Disclaimer: This WP blog is not affiliated in any way with Mr. Ivanishvili – Public information on Boris Ivanishvili, Georgian philanthropist.
Disclaimer: This WP blog is not affiliated in any way with Mr. Ivanishvili – Public information on Boris Ivanishvili, Georgian philanthropist.
Georgia – September 2007
Capital of charity in the country of profit
By Polina Miloradovich
Sachkhere district and its central Sachkhere town is a nice, pictorial mountainous place. If you come here, you will hear one name all the time. The name is Bidzina Ivanishvili – have you heard of him? Bidzina is one of the richest people in the world. Locals tell plenty of unbelievable stories about him. In Sachkhere, there is a very good, modern, perfectly equipped hospital with highly qualified staff. There might be only a couple of hospitals like this in the capital of Georgia. And it is definitely the only one in our country, considering this hospital’s humanity – it is absolutely free of charge for the local population. A local villager does not pay anything for any type of medical service conducted by the hospital. In the case a Sachkhere district resident needs to be treated in Tbilisi or abroad, he gets a free of charge medical insurance that covers the expenses. “Bidzina pays,” this is how locals describe this humanitarian project. “Bidzina pays” definite part of each family’s monthly power and gas bill. He pays additional money to teachers’ salaries (officially, the salaries are extremely low, and he doubles or triples initial fee). He constructs the roads and repairs the roofs. He tries to develop reduced rate crediting in order to teach Sachkhere residents to do business. Locals say that the ‘reduced rate’ actually means that Bidzina does not take the money back from those debtors, who actually managed to develop a small business.
Along with this, here you will not find tablet and name boards, indicating whose funds are being spent for roads construction or hospital work. There are no televised interviews, and no newspaper articles – in Sachkhere even local people do not know what Bidzina looks like.
Locals say that Ivanishvili intended to pay a special pension to pensioners, 200 lari per month (about 120 dollars, 5 times higher than minimal official pension); but, according to talks, Georgian president visited Ivanishvili and insistently demanded not to do so. The reason was that in that case the president would have problems explaining why others’ pensions are so low…
People say, that local authorities dislike Bidzina.
Locals say that Bidzina especially supports young married couples in his home village; for weddings, he gives them new houses and Niva cars.
They also say, that Bidzina remembers every single detail of his poor childhood, and gener-ously rewards all those, who was good to him. According to the locals, the oligarch lives in his home village together with his family. His wife had recently had their fourth baby in the Sachkhere hospital. And he has the same wife, the one he married when he was young and poor.
To put it briefly, he seems to be very different from other millionaires. Once you come to Sachkhere, you hear thousands of stories and feel really great – just look at this guy, he is such a good person! Actually, you can understand why he acts in this way: it must’ve feel great to make people, your fellow countrymen, stop feeling desperate, to render a good assistance to them. That is actually what happiness could be for a normal human. He somehow managed to withstand the test of money, opportunities, and someone’s envy. That could happen sometimes.
People of other regions and districts generally get amazed when learning the volumes of social care, Sachkhere residents have. These people really want to believe that Mr. Ivanishvili will one day decide to step beyond Sachkhere.
But Bidzina rejects without a trace offers to run for the country’s presidency.
But people keep dreaming. As all of them want to have humane authorities.
December 23, 2005
New iron ore mining company planned in CIS – Hoovers
A new iron ore mining and concentrating group with assets in Russia, Ukraine and Kazakhstan is to be set up next year, aiming to become a major international player rivalling world leaders CVRD, Rio Tinto and BHP Billiton.
The new business is the brainchild of Russian businessmen Alisher Usmanov and Vasily Anisimov, who recently paid $1.65 billion to acquire Russia’s second largest iron ore group, Mikhailovsky GOK, Kazakhstan’s Sokolovsko-Sorbaisky and Ukrainian Yuzhny GOK and Inguletsky GOK. Their plan is to unite these assets into a single group named the Eurasian Mining and Metallurgical Company.
The new company will have current production capacity of 78 million tons of iron ore a year with plans to increase to 100 million tons. While that’s still less than half CVRD’s 212 million tons a year it will create a new powerhouse in the region that will be able to influence not just local but also global prices through the opportunity to increase exports to iron ore hungry countries such as China, analysts say.
Russia, Ukraine and Kazakhstan have total iron ore reserves of 70 billion tons, eight times those of Brazil, four times Australia and three times China.
Russia produces annually 83 million to 85 million tons of iron ore concentrate and pellets, just enough to satisfy domestic demand.
Usmanov also has a large stake in Gasmetall, which in turn has an 80% stake in Lebedinsky GOK, Russia’s largest iron ore mining and concentrating enterprise.
Usmanov and Anisimov believe the new group will become a significant force on the world market with its existing assets and will also be attractive to investors, enabling rapid expansion.
“We are currently in consultations with the governments of Russia, Ukraine and Kazakhstan, as well as with the owners of the assets there, concerning the creation of the Eurasian Mining and Metallurgical Company,” said an official at Metalloinvest, the company which manages assets on behalf of Usmanov and Anisimov.
“We are discussing various forms of integration of the assets, taking into consideration the specific features of legislation in the three countries and the form of capital in the assets involved,” the official added. “All the participants in the process have confirmed that the creation of the group answers the national interests of Russia, Ukraine and Kazakhstan.”
Capitalization of the proposed group is estimated at $10 billion to $12 billion, with annual revenue $5 billion.
The Metalloinvest official said as soon as the consultation process was concluded, documents would be submitted to the Russian federal anti-monopoly service for approval.
The new group is expected to emerge in the second half of 2006. “All the potential participants in the new holding have received invitations to join and talks are under way,” said an analyst with Russia’s FINAM Investment Holding. ” It will take a few months to carry out the evaluation of assets and establish every participant’s share in the group.
“They will have to decide what legal form the holding will have and get permission from the Russian anti-monopoly service.”
The companies involved are already informally co-operating.
Domestic sales of iron ore in Russia have been booming and this trend looks set to continue.
In 2004 and the first half of 2005 Russian domestic iron ore prices reached their highest level for 15 years.
In the first quarter of this year, a ton of iron ore concentrate sold on the world market at an average price of $23/ton, while in Russia it was $66/ton.
This wide price differential led to complaints from steel makers and the federal antimonopoly body is investigating ore producers’ pricing policies.
Analysts say that Russian steelmakers were forced to buy concentrate and pellets at home because China created a global shortage as it increased imports by 40% in 2003 and by a further 70% in 2004.
Helped by strong ore prices, Mikhailovsky GOK’s revenue increased to $822 million in 2004 from $395 million in 2003, while net profit rose to $242 million from $7 million. In January-June of this year, Mikhailovsky GOK’s revenue reached $592 million while net profit was $251 million, according to company data.
In the same period, Lebedinsky GOK’s sales revenue was $584 million and net profit $299 million.
Up till now, capital investment in the region’s iron ore sector hasn’t been considerable. CVRD invested $1.9 billion in 2004, while the total investment in Russia, Ukraine and Kazakhstan didn’t exceed $308 million.
The production costs are also currently two to three times those of leading western mining companies, analysts say, which leaves plenty of opportunity for improvement.
October 25, 2005
Renaissance Capital Top Bank Executive in Fraud Probe
The president of investment bank Renaissance Capital, Oleg Kiselyov, is facing fraud charges, his lawyer Alexander Asnis said Friday.
The investigation, which is being handled by the City Prosecutor’s Office and the Moscow city police, is related to an alleged attempt in the last year to steal shares in one of Russia’s biggest iron-ore producers, Mikhailovsky GOK.
“I have not read the charges, so I cannot comment on them,” Asnis said, adding he hoped to get access to the charges on Monday, having first learned about the case in media reports Friday.
