The Famous 2005 Interview

Some have heard about this, and here it is in English.

Bidzina Ivanishwili’s 2005 interview with Vedomosti, probably the first and only interview of that entire time, gives his version of his life and business activities at that time.

As he called himself “Boris” at the time it is usually overlooked when people do a Google search. Here a machine translation, for everyone’s convenience. I also added some links to key figures. Not all of them may be the best, but can still add some insight.

The interview remains interesting reading even today.

Here is the original & all credit to them: https://www.vedomosti.ru/newspaper/articles/2005/04/07/intervyu-boris-ivanishvili-osnovatel-i-vladelec-banka-rossijskij-kredit

________________________________

INTERVIEW: Boris Ivanishvili, founder and owner of the bank “Russian Credit”

07 April 2005, 00:00

PARIS – Boris Ivanishvili, the founder and owner of the Russian Credit Bank [henceforth also RosCred], is one of Russia’s most enigmatic entrepreneurs. He rarely took part in public events and never gave interviews. What did Ivanishvili do away from prying eyes? He amassed a fortune.

Forbes magazine recently valued him at $2.6 billion. But, judging by Ivanishvili’s own words, the owner of RosCred is worth more than $5 billion. Last year, his business reached a turning point. He earned more than $2 billion by selling his largest industrial assets – Stoilensky and Mikhailovsky GOKs. This came as a complete surprise not only to market participants, but also to those who knew Ivanishvili. Why he did this, how he plans to spend the money he received – Boris Ivanishvili told Vedomosti in the first interview he gave in his life.

- Boris Grigorievich, you have never given interviews and from the very beginning of your entrepreneurial activity you preferred to remain in the shadows. What is the reason for such secrecy?

– I am indeed a private person, but this is due solely to my character. I do not like meeting with journalists, participating in public events, going to various parties. There you have to put on a mask, and I cannot stand formalities. I am a materialist, I do not believe in life after death, and life itself is short, and I do not want to do anything that limits my freedom. I do not like being in the spotlight at all, I do not like holidays, I never even celebrate my birthday.

– How can one explain the fact that “Russian Credit” (RC) and “Metalloinvest” did not even confirm that you are the owner of these structures?

- I have never broken the law, and I have nothing to hide. It's just that, unfortunately, from the very beginning of perestroika, all of us businessmen lived in a certain tension because something could threaten your business. It was much calmer to do business without drawing attention to your person and your property.

– In the early 90s, the situation in Russia was indeed tense, but not all businessmen went abroad like you did. When did you leave the country and why?

– I left Russia for the first time in 1993 after my brother was kidnapped in Georgia. They demanded a ransom for him, held him for a month, but I did not pay the ransom because I would have put my parents and sisters under similar threat. No one touched them later. And various officials from Georgia began to come to me, trying to help me find my brother, offering cooperation. I did not want to let them into my business, in order to avoid contact with them, I decided to formally distance myself from the bank: I announced that I was leaving the post of president, and in 1994 I left with my family for six months to visit friends in the United States. The situation in Georgia was unsettled, it seemed that life abroad was calmer, we thought that maybe it was worth leaving for the sake of the children, their future. We chose the country that we liked the most, settled on France, bought a house near Paris. But we did not live there permanently, for business, especially after the default, we mostly had to be in Moscow.

– But nevertheless, you received French citizenship?

– My wife and children – yes, I didn’t start receiving them, it would have taken a lot of time: I had to go through interviews and so on.

– Do you regret not giving interviews before? Were you really indifferent to what was written about you?

- Of course not. Unlike the Russian media, I was constantly in the spotlight of Georgian journalists. Some of them were reprinting from the Internet, where for a long time there was a dossier, allegedly formed from the data of the security service of the Most group. Since we once seriously competed with Most Bank, it is not surprising that this dossier contained a full set of perverted nonsense about RK and me personally, and even written using criminal jargon. It was so frivolous that not a single Russian newspaper used it. During Shevardnadze's time, Georgian journalists indiscriminately scolded everyone, including me, so I did not pay attention to their articles. But when, a year after the new government came to power, the articles about me resumed, I reacted to them for the first time: in November of last year, I instructed my services to deal with the owners of the Internet site where this dossier was posted. And the owners of the original source, the Federal Investigation Agency, withdrew the dossier and apologized.

- So everything that is written there is not true?

– The main “sensation” of that dossier is that I was allegedly connected with Otari Kvantrishvili, that we were involved in counterfeit payment orders together, etc. This is complete nonsense. When in the early 90s most banks, including state-owned ones, were hit by counterfeit payment orders, with the help of which tens of billions of dollars were stolen from the budget, I made gigantic efforts so that RK would confront those who ordered the scams, and it turned out to be the only bank that did not allow a single payment order.

