Adapting to enterprise culture began with soup cubes in car boot

KONSTANTIN Fyodorov's job in the old days was to drive a car for a foreign correspondent

KONSTANTIN Fyodorov's job in the old days was to drive a car for a foreign correspondent. It entailed battling with the ingrained bureaucratic process every day of his working life.

The correspondent wanted a train ticket for Leningrad. Kostya headed out in the morning, did his queuing and elbowing, the wheeling and dealing, and, if luck was on his side, the task might have been achieved by mid-afternoon.

The correspondent wanted to withdraw money from the bank and it was the same story hours of monotonous queuing and form filling before the money was received.

Talking of money, Kostya has plenty of it now. He is a millionaire businessman who supplied 53 per cent of all the pasta consumed in the vast Russian Federation. Like most Russian businessmen he won't give any figures and he plays things very carefully in a country in which business and crime are almost synonymous.

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No flash cars for Kostya, although he did once own a Mercedes. Now he runs a Zhiguli, or a Lada as it is known in this part of the world. "It's a great car because it's invisible," he says. The more invisible one's wealth is in Russia the better.

He had made up his mind to go into business as soon as it became permissible during the latter part of the Gorbachev years, and his first venture was in tourism. Under perestroika, visits to Russia became less difficult for foreigners and Kostya foresaw a booming industry in which he would have a valuable niche.

Weekend trips in giant Soviet military helicopters were arranged while he still had his day job as a driver Moscow to the ancient northern city of Novgorod became the favourite.

Then came inflation. Fuel prices sky rocketed and the helicopters were grounded. Down but not out, he recognised that the only asset he now had was the boot of his car and he had to use it to transport items which were small in size and had a decent mark up.

Soup cubes were the answer you could fit thousands in a boot. This became Kostya's first profitable venture and he hasn't looked back.

Fortunately for him the food industry was not infested with mafia types. "The mafia went first of all to where big money was to be made," he told me. "They went after oil and gas and diamonds and such. They also went for businesses that were highly visible, such as restaurants, night clubs and casinos. Luckily for me they weren't interested in pasta."

After bread and potatoes, pasta of one form or other is Russia's next most important staple food. In the old days Soviet factories churned out inferior makamni and it sold well because it was the only pasta available. Now the home made product has vanished, attempts to upgrade quality, including major investments from Russian banks in new plant, have failed.

"My idea was to import basic things that I always needed, that I always wanted myself. If I needed these things, if I yearned for them, then I reckoned most Russians would want them, too. I started importing Italian canned beef and then Italian spaghetti which became our main import, our main speciality," he said.

Russians want Italian pasta and Kostya supplies it and the canned sauces to go with it. If the customer cannot afford Italian pasta Kostya will supply cheaper brands from Iran, Algeria and Turkey.

His only major outlay is the hire of a warehouse outside Moscow. The trucks come there from Italy Turkey, Iran and Algeria and deposit their goods. Then the vans arrive from the shops who are Kostya's customers to collect the pasta and bring it to the outlets.

There are problems, of course there are always problems in Russia. Kostya like most small and medium sized business owners has a lot of complaints.

"The Soviet Union came to an end for economic reasons. It had nothing to do with ideology. The war in Afghanistan simply drained the economy of its resources and there was no choice but to move to a market economy.

"That was a good move, but what did our government do as soon as they got the market economy going? They got involved in a war in Chechnya that cost millions of dollars a day. Some people made money out of it, but it was very bad for the country as a whole."

There were personal difficulties, too there were problems at every step. "Nobody was blocking our way but nobody was helping either. My main problem was that I didn't have any experience, no office, no staff. I was my own lawyer, my own economist, my own typist. I had to meet the truck myself and I had to unload it myself. I had to arrange all the customs documents myself."

Today's difficulties are of a different nature. If a western company wants to borrow money to expand its business in Russia it simply goes to a western bank and gets a loan at 5 per cent. A Russian company, however, must borrow from a Russian bank and there the interest rates run to 140 per cent per annum.

And banks arc dodgy in Russia. Many arc owned and run by the mafia. There are banks but there is no banking system. You can't pay by cheque, for example all deals are paid for in hard cash.

"Business in Russia is dangerous. I am not talking about my personal wealth. You are dealing with big sums of money every day, big amounts of goods."

Kostya is rich and drives a Lada. He's rich and lives in an ordinary apartment. He's rich and he has taken one holiday in three years. Why does he do it?

"I enjoy the freedom of action. In the past you couldn't do what you wanted to because they would not let you. Now I can do what I want to do and I do it."

And the future? Well, Kostya is not very optimistic. We have to pay all these taxes now, so we have the right to expect that salaries of state employees are paid on time that our parents get paid their pensions or their salaries, that there will be some kind of free education and health service. But that doesn't happen. The state just collects the money and gives nothing in return."

Kostya concludes "Russia has a bright future. But we are crawling towards it and even then there arc people trying to pull us back."

Seamus Martin

Seamus Martin

Seamus Martin is a former international editor and Moscow correspondent for The Irish Times