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POLITICS IN TRANSLATION  / A WHO'S WHO OF MOSCOW BUSINESS REFORM
23.11.2006


The following Who's Who concentrates on those professionals who are working to improve business in Moscow. They have pushed for better legislation, more transparent corporate governance, and/or improved product quality and service standards. We've also given special emphasis to those who have worked to improve Moscow's infrastructure for transportation, communication, and information systems - which are crucial to modern business. As Moscow is a regional and now world financial capital, this list includes people of many nationalities, and those whose work has had greater effect than just on Moscow's economy.

Growing traffic outside the Kremlin wallThis list was compiled from nominations made by Moscow State University, The Moscow Times, GRINT Center for Education, and various Moscow-based professionals. It is far from complete, but we do believe it is representative of those currently campaigning for change in the still often shadowy and opaque world of Moscow business.

The entries were researched and written by Jeremiah Lach, who holds a Bachelors in Business Administration (BBA) from Ohio State University and who is currently studying Russian in Moscow through SRAS. Josh Wilson, the Assistant Director of SRAS also contributed to the content and organization of the piece.

Your questions, comments, and suggestions are welcome.

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Who's Who of Moscow Business Reform
By Jeremiah Lach, with SRAS

Rostislav Ordovsky, founder and CEO of Rostik International, in one of the Planeta Sushi restaurants in Moscow. Picture originally appeared in Passport Magazine.

 Rostislav Ordovsky-Tanaevsky Blanco
Founder and CEO of Rostik International

As the founder of one of Russia's largest food service enterprises, Rostislav Ordovsky-Tanaevsky Blanco (often known as simply Rostislav Ordovsky) has helped set new standards of quality and service in Russia. Both of these vital elements to modern capitalism, most agree, are still generally underdeveloped in Russia. Ordovsky has been phenomenally successful, with company growth averaging about 25% per year. His largest chain, Rostik's (named after himself) specializes in fried chicken and as of 2006, was operating over 80 restaurants across the FSU. The chain has actually pushed western competitor KFC out of the market, forcing KFC to instead opt for a strategic alliance with the Russian company.

Mr. Ordovsky was born in Venezuela. His father left the Soviet Union after the 1917 Bolshevik Revolution and Venezuela happened to be the first country to offer a visa. He was raised in a multi-cultural home; his mother was Spanish and his father Russian. After graduating from Simon Bolivar University in 1984 with a degree in chemical engineering, he formed his company, Rostik International (now the parent company to all his other businesses) to import electronics, photo equipment, and media to Latin America in partnership with such corporations as Kodak and Disney. After helping to produce Russian-Venezuelan film festivals in Moscow and Tashkent, he expanded his business efforts to Russia and was soon operating some 500 Kodak one-hour photo stores.

He decided to enter the restaurant business after often being turned away at Russian cafes by such unlikely signs as "sanitation day," "no seats available," and even "closed for lunch." Often, those that were open only had half of their menu in stock (a problem which still exists across Russia). After a franchising deal with Burger King fell through at the last minute (and there are still no Burger Kings in Russia), he opened the independent Spanish Corner in 1993.

Though this first venture has since closed, today Mr. Ordovsky operates many chains and establishments in addition to his highly visible Rostik's, including: Cafe Des Artistes, Il Patio (Italian family dining), Planet Sushi, The American Bar and Grill, Moscow's T.G.I. Friday’s locations, and the southwestern themed Santa Fe. These range from fast food to full service and from about $4 a meal to $60 a meal. His business empire also includes photo shops, real estate management, construction, tourism, and packaged foods.

Not only has the charismatic and friendly Mr. Ordovsky brought new life to the restaurant industry in Russia, created hundreds of jobs and well-trained employees, but he has also been a vocal campaigner for greater clarity in corporate governance in Russia, and is helping to set a standard by the governance of his own company. He has also been a vocal critic of Russia's still complicated and unclear corporate law and has helped push for change through his involvement with international organizations such as the Russo-British Chamber of Commerce. Lastly, he has also worked to encourage franchising in Russia, which is still seldom used but is quite promising in helping to spark initiative in small business owners by allowing them to use proven business models like those Mr. Ordovsky has founded.

