| Pilipovic-Chaffev | ||||||
It must be one of the toughest jobs in Russia.
In early 2000, Dragica Pilipovic-Chaffev took over as country head of the EBRD in its unassuming headquarters just off Novy Arbat in central Moscow. With a poor record of investments in Russia, and having lost out heavily in the 1998 debacle, the bank’s management decided to be more vigilant.
Pilipovic-Chaffev is tasked with carrying out that wish.
Relaxed and chatty, Pilipovic-Chaffev comes across as a favourite university professor, but has a reputation for being tough and straight talking. Those that have worked with her say she often disregards the cautious diplomatic tones, that are the norm for the bureaucratic EBRD, and says what she thinks. “The bank decided in 1999 that they wanted more people on the ground,” says Pilipovic-Chaffev sitting in a plain office that opens onto the Floor of desks where the rest of her staff work. “The directors of the teams are now in country in almost all of the countries where we work. It is one of the lessons learned from the Russian crisis.”
Pilipovic-Chaffev has plenty of experience with the former communist countries in eastern Europe. A Serbo-Croat born in Yugoslavia where she gained a masters in economics, she went on to take an MBA in the US before joining the Yugoslav Finance ministry. After jobs with both the World Bank and the IMF, she joined the EBRD in 1991, where she dealt with Financial institutions in the Balkans and central Asia. More recently she became the EBRD’s First female senior banker and was appointed co-director of the Financial institutions team taking over responsibility for Russia following the collapse of the rouble in September 1998. “We are here and will talk more with the government and have more access to information, such as the local press,” she says. “We will be able to guide the bank better, but the process will remain the same. The credit committee [that approves all loans the EBRD makes] is still in London… But we will talk more to clients and we hope to be more proactive.”
Russia lending has dramatically fallen off since the crisis. In 1997 the bank lent $720 million and was on course to hit its target of more than a billion dollars in loans in 1998, lending $670 million in the First half of 1998. In 1999 lending dropped to $220 million. “In 2000 we hope to lend more than last year,” says Pilipovic-Chaffev. “We still would like to lend a billion a year. We will when things are clearer. The leadership of the EBRD hopes this will be in the next three years.”
The bank has had several bad loans and is still smarting over its treatment by the likes of Tokobank, which ran into trouble in May 1998 forcing the EBRD to write off a $35 million stake. “When I looked through the books [of some banks following the crisis] I found that assets, like the buildings, were not owned by the banks, the computers were owned by third companies and even the Files were kept in different buildings,” says Pilipovic-Chaffev. “It was a shocking experience. They didn’t do the right thing but whatever was most useful to the owners. Will it stop? It depends on how good the environment is.”
Since her arrival the bank has gone on the offensive. In the middle of February the bank went public with a dispute with three of Russia’s most powerful so-called oligarchs, Boris Berezovsky, Roman Abramovich and Alexander Smolensky. The EBRD claims that Runicom, a Russian oil trading company and part owner of Sibneft (controlled by Abramovich and Berezovsky), has not paid a debt of $58 million, including interest. At the start of 1998, the EBRD opened a multi-million dollar credit line to SBS Agro (controlled by Smolensky) secured by an overdue loan to Runicom of $14 million. When the EBRD tried to collect the debt after the collapse of August 1998 it found itself being shuttled back and forth between Runicom and SBS Agro. Its recent legal actions in February in London and Moscow coincided with Sibneft hoping to launch ADRs.
It is the most aggressive action the EBRD has taken against abuses it has suffered since arriving in Moscow in 1991. Some hope that her Yugoslavian origins will be an advantage as personal relations and doing business the Russian way are the keys to success in Russia.
