An Interview with Mr. Timur Gushchin, General Director of “Molopak” LLC.

DN: Please tell us about the current situation in the company.

- We began to look carefully at the aseptic packaging market in 2010. There were only Tetra Pak and SIG Combibloc companies in this segment which held in general 100 percent of the market. "Elopak", which supplied its packaging of "Pure-Pak" type, poorly developed aseptic area because there was a small amount of aseptic packaging machines for "Pure-Pak". Naturally, we paid more attention to this area, I have traveled a lot around the world watching the equipment and finally we decided to buy a new technological line. We chose supplier, the Dutch company "Drent Goebel" (at that time "Tetra Pak" has already used 10 their machines) but to our bad luck "Drent Gebel" ruined. It was bought by the Swiss  "Müller Martini" company known throughout the world. I knew them well, the representation of this company existed in Russia since 1996. We met several times, I visited their factories, I saw their production, eventually I signed a contract and the construction of the equipment began.

The first alarm sounded, when the machine was being constructed for 12 months instead of 6. In some respects it was our fault: we decided to finish equipping by some things, but it seemed to us that it was without compromising the machine, because, roughly speaking, it was something like 2 hoses , something else. After that, when the machine was installed, the installation took 8 months instead of 3. What an installation is: the machine is to be installed; the machine is to be connected to the mains, after that debugging is to be started. Offset printing requires a very serious approach. In the end all this resulted in 24 months. And I had to start paying a bank in 6 months, at the cost of the machine of 7.5 million Euros.


DN: But there payment deferment should be provided?

- It was for 6 months.

DN: It's a bank. And a supplier?

- We did not have this. Since the machine was expensive, it was a special payment program. 25 percent of the machine’s cost - at the beginning of the machines construction. 25 percent - after its commission in Germany. 25 percent - after its acceptance at the workplace, 25 percent after installation. So when the machine appeared on the premises here, I have fully paid for it. According to the contract of the bank I had a grace period of 6 months, after which I had to start paying all sums - primary loan and interests.


DN: Was 100% Funding from the Bank?

- Yes, it was a direct target credit in the Khanty-Mansiysk Bank, which now is a part of the bank "Otkrytiye". The office where I took the credit, doesn’t exist now, everything was handed to "Otkrytiye"Bank . It is called now: Khanty-Mansiysk " Otkrytiye " Bank.

DN: Did Bank pay the full amount at once or in parts, so that you can pay by 25 percent?

- There were tranches. We made a mirror agreement, where the terms of payment were spelled out.


DN: Did the Interest payments begin right after the first 25 percent?

- Of course.

DN:  What time period were you planning to meet after the moment of conclusion of the contract till the start of the line?

- 6 months - the machine’s production, and 3 months - adjustment.  I had to start paying the Bank in 6 months.

DN: Don’t you think it was risky?

-  There was that sort of conditions. Do not forget that I had an ongoing business. At that time, according to the most pessimistic estimates, "Molopak" held 25-28 percent of the market in producing "Pure-Pak" package in Russia and CIS countries. Therefore, the purchasing of equipment for me was acceptable and I didn’t worry. Moreover, I had to pay for every 25 percent separately.

But contractors behaved extremely irresponsibly. At that time an international exhibition «Drupa» began, which took place in Düsseldorf, Germany - they got together and went to the exhibition, pushed assembling aside. I wrote an official letter with claims, their management answered that it was a large exhibition taking place once in 4 years, so they needed to be there.

I called Michael Masinovsky, Director of representation; he was a director of the representative office for many years, he was an experienced and a respectable leader and he came into a situation that our company was not as big as  "Muller Martini" concern and we were just a simple little Russian company. He supported our position, despite his contract and German citizenship. I flew to the "Drupa" exhibition  and there  I met with Mr. Bruno Müller, the head of "Muller Martini" state holding..

He convened a whole concilium, all pledged to speeding up time, asked to show understanding of their position, we shook hands and I left with the belief that all would be well. I was inspired but it seemed in vain. As a result, since the arrival of the machine at the enterprise it was launched into operation within 18 months only. Right after that the unacceptable defects in equipment were revealed, they were recorded, the document was done and we began to wait. They tried to adjust it for another 8 months, and then I said: “Take away the machine or I'll go to law”. Naturally, they told us that it was simply unacceptable for them just to take the machine back. Then I asked them to sign an agreement with the bank to pay all the interests and I along with the bank would wait for them to commission the machine.  They answered that they can’t do so, and we have filed a lawsuit against the representative office, which supplied the machine, and we won all the courts. They have hired a well-known company, "Baker & McKenzie", real seasoned lawyers. 12 lawyers of the company "Baker & McKenzie" were engaged in our case, the company which is 150 years old and there are 120 people that are being employed only in the Moscow office. As a result we won because we stood by the right. We performed the expert examination in cooperation with the Research Printing Institute the Research Institute of Printing Machinery equipment with the assistance of the most renowned experts in the field of offset printing. As a result, they have proven that the machine was defective and should be returned.

