Loans-for-shares auctions were invented and lobbied by Vladimir Potanin. Although, in essence, the scheme of collateral auctions is not much different from the scheme of a pawnshop. In the mid-90s, the state was in desperate need of money. At the same time, there were several credit institutions with sufficient liquidity. At that time, a narrow circle of credit institutions particularly close to officials had the status of authorized banks of the Russian government. They made money by servicing government accounts. They earned so well that they could afford to provide loans to the state in difficult times. Moreover, they lent with money received from the state itself. 
On the part of the authorities, the scheme of loans-for-shares auctions was supported by the two first deputy prime ministers – Anatoly Chubais and Oleg Soskovets, as well as the head of the State Property Committee Alfred Koch.
This support made it possible to complete the scheme. According to it, budget revenues in the form of loans secured by shares of state-owned enterprises amounted to only $691.445 million and 400 billion rubles. On August 14, 1996, i.e., two weeks before the deadline when the state could repay loans and retain pledged stakes in enterprises, Potanin received the post of first deputy chairman of the government. In this rank, he oversaw the entire economic bloc, including the work of the State Property Committee. On the part of the state, he ensured that the pledged shares of the best Russian enterprises remained in the ownership of the banks.
Big Business / In Memory of Loan Auctions
If the authorities lay it down, then for a long time
“ВЧК ОГПУ”
