Russia

"Raised to the rank of commander of the Legion of Honor in July 2007, decorated at the hands of Nicolas Sarkozy, Bruno Lussato had his entree to the Elysée, thanks in particular to the chief of staff of the former president. If there is a geopolitical issue on which Bruno Lussato has tried to weigh, it is indeed that of opposition to the entry of Turkey into the European Union. With, as a corollary, his desire to rather prioritize strengthening relations with Russia, "a country and a people much closer to us culturally, and with whom a partnership would be more natural," he explained."

"Algeria, like Russia, is a very promising nation. It can succeed in everything. But its social base, its youth, the most precious of its resources, must remain enthusiastic and confident that it can build. Contributing to this motivates this collection."

"Even the military-industrial complex looks challenged. The United States spends [nearly $1 trillion a year on defense](private://read/01k3jwt46q240aq6fe12mqkyr0/16_Notes.xhtml#_idTextAnchor372), about as much as the next ten countries combined. The return on this investment is not clear. In the aftermath of Russia’s invasion, Ukraine blew through several years’ worth of American munitions stockpiles in a matter of months, and American factories have struggled to scale up production. Fighter jets have faced enormous delays and cost overruns. The US Navy has reported that every single class of its ships and submarines is [one to three years behind schedule](private://read/01k3jwt46q240aq6fe12mqkyr0/16_Notes.xhtml#_idTextAnchor373)."

"Even the military-industrial complex looks challenged. The United States spends [nearly $1 trillion a year on defense](private://read/01k3jwt46q240aq6fe12mqkyr0/16_Notes.xhtml#_idTextAnchor372), about as much as the next ten countries combined. The return on this investment is not clear. In the aftermath of Russia’s invasion, Ukraine blew through several years’ worth of American munitions stockpiles in a matter of months, and American factories have struggled to scale up production. Fighter jets have faced enormous delays and cost overruns. The US Navy has reported that every single class of its ships and submarines is [one to three years behind schedule](private://read/01k3jwt46q240aq6fe12mqkyr0/16_Notes.xhtml#_idTextAnchor373)."

"Through a cousin of mine, we hired a bunch of guys from Hungary who had worked in some electronic factory and who were all part of the 56 exodus. Once we went to a trade show at a hotel in Houston with six or eight Hungarian guys in three Clairtone trucks. The unions from Chicago wanted to stop us unloading and setting up our displays on the weekend. These American union guys came out and said, “You're not supposed to move products. That job belongs to one of our state unions.” And the lead guy, Bertie Hahn, said, “You just try and stop us.” The Hungarian guys were water polo players, all at least six feet tall. No one was going to get in their way, either Saturday or Sunday. We were the only stereo and hi-fi display in the whole weekend trade show. Those guys would die for Canada. They hated Hungary. They hated Russia. In Canada they had a job, they had profit sharing, they had stock options. And we all made money. It was a fantastic time!"

"Every other year, Frederik Paulsen also finances the establishment of new fertility clinics in Russia. By both selling medication via Ferring and donating money to the development of the country’s fertility care, Paulsen hopes to help curb the drastically declining birth rate in the country."

"But Cook’s email to the board was a model of transparency relative to what he and Maestri would tell analysts on the earnings call just a few hours later. They informed Wall Street that Apple was expecting $89 billion to $93 billion of revenue in the holiday quarter, underwhelming investors. But they didn’t say a word about the muted sales of the XR, or the difficulties of forecasting, or that Cupertino now expected China revenues to shrink. Instead, they soothed investors with cheery sentiment. The obfuscation was brazen. Asked specifically about the XR, Cook replied that it’d been on sale for just five days so “we have very, very little data there.” Asked about “deceleration” in emerging markets including China, Cook said it was a “great question” and mentioned “we’re seeing pressure in… markets like Turkey, India, Brazil, Russia.” Then he switched to China, subtly moving from present tense—the nature of the question—and looked back a quarter: “In relation to China specifically, I would not put China in that category. Our business in China was very strong last quarter. We grew 16 percent, which we’re very happy with. iPhone in particular was very strong, very strong double-digit growth there.”"