DN: And what type of defects there were exactly found out?

-  Printing industry and offset printing is a very complex mechanism. It is necessary to combine many factors, only then you can get a quality product. Printing, especially offset printing is a complicated process. There has been registered in the data sheet that the machine’s speed had to be of 360 meters per minute. Actually, it could work at 100 meters per minute only – not more.  If you switch the machine for the speed more than 100 m/min – all printed material became defective. The length of the machine is 150 meters. And if there are defects - we have to throw out all of 150 meters of board. A cardboard is expensive, we brought it from Brazil and we were waiting for supplies for 3 months.

On the other hand – there is a question of the print quality. After the printing we send the material to the extrusion line, where we put 8 layers of composite material. As a result waste materials exceeded production volumes at the new machine. Instead of the expected 2 percent of the waste material we obtained 30-40 percent. How could I accept such a machine?

DN: How big is this "Muller Martini" company?

- It’s about 70 years old; it is a large Swiss company. Last year, it has a turnover of 1.6 billion Euros over the world. Its Headquarter is in Geneva, its office in Moscow has been working since 1996. It is 100 per cent their subsidiary, they are its founders. I met with the Ambassador of Switzerland in Russia, I met with the Ambassador of Austria, because they are supervised a sales office with this concern, and they had both the Austrian representative and Swiss representative in Russia. I showed them the court's decision, they agreed, claimed that this couldn’t be, they promised to investigate. Then a letter came: “It’s a pity; we do not interfere in commercial disputes”. But the Russian court has proved everything. The company’s management should remain to be gentlemen and to fulfill their obligations. But they preferred to ask us to call their lawyers in "Baker & McKenzie".

Interestingly that after all the stories they delivered the same machine to the one of Mexican companies. There the machine was also adjusted for a long time, but in the end it began to work. I asked them, why even after winning a court by our company the machine still did not work?   The silence was the answer. Once we received the answer - supposedly your people were all thumbs, so they couldn’t run this machine. And in my company one printer had 46 years of experience, and the other printer had 24 years of experience.  If they couldn’t operate the machine, then who could?
I suggested the following: we would remove all claims if experts "Muller Martini" would come and perform any 10 commercial orders during a day. Engineers came and they were not able to execute any order.

It’s extremely lamentable, that when we began to plead with them, they are at the same time opened another office through its Austrian office, they transferred there the main part of employees and began selling its technology and services through new office.

DN: And what about the representation?

- They bankrupted it as soon as I won the appeal. The same day they filed for bankruptcy. And that same day they opened a new office with the same director. I was shocked.

I called the Swiss Embassy, asked for help to file a Swiss court. They gave me a contact of a lawyer, but they did not provide any support or transfer. As they allegedly couldn’t help. But I found a law firm, filed for "Muller Martini" in court for 12 million francs.

The difficulty is that officially I bought a machine from representation of "Muller Martini" in Russia. In Europe a Trading House "Muller Martini Marketing AG" is opened, which is engaged in sales worldwide. And it turns out that I was physically cannot sue on it because I have a contract with their representative office,  and a  Trading House  supposedly doesn’t not know me, though  in all companies there are the same shareholders and responsible persons. But now that the company is in the verge of bankruptcy, those people that do not know me want to become creditors also and sue with the requirements. Pure…

DN: Whose creditors do they want to be?

- When representative of «Muller Martini" in Russia began the process of bankruptcy, we, as a side won the court, became its creditors at 98%. And this "Müller Martini Marketing AG" also wanted to become a creditor, because they allegedly did not pay them for some parts. There are some documents appeared, we, of course, dispute them: for 4 months we have tried to prove to the court that this was a fictitious transaction. But the judge said finally: "Well, what do you want? Managing Director  agrees, and the Managing Director is theirs. We told  him to sue. And  how he will do it, if he is theirs? " Managing Director  does whatever he wants, but he doesn’t  sue them. If he brought a case to court, we would solved everything very quickly.

And now, if you think, for today in Russia only "Tetra Pak" produces aseptic packaging of a such  type. The rest, more than 45 percent is imported from abroad. "Tetra Pak" in general does not produce fractional sizes of packaging in Russia, it’s being taken from the Ukraine. Now there are problems with the supply of products from Ukraine and they are forced to deliver it from Europe. SIG Combibloc delivers in Russia everything from its plant in Germany, "Elopak" – aseptic packaging from Denmark and Germany. Just in Russia nobody is doing this except our company.

