Clear Formula Has Helped

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Viatcheslav Kantor, a businessman and public leader, lives between Israel where he naturalized fifteen years ago, and Switzerland where he bought a house on the Lake of Geneva in early 1990s. When business takes him to Moscow, he welcomes his guests in a 19-century mansion, owned by Kireevskye-Karpovy before the Revolution.

Viatcheslav Moshe Kantor has owned his mansion on Bolshaya Ordynka, once the home of noblemen and merchants, since 1993. Authorities transferred title to the mansion to Intelmas, a company owned by Kantor, on condition that the mansion is fully restored and its historical interiors are preserved. Kantor’s mansion won third prize in the Restoration 1999 contest (the Cathedral of Christ the Saviour and the Grand Kremlin Palace won first and second prize). Evidently Kantor met authorities’ requirements.

Scientific Restoration

The mansion’s courtyard features a sculpture of the Archangel Michael by Ernst Neizvestny, the interior is filled with avant-garde works, and the walls of Kantor’s office are hung with memorable photos he has taken with influential people.

Kantor proudly points to a picture of him with Vladimir Putin taken in September 1999 at Acron in Veliky Novgorod: “On his first day as Prime Minister and official successor of the President, he visited us for a meeting that had been planned by [the previous Prime Minister Sergey] Stepashin. I immediately took note. I knew he would have a great future because he has a highly organized mind. He felt responsible for his predecessor’s decisions.”

Kantor’s office also has a framed article from an issue of Pravda in the early 1980s. The authors of the article “The Sun Shines at Night,” academician Zhores Alferov and Viatcheslav Kantor, Ph.D., describe a project to build a reflector satellite to cast a giant beam of sunlight on the earth for the night-time illumination of large regions. Kantor, who graduated from the Moscow Aviation Institute and served as head of the Moscow Aviation Institute laboratory, spent ten years on the spacecraft sun reflector project from 1976 to 1986.

In February 1993, Energy Scientific Production Association successfully cast a beam of sunlight from space on Poland, Belorussia and Ukraine using the Znamya 2 reflector satellite (Kantor has a satellite photo hung on his wall).

“By then I was no longer involved in the project, but I continue to be actively interested in spacecraft as an investor,” Kantor says.

Kantor does not go into detail about his investments in spacecraft. He generally becomes reticent and evasive when talking about his business. Kantor is believed to be the majority shareholder of the Acron agrochemical company in Veliky Novgorod, controlling over 70% of its shares. Open sources list Kantor as Chairman of the Coordinating Board of Acron and he calls himself the company’s “strategic process ideologist.” “That takes up the least of my time, which is 90% devoted to community activism”, Kantor says with a smile.

Leader from the East

The 55-year-old Kantor heads two influential public organizations with political functions. That is especially true of the European Jewish Congress (EJC). “There are no other public organizations that have political representatives in all the international institutions – the UN, UNESCO, OSCE, governmental organizations of the European Union,” he says. Last autumn Putin received an EJC delegation headed by Kantor and publicly expressed his support for the Congress’s activity.

Before Kantor, Russians were never Presidents of the European Jewish Congress. In 2002, Serge Cwajgenbaum, then Secretary General of the EJC, visited a synagogue opening ceremony in Veliky Novgorod hosted by Kantor. Cwajgenbaum liked what he saw and said meaningfully, “The centre of business activity has moved from Europe to the east. Future EJC leaders should come from the east,” after which, according to Kantor, he asked him to become Chairman of the Board of Governors of the EJC and take charge of its cultural programmes. Five years later Kantor decided to run for the EJC presidency and won.

By that time Kantor had already been President of the Russian Jewish Congress (RJC) for a year and a half. The international events he organized were having important influence around the world, not only in Jewish communities. In 2005, the EJC and RJC held the Let My People Live! World Holocaust Forum in Krakow to commemorate the 60th anniversary of the liberation of Auschwitz-Birkenau. Many European leaders participated in the Forum, Putin included. Kantor held the second Forum in commemoration of the Babi Yar tragedy in Kyiv. During preparations for the Forum President of Ukraine Viktor Yushchenko appointed him as his advisor (Kantor resigned after the Forum). “The 2008 Forum in commemoration of the 70th anniversary of die Kristallnacht will be the logical conclusion of this triangle,” Kantor says. At the 2008 Forum, which will be held under the patronage of the European Parliament in Brussels in November, the EJC wants to present a draft Convention on Tolerance in Europe.