Asnis said he eventually reached the investigator in charge of the case, Anton Golyshev, who confirmed that charges had been brought last Wednesday.
Kiselyov, who is currently undergoing medical treatment at an undisclosed location abroad, had also been unaware of the charges against him until Friday.
“The investigators have all my telephone numbers. I have not received a single call,” Kiselyov told Ekho Moskvy radio Saturday, speaking by telephone.
The City Prosecutor’s Office, which is leading the case, was not available to comment late Friday.
It was unclear Sunday if the charges would lead to an arrest warrant.
The prosecutor’s investigation centers on a series of events surrounding the alleged attempted theft of 97 percent of Mikhailovsky GOK, which until last year had been owned by Boris Ivanishvili through his Metalloinvest holding.
The sale of Mikhailovsky GOK, which was bought by metal moguls Alisher Usmanov and Vasily Anisimov for $1.6 billion, was held up by a dispute over ownership raised by the Bahamas-registered Colchester Group.
Colchester Group claimed it had bought the business in November 2004 for 3 million rubles ($106,000) but never received the shares, Vedomosti reported Friday.
In an attempt to block Usmanov and Anisimov’s purchase, Colchester had the disputed assets frozen by a Rostov regional court.
Colchester’s case came to nothing, allowing the freeze on the shares to be lifted, but the subsequent investigation led authorities to Kiselyov, Vedomosti reported.
A suspect in the case named Kiselyov as the person giving orders at the time the transaction was held up, the newspaper said.
There was no reaction Friday from Usmanov or Anisimov, who now own Mikhailovsky GOK.
Prior to the charges, Kiselyov had been a witness in the investigation.
Kiselyov had been chairman of Ivanishvili’s Metalloinvest in 2001-02.
Kiselyov, 52, belongs to a generation of businessmen that took advantage of the commercial opportunities that emerged when small private enterprises were allowed in the Soviet Union at the end of the 1980s.
He worked with billionaire Mikhail Fridman at the inception of what was to become Alfa Group and headed one of the conglomerate’s first businesses, Alfa-Eko, until 1992.
In 2003, after resigning from the previous posts he had held, Kiselyov was appointed president of Renaissance Capital.
Kiselyov on Saturday denied any wrongdoing.
“A friend of mine compared it to attempting to steal the Sistine Madonna,” he said Saturday. “It’s probably possible to steal it, but what next?”
Speaking to Ekho Moskvy, he discussed what his associates thought was behind the charges.
“Many of my colleagues have suggested that I may become a victim not of … political, but commercial, assault,” he said.
The corporations that now run the country’s key industries — including oil, gas and metals — assumed their current form after years of bitter media and legal battles for control over assets.
“These are the remnants of the corporate wars of the late 1990s,” he said.
According to Kiselyov, investigators appeared to have been satisfied with his cooperation as a witness in the case.
“I was treated in a kind manner,” he said, noting that no travel restrictions had been placed on him by investigators, who had been aware he was planning to receive medical treatment abroad.
Kiselyov said he intended to return to Russia once his treatment was over. It was not clear Sunday when that would be.
Meanwhile, Renaissance Capital is concerned that the case could damage its reputation.
“Even if an employee is found in the drunk tank, it’s not good for the company, and he [Kiselyov] is one of the leading employees of the company,” Alexander Shokhin, chairman of the bank’s supervisory board, said Friday.
Shokhin, who was recently elected president of the Russian Union of Industrialists and Entrepreneurs, or RSPP, said Kiselyov had the support of his employer and RSPP.
“We have no reason to think that the charges against him have any justification,” Shokhin said.
“There is a tendency in Russia for legal cases to be used in corporate wars, and afterward it turns out there’s no convincing argument,” Shokhin said.
Shokhin would like to see the case sent to the Prosecutor General’s Office in order to have a higher authority look into the matter.
“I can’t say that I have any suspicions. But I would like to rule out the possibility,” he said.
As an alternative, Shokhin also proposed that the matter be settled through a special commission within RSPP, which helps companies settle similar cases out of court.”This does not just concern the interests of one person or company. Kiselyov is a very public figure, as is Usmanov,” he said.
Located in the Kursk region, Mikhailovsky GOK controls 18.3 percent of the country’s iron ore. It has sufficient reserves to operate for another 300 years and employs around 9,000 people, according to its web site.
Of [ivanishvili] it left the shadow
“On my initiative with [RUBOP] was created the structure, which was financed by bank, its colleagues arrived along one our bell”
© “Vedomosti”, 07.04.2005, “he did not think that to camp by multi-millionaire”
Paris – founder and the owner of bank “Russian credit” of Boris [Ivanishvili] – one of the most mysterious Russian owners. It practically did not participate in the public measures, never it gave interview. How it was occupied [Ivanishvili] far from the outside looks? Accumulated state.
The periodical Of forbes recently estimated it in $2,6 billion but, judging according to [Ivanishvili] itself, the owner “Of [roskreda]” it stands more than $5 billion in the past year in his business it began critical moment. It earned more than $2 billion, selling its largest industrial active memberships – [Stoylenskiy] and Mikhajlovsk Of [gOKi]. This became complete unexpected contingency not only for participants in the market, but also for those, who knew [Ivanishvili]. Why he made this, as it plans to be ordered by the obtained money – about Boris [Ivanishvili]’s this it described “to Vedomosti” in the first interview, which it gave in its life.
– Boris [Grigorevich], you never gave interview and from the very beginning to their owner’s activity they preferred to remain in the shadow. With which is connected this secrecy?
– I actually [nepublichnyy] person, but this am connected exclusively with my nature. I do not love to be met with the journalists, to participate in the public measures, to be at the different get-togethers. It is there necessary to put on mask, but I will not carry formalities. I materialist, do not believe in the life after death, but life itself is short, and I want to make anything, which limits my freedom. I not at all love to be in the center of attention, do not love holidays, never even I note my birthday.
– A how it is possible to explain that the fact that “Russian credit” (RK) and “by metal-ineDS” even they did not confirm that you are the owner of these structures?
– I never disrupted law, and to me something to hide. Simply, unfortunately, from the very beginning reconstruction we all, businessmen, lived in the [nekoem] stress because something it can threaten your business. Much calmer it was be occupied by business, without drawing attention to its persona and to its property.
– At the beginning of the 90th the situation in Russia was actually stressed, but far from all businessmen left abroad as you. When you did leave from the country and why?
– For the first time I left from Russia in 1993. after the theft of my brother in Georgia. For it they required ransom, they held month, but I ransom did not give, because he would place under the analogous threat of its parents, sisters. Them then no one touched. But in me began to arrive from Georgia the different officials, who attempted to help me in the presence of brother, to propose collaboration. To release them into my business I did not want not in order to avoid contacts with them, I decided formally to be postponed from the bank: he stated that I depart from the post of the President, and in 1994. on half a year it left with the family to the familiar to the USA. Situation in Georgia was restless, it seemed, that live abroad more calmly, they thought, can, it is worthwhile to leave for the children, their future. Was selected the country, which most of all will be pleased, they stopped in France, they purchased house in the environs of Paris. But we constantly there did not live, on the business, especially after default, in essence it was necessary to be in Moscow.
– But nevertheless French citizenship you did obtain?
– Wife and children – yes, I did not begin to obtain, this would take away much time: it was necessary to pass interviews and other
– You do not feel sorry, that before they did not give interview? Really you did leave indifferent that the fact that about you they do write?
