by John Finotti
Updated 10 yearss ago
Finker says he saw opportunities in the economic free-for-all emerging throughout Russia and the former Soviet republics. "I had commercial contacts in Russia," says Finker, in heavily accented English. "I thought I could introduce them to U.S. counterparts."
Today, a decade after leaving Kazan for the U.S., Finker is indeed a businessman. A very successful businessman. Out of nowhere, Itera International, a small trading company that Finker helped start in Jacksonville in 1992, has burst onto the international scene as the world's second-largest supplier of natural gas. Itera's clout is awesome: It can cut off gas supplies to entire countries such as Georgia and Ukraine, where it has virtual monopolies on gas distribution.
Itera is using its new wealth on a number of projects in the U.S.: It's financing the construction of a high-end, $15-million office building in suburban Jacksonville. The firm and related companies have invested in a shopping center at World Golf Village in St. Augustine and a string of 7-Eleven convenience stores in Massachusetts. The company is negotiating to buy a fertilizer factory in Oklahoma and an oil and gas exploration company in Texas.
Finker says more deals are in the works. Itera is working on "serious projects" involving energy and real estate in the U.S. "Within six months to maybe one year, many people will see the accomplishments of Itera in the United States," he says.
Back in Moscow, however, where 2,000 of Itera's 7,000 employees work, the company's meteoric rise is raising eyebrows. The mystery: How could an obscure company in Jacksonville morph into a sprawling, worldwide enterprise with 120 companies and $3 billion a year in sales? Skeptics, including Boris Fyodorov, an articulate politician-turned-banker, suggest that Itera has benefited from a special relationship with RAO Gazprom, the huge state-run natural gas producer.
Gazprom's minority shareholders, including Fyodorov, allege Gazprom has transferred gas fields and customers to Itera because Gazprom managers are silent shareholders in Itera. Gazprom and Itera deny this. "Talk that Gazprom is doing us a special favor by giving us super-lucrative contracts or something is groundless," Itera Chairman and CEO Igor Makarov told the Moscow News.
Nevertheless, questions about the relationship between Itera and Gazprom -- and darker murmurs that dog successful businesses in Russia's organized crime-plagued economy -- aren't fading away. BusinessWeek reported that law enforcement officials in Europe and the U.S. are scrutinizing Itera's activities for possible money-laundering. The European Bank for Reconstruction and Development -- by far Russia's biggest investor -- has held up $500 million in loans to Gazprom pending answers. Gazprom's board has rejected calls for an outside audit, saying a planned probe by its longtime auditor PricewaterhouseCoopers will suffice. "They won't find nothing. Zero," Finker says.
Itera's remarkable ascent from obscurity is emblematic of Russia's lurching progress into capitalism -- and of the new breed of businessmen who've made fortunes in the chaos that followed the Soviet Union's breakup.
In 1992, while still teaching at FCCJ, Finker began looking for deals and partners. He met Makarov, a young, ambitious former world-class cyclist from Turkmenistan who was making jeans. Together with Finker's wife, Raissa Frenkel, an economist, and a Jacksonville businessman, Ted Kavalieros, they formed Itera. The name comes, Finker says, from the word "iteration" -- repetition. (Makarov still works in Moscow but, every other month, travels to Jacksonville, where he's building a 15,000-sq.-ft. oceanfront mansion with a wine cellar and indoor pool in Ponte Vedra Beach.)
Sitting at the conference table at Itera's Jacksonville office, Finker, a friendly man, sports closely cropped gray hair and a dark suit over a black T-shirt. He says the company started out trading commodities such as clothes, beer, cigarettes and frozen chickens in Russia and other former Soviet republics.
The group was partially backed by American investors whom it has been reluctant to identify. But the company now promises to publish a list of shareholders and detailed financial information as part of a campaign to raise international funding.
As Itera got on its feet, Makarov began selling goods back to his homeland of Turkmenistan. At one point in 1995, the government of Turkmenistan owed Itera about $30 million. Unable to pay, government officials gave Makarov an option: Wait to get paid in cash or take natural gas shipments now. He took the gas. Despite having no expertise in the field, Makarov successfully sold the gas to Ukraine. More gas deals followed.
Shipping natural gas from one former Soviet republic to another generally meant transporting it through Gazprom's extensive pipelines. Itera got better and better at bartering natural gas throughout the region, Finker says, and Gazprom, which was having difficulty collecting payment for its shipments, took notice.
Eventually, "Gazprom decided to let Itera deliver the gas because they realized we get paid," Finker says.
Getting paid is no easy matter in that part of the world, however. Several years ago, Itera was having a tough time getting Ukraine to cough up any of the $1 billion it owed for gas. "What happens when Ukraine doesn't pay, we need U.S. help," Finker says. "We have a right as a U.S. registered company. We pay taxes."
Itera did what most U.S. companies do. It sought the help of its elected official, U.S. Rep. Corrine Brown. She traveled to Ukraine with Itera executives to press their claim and also wrote a letter to the Ukrainian Embassy in Washington on Itera's behalf. Ukraine promptly released $150 million worth of grain, Finker says.
In return, Itera has helped Brown. Company executives and their family members contributed $10,000 to her campaign. Also, at her direction, the company donated money to Edward Waters College, the Jacksonville Urban League and disabled children. "She never asked for anything for herself," Finker says.
Finker says he's got big plans for Jacksonville. Itera sponsors forums at the First Coast School of Law. Finker personally contributes generously to the Jacksonville Jewish Community Center and provides assistance to Russian emigres who have been moving to the area in recent years. He wants to develop trade fairs to show off goods made in Russia, Ukraine and Kazan. He'd like to bring more entertainment to the city and a five-star Russian restaurant.
In the meantime, however, Itera labors under the questions and speculation surrounding its dealings back in Russia.
Finker says no one has contacted Itera, but he believes U.S. law enforcement officials are "looking" at the company. "We are not mafia," he offers, unprompted. "The FBI will get to the truth."