"According to sources, Hans Rausing was happy about his new role after selling his share of ownership. He had proven that he was an industrialist, which had been an important pursuit for him. Money and fame, however, had not been of much importance to him. “Hans never wanted to go down in history as the world’s richest man,” stated a person close to him. He could finally retire to his estate Wadhurst Park in Sussex, England, and use his fortune to do things that truly interested him. One such area was to finance and contribute with expertise and networks to develop companies in Eastern Europe and Russia."

"Even at this hour, before this great day shall pass away and be lost in the ocean of eternity, your emperor must address you, and say how satisfied he is with the conduct of all those who have had the good fortune to fight in this memorable battle. Soldiers! You are the finest warriors in the world. The recollection of this day, and of your deeds, will be eternal! Thousands of ages hereafter, as long as the events of the universe continue to be related, will it be told that a Russian army of 76,000 men, hired by the gold of England, was annihilated by you on the plains of Olmütz.121"

"Until the early 1990s, most bluefin tunas went to Japan, and for a while afterward, toro became extremely popular in the United States. However, when the IT bubble burst in the U.S., demand increased towards Russia, and now it’s China. Hearing about the destinations of bluefin tuna gives insight into where the economy is booming. I genuinely think bluefin tuna has become a global commodity. However, I still wish something could be done about the price. Bluefin has become truly expensive, making it hard for ordinary people to afford."

"The 1960s were a period of consolidation as well as expansion of Rupert’s tobacco and cigarette interests. The takeover of Carreras and Rothmans led to expansion in other parts of the world. Using Rothmans as his flagship, he created a stir with his philosophy of industrial partnership in various countries where he embarked on new initiatives. Partnership companies were established on a bilateral basis in Australia and New Zealand, Malaysia, Singapore, Indonesia, Canada, Jamaica, Northern and Southern Rhodesia (now Zambia and Zimbabwe) and Nyassaland (now Malawi) − eventually even beyond the Iron Curtain in Russia and China."

"the West’s current path toward addressing climate change problems has a serious flaw. Western nations share an ecosystem with China, India, and Russia, where there’s no evidence of a real commitment to reducing fossil fuel use. Play that scenario out, and American and European taxpayers will have spent tens of trillions of dollars for radical emissions reductions, while China, India, and Russia will be polluting more. All that…"

"what lessons can be learned from the crash? The first, I guess, is to look out for history repeating itself. In 2003 in Iceland, for example, I could see clear parallels with the leveraged boom in Russia of a decade earlier, although my vantage point had changed markedly."

"As Paul Klebnikov contends in his book, Godfather of the Kremlin: Boris Berezovsky and the Looting of Russia:"

"More and more it seemed like Russia all over again, with a government boosting interest rates to get cash so it could fund itself; and the krona exchange rate was just as artificial as that of the rouble in 1998."

"unrest are essentially structural, which is a problem for a business world that often fails to appreciate structural issues. I see strong similarities in some of these nations with the overturning of communism in Russia and eastern Europe in the late 1980s and early 1990s."

"An Icelandic economist has pointed out, and rightfully so, that the Icelandic banks are the only financial institutions in the world that have gone bankrupt with an A rating. With Russia, I was always aware of the fragile state of the economy. My assumption was that it could blow up tomorrow and everything would be gone."

"We rebuilt the factory so we could make soft drinks, and I was told that I would be there for six months with an option to extend to a year. My job was to create a brand, set up the marketing operation and train a Russian to take over, but I ended up staying in Russia for ten years. I had planned to build the factory and go back to New York, but in Russia, as in life, things often do not go to plan."

"Coming from the US, where everyone greeted me sweetly and asked how I was, it was a shock to arrive in Russia. If you asked a Russian how he was, you were likely to get the answer, ‘Better today than tomorrow.’ The Russians were a pessimistic bunch, used to hearing about grand three- or five-year plans without ever seeing anything getting better. So maybe it’s harsh to say that they were pessimists; perhaps they were just well-informed optimists."