– Certainly, no. In contrast to the Russian media outlets I was constantly in the field of the attention of Georgian journalists. Some of them were occupied by reprintings from the Internet, where long time was placed the dossier, formed allegedly from the data of the security service of group “bridge”. Since we seriously competed once with the Bridge- bank, it is not surprising that this dossier contained the complete set of the distorted nonsense about RK and me personally, by on top of that written with the use of criminal jargon. It was so unimportantly that not its one Russian newspaper used. In Shevardnadze’s times Georgian journalists without grounds scolded all, including me; therefore I did not turn attention to their articles. But when articles in my address were renewed the year after the arrival of new authority, I for the first time reacted on them: in November last year it charged to its services to be dismantled with the masters of the Internet site, on which was placed this dossier. And the owners of the ultimate source – the Federal agency of investigations – withdrew dossier and brought their apologies.
– I.e., everything which is there written, untruth?
– The main “sensation” of that dossier – this that I allegedly was connected with Otari [Kvantrishvili], we together dealt with false aviso and was other this complete delirium. When at the beginning of the 90th the majority of banks, including state, were struck by the false aviso, with the aid of which of the budget tens of billions of dollars were stolen, I exerted gigantic efforts so that RK would resist the customers of shady transactions, and it proved to be the only bank, which passed in itself not one aviso.
The same delirium and association into the united association me, [Kvantrishvili], [Bendukidze], [Magaradze], [Seliashvili]. I was sign not with whom of them. Georgian journalists, to which, until now does not give rest my imaginary connection from [Kvantrishvili], could conduct simple journalistic investigation, begin from the very well-known familiar of the same [Kvantrishvili]. Not problem to find both in Georgia and in Russia relatives, the friends Of [kvantrishvili], colleagues RK. And let they will find at least one witness or proof that in me or my structures from [Kvantrishvili] was although the least contact! There are such Georgian journalists, as, saying about me, use expression “someone [Ivanishvili]”, others write that “tentatively” I finished [TGU], the third under my surname print strange photographs. Others call “public house” the new business- center, which I to system in Tbilisi. What them all does unite? Allegedly terrible disturbance, that they cannot acquire information. But the same slyness. About the Georgian, who was being born in Georgia, who has parents, the heap of relatives and friends, in Georgia very rapidly it is possible to learn absolutely entire information. I did not turn herself into the law court with the actions about the protection of honor and merit, because never them he lost, it lived on the conscience.
“I wanted to let out armored hoses”
– What you have citizenship?
– Russian and Georgian.
– Where you do live now?
– I missed on Georgia and year ago with the family he moved to live into the village, in which passed my childhood. Family for me always in the first place, my dad recently died, mom at the age, it was wanted to live next to it. Constructed the new house next to the fact, in which it lived with the parents, I think that they settled here for a long time.
– Describe how you dealt they before organized “[Roskred]”.
– I was born in the mudflow Of [chorvila], not far from g. Of [chiaturi]. Father worked as miner at the combine “[Chiaturmarganets]”, which, by the way, recently purchased Russian “[Evrazkholding]”. After school I left to Tbilisi – he learned in the engineering economic department of Tbilisi State University, simultaneously worked at the Foundry- mechanical plant [im]. of the Kamas – by cleaner, as supplementary worker, and then by grinding-machine operator. University finished with the difference and remained to work at the same plant – by already senior engineer, and then – as the chief of laboratory on the scientific organization of labor. In 1982. it left to Moscow into the graduate study of NII (Scientific Research Institute) labor, and through several years, after being protected in the specialty “scientific organization and labor economics”, returned to Tbilisi into the local department NII. But its first business soon organized.
– As did arrive the idea to study business?
– What is the senior scientific worker at the end of the 80th? Neither interesting work nor prospects. I did not have either apartment, or family, veins in the hostel of Foundry- mechanical plant. Certainly, then in the thoughts there was not, that I will create bank, to camp multi-millionaire, simply he was the desire to begin to earn money. It decided to let out armored hoses, in those times they were in the scarcity. Cooperative registered, in the plant [im]. of the Kamas leased the accomodation and began pre-production. In the evenings personally sharpened the equipment, but to the production of hoses the matter not downy – it began to deal in computers.
– Why precisely by computers?
– I analyzed, in trade how it is possible to move, and it came to the conclusion that after the computers future. Demand on them was, and to here find them was problem.
I know Tbilisi Jews, who left abroad, [sozvonilsya] with them, they were glad to begin business. They began to send computers to me, and the Academy of Sciences of Georgia became the first buyer. But my activity was not pleased to Georgian procuratorship, then that only for the first transaction to the calculations of my cooperative arrived more than 1 mln rubles., they arrested calculations. I understood that also further to me they will place sticks in the wheels, and it decided to move into Moscow. Even in the graduate study it was introduced to Vitalius [Malkin], it then was the graduate student of Moscow railroad institute. I was the coach of one student in mathematics, and Vitalius – in physics. When I returned to Moscow, [Malkin] has already been occupied by business – resold something, it attempted by cafe to open, but I to it proposed the more organized business – trade in computers.
In [Malkina] was the comrades from the railroad institute – docents Sergey [Mosin] and Alexander [Bryantsev]. They built hot-houses in Naro-Fominsk, they have the cooperative “agro-progress”. In order not to lose time for the registration of new cooperative, they began to deal through “the agro-progress”, portions in all were equal. This was 1988 g. we removed room in the three-room apartment on the 5th floor without the elevator – there and office, and storage they were, business went full speed. Then business worked differently: much was done on the confidence, large sums transferred as [predoplaty]. They then became and [kseroksami], tape recorders, in telephones to deal.
Moscow in those times swarmed by the foreigners, who proposed different goods, they came in groups to me, but I saw that almost they all are swindlers. And we themselves went to abroad search for partners. They learned, that in Paris passes the exhibition of highly technological production. There they were introduced to one [gonkongskoy] firm, they went to them – I assure, we were the first Russian businessmen, who arrived to Hong Kong. They concluded with them our first large contract. Entire this technology made in China, and we risked to go still further: they purchased in China factory on the production of fastener telephones and cassette tape recorders. In 1990. our company was one of the large in the country on sale of electronic engineering, but many already understood that this is profitable business, and we decided to study something another. Whereas once began to appear the first particular banks, in 1990. we registered “Russian credit”.
– A was in you another business, except trade electronics? What capital you did accumulate up to the moment of creating the bank?
– There was no other business. But up to the moment of the discovery “Russian credit” we accumulated $100 000-120 000, these were large money, on them it was possible to open several banks. [Bryantsev] with us did not go, he said that already the wealthy man, continued to build hot-houses. I, [Malkin] and [Mosin] obtained equal portions. Then I redeemed the portion Of [mosina]. Thus, to me in the bank it belonged to 67%, To [malkinu] – 33%.
– A now what portion in [Malkina] in the banks and the industrial enterprises?
– It preserved its fractions in both banks, and minority packets in some industrial enterprises, which in it were, I recently in it redeemed.
“Simply we made that, what did not make others”
– Describe, how you did begin to be occupied by bank business, why “Russian credit” it was possible to be knocked out into the leaders?
– The first office of bank was in the building of kindergarten, and they worked in it on 24 hours a day. In the bank it was thus far to 100 people, any small solution I assumed itself. Then credits revealed without any guarantee, could be many no returns, it was necessary personally to decide, to whom to give credit, but to whom no. Simply we made that, what did not make others. They were first by the volumes of sales of the available currency: we, for example, specially ordered new dollar notes, were created the wholesale centers of retail sale of currency.
But then intuition solved generally much. I immediately felt that it is necessary to count on subsidary network. For this it was necessary to decide two crucial problems – to find accomodations and personnel. Once entire night he thought about this, and there was in the morning the finished solution. We came to the directors of enterprises, institutes and negotiated – they separated accomodations to us, while we made these organizations with the shareholders of bank, they gave percentage on two, they then became our clients. I created Russia’s first bank college, which prepared colleagues, for us, it read the first lectures there personally. But the main thing how I am proud, in the bank was created unique corporate spirit, the majority of colleagues work, until now.
