Extracts from the article in Fortune magazine dated June 19 2000
Last June Fortune magazine featured a long article on the Reuben brothers, David and Simon and their spectacular rise to great fortune in Russia after the collapse of the Soviet Union, with the help of two Russians - Lev Chernoy and his brother Michael.
The Reubens brothers were born in Bombay and raised by their Iraqi-born mother and grandmother after their parents separated. As poor teenagers, like so many ambitious kids in post-colonial India, the brothers made their way to London, where they landed briefly in a Jewish shelter. Simon eventually went into the rag trade and scraped together enough money to buy his first pieces of real estate. David spent his early years trading in scrap metal, later co-managing a Soviet metals-trading venture with Merrill Lynch - and eventually laying the groundwork for TransWorld by founding his own company in 1977.
When the Soviet Union fell, its entire military-driven aluminium industry collapsed with it. David Reuben says he had built TransWorld into one of the largest aluminium traders in Russia by that time, and he seized the opportunity to expand into the void. At that time everything in Russia was up for grabs. It wasn't long before Simon was enlisted in the project as well.
Of course, Russia was even then a fairly lawless mafia infested society, with overlapping business rules, rampant corruption, lax or naïve regulators, and state-appointed factory bosses who suddenly found themselves de facto capitalists - and in dire need of cash. Then, as now, a foreigner soon learned that these stormy seas were far more navigable if he had a local partner to help. As David tells it, not long after he opened his Moscow office, in 1992, a man with a heavy cane limped through the door. In the pre-perestroika shadow economy, Lev Chernoy had become a big trader in timber and fish, among other things, "Lev said that only those with money can solve everything", recalls David. "He said, ' Fly with me'." Lev soon introduced David to his older brother, Michael, now 48, who proved a valuable asset to the fledgling enterprise. Michael who speaks no English has useful connections, and a partnership was born.
Of TransWorld's four principals, only Michael Cherney wasn't interviewed face to face by Fortune. Instead, he responded to selected questions faxed to him in Israel. "I do not possess any exclusive information on the so-called Russian mafia", he wrote. As for questions about bribes, murder, or money laundering, they "have nothing to do with me.........."
Scribe: The lucky break came when the bosses of the International Monitary Fund gave Russia a $20 billion loan and made the foolish stipulation that the Rouble be made freely convertible into Dollars. Many privatised industries and businesses quickly obtained heavy borrowings from their banks and converted the Roubles into safe deposits in Switzerland. The $20 billion were cleaned up in a matter of days driving the Rouble to an all time low, and businesses were thus able to repay their bank borrowings in a depreciated Russian currency.
If you would like to make any comments or contribute to the scribe please contact us.