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Meet the Toughest Siberian Shark


It has been quite a climb for Oleg V. Deripaska. Just five years ago, he was an obscure regional business baron who ran Sayansk Aluminum Works, Russia's fourth-largest aluminum smelter, for London-based Trans-World Group. Now, at just 34, he is CEO and co-owner of Russian Aluminum (RusAl), a company with more than $4 billion in sales that has arrived at the top of an industry once racked by turf wars and brutal killings. Controlling 70% of the nation's aluminum industry, RusAl is rivaled in size only by Alcoa Inc. of the U.S. Deripaska also has a monopoly on bus production in Russia and owns Russia's second-biggest car plant, Gorky Avtomobilny Zavod.

Rivals complain that Deripaska's tactics are too combative. His terse reply: "That's business." As he would have it, there are only two things to fear from him: his razor-sharp mind and the number-crunching skills honed as a student in quantum mechanics at Moscow State University. But his is a mind that has also led him to one vital conclusion: To make big money in Russian business at this stage of its economic development, you have to take a commanding market position.

So far, that philosophy has taken him far. In 1997, he and his partners wrested control of Sayansk by issuing a block of new shares that diluted TransWorld's holdings. Two years later, he bought a big stake in the Nikolayev Alumina plant. Although in Ukraine, the plant was the principal provider of one of the main raw materials needed to produce aluminum in Russia. Deripaska soon began to withhold supplies from Roman Abramovich, who in 2000 bought out Trans-World to become Russia's biggest aluminum baron. Abramovich caved, merging his holdings with Deripaska's to create RusAl. "He had to shut down production or make a deal with us," Deripaska says simply. The tycoon is now casting a predatory eye on Russia's underdeveloped timber industry.

The metal baron's views on the economy often put him at odds with the free-market philosophies of President Vladimir V. Putin's team. Nowhere is that clearer than in his resistance to Russia's entry into the World Trade Organization. For more than a year now, he has lobbied the government to hike customs tariffs levied on imports of secondhand cars--a move he sees as crucial to the survival of his car plant, but one that could delay or derail WTO entry.

Deripaska has a lot of other ideas on how to improve Russia's economic policy. But there could be a few roadblocks in getting them implemented. For one, he made a lot of enemies in his aggressive buying spree for prime industrial assets. An aggrieved former aluminum baron, Mikhail Zhivilo, has filed a $3 billion lawsuit against Deripaska and his partners in a New York court, alleging that they used fraud, extortion, and death threats to gain control of a Siberian smelter he once owned. Deripaska denies the charges.

Still, Deripaska is well aware that tycoons like him have an image problem. So he is on a cleanup drive: preparing RusAl's books in accordance with U.S. generally accepted accounting principles and taking courses at the London School of Economics to hone his credentials as a policy wonk in Russia's economic debates. It remains to be seen whether those efforts will be enough to wipe away the grimy reputation Deripaska collected on his way to the top of Russia's roughest industry. By Catherine Belton in Moscow


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