Find Out More:
YUM! and Rostik's Strategic Alliance
Interview with Mr. Ordovsky

Mayor Luzhkov giving a speech in front of statue of Yuri Delgaruki (the prince who founded Moscow)

 Yuri Mikhailovich Luzhkov
Mayor of Moscow

Yuri Mikhailovich Luzhkov is the current mayor of Moscow and is the most controversial person we will include on this list. He has presided over dramatic decreases in crime and a vast restoration and expansion of Moscow's infrastructure of roads and public transportation. He has rezoned many districts to create new financial and business centers (such as the planned Moskva-Citi project) and move industry to the city outskirts. However, he has also controversially demolished historic structures, and many of his major projects, such as Moscow's Ring Road, have often lost some 30% of their funding to corruption and inefficiency. He is also believed to regularly deal with people with known ties to organized crime and is criticized for allegedly ordering mass expulsions of the homeless from Moscow's streets and turning a blind eye to racism, violence, and corruption within Moscow's police force.

He was born in Moscow in 1936. After graduating from Gubkin Institute of Oil and Gas, he became the soviet Minister for the Chemical Industry in 1964. In 1987 he became the first deputy chairman of the communist Moscow Executive Committee. In 1992, after the fall of the USSR, he became mayor of Moscow.

He is also controversially involved in Moscow's construction boom. Inteko, which is officially owned by Mayor Luzhkov's wife, Yelena Nikolayevna Baturina, but widely believed to be largely run by the mayor personally, controls significant amounts of Moscow's construction and construction materials markets. However, Inteko (and most other local construction firms – which are almost wholly owned by other government officials) is known for inefficiency, for hiring illegal workers at rock-bottom wages, for using government resources to forcibly take land for development and for charging inflated prices for their end product.

Although these practices have admittedly not entirely helped Moscow's economy, Mayor Luzhkov's stable and productive city government has. He took over when Gavriil Popov was forced to resign due to widespread corruption and political and economic instability. Mayor Luzhkov has since been re-elected three times, as many credit him for the economic wealth of Moscow and with having secured the relatively high level of salaries and pensions there (though they are still low by most standards). He has proved himself an effective administrator; in 1993 he made Moscow and the land surrounding it an independent state within the Russian federation and thus removed it from Russia's troubled privatization program. He is also known for clearly defining his staff's duties, defending them during controversies, and keeping bureaucratic scuffles to a minimum, thus helping to create a loyal and relatively efficient structure. This has all helped Moscow's economy to develop much faster than that in the rest of Russia.

Thus, despite the controversy and corruption, Mayor Luzhkov is helping Moscow's business climate. As a Russian anti-corruption politician told Time contributor Paul Quinn-Judge, "Perhaps Luzhkov is on the take, but he is getting this place into shape. So why should I waste my time on him? Others do nothing but steal."

Find Out More:
Biography of Yuri Luzhkov
Article from The Guardian
Article from The eXile

Andrei Kozlov

 Andrei Kozlov
Former First Deputy Chairman
of The Central Bank of the Russian Federation

Andrei Kozlov was the first deputy chairman of The Central Bank of the Russian Federation. During his career there he helped restore faith into the troubled Russian banking system.

He served in the Soviet Army from 1983 to 1985 after which he attended the Moscow Institute of Finance where he graduated in 1989. He then began working as a senior economist with the Soviet Union's central bank. Afterwards, he was promoted to first deputy chairman of Russia's central bank from 1997-1999 and then served in that post again, after a brief hiatus in the private sector, from 2002-2006.

During his final years, he effectively fought for reform in bankruptcy legislation and against financial crimes. He helped develop a system of deposit insurance (similar to America's FDIC), withdrew licenses from banks that were suspected of money laundering, and helped form the foundations of the Russian stock market.

He created security markets that were transparent enough to draw foreign investment in the amount of $50 billion into Russian Treasury Bonds. Under his tenure, Russia also qualified for international ratings and was thus able to sell more than $6.5 billion in Eurobonds. This has helped further inflate Russia's large stabilization fund, enabled Russia to pay off its international debt early and thus further raised Russia's and Moscow's reputation with and cash flow from foreign investment.

Just one week before his death he gave a speech in which he stated: "Those who have been found laundering criminal money should probably be barred from the banking profession for life. Such people disgrace the banking system." His work against financial crime obviously earned him powerful enemies and on September 13th, 2006 he was shot by two hired gunmen and later died from his injuries. However, his reforms were enacted so effectively that they are expected to be retained even without him.

Find Out More
Obituary from BBC
Wikipedia Entry for Mr. Kozlov

Arkady Volozh outside Yandex headquaters in Moscow

 Arkady Volozh
Founder and CEO, CompTek and Yandex.ru

Arkady Volozh is the founder of Yandex, Russia's largest Internet portal. His site has over twenty-five million users and is the main search engine for Russian-language searches. While Google has taken steps recently to improve its own searches in foreign languages, it is still far inferior to Yandex, which has several more years experience in studying how people search online for Russian-language material and which has more sophisticated software for searching for variations of declined nouns and conjugated verbs. (For years, Google could search only for specific character combinations in Cyrillic and did not take the uniqueness of the language into account.)

