Russians Embracing Capitalism With Relish -- But 2 Entrepreneurs' Stories Contrast Rewards, Pitfalls

MOSCOW - Alexander Smolensky strides into the room, brimming with confidence, radiating well-being and clutching a sheaf of color schemes for Stolichny Bank's new jetliner.

He leafs through the sketches quickly. "This one," Smolensky says, choosing the blue, red and white of the Russian flag and flashing a grin. "This looks presidential."

Eight years ago, Smolensky was a manager at a state construction company, worrying about finding a second job to make ends meet. Now, at age 40, the founder of one of Russia's biggest banks is pondering paint jobs for jets and collecting Old Masters.

These are heady times for Smolensky and a handful of others like him. Russia's capitalist cowboys, its young Carnegies, Rockefellers, Mellons and Morgans, are becoming the establishment.

"Five years ago, they were on the periphery of the establishment; seven years ago, they were outsiders," said political scientist Igor Bunin, who studies the evolving business class in Russia.

Their fortunes grew like weeds, in the cracks of a crumbling system. They turned chaos into cash, assembling business empires from the wreckage of the 1991 Soviet collapse.

Since business was basically a crime under communism and everything belonged to the state, most Russian fortunes have murky beginnings. But these captains of capitalism are no cash-flashing gangsters. They are billionaires on the inside track. They have wealth; they have connections; they have influence. And they want to keep it that way.

This means playing politics, a notoriously risky business in Russia. Many of the megarich are uneasy with an open quest for raw political power. They contribute, they cultivate, they lobby - but quietly. The business of bankers is banking, not politics, Smolensky is fond of saying.

EXCEPTIONS TO RULE

There are two striking exceptions. One - 30-year-old business wunderkind Oleg Boiko - illustrates the potential rewards. The other - banking, real-estate and media mogul Vladimir Gusinsky - is a case study in the risks.

Boiko presides over an empire - Olbi - of more than 60 businesses and one of the country's biggest banks, National Credit Bank. When Russian entrepreneurs ventured into politics in the December 1993 parliamentary elections, Boiko led the charge.

Many took a scattershot approach, contributing across the centrist spectrum. Boiko sank his money into what then was the most pro-Yeltsin, pro-reform party - Russia's Choice - and became the party's executive director.

Then, when Russia's Choice split with Yeltsin in March over the deeply unpopular war in Chechnya, Boiko quit. He started a new party called Stability and embraced the cause of keeping Yeltsin in power.

Claiming to speak for a handful of Russia's largest private companies, known as the "Big Eight," Boiko is urging that the 1995 parliamentary and 1996 presidential elections be postponed.

"It is clear that new elections would give us a much worse president and a much worse parliament," he said.

The comment drew widespread criticism painting Boiko as a budding dollars-before-democracy oligarch.

With polls showing Yeltsin's approval rating in the single digits, 1996 is clearly a threat to those - like the Big Eight - with a vested interest in the Kremlin status quo.

"Right now, they have the Kremlin wired," said Michael McFaul, a Russian expert with the Carnegie Endowment for International Peace.

A single spectacular deal shows just how much. The Big Eight is about to get control over the privatization of the crown jewels of Russian industry - oil, metals, telecommunications - in exchange for lending the cash-strapped federal government about $2 billion.

The deal would work like this: The banks controlled by the Big Eight would get the state's shares as collateral. They would run the companies, then handle the sell-off of shares to the public, reserving the right to buy shares for themselves at a discount.

Gusinsky's case shows what can happen to those on the outs with the Kremlin.

While Boiko, the Yeltsin cheerleader, flourishes, Gusinsky, the acerbic critic, lives in informal exile, driven abroad by a bizarre, bitter run-in with a powerful member of the president's inner circle.

Some say Gusinsky's combination of money and media - his MOST financial group owns an influential newspaper and a feisty independent television station - make him one of Russia's most powerful private citizens.

But none of that protects against Kremlin insiders who fear he plans to finance a challenger to Yeltsin in 1996. "In some ways, he is an example to the others of what happens when you get too exposed politically," McFaul said.

A VISIT FROM THE GUARDS

The affair began in November with an anonymous attack on Gusinsky's business practices and political intentions in the Kremlin's newspaper, Rossiiskaya Gazeta.

Two weeks later, heavily armed, uniformed men in ski masks followed Gusinsky's motorcade to MOST headquarters, then surrounded the skyscraper in downtown Moscow. The gunmen blockaded the building for several hours, roughing up Gusinsky's security men and refusing to identify themselves.

It turned out they were from Yeltsin's presidential guard, which is commanded by Alexander Korzhakov, a former KGB officer whose Kremlin clout far outstrips his official title. Korzhakov is said to be devoted to only one thing: perpetuating Yeltsin's power.

In January, the newspaper Nezavisimaya Gazeta published an article in which "a well-informed source at the Kremlin" said the secret police were out to ruin Gusinsky. Chillingly - especially for a Jew whose grandfather was shot in the Stalinist purges - the article raised the specter of prison and a show trial.

Gusinsky now spends most of his time abroad, where he owns several homes.

------------------------------------------ 5 BUSINESSMEN SET PACE OF WEALTH IN RUSSIA ------------------------------------------

Estimating wealth is tricky in Russia, but these top most lists of Russia's richest businessmen:

Oleg Boiko: 30, head of Olbi business group. Got start as student peddling gray-market computers. Opened check-cashing business and parlayed it into empire of 60 companies that include a major bank, retail chain and popular casino. Estimates personal fortune at $1.5 billion.

Vladimir Gusinsky: 42, chairman of Most Group. A theater director, he became a business consultant during perestroika. With good connections at city hall, cleaned up on Moscow property boom. The city also banked at Most. Branched into newspapers and television a few years ago.

Mikhail Khodorovsky: 31, conglomerate owner. Started a cafe during perestroika, then used profits and good connections to become venture capitalist. Now owns Menatep Bank, real estate, steel mill, food-processing and chemical companies, titanium-producing concern.

Alexander Smolensky: 40, owner of Stolichny Bank. Worked as a construction engineer for state. Like many new entrepreneurs, began in cooperative movement during perestroika. Parlayed building-materials business into major bank whose holdings include a 3,000-painting art collection.

Vladimir Vinogradov: 39, publicity-shy chairman of Inkombank, one of first private banks set up during perestroika. Vinogradov, former analyst for state bank, built it into one of Russia's largest private banks and is a major stockholder in an impressive portfolio of companies.