Hard Choices

Russia's Oleg Deripaska on Recovering from the Financial Crisis


We inherited from the Soviet Union these modern cities that rely on one industry. If the facilities close, the cities would not survive. About 50 cities were at high risk. I became CEO of [aluminum company] Rusal. In July 2008 aluminum was more than $3,200 [per metric ton]. Then the financial crisis hit, and it was a free fall. In February 2009 the price was around $1,300. We had $16 billion in debt, and less ability to pay. No one could adjust the costs at that speed. You can’t renegotiate the price with suppliers that quickly. I tried to explain all that to our bankers, but they were in shock.

The speed of transformation demanded leaders who could shoot five times quicker than normal people. I’m 10 times quicker. We needed to move quickly on strategy, commercial arrangements, and other things. We set up a war room. Insolvency wasn’t an option. People were feeling desperate.

One situation in the town of Pikalevo, in June 2009, got a lot of attention. There was a risk of losing control. In this case, the Prime Minister was touring our factory where production was down. The situation [unpaid back wages] had been solved the day before, and we had a contract with signatures. We had one meeting where Putin came into a room, and somebody pulled out a paper to sign. A lot of media were there. I was told I hadn’t signed it. There was a moment of panic. So I went over to read and then signed the paper. The media made it into this show and a PR stunt for the government. My role was to show how the oligarchs could be punished. The government felt they had to show that they had acted.

I didn’t argue. If you know the Russian environment as well as I do, you can use it in your favor. You can argue about the circumstances or let it go and do your business. I chose to let it go. The Russian environment is different from the environment that a Richard Branson or a Jeff Immelt lives in. Russia was so isolated for such a long time, and our transition to capitalism in the early ’90s was so chaotic. Any real investment takes a decade, and I am building this for the long term. — As told to Diane Brady   


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