"I had found a way to recreate a product that had a history in Russia because it had been imported from Finland. It was not registered in Russia so we could copy it. And there was no copyright in Finland because of a strange arrangement whereby the archaic Finnish state monopoly had an alcopop formula which it gave to one of three breweries every other year. This arrangement, where each brewery could produce for two years before handing on the rights, had been going for decades."

"Alcopops – fruit-based long drinks infused with a shot of liquor – had been sold for some time in Finland and had recently taken off in London. A small quantity of Finnish gin and grapefruit was even being imported into Russia. I could see that alcopops would be a winner in the Russian market because there was no culture of mixing drinks; it was just shots of vodka for men and champagne for women. It was as simple and basic as…"

"No matter how difficult all was, it had also set up an opportunity for me which would play out over a decade. His crazy idea in Russia would essentially be my launchpad into the career I made for…"

"Alcopops received tax breaks in Russia because the government was trying to steer people away from vodka. Vodka claimed many lives, and even though things have changed for the better in the last twenty years, the Guardian pointed out in January 2014 that one quarter of Russian men die before reaching 55, and their average life expectancy is only 64 years, placing Russia among the lowest 50 countries in the world in that category. Alcohol had long been a major cause…"

"My view was that I had signed up for a tour of duty for up to ten years. I would do it and then go somewhere else and settle down. My friends were all getting married and having children, but that was not an option for me at that time. I was well aware of the ‘tender trap’, which was basically hooking up with a Russian woman who then became pregnant. I didn’t want to end up being somehow a part of Russia. It was always a case of going in, making money and coming out again. Of course, I still have an emotional tie to Russia because of my time there."

"We made Lowenbrau under licence from the German company. We were the first plant to get such a licence to produce foreign quality beer. The royalties we generated for Lowenbrau in Russia had a side effect in that Heineken also showed an interest and ended up buying Lowenbrau in Germany as well."

"The place was demoralised. You had outstanding doctors and dedicated nurses, but they were frustrated by the process. If you do not know that your way of doing a leg operation, for example, is more or less costly than another equally successful way, then you have no basis on which to take rational decisions. You are just doing whatever happens next and that is a very depressing world to live in, and it is an incredibly wasteful one too. The hospital system had collected information about costs for 20 years, then stopped because nobody was doing anything with it. Information on costs alone was of no use for management unless they also had market prices, which show the value of what they were doing. At Freightways we knew exactly what each service cost and the value to the customer, represented by what they would pay, but these poor people simply got an amount of money and when they’d spent it, they stopped or requested more. Meantime, because money was limited, there were huge waiting lists in every area of medicine. Without prices, there can be no real management. We know how badly the Russian economy worked without prices. Here the government in New Zealand insisted that we run a huge and important system exactly the way the communists ran Russia. It was insane and still is."

"Seeing the world from a helicopter is phenomenal. You’re like a voyeur, looking over the neighbour’s fence, and then you come down and mix with locals. From 500 feet, you gain a grasp of the landscape and the geography. Then as you cover more ground, I think I’ve been to 130 countries so far, you get a real understanding of the earth. The first thing you realise is that it’s nonsense when people worry that the earth won’t be able to feed a growing human population. I’ve flown over millions and millions of acres of unused or underused productive land, particularly in the Ukraine and Russia, South America and Africa, where the most obvious example is in Zimbabwe. And the world’s certainly not crowded."

"In Russia, I was able to get out in time. This time, I was too deeply entrenched. As an investor, I was being chased by banks every day. ‘What do you want to do next?’ they would ask. ‘Want to deal in real estate? We’d love to help you. Can we lend you some money?’ The banks were hugely overbor-rowed themselves and yet chasing new opportunities to lend. We should have spotted the dangers of the situation a mile off."

