Loans for shares scheme
term
Beginning in 1995, Boris Yeltsin's government began privatizing state-owned shares in companies through a loans for shares scheme. The scheme helped with "fundraising" for Yeltsin's 1996 reelection campaign and restructuring freshly-sold companies at the same time (in order to outweigh communist sympathizers as one source speculated).
Russian bankers constituted the majority of those who have provided the funds (see Letter of thirteen). The rest included such entities as Stolichny bank (Russian: Столичный банк) and World Bank (who made a loan for a small percentage of the Sibneft oil company) and even some targeted investments from USAID in assistance to Chubais, according to Richard Morningstar, a U.S. aid coordinator for the former Soviet Union.
The scheme was primarily overseen by Anatoly Chubais who was linked to USAID program managed by head of the Harvard Institute for International Development (HIID) at the time.
The scheme implementation ultimately resulted in the emergence of an influential class of enterprise owners, known as Russian oligarchs.
Enterprises lease
To make companies whose shares were sold by the government profitable, the new investors sought to restructure them and install a western-style management approach by eliminating communist bureaucracy. However, that required them to push out entrenched managers with communist allegiances (so-called "red directors"). This had already become an immensely more cumbersome task once the communists took control of Russia's legislature in the 1995 elections and would be made excruciatingly challenging if the communists were to take control of Russia's executive government. Consequentially, in order for the companies to turn a profit, investors felt that the Communists would need to lose the election.
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