“We can no longer be tolerant of the neo-Nazism manifestations and glorification of the Nazis taking place in some countries. And we absolutely agree with the position of Russia’s leaders on this issue,” Kantor proclaims as if he were speaking from a pulpit. Incidentally, when Russia criticized Estonian authorities’ decision to remove the tombs of Soviet soldiers and the Bronze Soldier monument from the centre of Tallinn in May 2007, Acron immediately declared that it would suspend its investment projects in Estonia until the situation became clear.

“The laws of the country you live in are more important than the laws of the Torah.”

In the late 1980s Kantor founded a company called Intelmas (Intellectual Materials and Systems). “We bought low and sold high,” is his simple explanation of the origins of the start-up capital. With a nod to political correctness, he adds, “We still tried not to limit ourselves to speculation. We contributed to society by setting up computer networks for the Academy of Sciences. Back then that was a real novelty.”

Kantor’s firm also did environmental monitoring and biotesting. In an interview with Expert magazine ten years ago, he said that he received his first order for environmental monitoring from the Soviet Mineral Fertilizer Production Ministry. “They wanted to protect the Odessa Port Plant, which was slated for closure after the results of the Odessa referendum.” Sergey Yan, Chairman of Acron’s trade union committee, recalls that in 1992 there was a similar situation at Acron (then Azot): local environmental activists believed that Azot was harming the city’s environment and demanded that the plant be closed. As with the Odessa plant, the environmental studies carried out by Kantor’s firm, ranging from butterfly behaviour to plant growth, demonstrated that there was no need to close the plant.

In a forward-looking note, one year later 47.5% of Acron’s shares were auctioned at the first regional cheque auction[1]. Thirty-five per cent of the shares of Novgorod’s largest enterprise were acquired by Intelmas. . Thirty-five per cent of the shares of Novgorod’s largest enterprise were acquired by Intelmas.

People say that Kantor acquired the Novgorod region plant under the protection of the then Secretary of State Gennady Burbulis, who was a friend of Mikhail Prusak, governor of the Novgorod region in 1991-2007. (Vedomosti received no answer to an inquiry on this point submitted to the office of Burbulis, who is now a member of the Federation Council of Russia.) Prusak denies the link. “Kantor came to get acquainted with me when Acron was already being privatized.”

Kantor says that by the early 1990s he had earned several million dollars, not that much to his way of thinking. But it was enough to buy Acron. Now Acron is the third largest Russian mineral fertilizer producer (last year it posted production volume of 4.2 million tonnes and IFRS revenue of RUB 21.67 billion for the third quarter of 2007). Kantor regularly figures in lists of the wealthiest Russians: this year his fortune was estimated by Russian Forbes at $ 2.9 billion.

Kantor does not appreciate hints that he acquired his company cheaply by current standards.

“The price of anything is a fixed event in time and space. When privatization vouchers were issued, serious western investors saw nothing but slips of paper. But people who really understood those processes took risks. That is how a class of property owners appeared in Russia,” he says with annoyance. According to Kantor, the only thing that distinguishes his team from others is that they never supported the regime of “anything goes.”

He even backs up this opinion with a religious justification. “Our key approach in public and business activities is to strictly follow the laws of the country we live in. That may be called the Jewish law, which says that the laws of the country you live in are more important that the laws of the Torah. Maybe that is why we are still around in Russian business, despite the huge competitive tension.”

Prusak is still filled with wonder at Kantor. “With his money he could have bought Duma deputies, instituted his own policies and made everything go his way. But he didn’t do it.” The new owner has kept Acron’s management in place. Yan adds that there weren’t any layoffs of regular employees, either.

A Well Fertilized Business

Novgorod residents know Kantor as an easygoing entrepreneur; however, he displays the opposite traits in competition. Acron has been engaged in constant legal battle with Murmansk region-based Apatit, which was acquired by a subsidiary of Menatep during privatization. That litigation is ongoing, with Acron claiming that PhosAgro, the holding into which the Apatit plant was integrated, is guilty of setting monopoly prices, a charge that PhosAgro denies. Until recently, Acron had no other source of apatite since it had been designed from the outset to work with this particular supplier. It was only in 2006 that Acron began mining its own apatite ore next door to Apatit on the Kola Peninsula.

One businessman familiar with the situation says that Kantor did not want to compromise with the supplier and held his ground from the outset. In late 1990s and early 2000s, Novgorod governor Prusak was involved trying to settle this dispute. He met regularly with Murmansk governor Yuri Yevdokimov and applied to federal authorities for support. One of the people he contacted was State Duma deputy Vladimir Yudin, who authored the famous request that the General Prosecutor’s Office look into alleged violations during the privatization of Apatit. This request was the General Prosecutor’s starting point in the Yukos case.

