Top businessmen not immune to Putin’s wrath

Prime Minister’s personal handling of the business conflict in the town of Pikalevo has set a precedent in the public dressing-down of the country’s top businessmen for neglecting their social responsibility.

Interestingly, one of the people receiving the dressing-down was one of Russia’s most famous businessmen, Oleg Deripaska, who used to be the richest man in the country until the global financial crisis left him heavily in debt.

The high-point of the show was Putin virtually arm-twisting him into signing a contract, which was needed for the troubled factory to start working again. During the meeting, chaired by Putin, Deripaska was obviously unnerved, with cameras catching his every move and facial expression. Never before has a person of his caliber been publicly humiliated this way in modern Russia.

The experts are now confused over what this may mean. Was it the government’s signal to big business that they are not allowed to put their economic interests before social considerations? Will workers of the many troubled companies throughout Russia now be encouraged to take to the streets, expecting Putin to personally micromanage every labor conflict in the country? The situation resembles that of Dmitry Medvedev’s personal blog, which people now use, with a moderate degree of success, to report on injustices and the faults of local authorities.

Vladimir Putin is well known for his heavy temper and the ability to lash out with his angry words. However, previously his involvement in conflicts between business-owners hasn’t become public news, with all the hard talking done behind closed doors.

Lately this has changed. Among the latest examples of the economic stand-offs solved by the prime minister – in the style of Alexander the Great dissecting the Gordian knot, and with painful consequences to the people involved – are the price-fixing scandal with aircraft fuel and the case of Mechel last year.


Oleg Deripaska

But even among such episodes as these, Thursday’s trip to Pikalevo stands out. Pikalevo is a small town with one big employer, a typical situation hanging over from the Soviet economy. Some time ago, the production line was split into three separate businesses with different owners. This eventually led to a pricing conflict, raw material supply interruptions, production halts, the sacking of workers and a mounting wages debt. The situation spilled over this week, with people denied both jobs and payment for their previous work blocking a major road in protest.

On Thursday, Putin arrived on the scene and gave a really hard time to all involved. He alleged that the blocking of the road may have been paid for in order to disrupt his visit. He said the new owners have turned the factory into “a junk heap”. He accused the governor of the region of failing to do everything he could to solve the situation. And he put the blame on the businessmen for holding thousands of workers as hostages to their “ambitions, lack of professionalism and probable greed”.

After Putin stepped in, the indebted company managed to get a bank loan to pay the salaries in almost no time, and the parties resolved their points of disagreement and put the production line back in action. This all in one day, after months of stalemate.