Arkady Volozh graduated from Gubkin State University of Oil and Gas in 1986. In 1989 he sold half his personal assets, which at the time totaled only two personal computers to establish himself in Moscow and begin work on Yandex. He had intended the site to be sold to the highest bidder, but in the end, no buyer could be found and he began running it himself.

Yandex now employs over 300 people. However, this is only a fraction those employed by Yandex's parent company, CompTek, which is also owned and led by Volozh. CompTek is one of Russia's leading networking and telecommunication equipment distributors. Through Yandex and other spin-off companies such as InfiNet Wireless, CompTek is leading a highly effective campaign to turn cafes, business, malls, and other locations across Moscow and Russia into free WiFi hotspots. This is not only making information more readily available within Russia, but also creating ways for businesses in Russia to be more competitive.

In addition, Yandex has invested in developing other business-friendly services such as free web hosting, email, YandexMaps (of cities across Russia), and YandexMoney (an online, inexpensive money transfer system). All of this is making it easier for business to advertise, be found by customers, and collect payments.

Finally, CompTek has also successfully invested in training centers to produce qualified computer technicians and has pushed for government actions to ease the creation of communication infrastructure across Russia. Arkady Volozh is a pioneer who continues to develop new ways to make information and communication commercially viable services in Russia.

Find Out More
Article from Wall Street Journal
Article from The Moscow Times

Derk Sauer, CEO of Imedia

 Derk Sauer
Founder and CEO, Independent Media

Derk Sauer founded Independent Media – now re-branded as "Imedia" and which now controls one third of the market for print advertising in Russia. His influence on how newspapers and publishing houses are run has also been great.

He started his career as a publisher for Nieuwe Revu, a magazine in the Netherlands focusing on popular culture. In 1982 and became the head editor of that magazine. In 1992, after covering Russia's turbulent cultural scene through glasnost, he entered the Russia market by creating Imedia to run The Moscow Times, which is still Russia's largest English-language newspaper. Not only did The Moscow Times fill a specialty market in English, but it was the first publication in Moscow to feature weekly cultural listings complete with addresses, times, directions, and phone numbers for upcoming events. Distributed for free and paid for mostly through advertising, the Moscow Times became a highly sought after source not only for the Americans and Brits living in Moscow, but also for English-speaking Russians looking to plan their weekend. Soon, Russian newspapers were emulating the cultural section of the Moscow Times.

With this success, Mr. Sauer was able to quickly enter the magazine market, where he proved adept at taking international magazines and newspapers such as Playboy, the Harvard Business Review, Smart Money, Esquire, The Daily Herald, National Geographic, and Cosmo – not only translating their material, but also their format and branding to better suit the Russian market. Today, Imedia publishes nearly 30 different publications and controls one third of the print advertising market in Russia. Its profits currently total more than $10 million, most of which comes from the publication of the Russian version of Cosmo which is now the world's second largest magazine publication – printing some one million copies for each issue.

Not only has Mr. Sauer thus greatly expanded opportunities for print advertising, he has also affected journalism as a whole, often pulling promising young talent directly from university graduation and immediately training them according to Western standards. He has also provided a model of a publication house that can turn profits. Due to mismanagement and inefficiencies, most Russian newspapers rely on wealthy benefactors to stay afloat. Most agree that, as most of these benefactors are well-connected with the Kremlin, this system negatively affects editorial policy in Russia. The profits of Imedia have allowed the Moscow Times to remain a source for many educated Russians to find criticism of the Kremlin and has also now led to the creation of a new project: Russia Profile, a unique news source most notable for bringing a wide range of Russians' opinions about Russia, it's government, economy, and culture to the Internet in (generally) clear and well-expressed English.

As Mr. Sauer has said in an interview: "The bottom line is I'm a journalist, I'm not here to be a media tycoon. The moment that we cannot write what we want to write, I'm gone."

Find Out More
Interview with Radio Netherlands
Wikipedia Entry for Derk Sauer

Nikita Muzuria, CEO of Autoline

 Nikita Mazuria
President, Autoline Group

Nikita Mazuria has taken the transportation industry to new limits. His company, Autoline Group, specializes in supplementing public transportation in Moscow with a system of highly efficient and cheap mini-buses and vans. These are generally faster than Moscow's larger buses (which can often get stuck in traffic), while remaining competitively priced with them. In the 1990, when the company was founded, it was invaluable in allowing people to seek and hold down jobs further and further from their homes in Russia's newly decentralized economy. Moscow's crumbling public bus system simply could not handle the load, nor did Moscow have the resources to invest in the system itself.

