Business Rivals Don’t Mix in Standoff at Vodka Plant

Vodka is at the heart of many quarrels in Russia, but some Russian businessmen got almost everything right when they moved to take control of the country’s most famous vodka factory, Kristall, which makes Stolichnaya.

Peeved at a court decision against them, they pounced during a calm Friday evening in summer, a time when the only thing on most people’s minds is getting out of the city for the weekend. Police toting Kalashnikov assault rifles covered their move.

All went according to plan when they seized the director’s office. And there they camped.

They got only one detail wrong: A business quarrel that might have attracted little attention in the cut-throat world of Russian business at any other time of year was suddenly the top news item. Still holed up Monday in the director’s office, where he had been sleeping for three nights on a fold-down bed and snacking on dry biscuits, Alexander I. Romanov, who led the takeover bid, was looking decidedly uncomfortable fielding awkward questions from a mob of journalists.

Production continues, but an invisible line now divides the 99-year-old factory. The plant has two rival managements, two would-be directors and two armies of thuggish, shaven-headed security guards.

The dispute illustrates the unsavory side of doing business in Russia, where takeover wars often are played out by rival security teams and the word of the courts is not always final, nor is it necessarily untainted.

There has been a rash of similar cases. In the best known, Interior Ministry riot police used chain saws to break down the doors at the Transneft state pipeline monopoly last September and install a new president. Early this year, armed men ousted the director of the Kachkanar vanadium mine. Similar incidents have occurred at factories in Moscow and Kaliningrad.

Russian President Vladimir V. Putin has promised a “dictatorship of the law” in Russia, but in the Kristall dispute, Romanov claims to be representing the interests of the state.

Both sides here talk angrily about lawlessness and demand state intervention to decide the future of the plant, which is 51% state owned. And both are waiting to see what authorities will do.

Romanov was appointed general director by the board of directors in May, but that decision later was overturned by a Moscow court.

So why not go back to court to make his claim, rather than bed down in the director’s office beneath shelves containing dozens of commemorative bottles of vodka?

Romanov says that would take too long, maybe six months or a year. “I cannot sit around without a salary. I have to eat,” he said.

First Order of Business Is to Follow the Money

Deferring frequently to the whispered advice of his legal counselors during an interview, Romanov denied using force to enter the factory and said none of his guards were armed. But he conceded that there were armed police present at the time.

The immediate task, he said, is to get control of the firm’s financial flows. But with payday looming today, there is a problem.

The chief accountant, Vladimir L. Svirsky, whose signature is required for access to the firm’s bank accounts, is a chief player on the enemy team. But the cash desk, which hands out the paychecks, is Romanov’s territory. Neither side seems clear as to how the workers will be paid.

Romanov, a former vice president of Rosneft state oil company, acknowledged that he cannot go anywhere near the production line--nor any part of the plant outside the administration block--because it is controlled by his rivals’ security men.

“Our opponents are acting lawlessly,” he declared firmly. An advisor leaned forward to whisper a prompt: “That’s my opinion.”

“That’s my opinion,” Romanov added, his plump fingers clasped together on the director’s desk.

“The state should give the best possible support to speeding up the court procedures,” he said, then, turning to his advisor, queried: “Can it do that?”

“Well, not really,” came the noncommittal answer.

The struggle between rival factions on the board has been going on for six months.

While the state owns the majority of the plant, the remainder is divided among various other shareholders, including members of the plant’s old management.

Svirsky, who also is acting director representing the old management, is holed up in the marketing director’s office, surrounded by his own group of lawyers and advisors.

“They barricaded themselves in the director’s office. People can’t get inside. The entire plant is ours, and they control one building which has no connection to the rest of the plant,” Svirsky said. “We know the man [Romanov] has committed an act of lawlessness, and we expect the guilty party to be punished.”

The factory has seen dark days and frightening moments, according to Zinaida N. Stepanchuk, press officer at the plant, loyal to the old management.

The early 1990s were bad, she said, with the flood of cheap foreign vodka and collapse in production, but this crisis takes the cake.

“Now this oil man will produce his own vodka, which will reek of oil,” she spat, in a reference to Romanov’s background at Rosneft state oil company.

At the peak of production in Soviet times, the plant produced 120 million liters of high-quality vodka a year. Production now is 80 million liters.

Yevgeny A. Panteleyev, chairman of the board and an official of the Moscow city government, said the conflict was connected with the desire of the city government to appoint its own man, Romanov, as head of the plant. The Moscow government controls four seats on the board, compared with five seats for the federal government.

“The whole conflict is connected with the position of general director. We want him to be one of us,” Panteleyev said at a news conference. “We’ve made our decision, and nothing will change it. Even if the court makes another decision, it will change nothing, because our decision has been made.”

Conflict Sends Dubious Message to the West

Mikhail G. Delyagin, director of the Institute for Globalization Problems, said the conflict sent a message to Western investors that violence is acceptable in Russian business.

“If you are ready to conduct business in such a manner, you are quite welcome in our country,” he said. “The state doesn’t seem to know how to replace the management of its own enterprise in a more or less civilized way. As a result, we see quite questionable management decisions followed by open and direct violence.”

On the shop floor, where production continues unabated, the reports that Romanov stormed in with men who were carrying Kalashnikovs caused anger among many workers who feel loyal to the old management that has paid them good salaries.

Natasha Kozhevnikova, 37, who makes the equivalent of $144 a month, said nobody liked Romanov’s approach to the ownership conflict.

“Maybe he’s a bandit. I’m ashamed that the West sees all this stuff. I’m ashamed for my country, and I’m ashamed for my plant,” she said.

Nina Kudinova, 43, who used to earn $25 as a cleaner and joined Kristall a year ago on a salary of $180, shrugged her shoulders about the conflict. “I don’t see the old director; I don’t see the new director. I don’t care. To me, the most important thing is that I have work here every day.”

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Sergei L. Loiko of The Times’ Moscow Bureau contributed to this report.