Magnus

"A lot of corners were cut and the chaotic nature of the joint venture meant that it was effectively stillborn. The Russians, who owned 35% of the venture, contributed the land and buildings, and Ingimar and Bernard (who had a 65% stake) were supposed to contribute the old Icelandic bottling machinery and some start-up funds. Magnus, my father and I were supposed to be running the venture for the stakeholders who had contributed the machinery and the factory. We had no stake in the venture, but the hope – and promise – of earning equity if the business prospered. However, after the equipment arrived and was commissioned, we discovered that the BVI guys had tricked our Russian partners and Russian customs. Instead of contributing the machinery in return for share capital and thereby avoiding customs duties and taxes as start-ups could legally do, the manifest listed just some items of furniture and supplies. The BVI guys set up another offshore company that ‘owned’ the machinery to take leasing payments from the Russian factory’s monthly cash flow. They had tried to get UK investors for the joint venture and failed. They did put in a small amount of money but then tried to extract funds, as they did not believe the venture would ever become profitable – obviously influenced by their failure to get any investors, which was probably because they had no track record as principals in any deals, let alone risky emerging-market deals."

"The Russian joint venture went ahead in 1993 under the name Baltic Bottling Plant. Magnus was in charge of setting up the factory and I was in charge of marketing. We made two reconnaissance trips. We took a look, came back and said: ‘It’s a bizarre place but let’s see what we can do.’ We had heard that Russians wanted something colourful so we produced a batch of pink lemonade and shipped a couple of containers to Russia. I toured the shops, carrying out market research and trying to gauge the demand for soft drinks. But Russia was pretty chaotic at that time. I came across empty supermarket shelves and long lines of people queuing for food; the shops smelled and the service was dreadful. But I realised that we could make something there. Even though we had old products, they could still work. That is what Russia became in those years: a dumping ground for old stock."

"A lot of corners were cut and the chaotic nature of the joint venture meant that it was effectively stillborn. The Russians, who owned 35 per cent of the venture, contributed the land and buildings, and Ingimar and Bernard (who had a 65 per cent stake) were supposed to contribute the old Icelandic bottling machinery and some start-up funds. Magnus, my father and I were supposed to be running the venture for the stakeholders who had contributed the machinery and the factory. We had no stake in the venture, but the hope – and promise – of earning equity if the business prospered. However, after the equipment arrived and was commissioned, we discovered that the BVI guys had tricked our Russian partners and Russian customs. Instead of contributing the machinery in return for share capital and thereby avoiding customs duties and taxes as start-ups could legally do, the manifest listed just some items of furniture and supplies. The BVI guys set up another offshore company that ‘owned’ the machinery to take leasing payments from the Russian factory’s monthly cash flow. They had tried to get UK investors for the joint venture and failed. They did put in a small amount of money but then tried to extract funds, as they did not believe the venture would ever become profitable – obviously influenced by their failure to get any investors, which was probably because they had no track record as principals in any deals, let alone risky emerging-market deals."