– You periodically left from the country, and the latter of one-and-a-half year constantly you live in Georgia. How you do govern business, what problems you do solve personally?
– From the moment of creating “Russian credit” and to this day I and shareholder, and top manager in one person, in Russia is differently cannot. After founding bank, first years four I personally controlled everything which in it occurred. When business grew, I began to inject joint control. Now I more greatly am concentrated on resolution of strategic questions, but I know everything which is done in all directions of business. Even now, wherever I not was located, I each day the minimum four hours devote to resolution of working questions.
– A what functions were in [Malkina]?
– It fulfilled the [predstavitelskie] functions: represented bank in the state structures, replaced me at the different formal encounters, the nonformal get-togethers. It never decided, what direction of business [forsirovanno] develop, what do you mean, displace, what to buy, but what to sell as to select personnel and as them to govern. This was after me, Vitalius itself knew that it was incompetent in these questions.
We together began business, then no one knew, on that it was capable. Vitallium – my friend, it never me betrayed; therefore it remains my partner, but I am glad, that he made a friend wealthy man.
– Vasiliy Anisimov did occupy the post of the Vice President “Russian credit”, and portion in the bank in it was?
– The belonging to Anisimov plants were the important clients of bank, but Anisimov never was its owner. In me was the partners in the industrial enterprises, and in the bank, if we do not consider those, who obtained portions in exchange for the accomodations, coowner was only [Malkin]. Each important client was requested in shareholders, but I rejected to all. I generally try to avoid partnership. Partner for me – this is very serious and furthermore there is a risk, that the partner can bring.
– In those times, when you began business, any structure, which earns money, attracted attention of bandits. You did encounter such problems?
– We too early began to be occupied by computer business, and racketers simply overslept this moment. But here in the bank actually it was necessary to contend with such problems. But I perfectly well know: is worth one time going with them [with bandits] to the agreement, this with them will forever you connect. I withstood and, by the way, I consider that my main merit – that I released into my business not of one of those, whom they consider bandit. But later I began to collaborate with the law-enforcement agencies. In 1993. not without the aid of the leader OF [RUBOP] Vladimir [Rushaylo], who helped me to find brother, on my initiative with [RUBOP] was created the structure, which was financed by bank, but subsequently also by other large commercial structures. Its colleagues arrived along one our bell, and long time this structure effectively worked. But in 1997. we encountered the problem of no return of credits, and, instead of helping us, its colleagues began to take bribes from those, who were to us must. After this, I said to then-occuring to the head of this structure to Alexander [Kachur], that I cease collaboration.
– But indeed in those times it was not possible to make business, without having “roof” among the officials or the same bandits.
– This was possibly, only very complicatedly. Our bank never was one of the so-called [blatnykh] banks. In a quantity of [platezhek] “Russian credit” exceeded even [Sberbank] – this speaks, that we were held on the small and average clientele. I also never used the patronage of officials.
– But one official accurately brought benefit to your bank. In the period, when Eugene bull calves headed the RF Committee on Precious Metals and Precious Stones, “For [roskredu]” it was possible to become important player on the market for gold, and subsequently bull calves he became the Vice President of bank.
– The connection Of [bychkova] with the bank checked the State Auditing Chamber, and it found no disturbances, which it as official made. Bull calves it was useful to bank only fact that it led in it the pair of clients.
– “Russian credit” and “metal-ineDS” managed many active memberships of different types. What your business did prove to be most profitable?
– On the profitability – [Stoylenskiy] [GOK], on the return to the invested capital – plant “natural rubber”. We purchased its actions in 1991. for $150 000, and at his sale I will earn minimum $500 of million – plant in the center of Moscow has large territory, large building soon will begin on it.
– A when according to what principle you did buy industrial enterprises?
– Began privatization, in the bank the money, I personally examined the lists of the enterprises presented to sale, were evaluated their indices, prospects. Limitation with the selection was one: I never pretended to the active memberships, for which could be developed criminal war, which could subject to risk my life or life of my colleagues. Therefore bank did not participate in the purchase of petroleum, aluminum, steel foundry enterprises.
– “Russian credit” participated in many guarantee auctions, but it nowhere gained victory. Why?
– Bank gave claim fors participation in the guarantee auctions not in order to obtain control over the sold active memberships, and in order to tear away auctions. If we won, then would return actions to state. Then Communists attacked privatization, guarantee auctions gave to them powerful trump, there was risk, that they generally can tear away entire privatization. Indeed privatized laws were written quickly, they were [nesovershenny], and sale through the guarantee auctions was completely illegal.
– I.e., you did save privatization?
– Not only. Guarantee auctions disrupted the balance of forces prevailing on the market, their conquerors illegally obtained the competitive advantage over me. Naturally, I wanted to prevent this. But I raised sensation, in order to report its position to the government, President. But only it gained to itself serious enemies. At that time were passed duma elections, [motion] BY [NDR] [“our house – Russia”], leader of which was premier [Victor] [Chernomyrdin], it fell through. This caused to the critic Yeltsin, and one of the members of the cabinet of ministers of those days told me, that, being justified, [Chernomyrdin] was named the reason for failure on the selections our appearances against the guarantee auctions and noise, which we raised in media outlets. And although I cannot assert that there was the direct indication Of [chernomyrdina], in me all documents, which confirm, were preserved, that literally each control structure, which existed then in Russia, within a week paid to us the visit: currency control, district and urban tax inspections, the tax police, financial control, the Central Bank. And this occurred immediately after selections. The tax police manifested the greatest activity – it checked the bank of more than year, but no disturbances it revealed. Then the tax police began to press to international auditor Arthur Andersen, to knock out of them documents to the bank, otherwise threatening to forbid to work in Russia. I rushed to ring to the then chief of the tax police [By [sergeyu]] to Almazov. We with it met. Never I will forget that conversation. I attempted to understand, why its colleagues behave like a hooligan, indeed bank to them and so all documents gives, and it answered me: “Everything in you will be normal, only you to me say, as you do buy my colleagues? I for the third time change my best people, which check you, but they nevertheless cannot obtain any results”. I astonished, at first he did not understand. It explained: “As you them [okhmuryaesh]? As you with them negotiate?” I answered: “Yes God of [upasi]! I with the tax police talked not to time and I am not gathered. I understand, that to you all this ordered!” It did not, of course, acknowledge that was obtained the order. So we parted without anything.
– It is difficult to believe, that you did not participate in the largest privatized transactions from the ideological considerations…
– Nevertheless this thus. For example, when the year after guarantee auctions was sold it [gospaket] [TNK], to half of packet pretended Mikhail Friedman and Herman [Khan], and second-half Victor [Vekselberg] proposed to me to purchase with it together. I agreed, we with Victor more than two months were prepared for the auction, but enemies unexpectedly in it were located. Large noise apropos of its illegality raised the director general OF [TNK] Victor [Paliy]. And at the quite last moment I turned from participation to auction.
– [Vekselberg] also “of alphas-group” earned then on [TNK] many money. You do not feel sorry, that they did forego the purchase?
– I could not participate in the transaction, which causes in me at least the least doubts about her legality. I will give another example: we on [investkonkurse] purchased 20% of actions of Mikhajlovsk [GOKa]. But in [investprogramme] were soon discovered errors, but legislation did not make it possible to change it. Arbitrarily we did not begin to change program and returned actions to state. I assure, you will not find another case of the voluntary recovery of actions in [gossobstvennost]. Only in one-and-a-half years we could anew redeem the actions Of [gOKa] at the money auction. In me was generally other tactics: I bought the active memberships, for which there was no fight, which were underestimated and even they were unprofitable. All fought for the steel foundry enterprises, but the suppliers of the raw material for them no one interested; I then purchased Mikhajlovsk, [Stoylenskie], [Lebedinskie] ore-dressing combines.
– On the profitability, which reaches to 500%, [GOKi] now exceed even steel foundry enterprises.
