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. Last Updated: 07/27/2016

A Family of Born Leaders




Little is known about Yelena Baturina, a 35-year-old graduate of the Moscow Management Institute, a successful entrepreneur, the mother of two blonde little girls f Alyona, 6, and Olya, 4 f and the wife of the mayor of Moscow. And Baturina says she likes it that way.


"For as long as I am capable of escaping the floodlights of attention, I will do so," said Baturina during an interview at the offices of her Inteko holding company, located just off Ulitsa Tverskaya behind the Central Telegraph building. "For now, as the mayor's wife, I think I can remain in the shadows ? Besides, I have a great excuse: my tiny children."


But that's not to suggest Baturina is a shy or retiring person. On the contrary, this tough-spoken young woman presides over Inteko f a mid-size company that owns and operates five factories and the Moskva-Reka trading house f with much the same energy and appetite for detail her husband, Yury Luzhkov, displays in running the city of Moscow.


Baturina, a blond who looks younger than her 35 years and who laughs generously and often, is also the Luzhkov family breadwinner. That's according to the mayor himself, who told an interviewer in 1992 that nearly all of his family's income came from "the wife's plastics business."


She confirmed that. Her pre-crisis ruble salary of about $5,000 was five times more then the mayor's official salary. Luzhkov, Baturina, their two small children and Baturina's mother live in the official mayor's residence, but she said many other expenses came out of Baturina's pocket.


The Company


Baturina launched Inteko with her brother Viktor Baturin, now 42, in 1990. The company produces and sells disposable dishes f including those used by the Moscow-city owned franchise Russkoye Bistro f plastic bags, laundry baskets, toilet seats and, most notably, stadium seats, an area in which Inteko is close to being a monopolist on the Russian market.


Inteko employs nearly 2,000 people and the company had pre-crisis monthly turnover of about $1 million. As of January 1998, the company's assets were $10 million, Baturina said.


The Family


Baturina and Luzhkov met while both were among the four people working in the Moscow government's Committee on Cooperatives f a body Luzhkov headed that was set up to register some of the Soviet Union's first experiments with private business endeavors. Doors at the committee opened at 9 a.m. and did not close until 9 p.m. f and sometimes Luzhkov would still be accepting applicants as late as midnight or 2 a.m. Even so, lines regularly formed out front.


In this small and frantic environment, Luzhkov immediately noted Baturin for her work ethic.


"Yelena Baturina has always stood out because of her enthusiasm and energy. And I should say, I was immediately impressed by her, without having any thought that this very woman would become my second, and eternal, love," the mayor wrote in his memoirs. His first wife, Marina Bashilova, died in the late 1980s after a long and painful bout with liver cancer.


The Cooperative Committee was also working closely with the Moscow Committee for Science and Technology, which was headed by one of the Luzhkov family's closest friends and political allies f Vladimir Yevtushenkov, who today heads the national television station TV Center and the AFK Sistema holding company.


Baturina had come to the Cooperative Committee in 1987 from a Moscow economics and urban planning institute. But she said the committee took up so much of her time that she could not continue with her research and abandoned all hopes of a scholarly career. In 1989, she had left the city government to head a lobbying group for small businesses, the Union of Russian Cooperatives. A year later she and her brother were launching Inteko.


A year after that, Luzhkov and Baturina married. Luzhkov was 55 and Baturina was 28. The two together joined Boris Yeltsin in standing up against the failed August 1991 coup.


Alexander Korzhakov, Yeltsin's former bodyguard, recounts in his memoirs how the defenders of the Russian White House gathered in the basement at the time. In Korzhakov's account, then-Moscow Mayor Gavriil Popov was drinking too much out of fear, while Popov's lieutenant Luzhkov and his "young wife" Baturina sat calmly, as if they were "just waiting for a train to arrive." Baturina was pregnant. As if knowing that the wait would be long, Korzhakov wrote, "she had stocked up on some food."


'The Call of Her Roots'


Inteko was at first just a group of computer software programmers who were friends of Viktor Baturin's and went into business with him and Yelena. Soon, Baturina says, the company had opened a small tool-making shop at an already existing plant near Moscow, where they produced spare automobile parts. Baturina explains the decision to get into that business as "the call of her roots:" She and her parents had worked for the Soviet Union's Frezer tool-making factory, and most of her relatives are similarly blue-collar.


But she also says the decision to focus on manufacturing f as opposed to banking and finance, for example, or real estate development f was a calculated decision that was dictated by her position as the Moscow mayor's wife. Baturina wanted to run her own business, but she also did not want to open her husband to allegations that the mayor's wife was benefitting from his offices, or to tarnish him by association with dubious projects.


Baturina has a definite list of forbidden projects, and it is topped by development work on Moscow's highly-lucrative real estate market.


