Lace & Lipstick

While Nikita Khrushchev holds out visions of a consumer's paradise just around the corner of the next Seven Year Plan, a band of ingenious entrepreneurs are doing their individual best to make the dream come true a little sooner. They are the Soviet citizens--no one can tell how many--who operate private businesses for private profit, often dodging the police for years before they are caught. Operators of two of the cleverest syndicates were in the hands of the law last week, charged with running a textile empire and lipstick plant with profits that ran into the millions.

According to agents of the K.G.B. (Committee for State Security, or secret police), the textile operation had flourished since 1955, when Comrades Gazenfranz and Appelbaum arrived in Frunze, capital of Soviet Central Asia's Kirghiz Republic, with a proposition for the director of the state-owned knit-goods mill. Instead of producing sweaters, they suggested, why not overcome the drastic shortage of curtain lace, a commodity highly prized both as a status symbol and as the only way to secure privacy in a land without window shades or blinds. The trio promptly set to work importing machinery and bribing officials, including the capital's chief economic planner. Thanks to bribes, the lace was sold on the shelves of even the government stores, with the profits going into the pockets of the ring. Last year's illegal take: 3,200,000 rubles ($3,550,000). The ring's undoing was a typical capitalistic flaw: conspicuous consumption in the form of fancy cars and lavish dachas that finally alerted the cops.

High living by confederates also tipped police to the family-operated lipstick factory of Nikolai Kotlyar, who converted the basement of a house in the Moscow district of Ostankino into a miniature plant. Helped by wife, daughter and nephew, Kotlyar installed lipstick molds, mixed batter identical to the popular Ausma brand manufactured in Riga. Soon he persuaded Ausma officials--for a price--that competition was wasteful, and began importing the authentic recipes and lipstick tubes direct from the maker. When Kotlyar was nabbed, he had invested his lipstick loot in precious gems, gold and state bonds worth more than 1,500,000 rubles ($1,665,000). The cache of jewels found in his home, said he, was part of his wife's trousseau.

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