In court, jailed Menatep co-owner Platon Lebedev asserted that prior to his arrest Kantor met with him and offered him $350 million for Apatit. The defendant claimed that in return, Kantor promised to sort out his problems by arranging for him to go horseback riding with deputy head of the Presidential Administration Igor Sechin.

When asked about this, Kantor exclaims “Amazing information! Unfortunately I have nothing to say as I know nothing about the matter.” PhosAgro Director General Maxim Volkov refused to comment on his company’s relations with Acron.

Prusak praises Kantor for pushing Acron to export its production in the early 1990s. “The company had no foreign presence. It was Kantor who introduced the company to the world, and he was responsible for making the facility operate like clockwork.” According to Igor Kaluzhsky, executive director of the Russian Association of Fertilizer Manufacturers, the USSR usually built mineral fertilizers facilities for the exclusive purpose of supplying a particular region.

“As the Soviet economy collapsed, these facilities lost their solvent consumers and agriculture declined. New owners of mineral fertilizers facilities relied exclusively on export to develop.” Needless to say, this is a strong lever.

In 1998, Kantor told Novgorodskie Vedomosti “In 1991, Acron’s agrochemical products cost us $2 per tonne to produce. The global market selling price was $100 per tonne.”

Today the margin is significantly lower: Finam analyst Mikhail Frolov estimates that the export prices for nitrogen fertilizers are just 30-50% higher than domestic prices, and in April 2008, the government levied them with 8.5% export duty. However, export still provides the industry with a major flow of funds. According to Kaluzhsky, only 2 out of every 20 tonnes of Russian mineral fertilizers are consumed domestically. Acron’s financial reporting shows that it exported 75% of its products in the first quarter of 2008 (against 90% in the early 2000s).

Kantor’s Collection

Now and then Kantor uses expressions that betray his past as a scientist, calling quotes or concepts he likes “formulas.” He also has a good formula behind his collection of Russian Avant-garde, which forms the basis for the NERV educational project (the acronym stands for “Russia’s Unseen Greatness”).

With enthusiasm, the EJC head says that “The main point is to show that Russia is not just a source of oil and gas. Russia makes important spiritual and cultural contributions. The formula of the collection was not devised at once. But as a result, we arrived at a very harmonious structure, with 33 outstanding Russian Jewish artists. These artists are recognized as geniuses all over the world: Chaim Soutine, for example, or Mark Rothko. In Russia, however, people have rarely even heard of them.”

Alfa-Bank president Petr Aven praises his friend’s collection “His collection isn’t large, but it’s well selected. [Marc] Chagall is there, as are a number of other valuable works.”

Kantor has collected works for the Museum over seven years. He says that is not a long time for this collection. Sometimes it might take that long just to buy a single painting.

“The accuracy of the formula helped us do the work very quickly. Everybody [in the market] knew what specific works we wanted, so nobody even offered us other works. We bought the works at auction and directly from collectors. If you set your traps out, sooner or later you catch something,” Kantor says jokingly.

Kantor’s business acquisitions are generally also ruled by a single idea – fertilizers and the materials to produce them. At a 1994 cheque auction Acron acquired a controlling interest in Smolensk-based Dorogobuzh. In 2000, it established Nordic Rus Holding jointly with the Norwegian Yara in order to purchase stock from Apatit on better terms. Late in 2000, Acron registered a joint venture to produce nitrogen and phosphate fertilizers in China. This year, for the first time Acron has acquired a licence to develop a large potash deposit in Perm Krai. Shortly after that, it offered Gazprom to swap Acron’s 21% interest in Sibneftegaz for fertilizer assets currently held by the gas monopoly.

In July, the company plans to place up to 20% of its shares at western stock exchanges and anticipates receiving $900 million for the stake.

“If at some point I feel that I cannot improve the company any further, then I will have the motivation to sell it. It seems to me that I still have the vision,” says Kantor in answer to a question about the possible sale of the company.

Final Touches to the Portrait

“We came to business as poor as church mice. We had neither political support nor experience in business. […] All we had was life experience, experience surviving in a perverted bureaucratic environment. That experience turned out to be valuable.” (Interview with Expert magazine, February 9, 1998)

“Fortunately, there is no resource rent in agrochemicals. […] If there is no resource rent and you are not a monopoly, you have to work three times as hard.” (Interview with Rossiyskaya Gazeta, June 22, 2004)

“My personal experience shows that you should not be embarrassed to be a Russian citizen. You should not be ashamed of the people who lead the country.” (Interview with Kommersant newspaper, August 15, 2007)

[1] Cheque auction – Russian чековый аукцион; a type of auction used to privatise Russian companies in the early 1990s; the shares up for auction were called “cheques.” (Translator’s note)