"If I get a great offer, I have to walk around it time and time again to figure out if there are any undercurrents, any possibility that the project could cast a shadow of suspicion that I am exploiting my husband's influence for the sake of my business," Baturina said. "We also therefore do not do work on budget-financed contracts f which is exactly what I have been accused of."


Her brother adds that making money on food imports or hard currency operations would also be off-limits on grounds that this might clash with some of Mayor Luzhkov's stated political positions. "Taking into account her position, it was a conscious decision to move away from any easy money," her brother says. "And we have never made any easy money."


Nevertheless, running a business in post-Soviet Russia inevitably brought the Baturins into contact with the city. In 1992, Inteko bought the Lyubuchansky plastic factory, the company's first, for $1 million in investments at a Moscow region privatization tender.


Since then, Baturina has purchased controlling stakes in two other plastics factories, Almeko and Bistro-Plast, and two other toll-making factories.


Until Oct. 1996, Almeko's 24 percent stake belonged to Yevtushenkov's AFK Sistema. Today a visitor strolling through the company's gates is greeted by piles of stadium seats, each carefully wrapped in a durable plastic bag. Inside the factory itself, every two minutes around the clock, young men and elderly women step up to a machine press to remove a freshly formed red or blue plastic seat, still warm from the process.


In the spring, Almeko workers will spin plastic film for use in making the walls of dacha greenhouses. In the summer, they will make plastic lounge tables and lawn furniture. Year round, they continue to produce buckets, clothes hangers, and vases. Bistro-Plast came not from Sistema but from the City Property Committee, said Bistro-Plast's director, Valery Grin. Inteko has invested more than $3 million into renovating the once dilapidated building and outfitting it with new plastics presses. Now, in its light airy halls, semi-automatic machines press out weightless transparent glasses, tiny forks and sturdy plastic plates for clients like Russkoye Bistro, a city-owned fastfood chain Mayor Luzhkov set up a few years ago with the stated intention of "bringing McDonald's to its knees."


Every tenth disposable dish in the city is manufactured by Inteko. But Baturin, who as Inteko's general director handles day-to-day operations, says Inteko is adding a new production line at Bistro-Plast f which already churns out 120 tons of plastic a month f and hopes by the end of 1999 to be producing every second plastic plate, glass, fork or spoon used in Moscow.


Women in tidy white overalls at Bistro-Plast sort, count and bag forks by the hundreds. Into each bag goes a tag stamped with Inteko's trademark blue oval. Grin said an average Bistro-Plast salary is more than 2,000 rubles (about $87), with the lowest-end assembly line jobs paying about 800 rubles a month, with a year-end bonus that could be equal to a month's salary.


Do they know that they work for Mr. Luzhkov's wife? "Yes, one woman just told me about it yesterday," whispered a blushing young girl who started work in December.


Monopoly at Luzhniki


Moscow's gigantic 85,000-seat Luzhniki stadium was Inteko's launching pad into the world of refitting stadiums. Since 1997, when Inteko replaced Luzhniki's old wooden benches with sparkling new Inteko-made plastic seats that meet UEFA requirements, Inteko has spun the stadium-refitting business into gold f refitting some 24 additional stadiums across Russia.


Baturina says she decided to get into the stadium business after reading in a newspaper that UEFA, the Union of European Football Associations, had ordered all soccer stadiums to install individual seats with high backs to prevent unruly crowds from surging onto the fields.Originally UEFA required all stadiums to install such seating before the 1997-98 season, and then it gave clubs a one-year extension.


By the time Luzhniki announced a tender for replacing its seating, Baturina said, Inteko already had prototypes of seats to show. Inteko left all competitors in the dust by offering the lowest price, $10.50 per seat including installation."At that time, it was difficult to find a good seat for less than $16 apiece on the market," said Mikhail Anokhin, assistant to the director of Mytishchi-based Mosstroyplastmass factory, a large producer of construction materials. "Inteko was ahead of us in the game. They simply were quicker."


Anokhin said that Mosstroyplastmass then had only a few presses capable of producing their sturdy Italian-designed seats, and they simply could not produce enough seats to meet Luzhniki's needs. On a slightly more bitter note, the Mosstroyplastmass deputy director, Viktor Sak, said, "Well, our seats are much more durable, but theirs got much better lobbyist backing."


Inteko got the job done in one summer, for what Baturina said was a 25 percent profit. For smaller stadiums, the profits range between 10 and 15 percent of the job.


But if few quibble with the quality of Inteko's work at Luzhniki, eyebrows raise at Baturina's account of stumbling across that lucrative market in the sports pages.


