Repatriate Finds a Home in Russian Insurance

MTPaul Goncharoff has faith "in the country as it is today and as it will be tomorrow."
A New Yorker raised amid 1950s McCarthyism and nurtured by two sets of Russian monarchist grandparents, Paul Goncharoff grew up hearing enough horrifying stories about communism to convince him that he would never visit, let alone work, in the Soviet Union.

With that kind of upbringing, Goncharoff, 47, was surprised to find himself, decades later, deeply involved in opening trade ties between the United States and the Soviet Union during the Cold War's twilight.

Now, his grandparents' warnings only a distant echo, Goncharoff has become a pioneer in Russia's insurance industry at the helm of Progress Garant. The development of the industry is an essential ingredient in creating civil society, he said.

"If you asked me why I'm still here, I might jokingly say it's because I can still smoke cigarettes in a restaurant," he said.

But in reality, the real reason Goncharoff said he stayed is that he has faith "in the country as it is today and as it will be tomorrow.''

Goncharoff's career in Russia began in the mid-1970s while he was working as a metals trader at Ayrton Metal & Ore Corporation to pay his way through New York University's College of Business and Public Administration. During that period Goncharoff's boss, Sam Ayrton, asked a group of traders: "Who here speaks Russian?"

Goncharoff kept quiet, but Ayrton pressed harder. Before Goncharoff knew it, he had admitted to his Russian roots and was sent on his first mission to the Soviet Union, inaugurating a quarter-century relationship with a country he now happily calls home.

That happiness came slowly, though. Goncharoff had been raised to consider himself an American first and foremost, and especially against the background of the Red Scare, identifying with Russia was unpopular.

But Goncharoff has been slowly drawn to his roots.

"Like it or not, I'm an American, but I am an American of Russian descent," he said.

Goncharoff never studied Russian except for a few months when he was 10 at Manhattan's St. Sergius School for Russian Studies, from which he was expelled for blowing up a homemade cherry bomb in the men's room.

His informal tutelage -- in Russian language as well as politics and business -- came at his grandparents' kitchen table.

"My grandfather was a parliamentary monarchist from the word go," Goncharoff said. "He almost disowned me when I first went [to the Soviet Union]. But he said if you can do the impossible and make money from the Bolsheviks, make as much as you can."

On a 1975 trip to the Soviet Union, he started doing just that. He helped create the largest and longest-term supply contract ever signed between the United States and the Soviet Union for platinum group metals, which guaranteed supplies for the next 16 years.

At first, Goncharoff did not enjoy his visits to Moscow. The country's poverty and inertia frustrated him.

He recalled a business trip to Moscow before perestroika when he stayed at the National Hotel before it was renovated. He asked to stay in room 14, the room in which his grandfather had said he lost his virginity. Inside the room was an old piano.

"When I came back home, I showed some photos to my grandfather. He went silent and then said, 'Oh my God, the same piano,''' Goncharoff said.

Four or five years later, Goncharoff stayed in the same room again. The piano, still unpainted and out of tune, was still there. "The poor piano just got worse," he said.

After a series of positions trading precious metals, Goncharoff left the industry in 1986 because he thought the profit margins had become less interesting as the number of players had multiplied.

He became vice president of Robots and Software International, a medical and technological research and development firm, which helped create Israeli technologies like the Primus, which is used to treat prostate disease.

Goncharoff said the leap from metals trading to medical research was not too extreme -- as in his previous endeavors, it was prompted by his curiosity and nose for sales opportunities.

At the same time, during the first stirrings of glasnost and perestroika, Goncharoff became the first non-Russian ever nominated to the Presidium of the Academy of Technological Sciences of the Russian Republic. There he focused on commercializing technologies to benefit inventors instead of their institutes, an initiative that he said failed because the right legislation did not yet exist.

Concurrently, Goncharoff bought the rights to the Primus technology and started Goncharoff Holdings, a company that produced medical devices. After a decade of relative stability, the 1998 crisis sent Goncharoff Holdings under -- nearly 100 percent of its exports had been destined for the newly weakened Russian market.

But because he had juggled so many hats during the 1980s and 1990s, Goncharoff had already created other options -- including opportunities in insurance.

He became the director of AIG Russia General Insurance, a subsidiary of the U.S.-based American International Group.

He took the job at AIG despite the fact that there was no precedent for Western-style insurance in Russia at the time. AIG, which had been operating in Russia since 1995, had been hit hard by the 1998 crisis.

Goncharoff left AIG in June of 2002 partially because of a dispute over sales policies, he said.

"I got interrupted halfway through the dance," he said. "So when Group Menatep [which owns Progress Garant] approached me, I did some soul searching and looked around and said OK, now I can effectively make the rules."

Group Menatep offered Goncharoff the reins of Progress Garant in October 2002. Goncharoff said his biggest challenge in his new position has been positioning Progress Garant as a competitive player that can move beyond just servicing Group Menatep companies.

Goncharoff also sits on the advisory board of the Independent Directors Association of Russia, which promotes corporate governance and transparency.

"Do business however you have to, but there comes a point where it's counterproductive to gray it," he said. "If you look at Russia today, there really isn't any reason to be off books -- it's inefficient."

Goncharoff, a self-described student of the world, has been all over the map, and warns that insurance might not be his last stop.

"At some point in my life, I'd like to open a restaurant because I love to cook. If you can eat it, I can cook it," he said.