World

Ex-RICHEST Man in Russia, Must Pay Employees Over $1 Million

by sara star | June 30, 2009 at 04:03 am

196 views | 24 Recommendations | 3 comments

How do workers in Russia, who make $250/month, protest for not being paid? Especially if the Boss was THE richest man in all of Russia. (He lost $40 billion in the economic downturn and only has about $5 billion left.)

Pikalevo is the town that has seen the most social unrest since the fall of the economy. So earlier this month, they stopped the traffic for 250 miles on a main highway and demanded the presence of Putin to solve the problem.

Last week Pikalevo’s residents vented their anger over job losses and unpaid wages at one of the oligarch’s local factories by blocking a major road and causing a 250-mile traffic jam.

Mr Putin first had a serious talk with tycoon, Oleg Deripaska.

Mr Putin, who is a master at dispensing ritual humiliation, likened Oleg Deripaska to a cockroach and forced him to accompany him on a tour of Pikalevo, a factory town that has witnessed the most serious social unrest Russia has seen since the start of the global economic crisis.

...“Why has your factory been so neglected?” he demanded, as Mr Deripaska hung his head in apparent shame. “They’ve turned it into a rubbish dump.Why was everyone running around like cockroaches before my arrival? Why was no one capable of making decisions?”

Putin ordered him to pay the wages. Isn't that what Prime Ministers do?

He then ordered the tycoon to pay all outstanding wages – £830,000 – before the day was out. Mr Deripaska was Russia’s richest man until last year. He has suffered a dramatic reversal of fortune as mounting debt has seen his assets shrink from £17 billion to about £2 billion today.

UPDATE:

To add to this posting is an opinion by Russian journalist, Yulia Latynina, who asserts that the Kremlin "bailed out" owner Deripaska after disgracing him on TV.

Everywhere else in the world, an owner who makes a critically flawed business decision loses ownership of his company. In Russia, oligarchs who don’t pay their debts receive state support.
In early June, weeks after Deripaska’s BaselCement factory in the small town of Pikalyovo had halted production and stopped paying wages, angry workers blocked a federal highway. Putin flew to the city, and the entire country watched on television as he threw a pen at Deripaska and told him to sign an agreement to pay back wages and reopen the plant.
It appeared from the carefully orchestrated scene that Deripaska was publicly disgraced. He certainly looked disgraced, as his head was scrunched between his shoulders and his tail tucked between his legs. What viewers didn’t know, however, was that this was all a charade. The contract that was supposed to bring Deripaska down to size actually ended up being heavily in his favor. One day earlier, Putin had presided over a meeting of the VTB supervisory council that extended $4.5 billion in credit to the oligarch. Although analysts estimate that Deripaska spent $50 million from his personal fortune to build an elite golf course in Tseleyovo near Moscow, the 1.5 billion rubles ($45.3 million) used to refit the oligarch’s factory did not come out of the oligarch’s pocket; the financing was provided by VTB.