The same nonsense is the unification of me, Kvantrishvili, Bendukidze, Magaradze, Seliashvili into a single community. I was not acquainted with any of them. Georgian journalists, who are still haunted by my imaginary connection with Kvantrishvili, could conduct a simple journalistic investigation, starting with very well-known acquaintances of the same Kvantrishvili. It is not a problem to find relatives, friends of Kvantrishvili, employees of the RK both in Georgia and in Russia. And let them find at least one witness or proof that I or my structures had even the slightest contact with Kvantrishvili! There are also such Georgian journalists who, when writing about me, use the expression “some Ivanishvili”, others write that “approximately” I graduated from TSU, others publish other people's photos under my name. Others call the new business center that I am building in Tbilisi a “brothel”. What do they all have in common? Supposedly, terrible indignation that they cannot obtain information. But this is deceit. About a Georgian born in Georgia, who has parents, a bunch of relatives and friends, in Georgia you can very quickly find out absolutely all the information. I have not filed lawsuits to protect my honor and dignity, because I have never lost them, I have lived according to my conscience.

- What is your citizenship?

- Russian and Georgian.

- Where do you live now?

– I missed Georgia and a year ago I moved with my family to the village where I spent my childhood. Family always comes first for me, my dad recently died, my mom is old, I wanted to live near her. I built a new house next to the one where I lived with my parents, I think we will settle here for a long time.

– Tell us what you did before you organized Rossiyisky Credit.

– I was born in the village of Chorvila, not far from the town of Chiaturi. My father worked as a miner at the Chiaturmarganets plant, which, by the way, was recently bought by the Russian Evrazholding. After school, I went to Tbilisi to study at the engineering and economics department of Tbilisi State University, and at the same time worked at the Kamo Foundry and Mechanical Plant as a cleaner, a handyman, and then a grinder. I graduated with honors from the university and stayed to work at the same plant – as a senior engineer, and then as the head of the laboratory for scientific organization of labor. In 1982, I went to Moscow to do a postgraduate course at the Research Institute of Labor, and a few years later, having defended my thesis in the specialty of “scientific organization and labor economics,” I returned to Tbilisi to the local branch of the Research Institute. And soon after, I organized my first business.

– How did you come up with the idea to start a business?

– What was a senior research fellow in the late 80s? No interesting work, no prospects. I had no apartment, no family, I lived in a dormitory at the Foundry and Mechanical Plant. Of course, I never thought I would create a bank or become a billionaire, I just wanted to start making money. I decided to produce reinforced hoses, which were in short supply at the time. I registered a cooperative, rented a space from the Kamo Plant and started preparing for production. In the evenings, I personally turned equipment, but I never got around to producing hoses – I started selling computers.

– Why computers?

– I analyzed what I could advance in trading and came to the conclusion that computers were the future. There was a demand for them, but finding them was a problem.

I knew some Tbilisi Jews who had gone abroad, I called them, they were happy to start a business. They started sending me computers, and the first buyer was the Georgian Academy of Sciences. But the Georgian prosecutor's office didn't like my activity, the fact that more than 1 million rubles came into my cooperative accounts for the first transaction alone, they seized the accounts. I realized that they would continue to put spokes in my wheels, and decided to move to Moscow. While still in graduate school, I met Vitaly Malkin, who was then a graduate student at the Moscow Railway Institute. I was a tutor for a student in mathematics, and Vitaly was a tutor for physics. When I returned to Moscow, Malkin was already engaged in business - reselling something, trying to open a cafe, but I offered him a more organized business - trading in computers.

Malkin had friends from the Railway Institute – associate professors Sergei Mosin and Aleksandr Bryancev. They built greenhouses in Naro-Fominsk, they had a cooperative called “Agroprogress”. In order not to waste time on registering a new cooperative, they started trading through “Agroprogress”, everyone had equal shares. It was 1988. We rented a room in a three-room apartment on the 5th floor without an elevator – there was an office and a warehouse, business was in full swing. Business worked differently then: a lot was done on trust, large sums were transferred as prepayment. Then they started selling photocopiers, tape recorders, and telephones.

