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. Last Updated: 07/27/2016

Soviet Premier Excels Selling Software




Valentin Pavlov is hardly a typical U.S. computer industry executive.


After all, how many American firms can boast a vice president who has helped stage an abortive coup d'etat, conducted a confiscatory monetary reform and presided over the demise of a bank?


Yet New Jersey-based software developer Business Management Systems, or BMS, appointed Pavlov its vice president for business development earlier this year.


"If I could not complete something on the national scale, why can't I do it at the corporate level?" said Pavlov, who was prime minister of the Soviet Union at the time of the Aug. 1991 hard-line Communist coup.


BMS, a developer and seller of industrial production and distribution software, is no fly-by-night operation. In Russia, it counts among its clients such international giants as Coca Cola and Ford. And Pavlov has played a major role in securing the contracts.


Fellow BMS Vice President Zakhar Kogan said Pavlov fit his position perfectly.


"His connections allow him to organize the company's whole business on the scale of the former Soviet Union," Kogan said. "He knows a great number of companies, the people who run them and what they need."


His success with Coca Cola notwithstanding, cynics suggest Pavlov's effectiveness is mostly explained by older company managers' nostalgia for the regime Pavlov used to represent.


"He can call a factory director and ask him if he needs the software, and the director will buy it even if doesn't really need it," said an expert with the Rating Information Agency who asked not to be identified. "Among the older generation, his weight is enormous."


Pavlov himself says he feels no nostalgia. Since the Soviet Union's demise, he has tried to make the market economy work for him and his family, and he is proud of the results, he told The Moscow Times in an interview.


"Most Russian people carry the gene of the past, there's a duality inherent in everybody today," he said. "I am, on the one hand, a man who started market reforms back when democrats were not even around yet, and on the other hand, a man with vast experience of centralized state management."


Pavlov, however, is best known not for implementing market reforms, but for a confiscatory exchange of 100-ruble and 50-ruble bills in 1991. Russians were given three days to exchange old bills for new ones, and tough limits were imposed on how much cash could be exchanged. Pavlov is still widely disliked for the money "reform," but he defends it now just as he did seven years ago.


"I don't know anybody who can claim he lost his money in the reform," he said. "This was an anti-crime, anti-corruption measure."


One of the leaders of the August 1991 coup against Mikhail Gorbachev, Pavlov spent 18 months in jail with his fellow plotters. His career in the private sector began immediately after he was granted amnesty in 1993.


He managed a small bank for 18 months but then resigned when the owners sold Rublyovsky.


For three months in 1995, he was the president of Chasprombank, which went under along with a number of other Russian banks that year.


Pavlov blamed the bank's decline on its founders, including the Mikrodin trading company and the Uglich watch factory, which took out loans from the bank and failed to repay them.


The Rating Information Agency analyst agreed that the bank fell victim to its management's "risky credit policy" and that Pavlov was not responsible.


In January 1996, Pavlov became a financial consultant to Yakov Dubenetsky, chief executive of Promstroibank, one of the Russia's largest commercial banks. During his tenure there, the former prime minister says he advised Dubenetsky not to give a $40 million loan to Grigory Lerner, a notorious scam artist who last spring received a six-year sentence from an Israeli court for fraudulently obtaining $14 million from Russian and Israeli banks.


Pavlov and Lerner were inmates together at the Matrosskaya Tishina Prison in Moscow. "I knew what kind of person [Promstroibank managers] were dealing with," he said.


Pavlov claims that after his failure to obtain the $40 million, Lerner launched a smear campaign against him, accusing Pavlov of financing the Russian Communist Party through Promstroibank. Articles to that effectindee d appeared in a number of Russian newspapers at the time, but the allegations have never been proved.


"In this situation I decided I had better leave if my presence there hurts my friends and colleagues," Pavlov said.


In the 1970s, Pavlov served as a department head at the Soviet superministry Gosplan, which boasted the most powerful computer center in the country at the time. He says enlightening his staff on the advantages of information technology was part of his job.


"Many believed, as they do now, that automation would mean job losses. Later, people realized that the machine was an ally, not an enemy," he said.