Mr. Mazuria currently has over 2,500 vehicles operating in Moscow and reaching out into the surrounding areas which are not always served by public transportation. Most of them begin and/or end their routes at metro stops, where one can almost always find an AvtoLine (or one of its smaller competitors') little yellow buses waiting outside. The average charge ranges from 15 to about 50 rubles (about 60 cents to about two dollars), depending on the length of trip. 

AutoLine has been widely recognized by both city and federal governments for its service to transportation in Moscow and has been a leader in corporate charity, regularly giving to support police forces, disabled persons, and architectural restoration in Moscow.

Find Out More
Article from RBK
Article from AvtoPress

Rueben Vardanian, President and CEO of Troika Dialogue

 Ruben Vardanian
Co-Founder and CEO, Troika Dialog

Ruben Vardanian helped found Troika Dialog, one of Russia's first commercial investment firms and now its largest and one of its most respected. Not only has Troika Dialog helped many businesses get their start and many others raise money through bonds and IPOs to reinvest in the Russian economy, it has been a leader in setting an example of a highly profitable and transparent business. Mr. Vardanian's reputation soon earned him an appointment as the Head of the Corporate Governance Committee for the Russian Union of Industrialists and Entrepreneurs (RSPP). Mr. Vardanian's latest project, however, may prove more profitable to Russian business than any other effort he has undertaken: the founding of a new state-of-the-art business school in Moscow to help train the next generation of Russian businesspeople.

Mr. Vardanian was educated at Moscow State University, where he studied economics and finance. At the age of 22 he started Troika with three other partners including Bernard Sucher, who later went on to lead Alfa Investment, another major financial institution. With an initial investment of just 35,000 USD in 1991 Troika Dialog exploded to over 36 million USD in assets by 2002 and today the company manages some 3 billion USD in assets in addition to being a market leader in investment banking, securities, pension management. Furthermore, with the acquisition of Rosgosstrakh, formerly the Soviet-era monopoly provider of insurance, Vardanian is also set to bring his business expertise to Russia's growing insurance markets.

His recent work on founding what will become the Skolkovo-Moscow School of Management he says was inspired by his eleven-year-old son; Mr. Vardanian wanted him to have a local school on par with any available in the West. Mr. Vardanian successfully raised some sixty million dollars from several like-minded businessmen who also had an interest in contributing to producing local business talent in Russia.  The school, which will offer a fully-accredited MBA program, will feature master classes given by successful foreign and local businesspeople, case-study based education, and classes in ethics and corporate governance. Its courses will be offered in English – and eventually Chinese, Spanish, and Russian as well. The school should be teaching students by 2008 and have a fully operational campus by 2009.

Both Troika and Mr. Vardanian have earned countless awards and recognitions for their work. For Troika, this includes #1 pan-European brokerage (Thomson Financial Extel Survey 2003 and 2004); Best Equities House in Russia 2004 (Euromoney Awards for Excellence). At just 38, Mr. Vardanian has also been honored as "Businessperson of the Year" by the American Chamber of Commerce in Russia and "Entrepreneur of the Year" by Ernst & Young as well as named one of Russia's top three business leaders by the Russian National Association of Managers.

Find Out More
CV for Mr. Vardanian
Article from Financial Times
Editorial by Mr. Vardanian

William Browder, CEO of The Hermitage Fund. Photo originally appeared in The Wall Street Journal

 William Browder
Co-Founder and CEO, Hermitage Capital Management

William Browder is the co-founder and CEO of Hermitage Capital Management, one of the largest private investors in the Russian economy. The company currently has more than four billion dollars under its management and has made considerable waves in Russia by using its financial might as a shareholder to demand better corporate governance from state-controled enterprizes.

Mr. Browder holds a Bachelors in Economics from the University of Chicago and an MBA from Stanford Business School. He worked as a business consultant and a manager of Russian proprietary funds before founding the Hermitage Fund in 1996 with Lebanese banker Edmond Safro. Since then, the fund has been named "The World's Best Emerging Markets Fund" and has produced shareholder returns of more than 2500%.

While Mr. Browder is a steadfast supporter of President Putin and one of the greatest advocates of the Russian economy, he has also been one of the greatest critics of corporate law and has exposed widespread corruption and unethical behavior in state-controlled businesses. In likely the best-publicized case of this, he publicized that Gazprom officials had illegally siphoned 9.6% of the company revenues into funds used for their personal benefit. Gazprom's CEO was replaced eight months later.