"Extracting myself from my misplaced investments in Icelandic banks was much more difficult. I knew that I could not sell the 40 per cent stake in Landsbanki or the 38 per cent holding in Straumur, the Icelandic investment bank of which I was chairman. I held both stakes jointly with my father but realised that they were simply too large a piece of the financial infrastructure for them to be allowed to be sold without a great deal of time-consuming regulatory scrutiny. And I had grave concerns about the strength of the krona, the management of the Central Bank and Iceland’s financial system. I kept thinking of what had happened in Russia ten years earlier. The Icelandic krona was being artificially strengthened by the government, which was offering foreign investors krona-denominated bonds at excessive rates of interest. As the coupon on the bonds went from 10 per cent to 12 per cent then 14 per cent and 16 per cent, my forebodings grew. More and more it seemed like Russia all over again, with a government boosting interest rates to get cash so it could fund itself; and the krona exchange rate was just as artificial as that of the rouble in 1998. But this time it was happening in my own country where I was heavily exposed to the economy. I needed an exit plan."

"So what lessons can be learned from the crash? The first, I guess, is to look out for history repeating itself. In 2003 in Iceland, for example, I could see clear parallels with the leveraged boom in Russia of a decade earlier, although my vantage point had changed markedly. Instead of being young, poor and mustard-keen in a freezing Khrushchevera apartment block, I had made my first fortune, was living and travelling first class and had an office in Park Lane. Still, I could not resist grabbing another piece of the action. Five years later, I experienced a familiar feeling. Iceland’s boom was not going to last any longer than Russia’s had but, while the merry-go-round kept turning, it was tempting to stay on for the ride. ‘When there’s so much money available, you should take it while it lasts,’ was the prevailing sentiment at the time. It was another land-grab situation."

"When communism crumbled in eastern Europe, the fear was palpable. Entire economies were coming apart, familiar structures were vanishing overnight. But beneath that surface, something new was taking shape. I didn’t run from that chaos – I ran towards it. In Russia, I found opportunities where others saw only risk, and I managed to create a start-up business in the rubble of the old system there. The same was true during the eastern European privatisations. Governments were offloading valuable assets, often at fire-sale prices, like in Bulgaria in the pharma and telecoms assets, simply to survive the transition. These were moments not of destruction, but of reinvention. And they rewarded those who dared to act."

"A decade and a half later, I made my first fortune amid the Khrushchev-era concrete apartment blocks of Russia’s hinterland following the collapse of the Soviet Union and fall of communism. I made my money from alcopops and beer, funding growth through my credit card, bank and private equity borrowings and working all the hours I could. Calculating that there were large profits to be made for the first outsider to successfully launch a premium beer brand in newly capitalist Russia, I set up shop in the Wild East and built the nation’s biggest foreign-owned brewery start-up, selling out for hundreds of millions of dollars ten years later."

"In Russia I was just a marginal character outside the system, whereas at the time of the crash in Iceland I was close to the centre. I had the biggest balance sheet and the biggest exposure to the economy, but I did not realise how weak the state was. I was also fooled by the ratings. An Icelandic economist has pointed out, and rightfully so, that the Icelandic banks are the only financial institutions in the world that have gone bankrupt with an A rating. With Russia, I was always aware of the fragile state of the economy. My assumption was that it could blow up tomorrow and everything would be gone."

"Another similarity is the oligarchies that had emerged in pre-crash Russia and in Iceland. I would estimate that in 2008 about 30 people controlled Iceland’s economy, out of a total population of 300,000. That is one in 10,000: not an excessive concentration of power compared with, say, the US or the UK, but the extent of what Iceland’s political and financial oligarchs controlled was, as with their counterparts in Russia, disproportionate, which in such a small country created a huge imbalance."

"What happened is that money got diverted out of the economy into the capital markets. It is like when people stop buying houses and cars and instead mortgage their apartments and start speculating in the equity and government bond markets. Companies can do that too. Directors say to each other: ‘Let’s not focus so much on fishing or making more food here. Let’s just buy this debt.’ This is one similarity between what happened in Russia and Iceland before their respective crashes. In Iceland, the situation was stoked up by an unrealistically strong krona and the state issuing paper. Of course, the banks had their problems too, but the biggest problem was the unsustainable strength of the currency. That is what caused the most collateral damage when the bubble was finally pricked."