– This profitability was actually, but the high profit Of [gOKi] they began to bring only last three or four years. But thus far the fifth-sixth of their years it was necessary to subsidize, even wage to convey to the colleagues of these combines from Moscow. Metallurgists dictated to combines, on what price they will buy raw material, and they usually bought below prime cost. To break in two situation for me it was worthwhile the large efforts: on my initiative Russian [GOKi] and Sokolovsky -[Sarbayskoe] [GPO] [Kazakhstan] concluded cartel agreement and reduced the volumes of production, i.e. they removed from the market excess raw material, and only after this metallurgists fell into the dependence on [GOKov].
– You say that never they were, where there is a risk, but themselves in 1997. they proved to be in one of the very flash points – on Krasnoyarsk aluminum plant ([KrAZ]).
– The actions Of [krAZa] I bought on the second market, moreover he was far from quite important shareholder of plant. Thus it came out that in Krasnoyarsk I began to work long before the arrival on [KrAZ]. Still in 1992. bank acquired more than 30% actions of Krasnoyarsk metallurgical plant. Plant is located through the fence from [KrAZa], makes production from aluminum, but at that moment it interested nor stood no one, because metal to it they did not give. To those times, thus far in 1994. from the supply of the shareholders Of [krAZa] was not accepted the solution to transfer to the balance Of [kraMZa] on 20% of actions Of [krAZa] and [Achinskogo] aluminum combine, which were located in [gossobstvennosti].
– By A you to this hand did not apply?
– I nothing about this knew. The owners Of [krAZa] thought that the control over these packets subsequently will be obtained, and they were terrible astonished, when they learned that [KraMZa] already long ago has an important shareholder. They proposed to me to sell this packet, and in 1996. I sold him very dearly. But even in year among the shareholders Of [krAZa] began differences. Vasiliy Anisimov knew well three of them – Alexander Capped, Vladimir [Ratnikova] and Oleg Kim, by whom it belonged to 28%. He said to me that caps and warriors they search for buyers to 48% of actions of plant. But we with Vasiliy purchased from them actions only after they they returned 20% to Anatoliy Bykov and Gennadiy [Druzhinin] and Bykov it agreed that we will work together.
– A why Bykov then was appointed as the Vice President “Russian credit”?
– He was not the Council member of bank, was not obtained wage and it played in the bank of no role. In the bank there were always many Vice Presidents, this was my idea: we assigned to this post of leaders or owners of important enterprises – the clients of bank. To people it was pleasant, but practically they only obtained morning coats with the inscriptions “Vice President”.
– What block of the shares Of [krAZa] to you did belong? When and why you did leave from the plant?
– We with Vasiliy [by Anisimov] purchased from it was capped and associates on two 14%. On 5% then they redeemed in Glencore and Daewoo, thus, when I it departed from [KrAZa], i had 12%. But I was on [KrAZe] less than the year – left after in Bykov and other shareholders Of [krAZa] he began conflict with the governor [of edge] by Alexander [Lebedem].
– They indicate that you sponsored Cygnus.
– I untwisted Cygnus, when he was the deserted politician. Me then was included in so-called “[semibankirshchinu]”. The members of the pre-election staff of Yeltsin, whom headed Anatoliy Chubais, did not receive Cygnus seriously. But I placed in the office of bank his pre-election staff, he financed his spinup. Everyone understood in the month before the selections that I was the rights: in Yeltsin was low rating, Cygnus on the selections returned its voices to Yeltsin and thus ensured victory to it. To me then no one even thanks said, but when Cygnus they removed [from the post of the leader of the Security Council], all recalled that this I him gave, and they made me extreme. This was the only time, when I participated in the policy. Then, when Cygnus was selected by governor, I on the old memory helped it personnel, but directly he did not finance and it was with it in no way connected.
“I could lose everything”
– You bought diverse active memberships, but at the end the 90th investment activity was reduced. With which this is connected?
– After default 1998 g. all forces were cast to the solution of the problems “Russian credit”. Brought then, by the way, officials. On the eve of the declaration about the default us, the owners of the largest banks, they warned about this. I was categorically against the declaration of default, but all calmed down me, and leader TsB Sergey [Dubinin] promised that, if bank it is required credit, its bank will be obtained. Default declares, and depositors throw to take away money. If we, as many others then, did not begin to issue money, the consequences of crisis would be not so destructive for the bank. But we during two weeks honestly gave out all desiring to $180 mln. when money they ended, I reminded [Dubininu] about his promise, but he credit did not give.
– What did prove to be for the bank the consequences of default? What you did undertake for the conclusion of bank from the crisis?
– I then proved to be before the complex selection – to become bankrupt bank or to independently carry out restructuring. Although this solution was given not easily, I selected restructuring. , It did not have economic sense for me as shareholder, since I understood, that the market value of the [restrukturirovannogo] bank will be very low. The break between liabilities and assets of bank at that moment was about $1 billion.
It is paradoxical, but the estimated cost of all my active memberships, in no way connected with the bank, at that time also hardly reached $1 billion then I was made a decision for the guarantee of the bank debts to place all belonging to me actions of industrial enterprises – [Lebedinskogo], [Stoylenskogo], Mikhajlovsk Of [gOKov], “Tulachermet (Tula Ferrous Metallurgy Enterprise)”, Orel steel-rolling plant, hotels, “[RTI]- natural rubber” and other without such guarantee, whose part for me it was necessary to then sell, the clients “Russian credit” would sustain the extremely perceptible losses, but to allow this in view of my vital principles I did not can. This almost no one understood – familiar businessmen considered me almost a suicide. (RK passed for control OF ARCHES in 1999. After obtaining into property 25% + 1 action of bank, and 50% more – into control, agency opened to it credit line to 4,5 billion rub. The accounts payable RK was about $1 billion in August 2000 at that moment. was affirmed the world agreement, by which the depositors (requirements – 1,8 billion rub.) obtained one-time payment to 30 000 rub. and draft RK, and corporate creditors (requirements – 21 billion rub.) – to 10% from the requirements by money and the draft of bank with the period of pay-off to 10 years. By June 2003. bank extinguished 90% of obligations before the physical persons. In November 2003. capital RK again became positive. According to the representatives OF ARCH, this occurred as a result the conversion of bank debts into its capital in the course of [dopemissii]. – “Vedomosti”.)
– What active memberships for you it was necessary to sell for the payment with the creditors?
– The packets, which made it possible to control [Lebedinskiy] [GOK], Orel steel-rolling plant, “Tulachermet”. Sold that, on that there was the greatest demand. By the way, the actions of Mikhajlovsk [GOKa] then no one were necessary, for them then $50 million would give no one. The shareholders of bank transferred in all to creditors of approximately $450 million – this sum includes income from the realization of actions and credits OF ARCHES, which subsequently we liquidated from our business. By the way, if I then left them and he sold now, then another plus $3 of billion would rescue.
But I could lose everything. If the upsurge of the economy in the country was braked even by half a year- year, I would be forced to sell entire placed property and would remain without anything. In the past year RK completed restructuring. I am confident, that this raised not only prestige RK and his shareholders, but also confidence in the entire banking system of Russia. Foreign bankers with close attention followed then the situation in the country, and the restructuring of our bank showed that in Russia examples of the civilized solution of this problem were possible.
– You do not feel sorry today, that send to this restructuring?
– I am proud of the fact that thus he entered. I preserved the bank, which created. Restructuring RK – only case in the world practice, when private company answered on the debts, which arose through the fault of government. Although, of course, it is a little sour, that almost no one estimated that the fact that for me it was necessary to make.
But I do not feel sorry. Well I would not lose so many money, in my life this would change nothing. Money for me not have a self-worth; excess money – as excess fat in the man: they burden and are created additional problems.