While the Russian government has not made a specific statement on the issue, many cite this activism and the enemies it has made him as the root cause of his recent denial of a Russian visa to re-enter the country on the grounds that he is a "security threat." His outspoken stance on corruption may have temporarily barred him from entering Russia, but he has done what President Putin promised to do when he was elected - fight corruption. Despite the recent affront, Browder remains a supporter of the Russian President and continues to encourage foreign investment in Russia through the Hermitage Fund, as Chairman of the Russia Task Force for the Institute of International Finance, and other capacities.

Find Out More
Wikipedia Entry Mr. Browder
Interview (video) with Fareed Zakaria
Article from Newsweek

Andrew Somers, President of AmCham Russia

Andrew Somers
President, AmCham Russia

Andrew Somers is president of the American Chamber of Commerce in Russia. Over the last six years his leadership has helped the organization to become one of the most influential business organizations in Russia, with a membership of over 800 companies. He has been integral in simplifying and improving business and labor legislation that applies to foreigners working in Russia and foreign businesses operating in Russia. He has also worked with the US Congress to improve legislation for companies and professionals who bridge the two countries.

Mr. Somers has been active in the legal field for some time. He holds a law degree and masters degree in Russian history from Columbia University. He served as Assistant District Attorney in Manhattan before become a senior legal advisor to American Express in 1973. In 1989 he rose to the position of Executive Vice President of American Express TRS Company. Then, in 1995, he quit American Express to form a consulting company specialized in helping companies enter markets with high barriers of entry. On December 2000, he accepted the position of President of the American Chamber of Commerce in Moscow.

Andrew Somers is effective because he chooses his battles well and fights them quietly, with respect for the officials involved. For example, in 2004 the Russian Duma was considering a new law that would require mandatory special VAT accounts that would have complicated business and added expenses to doing business in Russia. In response, Mr. Somers wrote a paper stating the position of the American Chamber of Commerce and hand delivered it to the Prime Minister. Then he coordinated with other Russian business associations to similarly lobby the government. In the end, the legislation was dropped. Alternately, in response to new work visa requirements that forced applicants to be tested for a range of diseases such as leprosy, Mr. Somers began lobbying against it. However, when it became clear that officials were steadfast on the new requirements and that the additional tests amounted to only a relatively small inconvenience and expense to businesses, Mr. Somers diplomatically acquiesced.

While his lobbying has been quiet, his diplomacy, tact, and connections have done much for foreign business and the climate for international investment in Moscow and Russia.

Find Out More
Official Biography
Article from Moscow Times
Interview with Prime-Tass

Arkady Novikov, CEO of Novikov Group

  Arkady Novikov
Founder and CEO, Novikov Group

 

Arkady Novikov is another restaurateur in Russia. He is most known for creating menus and atmospheres that appeal to his unique Russian customer base.

He graduated from a Soviet cooking school and tried to get a job with the first McDonalds but was not hired. He came up with the idea of selling top dollar meals to the city's emerging capitalists. In 1992, he borrowed $50,000 to start a seafood restaurant called Sirena which includes a transparent floor with a giant aquarium underneath. It was an instant hit. Each new restaurant he opened concentrated not only on presenting novel atmospheres, but also on presenting unique and tasty menus. In a city where the newest trends bring the richest out to play, his restaurants have developed a reputation of being the most fashionable.

He now operates dozens of restaurants and several retail shops, which are officially owned by the Novikov Resaurant Group. The average check in his eateries is some $100 per person. However, his most visible restaurant chain has been Yolki Polki, a low-priced buffet that focuses on bringing traditional foods of the former FSU to customers in romanticized "traditional" settings. He was told by many that Russians would not pay higher prices for such common foods as pelmeni and borsch, but he has proved his critics wrong and there are now several chains which emulate Yolki Polki (often with similar names like Mu-Mu and Zhili-Byli).

He has since helped found and run The Federation of Restaurateurs and Hoteliers, a Russia-wide group that pushes for improved standards in the hospitality industry and improved legislation. 

Novikov is a pioneer in localizing such concepts as branding and marketing in the Russian markets. While he now largely concentrates on serving the needs of Moscow's new super-wealthy, he can be said to have greatly influenced business in Moscow as a whole.

Find Out More
Article from The Economist
Article from The Washington Post
Article from Businessweek

Find Out More About Business in Russia
The Library: Business in Russia; Resource Extraction and Export
Vestiges: Capitalism in Post-Soviet Space (article)
SRAS Interviews and Personalities (many with professionals in Russia)
Study Russian in Russia (internships and business courses available)
Snapshot of the Russian Economy

 

Questions or comments about this article?  Contact the editor.



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