Moscow at that time was teeming with foreigners who offered various goods, they came to me in crowds, but I saw that almost all of them were swindlers. And we ourselves went abroad to look for partners. We learned that an exhibition of high-tech products was taking place in Paris. There we met a Hong Kong company, went to them - I assure you, we were the first Russian businessmen who came to Hong Kong. We signed our first major contract with them. All this equipment was made in China, and we risked going even further: we bought a factory in China for the production of push-button telephones and cassette recorders. In 1990, our company was one of the largest in the country selling electronic equipment, but many had already realized that this was a profitable business, and we decided to do something else. At that time, the first private banks began to appear, in 1990 we registered "Russian Credit".

– Did you have any other business besides electronics trading? How much capital had you accumulated by the time you created the bank?

– There was no other business. And by the time “Russian Credit” opened, we had saved up $100,000–120,000, that was a lot of money, we could have opened several banks with it. Bryantsev did not go with us, he said that he was already a rich man, he continued to build greenhouses. Malkin, Mosin and I received equal shares. Then I bought out Mosin’s share. Thus, I owned 67% of the bank, Malkin – 33%.

– And what is Malkin’s current stake in banks and industrial enterprises?

“He retained his shares in both banks, and I recently bought out the minority stakes in some industrial enterprises that he had.

– Tell us how you started in the banking business, why did Russian Credit manage to become a leader?

– The bank’s first office was in a kindergarten building, and we worked there 24 hours a day. While there were up to 100 people in the bank, I made every little decision myself. Back then, loans were issued without any collateral, there could be many defaults, and I had to personally decide who to give a loan to and who not. We simply did what others did not do. We were the first in terms of sales of cash currency: for example, we specially ordered new dollar bills, created wholesale centers for the retail sale of currency.

In general, intuition decided a lot back then. I immediately felt that I needed to focus on a branch network. To do this, I needed to solve two key problems – find premises and personnel. One night I thought about it all night, and in the morning I had a ready-made solution. We came to the directors of enterprises and institutes and came to an agreement – they allocated premises to us, and we made these organizations shareholders in the bank, gave two percent, and then they became our clients. I created the first banking college in Russia, which trained our employees, and I personally gave the first lectures there. But the main thing I am proud of is that a unique corporate spirit was created in the bank, and most of the employees are still working there.

- You have left the country periodically, and for the last year and a half you have been living in Georgia permanently. How do you manage your business, what issues do you resolve personally?

- From the moment of the creation of "Russian Credit" and to this day, I am both a shareholder and a top manager in one person, in Russia it is impossible to do otherwise. Having established the bank, for the first four years I personally controlled everything that happened in it. When the business grew, I began to introduce collegial management. Now I concentrate more on solving strategic issues, but I know everything that is being done in all areas of the business. Even now, wherever I am, I devote at least four hours every day to solving work issues.

- And what functions did Malkin perform?

- He performed representative functions: represented the bank in government structures, replaced me at various formal meetings, informal get-togethers. He never decided which area of business to develop rapidly, which to wind down, what to buy and what to sell, how to select personnel and how to manage them. This was up to me, Vitaly himself knew that he was incompetent in these matters.

We started a business together, then no one knew what he was capable of. Vitaly is my friend, he never betrayed me, so he remains my partner, and I am glad that I made my friend a rich man.

– Vasily Anisimov held the post of vice-president of Russian Credit, and did he have a share in the bank?

– The factories owned by Anisimov were major clients of the bank, but Anisimov was never its owner. I had partners in industrial enterprises, but in the bank, if you don’t count those who received shares in exchange for premises, Malkin was the only co-owner. Every major client asked to become a shareholder, but I refused everyone. I generally try to avoid partnerships. A partner is very serious for me, and there is also a risk that a partner can let you down.

- When you started your business, any structure that made money attracted the attention of bandits. Did you encounter such problems?

– We started doing computer business too early, and racketeers simply slept through it. But at the bank we really had to face such problems. But I know very well: once you make a deal with them [bandits], it will tie you to them forever. I held out and, by the way, I consider my main merit to be that I did not let any of those who are considered bandits into my business. And later I began to cooperate with law enforcement agencies. In 1993, not without the help of the head of RUBOP Vladimir Rushailo, who helped me find my brother, on my initiative a structure was created under RUBOP that was financed by the bank, and later by other large commercial structures. Its employees would come at one of our calls, and for a long time this structure worked effectively. And in 1997 we faced the problem of non-repayment of loans, and, instead of helping us, its employees began to take bribes from those who owed us. After that, I told the then head of this structure, Alexander Kachur, that I was ending our cooperation.

– But in those days it was impossible to do business without having a “roof” among officials or those same bandits.

- It was possible, but very difficult. Our bank was never among the so-called crony banks. In terms of the number of payments, Russian Credit surpassed even Sberbank - this indicates that we relied on small and medium-sized clients. I also never enjoyed the patronage of officials.