– A which connected you with the owner with Arkady [Gaydamak], whom in 2000. was engaged the post of the chairman of board of directors “[Roskreda]”? have you joint projects? They speak, he wanted to be joined to the purchase of Orel steel-rolling plant.
– I was introduced [Gaydamakom] in 1991. He wanted anything to purchase in Russia, I with it, as with thousands of other owners, discussed the possibility of joint investments. He actually wanted to [pouchastvovat] in the acquisition of the actions of Orel steel-rolling plant, but as a result money it did not give. No joint business i with it had. Then because of it I studied real estate. In 1992-1993 yr. [Gaydamak] took in the bank the credits, provide ford with the actions “of Minsk” and “with central”, and it did not return them.
– Was nevertheless [Gaydamak] the shareholder “Russian credit”? In 2000. in the bank they declared, that it is shareholder.
– From the first day of acquaintance it persuaded me to sell at least 10% of bank, but I rejected. And here in 2000. [Gaydamak] appears and indicates that is ready to purchase 25% for $200 mln. at this time banks was under control THE ARCH. If it money would give, I to it and larger packet for the smaller money sold. The documents, true, immediately none they signed, but they appointed it the chairman of council – exactly then [Alexander] Lifshitz departed from this post, it was necessary in his place of someone to select. [Gaydamak] did not, apparently, believe that I will not bank become bankrupt. Worked three months, saw with its eyes all guarantees and left. Well and when we learned, that it in weapon deals, I said that his feet more in the bank will not be.
“Decided to direct order in its large economy” – As you do plan to further develop your banks? You are not going to sell [IMPEKSBANK]? Are possible whether the confluence “Russian credit” and [IMPEKSBANKa]? – To the transaction on Mikhajlovsk [GOKu] I examined the version of sale Of [iMPEKSBANKa], but now he decided to make financial sector one of the priority. Recently I already increased regulation capital RK on $100 million to $350 million – it put the money, obtained from sale of the actions “of Tulachermet (Tula Ferrous Metallurgy Enterprise)”. Recently $50 million put also in [IMPEKSBANK]. Plan to put soon into both banks $150 more of mln. to unite them I I do not plan, in this there is no economic sense, to much more conveniently hold two banks – one, [IMPEKSBANK], which is specialized in the retail services, but RK through several years I will make one of the best investments bank in the country. Although for this it is necessary to apply many efforts, first of all this concerns an improvement in the image of bank, indeed all remember that “Russian credit” several years lay. – A how [opravdanno] to develop [IMPEK]C[BANK], indeed the positions of foreign banks are strengthened, to compete with them it is begun increasingly more complexly. – In order to resist competition from the side of foreign banks, it is necessary to take one of them in partners. We wanted to sell to 25% [of actions], but potential buyers us convinced that less than blocking by him it is not interesting, and now we conduct the negotiations about sale 25% + 1 action. This transaction will give impetus to the development of bank, it will remain to only correctly build business. – A with whom you do conduct negotiations? – With the largest banks of France, Germany, Netherlands. Selection will be made soon.
– Why you did sell Mikhajlovsk [GOK]? – Even from the middle of the 90th I attempted to combine [GOK] with any steel foundry combine in order to create the final production chain. The possibility of the association of active memberships it discussed with the owners of all most important combines – with Vladimir [Lisin], Victor [Rashnikov], Aleksey [Mordashov]. But each of them wanted to preserve controlling interest in the united company for itself, this was not arranged me. Further all I moved in the negotiations with [the coowner “Of [evrazkholdinga]”] by Alexander Abramov. In the past year we with it agreed about the association “[Evrazkholdinga]” and Mikhajlovsk [GOKa], in the united company with the additional payment I would be obtained to 40%, which would make me with her most important shareholder (to action “Of [evrazkholdinga]” they were distributed among the management of company. – “Vedomosti”). The documents were already ready to signing, but here to me entered proposal from my old friend of Vasiliy Anisimov and [Alishera] of Usmanov. – It was first declared, that you will unite active memberships, and through several months of all took aback by information about the fact that for $2 billion you sold combine to them. – We began from the consideration of the possibility of joint business, creating the new metallurgical production on the base of the belonging to them combine “[NOSTA]”. I wanted to preserve for itself control block of shares of Mikhajlovsk [GOKa], and they in this case insisted on the parity in the combine “[NOSTA]” – the producer of finished end product. This version was for me unacceptable, I decided to sell to them entire packet – in contrast to Abramov they to me made this proposal. – It can be, decision about the output from the metallurgical business you did make under the effect of the fact that in Russia increasingly more are stiffened the conditions for conducting the business? – The actions of Mikhajlovsk [GOKa] I sold, because for them good money proposed to me. I do not want to comment on politics. – A in which of the periods to you it was more comfortably entire work – for you indeed it was possible to feel the special features of each period of the so-called market relations? – Most comfortable I felt itself, when “Russian credit” was one of the largest banks in the country, which was located on the peak of development. – To the transaction on Mikhajlovsk [GOKu] you sold [Stoylenskiy] [GOK]. This appears in the manner that as if you you carry out the sale of property. – I decided to introduce order in my large economy. Energy no longer is that in order to be occupied by all immediately. I have very many diverse active memberships, many of which were bought still at the very beginning privatizations. I want to the end of the year to get rid from all nonspecialized active memberships, I will leave only “[Stoylenskuyu] field”, banks, real estate, pharmaceutical business, [VSNK].
– In how much you do evaluate the active memberships “Of [unikora]”? How much can bring sale of nonspecialized property? – I think, now the cost of all active memberships – $1,5-2 billion nonspecialized active memberships stand about $500 mln. – You did sell [Stoylenskiy] [GOK] for $510 million, Mikhajlovsk [GOK] and “Tulachermet (Tula Ferrous Metallurgy Enterprise)” – for $2 billion markets it was intrigued – as you will be ordered by the rescued money? – Half of means from the transaction with the actions of Mikhajlovsk [GOKa] I plan to direct into my present projects. Priority for me – agriculture. In “[Stoylenskuyu] field” are already inserted about $200 million, I plan to invest $200-300 additional mln. I now conduct the negotiations about the acquisition of company, compared according to the size with “[Stoylenskoy] field”, thus far I do not can to name it. – A why you do count on agricultural business? You have some calculations, which show that it is promising? – Under the present conditions such calculations cannot be made, much will depend on the position of government. But by me moves its kind sport interest, ardor – to assemble successful company in the difficult sector. – A did justify pharmaceutical business your expectations? – We it created from zero, until profit yet exceeds the inserted investments, it entire is reinvested, but I consider this direction promising. Will put there $100-200 mln. in the past year we they already purchased large pharmaceutical network in the southern federal region, we now carry out its [rebrending]. But now by many is interesting this business – we stated that they were ready to buy pharmaceutical networks, so no one wants to sell. – What projects on real estate you are going to realize? – Began the reconstruction “of Minsk”, on the stage – hotel “central”. I study the possibility of purchase on the second market for even any hotels. In the territory of plant “natural rubber” with an area of 10 GA soon will begin the building of large multifunctional complex – offices, apartment buildings and by other real estate we will be occupied and it is further, we already search for the old accomodations, the earth for the building. In real estate there will be the largest investments – about $500 mln. – You have large transport company “center of ore transportation”. It to sell you are not going? In how much you it do evaluate? – I think, in this $250 mln. companies – largest on the market for rail transportation, in it park – 4000 railroad cars, its no one will be able to make room the next 10 years. I on sale do not thus far advance it, but if buyers are located – I sell. – The second-half of money for Mikhajlovsk [GOK] as you are going to spend? You do plan to purchase some large active membership? It can be, beyond the limits of Russia? – All acquisitions I will make only in Russia, which I know well. I would want to purchase new important enterprise, but there are no interesting proposals. One of the versions will be the purchase control block of shares [VSNK]. “To [unikoru]” they belong to 28,5% of actions of this company, it is occupied by the mastery of the weakly investigated, but promising oil reserves of East Siberia, in particular in by Krasnoyarsk edge, which I know well. – As you did prove to be in this project? – After the disintegration “OF [YUKSI]” (in spring 1998 g. the owners “of Sibnefti” and “YUKOS” planned to create the united company with this name. – “Vedomosti”) the shareholders “of Sibnefti” sold [VSNK] to certain [neftetreyderam], I no longer remember, as they called them, those sold 100% of actions [VSNK] to me, but I solved, that same this project I will not stretch, and it organized sale of the controlling interest [OF [VSNK]] “to YUKOS”. The fate of this project is thus far obscure. If state states its position on [VSNK], then I could pretend to the ransom of controlling interest, but I must understand, with whom the news is negotiations, with “the YUKOS” or with the state.
