Sorry, but I don't think that this story is true. I was doing a lot of business in St.Petersburg back then and had the pleasure of visiting the LOMO plant just outside the city. Well, the parts of it that were available to a foreign visitor, mind you. They make submarine periscopes and FLIR sights for helicopters. Those departments is not available for citizens of NATO countries. To put it mildly.
You see; LOMO was privatized already in 1993. There is no way that the deputy governor of St.Petersburg, Vladimir Putin, had the power and reach within a then privatized company then owned by a flock of oligarchs. Back in 1995 he was busy getting rid of the corrupt, but popular governor Chobchak. - Who fled to France and died mysteriously shortly thereafter. Strange, he?
Further; the LOMO craze was about to take off first in 1996 -97. I remember well the many small photo shops selling russian photogear up and down Nevsky Prospekt. - Or other unique russian colectors items at small 'torgs' around the city, be it WWII artifacts, fake classical paintings, ikons, painted boxes, night binochulars etc. etc. 1994 - 95 was just a little early before the flood of collectors came across the border. But those who came were, first of all, germans and very possibly austrians, looking for WWII artifacts, german antiques etc.
Today this is a very mature market. Back then you could by rare and very valuable collector items for 'a song'.