- But one official definitely brought benefit to your bank. During the period when Evgeny Bychkov headed Roskomdragmet, Roscred managed to become a major player in the gold market, and later Bychkov became the bank's vice president.

- Bychkov's connection with the bank was checked by the Accounts Chamber, and it did not find any violations that he committed as an official. Bychkov was useful to the bank only because he brought a couple of clients to it.

- "Russian Credit" and "Metalloinvest" owned many diverse assets. Which of your businesses turned out to be the most profitable?

- In terms of profitability - Stoilensky GOK, in terms of return on invested capital - the Kauchuk plant [link probably here, but might be here]. We bought its shares in 1991 for $150,000, and from its sale we will earn at least $500 million - the plant in the center of Moscow has a large territory, and a large construction will soon begin there.

- And when, on what principle did you buy industrial enterprises?

– Privatization began, the bank had money, I personally looked through the lists of enterprises put up for sale, assessed their indicators and prospects. There was one limitation in the choice: I never laid claim to assets for which a criminal war could unfold, which could put my life or the lives of my employees at risk. Therefore, the bank did not participate in the purchase of oil, aluminum, or steel enterprises.

- "Russian Credit" participated in many collateral auctions, but did not win anywhere. Why?

– The bank applied to participate in the collateral auctions not to gain control over the assets being sold, but to disrupt the auctions. If we had won, we would have returned the shares to the state. At that time, the communists attacked privatization, the collateral auctions gave them a powerful trump card, there was a risk that they would be able to disrupt the entire privatization. After all, the privatization laws were written hastily, they were imperfect, and the sale through collateral auctions was completely illegal.

– So you saved privatization?

– Not only that. The collateral auctions upset the balance of power that had developed in the market, and their winners illegally gained a competitive advantage over me. Naturally, I wanted to prevent this. And I raised a fuss in order to convey my position to the government, to the president. But I only made serious enemies for myself. At that time, elections to the State Duma were taking place, and the NDR [“Our Home is Russia” movement], led by Prime Minister [Viktor] Chernomyrdin, failed. This drew criticism from Yeltsin, and one of the members of the then cabinet of ministers told me that, in justifying himself, Chernomyrdin cited our protests against the collateral auctions and the fuss we made in the media as the reason for the failure in the elections. And although I cannot claim that there was a direct order from Chernomyrdin, I have kept all the documents confirming that literally every control structure that existed in Russia at that time paid us a visit within a week: the currency control agency, the district and city tax inspectorates, the tax police, the financial control agency, the Central Bank. And it happened right after the elections. The tax police were the most active – they checked the bank for over a year, but found no violations. Then the tax police started putting pressure on the international auditor Arthur Andersen, getting documents on the bank out of them, otherwise threatening to ban them from working in Russia. I rushed to call the then head of the tax police [Sergey] Almazov. We met. I will never forget that conversation. I was trying to understand why his employees were acting up, because the bank gives them all the documents anyway, and he answered me: “Everything will be fine with you, but tell me, how do you buy my employees? This is the third time I’ve changed my best people who are checking you, and they still can’t get any results.” I was surprised, at first I didn’t understand. He explained: “How do you charm them? How do you negotiate with them?” I answered: “God forbid! I’ve never spoken to the tax police and I don’t plan to. I understand that you were ordered to do all this!” He, of course, did not admit that he had received the order. So we parted with nothing.

– It’s hard to believe that you didn’t participate in the largest privatization deals for ideological reasons…

- Nevertheless, it is so. For example, when the state-owned stake in TNK [Tyumen Oil Company] was sold a year after the collateral auctions, Mikhail Fridman and German Khan laid claim to half of the stake, and Viktor Vekselberg offered me to buy the other half together with him. I agreed, Viktor and I prepared for the auction for more than two months, but unexpectedly it had opponents. TNK CEO Viktor Paliy raised a big fuss about its illegality. And at the very last moment I refused to participate in the auction.

- Vekselberg and Alfa Group later made a lot of money on TNK. Do you regret that you refused to buy it?

– I could not participate in a deal that made me have even the slightest doubts about its legality. I will give you another example: we bought 20% of the shares of the Mikhailovsky GOK at an investment competition. But soon, errors were discovered in the investment program, and the law did not allow changing it. We did not change the program arbitrarily and returned the shares to the state. I assure you, you will not find another case of voluntary return of shares to state ownership. Only a year and a half later we were able to re-buy the shares of the GOK at a cash auction. I had a completely different tactic: I bought assets for which there was no fight, which were undervalued and even unprofitable. Everyone was fighting for steelmaking enterprises, and no one was interested in suppliers of raw materials for them; then I bought the Mikhailovsky, Stoilensky, Lebedinsky mining and processing plants.