– You do conduct the negotiations with “the YUKOS” about the purchase control block of shares [VSNK]? – Thus far I do not conduct. – How this project you it does draw? – I know well this company, she successfully was developed, it was not to it and there are no claims from the side of [gosorganov], which regulate questions of use of natural resources. Shareholders already invested into it $190 mln. strategy of development [VSNK] us as minority shareholders, it arranges. If [VSNK] will be sold, some my money to the mastery of this project it will not be sufficient, will have to draw additional means. – A if purchase [VSNK] does not take place? – I will be [portfelnym] investor. I know well investment business. To me already belong about 1% of actions “of Gazprom”, “Lukoil”, other companies. I will further buy the ready papers of Russian companies. – You returned to Georgia recently. But by business you have there long ago been occupied? – In Georgia I about 10 years already deal with business. Active memberships are very diverse. To me belongs one of the most important food companies – “seagull”, make ice cream, pelmeni, pastry. There is a bank “map”. Quite important construction company in Georgia – builds offices, and dwelling. Agricultural company, manages 600 GA of the earth. There is in i and the largest in Georgia buried, cut into the mountain. In it enormous cisterns with the wine cost. We planted more than 300 GA of vineyards, they thought to be developed. But now all this I sell. Buyers exist already to everything. I will leave only bank. – Why you did decide to sell Georgian business? – To me soon 50, and it is necessary to be concentrated on the main thing, there are no forces to be occupied by all. The only project, which I want to complete, this creation of the mountain-skiing complex “Of [bakuriani]-2”. Several years ago I purchased the large section of the earth on one of the best mountainous areas of Europe. Canadian and Austrian companies already prepared the general plan of the development of health resort complex, it will include ski routes and entertaining center. In this year I will begin financing the building of the first stage of project – nacelle cableway, in the following year entire infrastructure must be finished. But I myself do not want to be occupied by this project. In essence Russian tourists will there drive. I want so that Russian [turoperatory] would be occupied by the building of hotels, it was ready to transmit to them gratis the earth under the building, to grant to them privilege financing. – Your passage into Georgia coincided with the serious political changes in the country. How you them do evaluate? – At the authority arrived young forces, but I neither after nor against them – this all, that I can say. I generally greatly will regret, that the Russian-Georgian relations visited into this river bed. – How public a way of life you do conduct to Georgia, as to you do relate local politicians, businessmen? – I not with whom of them contact, I live very apart, I associate only with the relatives, the close friends. I do not have political ambitions, me simply it is desirable quietly to live with its family, my village Of [chorvila] in the matters of business I leave only sometimes. – If all this then, why you did give to law court action about the protection of honor and merit? – Because I never and lost honor and merit, he lived on the conscience, but about the restoration of these values let those will think, who wrote about me untruth.
Biography Boris [Ivanishvili] 48 years. In 1978. finished the engineering economic department of Tbilisi State University, in 1986. – the graduate study of NII (Scientific Research Institute) labor in Moscow, where it protected candidate thesis. After this, he worked as the senior scientific worker of the branch of NII labor in Tbilisi. In 1990. established bank “Russian credit”, after engaging the post of the President. Since 1994. to this day the held post of the first Vice President “[Roskreda]”. In 1997. it created holding company “metal-ineDS” for control of industrial active memberships and real estate. In 2004. control functions of these active memberships are transferred on [UK] “Of [unikor]”. In 2002. created the network of drugstores “doctor Stoletov”. In March Forbes estimated the state Of [ivanishvili] in $2,6 billion, but owner himself counts this estimation of that understated. How manages Boris [Ivanishvili] To [ivanishvili] belongs on 67% of actions “Russian credit” and [IMPEKSBANKa], on 100% of company “[Interfin] of [treyd]” and of the controlling company “[Unikor]”. It manages almost 100% of actions of enterprises, which are found under the administration “Of [unikora]”, “[Stoylenskoy] field”, “[Tyazhmekhpressa]”, “[RTI]- natural rubber”, the Ural plant of mechanical rubber goods, “[Erkafarma]”, insurance company “RK- guarantee”, hotels “Minsk” and “central”, of transport company “center of ore transportation”, 28,5% of actions of Eastern Siberian natural gas company.
November 01, 2005
Central & Eastern Europe: Russia – Rossisky Resurrection – Rossisky Kredit Bank Nearly Went Under In Russia’s 1998 Financial Crisis. Ben Aris Reports From Moscow On How It Weathered The Storm And Its Miraculous Comeback As An Investment Bank.
Rossisky Kredit Bank (RKB) is back from the dead. One of the dozen banks that were household names in the 1990s, but collapsed during the 1998 financial crisis, RKB is the only big Russian bank to have paid off all its debts and returned to profit.
RKB’s recovery is a damning condemnation of its peers, which walked away from billions of dollars in debt and left hundreds of thousands of pensioners destitute after they lost their life savings. RKB’s owner, Boris Ivanishvili, is the only pre-crisis oligarch to make a sincere attempt to pay off his debts.
The bank’s recovery is particularly galling to its peers because it was among those hardest hit by the collapse of the banking system. Within weeks of the crash, it was due to pay back a one-year $125m syndicated loan and make a $10.2m coupon payment on a two-year $200m Eurobond. A government moratorium on international payments meant that it defaulted on both.
To add to its problems, the bank had ploughed hundreds of millions of dollars into the Russian stock market shortly before its pre-crisis peak of 572, only to see the index fall to 38 over the next six months.
Fast-forward to the present day and Russia’s stock market is flying, the capital of the banking sector is growing by a third every year and consumers’ money has become a stable platform on which to build up a flourishing business.
RKB got a big shot in the arm from the stock market, which reached a new all- time high at the end of September by passing the 1000 mark. After the 1998 crisis, the bank held on to its portfolio, which is now worth more than $200m and makes RKB one of the biggest operators on Russia’s equity market.
Even before it returned to the black, the bank was keeping it promises. The last of its small depositors was paid off in 2002 (albeit at a unfavourable exchange rate imposed by the government), the bank will pay off all its dollar-denominated debt at the end of this year and the remaining rouble- denominated debt should be settled by 2008.
Now the bank is revving up to re-take its place at the head of Russia’s rankings. It will be in the market next year to raise capital for a string of potentially lucrative project financed schemes. Its sister bank, Impexbank, targeted the booming retail sector two years ago and is now a top 10 player by assets.
RKB was a victim of the crisis and was brought down as much by bad luck as bad management. Before Russia’s default on its international obligations and devaluation of the rouble on August 17, 1998, RKB was highly liquid. But its cash reserves were not enough to cope with the run on deposits after the population panicked.
The evening news showed crowds of depositors fighting outside the locked doors of some of Russia’s leading banks and RKB was caught up in the maelstrom. More than $180m – a third of the bank’s capital – flew out of the door in a matter of weeks, yet the bank kept its doors open until the end of September, the last of the big banks to admit defeat and lock customers out.
