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We need to talk about Russia


WORKING FOR THE OLIGARCH: Conor Lenihan. Photo: Gerry Moo

WORKING FOR THE OLIGARCH: Conor Lenihan. Photo: Gerry Moo

WORKING FOR THE OLIGARCH: Conor Lenihan. Photo: Gerry Moo

NESTLED amid huge Soviet-era skyscrapers which tower near Conor Lenihan's home in central Moscow lies a quiet elegant Russian cafe bar close to the majestic Patriarch's Ponds – a haunt beloved of Muscovites and etched in their literary folklore.

A man watching closely from the corner of the bar might in times past have been unnerving for foreigners in Moscow.

"What brings the former minister to this part of town?" he calls out. The mystery man turns out to be a Mayoman just arrived on a mission to sell tractors and combine harvesters to the Russians.

Within minutes, he and Lenihan are locked in conversation about mutual acquaintances in the west (of Ireland), the tractor market in Russia and Ukraine and how Russian agriculture compares with home.

Neither had ever been to the pub nor had met before – and the stranger is likely to be the only Mayoman among Moscow's 18 million or so residents with a tiny Irish community of around 200. But Lenihan's political DNA seems to have a magnetic knack of making connections wherever he goes.

It was a connection, however, to one of Russia's four richest men, Viktor Vekselberg, which has seen Lenihan glide from the inner circle of Irish politics to the top flight of Russian business, only months after his political career lay in ashes following after Fianna Fail's crushing 2011 election defeat.

The political jungle of Leinster House might seem more like a rose garden compared with the cut-and-thrust of Russian business, but the skills and instincts Lenihan honed in politics back home are those by which he makes his living now.

Vekselberg – worth over $17bn (€12.3bn) – was appointed by the Kremlin to head up its Skolkovo project. Dubbed Russia's Silicon Valley, the Russian government is investing over $10bn to harness the country's world-class firepower in the sciences and marry it with western know-how and multinationals' needs to help Russia dramatically modernise.

Russia hopes to woo huge hi-tech multinationals and involve them in partnerships to develop the country's economy away from one heavily reliant on the sale of oil, gas and minerals, with research and development (R&D) central to the ambitious plans to engage some of the best brains in the world.

For the multinationals, tax breaks, grants and enlisting some of Russia's gifted ranks of scientists, engineers and mathematicians are the attraction, as well as a Kremlin-backed foothold in an emerging market with huge potential. Smaller entrepreneurial companies are also part of the focus and are seen as a future engine of hi-tech growth.

But marriages need matchmakers – which is where Lenihan came in. He knew he'd need a new career long before Fianna Fail's election drubbing.

"I had come under significant internal party criticism when I'd warned the leadership two years out from the election that we were in real danger of being wiped out.

"When it actually happened, I wasn't surprised. I didn't expect to win my seat and I knew my number was up," says Lenihan.

He hit the road for London in search of work even before the new Coalition was formed. Through a stroke of networking luck, it was, however, the Russians who came looking for him.

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"A US-based businessman and friend recommended me for the job without telling me – and then rung me up in a bit of a hurry, saying the Russians were quite interested and Vekselberg wanted to meet me," says Lenihan.

A rendezvous was arranged in Rome where the Russian billionaire's priceless Faberge egg collection was on show in the Vatican Museum.

Nerves might jangle in meeting one of Russia's most powerful men – but Lenihan said a Russian friend's advice helped.

"I asked how long the interview might last – and was told '15 minutes if he doesn't like you'. Two hours later we were still talking," says Lenihan.

"At our first meeting, he put me very much at ease. Oligarch isn't a term that many of them particularly like themselves as a label: when people hear that word they think of someone who's very much authoritarian.

"He's quite the opposite – he's very managerial. He likes to work and encourage his team. He's an easy guy to get on with but, of course, he's tough as well, he can be very demanding of people. He's very interesting in that he likes working in a team-setting despite having such power," says Lenihan.

Being part of the government at the helm when Ireland ended up on the rocks might seem to some not the strongest selling point to join the crew of Russia's flagship investment project. Not so says Lenihan: the Russians were more interested in replicating Ireland's successes in attracting hi-tech multinationals than the crash caused by different factors.

"From a Russian perspective, the priority for them was to bring in these large global companies. I had significant experience in Ireland in politics working directly with the IDA pitching on behalf of the country to major global corporates to locate research and development or shared services operations in Ireland.

"That kind of experience was vital because it's the kind of investment skill that they needed in this project. They felt that I was the right man for them to do the job that they needed done here," he says.

Despite the crash, Ireland is seen positively in Russia, he says.

"Ireland has a very strong reputation in Russia among the elites and among the people who think and study public policy, in particular investment policy and how you attract investment. Ireland is one of the best operators in the world, the IDA one of the best organisations in the world when it comes to attracting foreign investment so we have a world-class reputation," he adds.

He might be out of politics, but Lenihan still makes his living from canvassing and travelling the world on behalf of Vekselberg to entice hi-tech giants to Skolkovo. Vekselberg's passionate belief in Skolkovo's importance for Russia is so strong that he spends 70 per cent of his time on the project despite his massive commercial interests elsewhere.