After all, her husband was the patron of the vast 1.2 billion ruble (then about $230 million) renovation of Luzhniki. For years, the Moscow mayor has been going there at least once a week to play soccer with a team of his bureaucrats. Twice a week, Yury Mikhailovich and Yelena Nikolayevna play tennis there as well. Luzhkov is also the head of the city's Investment Economic Advisory Board, a committee that makes decisions on investing the money that the city has borrowed through Eurobonds and other municipal bond programs. Work on Luzhniki was partly financed with a five-year 580-million-ruble loan from the city. Since Luzhniki is 49 percent city-owned, the interest rate was just 10 percent, said Leonid Nikolayev, deputy head of the city committee on municipal debt.


That history no doubt prompted the authoritative newsweekly Kommersant Vlast to suggest last fall that most of Inteko's business comes courtesy of her husband and his City Hall f a suggestion Baturina shrugged off. "What Vlast wrote is absurd," she said. "The stadium contracts are not covered by budget money. Stadiums are all independent companies, and no one is giving budget money for their renovations. They [the stadiums] are coughing up their last money for these projects."


That's only partly so. According to Luzhniki spokesman Sergei Borisov, 20 percent of the cost of renovation Luzhniki was paid for by the stadium itself, 40 percent was paid for by the city budget and another 40 percent was paid for with a loan to the stadium from the city-controlled Bank Moskvy, under the City Hall guarantees.


Do all of these webs of Moscow city involvement mean Luzhkov gave some sort of order that his wife's company be given this business? Of course not, said an insider familiar with the decisions on Luzhniki construction contracts.


"Luzhkov does not need to descend to such a level: Everyone is smart enough," this source said. "But I don't see anything wrong here. The quality was good. Yes, we could have found something more durable, but hey, who else can deliver 1,500 seats in a matter of days, and replace the ones that break within a single day?"


A Sort of Warranty


But there is something to support every argument in Inteko's work on Luzhniki and other city projects.


It is entirely consistent with Luzhkov's stated politics that a domestic Moscow-based company would get the city's Luzhniki contract, for example. "The position of Luzhkov on contracting could be summed up like this: we, the poor, should not finance the rich," said Luzhniki spokesman Borisov. "If there is a way to find a local, domestic producer, weshould go for it."


And in some ways, being the mayor's wife amounts to a character reference no bidding process could ignore. "They know perfectly well that I cannot cheat them. I cannot just take money and do nothing," says Baturina."I don't need a scandal. I will sacrifice everything, but I will get that job done. So it is a sort of warranty for them."


After the Luzhniki contract, Inteko went on to replace 40,000 seats at the Dynamo and 17,000 at the Lokomotiv stadiums, both in Moscow.


"At that time it was clear that Ajax [the Dutch national team] would play here, and we pleaded with them: Guys, please help us!" recalled Oleg Tychelovich, Dynamo's facilities manager. "They were great. They showed real heroism f working for eight to 10 hours [a day] in terrible weather."


Afterwards, Tychelovich said, he thanked Inteko on television, thanked them in Dynamo's brochure and displayed Inteko's banner at the stadium. But in a recent interview, it was with sincere-sounding surprise in his voice that Tychelovich said he never had the slightest idea that Luzhkov's wife was involved with Inteko: "All contracts were signed by [Viktor] Baturin, and he was the one we negotiated with."


After refitting Moscow largest stadiums, Inteko won contracts to install seats in Stavropol, Kalmykia, Nalchik and even in stadiums in Yugoslavia. Seven more deals to refit stadiums are in the works now, six in Russia and one with a stadium in Cyprus.


Chess City to Pushkin


Baturina says she only once bent her rule on not getting involved in real estate development: when Kirsan Ilyumzhinov, the autocratic and flamboyant president of the Russian republic of Kalmykia, asked Inteko to take charge of his pet project, Chess City, a gleaming suburb to house visitors to a chess olympics Ilyumzhinov was hosting. Inteko had just finished refitting Uralan stadium in Elista, the capital of Kalmykia, and accepted the new $23 million project.


Viktor Baturin was there to cut the ribbon at the September opening ceremony. Ilyumzhinov at the time offered his "special gratitude to the Inteko company and its president Yelena Nikolayevna Baturina" f and even more impressively, the post of prime minister of Kalmykia to Viktor Baturin. He lost that post in January, a little more than three months after taking it up, when Ilyumzhinov declared himself prime minister instead.


Inteko has other large state partnerships, notably with AZLK, the Moscow-based manufacturer most associated with the Moskvich automobile. For almost a year, Inteko has been a sole supplier of heating systems for cars produced at AZLK f a giant plant that has for years enjoyed Mayor Luzhkov's favor. The mayor, for example, has tried to boost the sagging fortunes of the Moskvich by forcing taxi companies and his own bureaucrats to switch to AZLK-produced cars.