– In terms of profitability, which reaches 500%, mining and processing plants now surpass even steelmaking enterprises.

– Such profitability really existed, but mining and processing plants started to bring in high profits only in the last three or four years. And before that, for five or six years they had to be subsidized, even the salaries of the employees of these plants had to be transported from Moscow. The metallurgists dictated to the plants at what price they would buy raw materials, and usually bought below cost. It took me a lot of effort to turn the situation around: on my initiative, Russian mining and processing plants and Sokolovsko-Sarbayskoye GPO [Kazakhstan] entered into a cartel agreement and reduced production volumes, i.e. removed excess raw materials from the market, and only after that did the metallurgists become dependent on the mining and processing plants.

– You say that you have never been where there is risk, but in 1997 you found yourself in one of the hottest spots – the Krasnoyarsk Aluminum Plant (KrAZ).

– I bought KrAZ shares on the secondary market, and I was far from being the largest shareholder of the plant. It so happened that I started working in Krasnoyarsk long before coming to KrAZ. Back in 1992, the bank acquired more than 30% of the shares of the Krasnoyarsk Metallurgical Plant. The plant is located across the fence from KrAZ, it makes products from aluminum, but at that time no one was interested in it and it was idle because they did not give it metal. Until 1994, at the instigation of KrAZ shareholders, a decision was made to transfer 20% of the shares of KrAZ and the Achinsk Alumina Refinery, which were state-owned, to the balance sheet of KraMZ.

- And you didn’t have a hand in this?

– I didn’t know anything about it. The owners of KrAZ thought that they would eventually gain control over these packages, and were terribly surprised when they found out that KrAZ had a large shareholder for a long time. They offered me to sell this package, and in 1996 I sold it at a very high price. And a year later, disagreements began among the KrAZ shareholders. Vasily Anisimov knew three of them well – Alexander Kolpakov, Vladimir Ratnikov and Oleg Kim, who owned 28%. He told me that Kolpakov and Ratnikov were looking for buyers for 48% of the plant’s shares. But Vasily and I bought the shares from them only after they returned 20% to Anatoly Bykov and Gennady Druzhinin, and Bykov agreed that we would work together.

– Why was Bykov then appointed vice-president of Russian Credit?

- He was not a member of the bank's board, did not receive a salary and did not play any role in the bank. The bank always had many vice presidents, it was my idea: we appointed managers or owners of large enterprises - clients of the bank - to this post. People were pleased, but in practice they only received business cards with the words "vice president".

- What share package of KrAZ did you own? When and why did you leave the plant?

– Vasily [Anisimov] and I bought 14% from Kolpakov and his associates together. Then we bought 5% from Glencore and Daewoo, so when I left KrAZ, I had 12%. And I was at KrAZ for less than a year – I left after Bykov and other KrAZ shareholders started a conflict with the [regional] governor, Alexander Lebed.

– They say that you sponsored Lebed.

– I was promoting Lebed when he was an abandoned politician. I was then included in the so-called “seven bankers”. Members of Yeltsin’s election headquarters, headed by Anatoly Chubais, did not take Lebed seriously. But I placed his election headquarters in the bank’s office and financed his promotion. A month before the elections, everyone realized that I was right: Yeltsin had a low rating, Lebed gave his votes to Yeltsin in the elections and thus ensured his victory. Nobody even thanked me then, and when Lebed was removed [from the post of head of the Security Council], everyone remembered that it was I who brought him in and made me the scapegoat. That was the only time I participated in politics. Then, when Lebed was elected governor, I helped him with personnel out of habit, but I did not directly finance him and was not connected with him in any way.

– You bought various assets, but in the late 90s investment activity decreased. What is the reason for this?

– After the default of 1998, all efforts were thrown into solving the problems of “Russian Credit”. By the way, it was the officials who let us down. On the eve of the announcement of default, we, the owners of the largest banks, were warned about it. I was categorically against declaring default, but everyone calmed me down, and the head of the Central Bank, Sergei Dubinin, promised that if the bank needed a loan, the bank would get it. Default is announced, and depositors rush to take their money. If we, like many others then, had not issued money, the consequences of the crisis would not have been so destructive for the bank. But we honestly issued $180 million to everyone who wanted it within two weeks. When the money ran out, I reminded Dubinin of his promise, but he did not give the loan.

- What were the consequences of the default for the bank? What did you do to bring the bank out of the crisis?