“The bank was prepared to serve payments for both Eurobond and syndicated loans, but the main problem was the run on deposits,” says Dmitry Eropkin, who was vice-president of RKB at the time. “Even by the end of September, RKB was paying out money – but [stopped] when there was no additional supply and we couldn’t even sell the assets in the industrial group because the market was closed.”
The quiet oligarch
It was a dramatic end to a meteoric rise. Mr Ivanishvili is one of Russia’s lowest-profile oligarchs who grew rich during the era of president Boris Yeltsin. He is RKB’s, Rossisky Kredit Bank majority shareholder along with his partner Vitaly Malkin, who holds a minority share in the bank but was its public face.
The two men were academics and met in the 1980s at the state railway institute, where Mr Ivanishvili was studying for a post-graduate degree in physics and Mr Malkin was a PhD candidate in Latin. As perestroika Перестро́йка rolled back the state controls, they made their first fortune importing cheap computers and video recorders from China. With hard currency in their pockets, their next venture was to found five banks in the early 1990s selling dollars in the midst of hyperinflation.
“You could make extraordinary profits from the wholesale of hard currency in those days. If you could get hold of banknotes and deliver them to cash offices then you could earn 20% a day. The people were not hungry, but they were trying to protect their life savings by buying dollars and holding on to them,” says Mr Eropkin.
By the middle of the 1990s, Mr Ivanishvili was a multimillionaire and began snapping up privatisation vouchers as Russia’s industrial jewels were put under the gavel by a cash-strapped state. He shied away from the politically-charged scrum over the oil and metal companies, preferring to buy up the biggest iron ore mines, known as GOKs ГОК in Russian, which have only recently come into their own.
RKB was on the verge of moving into the big league in the months before the crisis. Mr Malkin was invited to Mr Yeltsin’s Борис Николаевич Ельцин so-called oligarch meetings in the months leading up to devaluation, as the sick president called on Russia’s captains of industry to bail out the state. But it was too little, too late. After the collapse of the currency, both Mr Ivanishvili and Mr Malkin dropped off the radar until last year.
Sticking it back together
In the winter of 1998, the government began to pick up the pieces. A law on restructuring banks was passed and state agency ARCO Agency for Restructuring Credit Institutions was set up to organise it. Most of the big banks went belly up but RKB was one of the few that was placed in ARCO’s care. Mr Ivanishvili offered to put his industrial holding into the pot and hired KPMG to thrash out a realistic restructuring plan.
RKB had $2bn of liabilities on its balance sheet when it closed its doors, but no cash. The international creditors accepted a $1bn restructuring deal but insisted on a 10% down payment.
“Ivanishvili was forced to sell his biggest and best iron ore mine, Lebedansky GOK, which fetched a mere $50m. Compare this with the sale of Mikhailovsky GOK last year the second biggest iron ore mine and also part of the group, which was the deal of the year and raised over $1bn,” says Mr Eropkin, who negotiated the agreement with the creditors.
As Russia’s economy began to grow strongly in 2000, the task became easier. Depositors were paid off two years ago and the bank has been meeting scheduled payments on the rest.
Back in black
Mr Ivanishvili is bucking the trend: while the other oligarchs are consolidating their industrial holdings and expanding overseas, he has changed tack and is in the process of dumping his industrial holdings in favour of finance. He has invested about $3bn from recent assets sales into the Russian blue-chip utilities company United Energy Systems, oil major Lukoil and gas monopoly Gazprom Газпром through his financial holding company Unicor (formerly Metalloinvest).
Last year, he hired London-based Daiwa Securities to look at the Russian banking sector and decide if there was a future for a medium-sized Russian bank in the market. They decided there was. Mr Ivanishvili has begun to build up RKB, Rossisky Kredit Bank and at the start of this year he pumped another $25m into the capital of Impexbank, which targets retail and small and medium-sized enterprises (SMEs).
Impexbank survived the 1998 crisis and is now flourishing by going into 43 of the more sparsely serviced Russian regions, which now account for 80% of its loan portfolio. Impexbank chairman Pavel Lysenko says profits from the regional business are so high that capital invested to open regional offices can be earned back in less than 18 months. The bank already ranks 12th in terms of household deposits and sixth in terms of SME loans.
“There is enough for everyone. Despite the 1300-odd licensed banks, Russia is actually under-banked. The nominal rates of loans are high and still we are growing very fast. We finished 2004 with $87m in retail loans. Now we have $270m by the middle of 2005 and the forecast for the end of this year is $500m,” says Mr Lysenko.
“The ratio of household deposits to GDP in Russia is less than 20%. Even in Serbia it is 40% and in countries like Hungary and Poland, it is 80%-90%. We have a lot of potential.”
Type: Private owner
Total sales of all controlled enterprises in 2001: 7 614 620 thousand rub.
Total employment of all controlled enterprises in 2001: 18 924
Member of group: Gindin/Ivanishvili
Otechestvennye Lekarstva, OJSC (100%)
Krasfarma (Krasnoyarsk), OJSC (100%)
Novosibkhimfarm (Novosibirsk), OJSC (100%)
Shchyolkovsky Vitamin Plant (Moscow), OJSC (100%)
Kauchuk Plast (0%)
Lipecky metallurgical plant “Svobodny sokol” (40%)
Mihailovsky FOEP (100%)
Zheleznogorskiy Kirpichniiy Zavod (100%)
Moscow metallurgical plant “Serp i molot” (40%)
Moskovsciy zavod “Fizpribor” (100%)
Stoilensky FOEP (75%)
Pererabativauchiy komplex “Stoilenskiy” (100%)
Bread kombinat “Starooskolskiy” (100%)
464 kombinat nerudoiskopaemih (33%)
Barsukovskoe rudoupravlenie (33%)
Tulskiy zavod stroimaterialov (0%)
Uralsky Zavod Reziniovih Technicheskih iazlekiy (50%)
Rossiysky Kredit (50%)
23.04.2007 – Moscow’s Central Hotel to Go 5-Star
Following reconstruction, Moscow’s Central Hotel will be reclassified as a five-star luxury hotel, with the well-known operator Mandarin Oriental Hotel Group most likely assuming management of the building.
This information was reported by Unicor management company, which is owned by Boris Ivanishvili and controls 100% of Central Hotel Complex (owner of the hotel). Representatives from Mandarin Oriental Hotel Group have not commented on the announcement released by Unicor.
Unicor and Rossiisky Credit Bank plan to invest around $220 million in the restoration and improvement of the Central Hotel into a 55,000-sqm five-star luxury hotel. The name of the hotel will be returned to the previous Luxe Hotel, each room will increase in size, and a 10,000-12,000-sqm retail zone will be included.
The 260-room Central Hotel opened in 1911 on Tverskaya St. in the house of the famous baker Dmitry Fillipov. In February 2007, Unicor bought 20% of the hotel’s shares, and reconstruction on the 18,300-sqm building is slated to begin at the end of this year and be completed in 2011.
Mandarin Oriental Hotel Group manages 20 deluxe-class hotels in 20 countries and is currently building another 14 hotels. The company’s total revenues in 2006 were $404.6 million, with a profit margin of $80.2 million. Central Hotel will be the company’s first project in Moscow, while the company had previously been considered one of the forerunners to manage a hotel on Red Square in the Kremlyovsky complex.
Ivanishvili is the founder of Rossiisky Credit Bank and Metalloinvest and also holds shares in Roscred, Impexbank, Interfin and Unicor, as well as in Minsk and Central hotels, respectively. According to estimates by Forbes, Ivanishvili is worth $2.6 billion. The entrepreneur’s first major project in hotel real estate, which began in 2006, was the reconstruction of the Minsk Hotel and the introduction of the InterContinental brand name on the Moscow market.