Results rather than passion are what keep you on his team, however, and considering that Vekselberg can buy the best expertise in the world, Lenihan's place in his inner circle is impressive.

"I personally was leading a team of people that raised in the last three years $1.2bn worth of investment – that's R&D investment by major companies like Intel, IBM, Microsoft, Honeywell, Samsung, EADS, Boeing and other companies," says Lenihan. Around 30 'majors' have committed to the project, along with 1,000 start-ups – "all hungry Russian companies with high growth potential," he points out.

"Most of the major companies in Skolkovo have operations in Ireland. When I went around pitching the Skolkovo project to them, they would talk very fluently and at great length about their positive experience in Ireland. It's not just about the tax – it's about the quality of the people, the set-up, the infrastructure around science and research."

Selling Russia to foreign multinationals might be a tougher job than selling Fianna Fail after 2011, not least with the country's reputation for corruption. The job isn't made any easier when men in combat gear turn up in your Moscow office as you are briefing an American executive from one of the world's largest companies.

"I was sitting there for a meeting with a senior executive from Intel – and I saw these guys with flak jackets walking through the corridors very swiftly and decisively. The Intel executive asked me 'What's happening, Conor?' I told him it was either a fire drill – or an FSB raid. It was the latter."

A SWAT team from the FSB – the post-Soviet version of the KGB – swarmed through the Skolkovo office as part of an anti-corruption sweep ordered from the top. Lenihan says the raid came as a shock but uncovered nothing.

"This happens frequently in Russia and is one of the things that worries and concerns external investors in Russia that you can be the subject of a very predatory raid or enforcement action either by judicial or tax or other regulatory bodies. But in this case, we got a clean bill of health, and the Russian government decided to allocate another $10bn to the project to bring it to completion in 2020.

"Russia is a very difficult business operating environment for investors coming in – that's why they need strong support from the governmental agencies operating there whether it's Skolkovo or others. I think that the corruption is openly acknowledged at the highest level – President Putin and others have pointed out that this is holding the country back.

"But probably the more serious problem for investors in Russia are the strong layers of bureaucracy that exist that particularly inhibit the development of a small to medium enterprise sector and an entrepreneurial culture – in an oil-rich sector with industrial giants employing hundreds of thousands of people. That's a real challenge."

Navigating bureaucracy may be important, but Lenihan says understanding Russian culture is essential to be successful there.

"There is a tendency among expats in Russia to be slightly finger-wagging towards Russians. I think it's a big mistake to start lecturing Russians about how they should do business, I've seen that happen – and it won't be accepted, just as it wouldn't be in Ireland either," he warns.

"I think it's very important that people who want to do business in Russia make real friends and hire Russian people to negotiate and work closely with them."

He urges Irish companies to consider Russia – and says Irish business should see the many Russian-speakers now living in Ireland as a great asset to bring on board and help in a country where English is spoken less than in the EU.

Ireland can learn lessons from Russia too, he says. While lawyers and accountants or those with business degrees dominate Irish boardrooms, many powerful players in Russia, such as Vekselberg, are educated to PhD level in engineering, maths and the sciences. Ireland's drive towards a knowledge economy in hi-tech fields means we need new leaders – with science, engineering and mathematical qualifications.

"We need to do more in Ireland in the same area – we need to push more engineers or people with strong engineering, mathematical or scientific backgrounds into business and positions of leadership within companies. We very much are part of the development of the knowledge economy globally and need to do this to fully play our part."

As Ireland fights tooth-and-nail to protect its low corporate tax regime, Lenihan warns the country also needs to keep its eye on the ball.

Entrepreneurial talent in the country is key to future success, but a real danger now exists of hi- tech start-ups being poached by Britain under David Cameron's "Silicon Roundabout" initiative to develop the UK's digital economy.

"It's very serious for Ireland if we start losing highly motivated start-up entrepreneurs who choose to establish their business in the UK rather than Ireland because the incentives have become disproportionately better in the UK," he says.

Lenihan says that these people are key to Ireland's future development – and should be given incentives to stay.

"We can't compete with the UK in purely financial incentives but we need to look at all those incentives that we deployed towards property and construction in the last 20 to 30 years. We need to construct a very similar and significant incentive system for high-growth potential companies that can export."

Links between Ireland and Russia are very strong culturally he says, with many Russians aware of Irish culture and Ireland's historical story, something he sometimes has to explain elsewhere on his missions abroad.

When not travelling the world on behalf of his billionaire boss, he's immersed himself in Moscow's wealth of art, exploring galleries, concert halls and reading.

"To understand Russia you really need to read the Russian literature," he says. "And they have a complete mastery of the short story, something we have in Ireland too. You get a sense of how resilient and strong this country is in a cultural sense."

He says that Russia is now experiencing tensions between traditionalists and modernisers over social issues – such as gay rights – which mirror what happened in Ireland in the 1980s over issues like abortion and divorce.

"It's an extraordinary place and there are parallels with Ireland's development in the 1980s – that tension between modernising and an appeal to traditional values," he says.

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