– I then faced a difficult choice – to bankrupt the bank or conduct restructuring myself. Although this decision was not easy, I chose restructuring. It made no economic sense for me as a shareholder, since I understood that the market value of the restructured bank would be very low. The gap between the bank’s liabilities and assets at that time was about $1 billion.

Paradoxically, the estimated value of all my assets that were not connected to the bank at that time also barely reached $1 billion. Then I decided to pledge all my shares of industrial enterprises as collateral for the bank’s debts – Lebedinsky, Stoilensky, Mikhailovsky GOKs, Tulachermet, Oryol Steel Rolling Plant, hotels, RTI-Kauchuk, etc. Without such collateral, part of which I later had to sell, the clients of Russian Credit would have suffered extremely significant losses, but I could not allow this due to my life principles. Few people understood this – my businessmen friends considered me almost suicidal. (RK came under the management of ARCO in 1999. Having received 25% + 1 share of the bank as its property and another 50% for management, the agency opened a credit line for it for 4.5 billion rubles. At that time, RK's accounts payable amounted to about $1 billion. In August 2000, a settlement agreement was approved, according to which depositors (claims - 1.8 billion rubles) received a one-time payment of up to 30,000 rubles and RK bills, and corporate creditors (claims - 21 billion rubles) - up to 10% of claims in cash and the bank's bills with a maturity of up to 10 years. By June 2003, the bank repaid 90% of its obligations to individuals. In November 2003, RK's capital again became positive. According to ARCO representatives, this happened as a result of the conversion of the bank's debts into its capital during an additional issue. "Vedomosti".)

– What assets did you have to sell to pay off creditors?

– Packages that allowed us to control Lebedinsky GOK, Orlovsky Steel Rolling Plant, Tulachermet. I sold what was in the greatest demand. By the way, nobody needed Mikhailovsky GOK shares then, no one would have given even $50 million for them. In total, the bank’s shareholders transferred about $450 million to creditors – this amount includes income from the sale of shares and ARCO loans, which we subsequently repaid from our business. By the way, if I had left them then and sold them now, I would have earned another $3 billion.

But I could have lost everything. If the country's economic recovery had slowed down for another six months or a year, I would have been forced to sell all the mortgaged property and would have been left with nothing. Last year, RK completed its restructuring. I am sure that this raised not only the prestige of RK and its shareholders, but also trust in the entire banking system of Russia. Foreign bankers were closely monitoring the situation in the country at that time, and the restructuring of our bank showed that examples of a civilized solution to this problem are possible in Russia.

– Do you regret today that you went for such a restructuring?

- I am proud that I did so. I saved the bank that I created. The restructuring of the RK is the only case in world practice when a private company was responsible for debts that arose due to the fault of the government. Although, of course, it is a little bitter that few people appreciated what I had to do.

But I don't regret it. Well, if I hadn't lost so much money, it wouldn't have changed anything in my life. Money has no intrinsic value for me; extra money is like extra fat on a person: it weighs you down and creates additional problems.

- What connected you with the businessman Arkady Gaidamak, who took the post of chairman of the board of directors of RosCred in 2000? Did you have any joint projects? They say he wanted to join in the purchase of the Oryol steel rolling plant.

– I met Gaidamak in 1991. He wanted to buy something in Russia, and I discussed the possibility of joint investments with him, as with a thousand other entrepreneurs. He really wanted to participate in the acquisition of shares in the Oryol Steel Rolling Plant, but in the end he didn’t give me any money. I didn’t have any joint business with him. But thanks to him, I got into real estate. In 1992–1993, Gaidamak took out loans from the bank, secured by shares in Minsk and Centralnaya, and didn’t repay them.

– And yet, was Gaidamak a shareholder of “Russian Credit”? In 2000, the bank stated that he was a shareholder.

– From the first day we met, he tried to persuade me to sell at least 10% of the bank, but I refused. And then in 2000, Gaydamak showed up and said he was ready to buy 25% for $200 million. At that time, the bank was under the management of ARCO. If he had given me money, I would have sold him a larger stake for less money. True, we didn’t sign any documents right away, but he was appointed chairman of the board – at that time, [Alexander] Livshits was leaving this position, and we had to find someone to replace him. Gaydamak apparently didn’t believe that I wouldn’t bankrupt the bank. He worked for us for three months, saw all the collateral with his own eyes, and left. Well, when we found out that he was trading in weapons, I said that he would never set foot in the bank again.

“I decided to put my large household in order.”

- How do you plan to further develop your banks? Are you not going to sell IMPEXBANK? Is a merger of Russian Credit and IMPEXBANK possible?