Subtle signs crop up everywhere to show that Inteko is in tune with the Moscow's mayors initiatives. This year, Moscow is celebrating the 200th birthday anniversary of Russia's most revered poet, Alexander Pushkin. Even the strained city budget still has a line item for the festivities. And Inteko's presses spit out nice white plastic bags sporting Pushkin's profile. The walls of the plastic bag shop are decorated with bags from two years earlier, when the city celebrated its 850th anniversary, and Inteko provided disposable plates and cups for the festivities on a $100,000 contract from the organizers. And Intekostroi, an Inteko subsidiary that specializes in plastering and painting buildings with protective coatings the company has developed itself, helped refurbish the facades of the Dom na Naberezhnoi f a monstrous Soviet-era grey building sitting across the Moscow River from the Christ the Savior Cathedral whose face-lift was a Luzhkov-sponsored 850th city beautification program.


Last year, the city threw millions of rubles into hosting the World Youth Games, another fancy project f and again Inteko was there to sell $25,000 of disposable dishes to the organizers. Intekostroi has also worked on the facades of historic buildings on Kamergersky Pereulok, a pedestrian street off Tverskaya whose renovation was another high-profile city project. But aside from the dishes for the 850th, Baturin said, none of the company's contracts were directly paid by the city budget.


"If there were any city projects, we were working for contractors, for commercial contractors, and receiving payments as sub-subcontractors," he said.


A Banal Reason


Baturina says she is content to run a business and to stay out of politics, but there has been much talk that she would play a strong role in her husband's widely-expected bid for the Russian presidency.


In fact, in Korzhakov's memoirs f which were devoured by Russian readers, even as they were derided as scandalous and tendentious f Korzhakov claims that Luzhkov's wife was the "banal reason" Yeltsin refused to see the mayor as a possible successor.


"Yeltsin was scared of the influence Yelena Luzhkova had on her husband and his circle," Korzhakov wrote. Noting that Mikhail Gorbachev's wife Raisa had become a political liability for the Kremlin f the public saw her as too assertive for a Russian first lady f Korzhakov said he feared Luzhkov's wife could be similarly unpopular with the public: "The memory of Raisa Maximovna [Gorbachev]'s boisterous activity in the Kremlin was still fresh, and no one wanted to go through it all over again."


Other observers have compared Baturina not to Gorbachev's wife but Yeltsin's daughter, Tatyana Dyachenko, an adviser who has also been influential in Kremlin politics and is seen as allied with Boris Berezovsky, the infamous financier and Yeltsin family friend. "Yelena Baturina could play in Luzhkov's election campaign no lesser role than Tatyana Dyachenko played in Yeltsin's," Kommersant Vlast wrote in November.


Most of Baturina's middle-aged lieutenants shiver at any comparison of the Luzhkov and Yeltsin family clans. "Let Yeltsin's daughter, or anyone from his family, show us their manufacturing line," one of them said, adding that Baturina's people are getting ready for vicious public onslaughts as a part of the coming political campaign season.


Sitting in her office, Baturina laughs easily in response to a question about the influence she has on her husband.


"If it is an issue of selecting his clothes, then yes! I will always force him to wear what I deem necessary," she almost yells, adding that she is trying to get her husband to wear single-breasted suits. Baturina herself is dressed in black from head to toe, wearing no jewelry, no makeup and elegant glasses with barely noticeable frames.


She does acknowledge that at times she and Luzhkov discuss politics. "If someone from a family ever tells you that they never discuss each other's affairs and ask for advice, that would be a lie. If a husband and wife do not talk about their problems surfacing at work, that is abnormal."


So does he talk to her about his new national party Otechestvo and she about Luzhniki? "It happens," she says, cutting that line of questioning short.


Leadership Genes


There is one side-benefit to being the wife of the mayor that Baturina is not about to apologize for, and that is that it lets her be her natural assertive self f even with middle-aged men who work for her but otherwise might be slower to obey a blond woman in her thirties.


"The mere fact that I am the mayor's wife means that in some way I am allowed to order people around. Say there is a director in his 50s who has spent all his life working in industry, and here comes some girl f I don't look that old f forbidding him to do this, stick his nose into that," she said.


"But [he'll think], 'What can you do with a mayor's wife?'" she continued. "'She is just used to ordering people around.'"


Baturina's middle-aged lieutenants, who mostly represent the slowly aging class of Soviet-style stocky directors, say that "Yelena Nikolayevna" gives herself too little credit with such talk. "She gets everything immediately," said Vladimir Grigoryants, Almeko's director. "She is a woman with a character."


Much the same admiration is expressed of Luzhkov's character. So did Luzhkov learn to be tough from his wife, or did Baturina learn it from him?


Actually, it seems they were both always tough. So a better question may be: What are their daughters going to be like? "I can tell you one thing: My six-year-old daughter already can get around anyone if she wants something," said Baturina with a gleam in her eye.


"These are genes. A person is either naturally a leader or not. And I was always like that."