Hoover Institution (Stanford, CA) – Hoover Board of Overseers chair John Kleinheinz (Stanford 1984) discussed The Siberia Job, a fictional work by Josh Haven that mirrors Kleinheinz’s experiences as an investor in Russia following the collapse of the Soviet Union. The book talk, which took place Wednesday in Hoover’s Hauck Auditorium, was moderated by Stephen Kotkin, renowned scholar of Russian history, geopolitics, and authoritarianism, who is the Kleinheinz Senior Fellow.
In the conversation, introduced by Hoover director Condoleezza Rice, Kleinheinz described how, when he first visited Russia in 1992, the country had been experiencing severe economic turmoil and the morale of the people was evidently low.
Kleinheinz said that when he returned to Russia in 1994, the country was being transformed economically. This was occurring because of a new voucher privatization program, whereby the government dispersed vouchers across the population that they could use to purchase shares of former Soviet state–owned companies, 80 to 90 percent of which were being auctioned off to private investors. These vouchers, he explained, were also transferable. Voucher holders could go to market and sell to buyers, who in many cases were outside investors like Kleinheinz.
Kleinheinz explained that he and his partners would accumulate vouchers in a manner that would seem unorthodox to participants in Western markets. They would wire money to a Russian bank and then withdraw large amounts of hundred-dollar bills, which in turn, they could exchange for the vouchers.
These investments proved immensely profitable. Kleinheinz and his partners bought shares at 1 to 2 percent of a company’s asset value that would eventually yield extraordinary returns. For example, Kleinheinz bought stock in Russia’s energy giant Lukoil, then at a valuation of $300 million. Just prior to Russia’s invasion of Ukraine in 2022, the company had a $60 billion market capitalization. However, Kleinheinz sold the shares long before Lukoil reached that substantial value.
The plot of The Siberia Job focuses on the auction of another energy giant, Gazprom, the company that built the Nord Stream pipelines connecting Germany to Russia.
Kleinheinz read to the audience a passage from the book that describes the business environment in Russia, when the protagonists attempted to take majority control of a tobacco company. During a meeting with the company’s leadership, they were threatened with extortion and scandalized by other nefarious practices of Russia’s criminal underworld.
Kleinheinz explained that the characters in The Siberia Job are composites of multiple real-life people, including himself. He said that although many of the anecdotes in the book are true, the plot sequence is fictional. The book is full of intrigue and improbable events, some of which did take place and others that did not.
“I don’t think the book would have been as interesting as a nonfiction work,” Kleinheinz said.
Kotkin, who read the book in one sitting, lauded The Siberia Job as gripping and true to the characteristics of Russia in the early 1990s.
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