– Before the deal on Mikhailovsky GOK, I considered the option of selling IMPEXBANK, but now I have decided to make the financial sector one of the priorities. Recently, I have already increased the authorized capital of RK by $100 million to $350 million – I invested the money received from the sale of shares of Tulachermet. Recently, I invested $50 million in IMPEXBANK. I plan to invest another $150 million in both banks in the near future. I do not plan to merge them, there is no economic sense in this, it is much more convenient to have two banks – one, IMPEXBANK, specializing in retail services, and in a few years I will make RK one of the best investment banks in the country. Although this will require a lot of effort, first of all, this concerns improving the image of the bank, because everyone remembers that “Russian Credit” was lying around for several years.

– And how justified is it to develop IMPEXBANK, since the positions of foreign banks are strengthening, and it is becoming increasingly difficult to compete with them.

– To withstand competition from foreign banks, we need to take one of them as a partner. We wanted to sell up to 25% [of shares], but potential buyers convinced us that they were not interested in less than the blocking amount, and now we are negotiating the sale of 25% + 1 share. This deal will give impetus to the bank’s development, all that remains is to properly structure the business.

- Who are you negotiating with?

- With the largest banks of France, Germany, the Netherlands. The choice will be made in the near future.

– Why did you sell the Mikhailovsky Mining and Processing Plant?

– Since the mid-1990s, I have been trying to merge the mining and processing plant with some steel mill to create a complete production chain. I discussed the possibility of merging assets with the owners of all the largest mills – Vladimir Lisin, Viktor Rashnikov, Alexey Mordashov. But each of them wanted to retain a controlling stake in the merged company, and that did not suit me. I made the most progress in the negotiations with [co-owner of Evrazholding] Alexander Abramov. Last year, we agreed with him to merge Evrazholding and Mikhailovsky GOK; in the merged company, with an additional payment, I would receive up to 40%, which would make me its largest shareholder (Evrazholding shares are distributed among the company's management. – Vedomosti). We already had the documents ready to sign, but then I received an offer from my long-time friend Vasily Anisimov and Alisher Usmanov.

– At first it was announced that you would be merging assets, and a few months later everyone was stunned by the news that you had sold the plant to them for $2 billion.

- We started by discussing the possibility of a joint business, creating a new metallurgical production facility based on their NOSTA plant. I wanted to retain a controlling stake in Mikhailovsky GOK, and in this case they insisted on parity in the NOSTA plant, the manufacturer of finished products. This option was unacceptable to me, and I decided to sell them the entire package - unlike Abramov, they made me such an offer.

– Perhaps you made the decision to exit the metallurgical business under the influence of the fact that the conditions for doing business in Russia are becoming increasingly stringent?

- I sold the shares of Mikhailovsky GOK because I was offered good money for them. I don’t want to comment on politics.

– And in which of the periods was it most comfortable for you to work – after all, you managed to feel the peculiarities of each period of the so-called market relations?

– I felt most comfortable when Russian Credit was one of the largest banks in the country, which was at the peak of its development.

- Before the deal on Mikhailovsky GOK, you sold Stoilensky GOK. It looks like you are conducting a property sale.

- I decided to put my large business in order. I don't have the energy to do everything at once. I have a lot of different assets, many of which were bought at the very beginning of privatization. I want to get rid of all non-core assets by the end of the year, I will leave only Stoilenskaya Niva, banks, real estate, the pharmacy business, VSNK.

- How much do you value Unikor's assets? How much can the sale of non-core assets bring in?

– I think that the value of all assets is now $1.5–2 billion. Non-core assets are worth about $500 million.

– You sold Stoilensky GOK for $510 million, Mikhailovsky GOK and Tulachermet for $2 billion. The market is intrigued – how will you use the proceeds?

– I plan to direct half of the funds from the deal with the shares of Mikhailovsky GOK to my current projects. My priority is agriculture. About $200 million has already been invested in Stoilenskaya Niva, I plan to invest another $200–300 million. I am currently negotiating the acquisition of a company comparable in size to Stoilenskaya Niva, I cannot name it yet.

- Why are you betting on the agricultural business? Do you have any calculations showing that it is promising?

- In the current conditions, it is impossible to make such calculations, much will depend on the government's position. And I am driven by a kind of sporting interest, excitement - to build a successful company in a difficult sector.

– Has the pharmacy business lived up to your expectations?

- We created it from scratch, while the profit has not yet exceeded the investments, it is all reinvested, but I consider this direction promising. I will invest $100-200 million there. Last year we already bought a large pharmacy chain in the Southern Federal District, now we are rebranding it. But now many are interested in this business - we said that we are ready to buy pharmacy chains, but no one wants to sell.