"Coming from the US, where everyone greeted me sweetly and asked how I was, it was a shock to arrive in Russia. If you asked a Russian how he was, you were likely to get the answer: ‘Better today than tomorrow.’ The Russians were a pessimistic bunch, used to hearing about grand three- or five-year plans without ever seeing anything getting better. So maybe it’s harsh to say that they were pessimists; perhaps they were just well-informed optimists."

"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."

"It has been amazing to watch how this man has shaped Russia over the last quarter of a century. When he first appeared in the Kremlin with real power as prime minister in 1999, while I was living in Russia, he was just what the country needed. A disciplined leader with ambitions to turn Russia around from the downward economic and social spiral that his weak predecessor Boris Yeltsin had presided over while he was in power. Yeltsin was simply a raging alcoholic with a kleptocratic circle of oligarch advisers who were not working in either his or Russia’s best interests by any measure."

"We made Lowenbrau under licence from the German company. We were the first plant to get such a licence to produce foreign quality beer. The royalties we generated for Lowenbrau in Russia had a side effect in that Heineken also showed an interest and ended up buying Lowenbrau in Germany as well."

"My view was that I had signed up for a tour of duty for up to ten years. I would do it and then go somewhere else and settle down. My friends were all getting married and having children, but that was not an option for me at that time. I was well aware of the ‘tender trap’, which was basically hooking up with a Russian woman who then became pregnant. I didn’t want to end up being somehow a part of Russia. It was always a case of going in, making money and coming out again. Of course, I still have an emotional tie to Russia because of my time there. But my motto was: ‘Never have anything in your life that you’re not ready to walk out on at five minutes’ notice. Be totally flexible, because the world can change in a minute.’ It sounds harsh, but it is how I operated."

"The transaction with Heineken also included 49 per cent of the long drinks company, but we kept the remainder and managed the business. Heineken did not have much interest in that business so a year later I went to see Jean-François van Boxmeer, who was later to become Heineken’s chief executive, and offered to buy the Dutch brewer out of the venture. ‘Interesting,’ he said. ‘You actually want to buy the business from us?’ I replied: ‘Yes. I can pay cash for it now,’ and he laughed. ‘That’s great news,’ he said. ‘If you want to buy it, basically it means it’s worth a lot. If you want to buy it, I don’t want to sell.’ He tapped his nose. ‘You have a nose for business,’ he said, ‘I want to sit next to you as a seller!’ We ended up selling the long drinks company to a listed Russian company and, yes, we both made money on the deal."

"This became more difficult when I made the move from business operator to investor. I started this diversification before selling my Russian operations, and in 2000 an investor road show was held for a deal that I was doing in Iceland. There was a morning meeting with Icelandic bankers and analysts and all the relevant business executives. We asked if there were any questions and after two minutes of silence, one of the analysts said: ‘Thor, how was the mafia in Russia?’ I had to spend time telling him that I really didn’t come into contact with it much. During my ten years in Russia, I reckon that the proportion of my time spent having to deal with mafia-related issues was less than 2 per cent. Nevertheless, it is not the sort of thing that twitchy lawyers, accountants, bankers and regulators want to have to think about when dealing with investments."

"If this all sounds breathless and conducted at breakneck speed, that’s exactly how it was. A few years after first getting involved in Bulgaria, I employed 12,000 staff in telecoms and 4,000 in pharmaceuticals. I used the nation’s top investment bankers and owned some of its best real estate. But in Bulgaria I had a very different role from the one I had in Russia."

"Those disasters apart, however, my self-made life as a special situations agent moving from country to country in search of financial action was tremendously exciting. Looking back, it is perhaps not surprising that I didn’t want to get off the carousel even though I knew intuitively that it wouldn’t and couldn’t keep going for ever. The signs were there towards the end, but the markets were with us for such an uncommonly long period. There had been plenty of privatisations and I was operating in eastern European and Scandinavian markets that I knew. In Bulgaria, for example, we were operating in a different league compared with the rough and tumble that we had experienced in Russia. We mixed with mayors and prime ministers and always travelled with armed bodyguards. And we always tried to fit in with the local culture – even when we had to eat calf brains."