down yet another russkiy salat in the government cafeteria as they tried to keep the retrograde forces at bay.
And Jonathan? Well, I always thought he was envious of the way all these Russian businessmen were raking in the money, riding expensive cars and throwing their money about. To be honest I couldn't see him actually spending the money on anything like clothes or food, but I think he envied the evidence that they were "winning" in the larger game. So the possibility that Elizabeth would profit from it all didn't, I'm sure, bother him. And it should have. And I wish it had, because then it would not have led to Dima Vasiliev ultimately losing the fight with the Central Bank, and perhaps not to Summers's resignation. Although probably Summers's resignation was one of those overdetermined events.
One last thing. I admire Summers's loyalty. This isn't the first time he's stood by a protege and taken the fall himself rather than let his protege down. He did the same thing when he was Chief Economist at the World Bank and he took responsibility for the exporting pollution memo. He's a standup guy, and he was also a breath of fresh air at Harvard. His leaving takes away the hope I had that Harvard could become more honest with itself and more brave. And although I am as lacking in school spirit as you can get, I still care about my alma mater.