– What real estate projects are you planning to implement?

– The reconstruction of “Minsk” has begun, the “Centralnaya” hotel is next in line. I am studying the possibility of buying some more hotels on the secondary market. The construction of a large multifunctional complex – offices, residential buildings, etc. – will soon begin on the territory of the “Kauchuk” plant with an area of 10 hectares. We will continue to deal with real estate, we are already looking for old premises, land for development. The largest investments will be in real estate – about $500 million.

- You had a large transport company, the Ore Transportation Center. Are you planning to sell it? How much do you value it?

- I think $250 million. This company is the largest in the railway transportation market, it has a fleet of 4,000 cars, no one will be able to displace it for the next 10 years. I am not putting it up for sale yet, but if buyers are found, I will sell it.

- And how are you going to spend the other half of the money for Mikhailovsky GOK? Are you planning to buy some major asset? Maybe outside of Russia?

- I will make all acquisitions only in Russia, which I know well. I would like to buy a new large enterprise, but there are no interesting offers. One option would be to buy a controlling stake in VSNK. Unikor owns 28.5% of the shares of this company, it is engaged in the development of poorly explored but promising oil reserves of Eastern Siberia, in particular in the Krasnoyarsk Territory, which I know well.

– How did you end up in this project?

– After the collapse of YUKSI (in the spring of 1998, the owners of Sibneft and YUKOS planned to create a united company with this name – Vedomosti), the shareholders of Sibneft sold VSNK to some oil traders, I don’t remember their names anymore, they sold 100% of VSNK shares to me, and I decided that I couldn’t handle this project myself, and organized the sale of a controlling stake [of VSNK] to YUKOS. The fate of this project is still unclear. If the state declares its position on VSNK, then I could lay claim to buying out the controlling stake, but I have to understand with whom to negotiate – with YUKOS or with the state.

– Are you negotiating with YUKOS about purchasing a controlling stake in VSNK?

- I don't yet.

– What attracts you to this project?

- I know this company well, it has been developing successfully, there have been and are no claims against it from state bodies regulating issues of natural resource management. Shareholders have already invested $190 million in it. The development strategy of VSNK suits us, as minority shareholders. If VSNK is sold, my money alone will not be enough to develop this project, additional funds will have to be attracted.

- And if the purchase of VSNK does not take place?

- I will be a portfolio investor. I know the investment business well. I already own about 1% of shares in Gazprom, LUKOIL, and other companies. I will continue to buy liquid securities of Russian companies.

- You returned to Georgia recently. Have you been doing business there for a long time?

– I have been doing business in Georgia for about 10 years. The assets are very diverse. I own one of the largest food companies – “Chaika”, it makes ice cream, pelmeni, cookies. I have a bank “Kartu”. The largest construction company in Georgia – it builds both offices and housing. An agricultural company, it owns 600 hectares of land. I also have the largest cellar in Georgia, cut into a mountain. It contains huge tanks with wine. We planted more than 300 hectares of vineyards, we thought about developing. But now I am selling it all. There are buyers for everything. I will only leave the bank.

– Why did you decide to sell your Georgian business?

– I will soon be 50, and I need to concentrate on the main thing, I don’t have the strength to do everything. The only project I want to complete is the creation of the Bakuriani-2 ski resort. Several years ago, I bought a large plot of land on one of the best mountain ranges in Europe. Canadian and Austrian companies have already prepared a general plan for the development of the resort complex, it will include ski slopes and an entertainment center. This year, I will begin financing the construction of the first stage of the project – a gondola lift, next year the entire infrastructure should be ready. But I myself do not want to deal with this project. Mostly Russian tourists will go there. I want Russian tour operators to build hotels, I am ready to transfer the land for construction to them free of charge, provide them with preferential financing.

– Your move to Georgia coincided with serious political changes in the country. How do you assess them?

- Young forces have come to power, but I am neither for nor against them - that's all I can say. In general, I am very sorry that Russian-Georgian relations have gone down this path.

– How public is your lifestyle in Georgia, how do local politicians and businessmen treat you?

- I don't have any contact with any of them, I live very isolated, I communicate only with relatives, close friends. I have no political ambitions, I just want to live peacefully with my family, I leave my village Chorvila for business only occasionally.

– If all this is true, why did you file a lawsuit to protect your honor and dignity?

– Because I never lost my honor and dignity, I lived according to my conscience, and let those who wrote lies about me think about restoring these values.

[END] Probably this interview has never been fact-checked and annotated.