I do not understand the logic of "Muller Martini". This is the concern. Court proved that it made a poor quality machine. Experts also confirmed this. What is 200 million rubles for them? Nothing. MM Rusland controlled  by "Baker & McKenzie" barges in everything related to our situation, and I have the feeling that they just want to crush me. It was specially done that I would not going to sue in Europe and finally would stop fighting. We have won the court by law, including the Supreme Court, from our supplier, which has proved:

"Molopak" should get a refund for defective goods. And these cunning fellows do the following: they fit into our bankruptcy and tell us to return the machine to them. How can I get it back? Firstly, I was not returned the money for it, and secondly, the machine is pledged to the bank, I cannot dispose of it in entirety. Then they brought a case before my court, where there was monitoring for bankruptcy and the court made them creditors at me for 200 million rubles. That is, I yet owe them. I went to court and said: “Esteemed judges, how do you see it? I am a manufacturer, I owe for this machine to the bank. And now it turns out that I owe the same amount to those impostors? I don’t have 2 machines and only 1. Where is justice, how can I pay for one product to two different companies, how can we call it?”

DN: On what basis do they ask for money?

- We, as having won a court, entered into their bankruptcy as creditors, the court admitted that we have to receive 300 million rubles. This is the cost of the machine, plus losses. But the company, of course, doesn’t have money, they have zero account. However, we are the creditors there, and they tell us:  “As we are the creditors there and have exercised our rights, we want now to be creditors here on the basis that the machine was not returned to us. Our lawyers said the company must first return us the money, it is written in the documents.” But the judge takes into account their words, and now a stalemate is formed.

I was writing to the President of the Russian Federation, asking what to do in such a situation. After all, our President Vladimir Putin raised the flag: Import substitution, rising of the Russian product. We are the only ones in Russia who could make an innovative product in the field of aseptic packaging made of cardboard,  and we ask for support - not by money, but politically, providing lawyers and simple words of support. Twice I wrote letters, twice there came an answer that I filled a complaint form incorrect, that I just told them my story, but didn’t ask for specific assistance. And what kind of specifics do I need to ask? I cannot demand that the President would go to court and defend the rights of Russian company which is being ruined by the Swiss company.

DN: But the government has got some sort of organization that would be able to support the rights of our people abroad, hasn’t it?

- Of course. For example, it’s Boris Titov, authorized person under the President of Russia on the rights of entrepreneurs. We have written to him, he replied that he accepted our documents and a now we are waiting with hope for what happens next.  I also went to the "National Front," and many times appealed to the State Duma. "National Front" refused due to the fact that we have a commercial dispute and they cannot help. Why is this commercial dispute? I proved everything, but in front of everyone I was actually being suffocated by a foreign company. How can I owe for 1 machine as for 2?

I wrote to the Government, to Dmitry Medvedev, my letter was sent to the Committee on Industry, from there - to the Ministry of Forest Industry. The minister wrote to me: “Why do you need the forest”? What a shame. I watched on TV as Vladimir Putin spoke to entrepreneurs of Moscow region. There a lot of people gathered, all of them had the problems, they wanted to produce products, but foreigners give dumping prices, not allowing to work without problems. Vladimir Putin said: “Write us, we will investigate and help”. There is the real sector in billion’s performance, because if we take an average of aseptic packaging market, we can understand what the volumes are. In the past year "Tetra Pak" has sold almost 14 billion of packaging.

DN: It might be just the competitive struggle?

- I do not believe that "Tetra Pak" could do it, because I never bothered them, my production is small enough. I have never had a policy of dumping. "Tetra Pak" was Russian monopolist by FAS decision. It’s not profitable for them to suffocate me. On the contrary, they need to have as many players as possible in the Russian market.

DN: And the other players?

- "Elopak" is just beginning to take the first steps on the aseptic market in Russia. They had all the production in Europe and only one factory in Russia. In principle, as a strategy, I could be a pain in their place, but it is a big and experienced company that could easily bypass us by resources and technology. On the other hand, we had good contacts and I don’t believe it.
On the one hand, everything is fine, and on the other - the facts are obvious.

DN: So, is it difficult to blame someone?

- In general it’s impossible and difficult. But if you think logically, this market is of interest to everybody; the market is growing and developing

DN: And what happened to SIG Combibloc? They entered the dairy market, but it seems that it’s hard for them.

- The combination of many factors prevents them to move quickly and steadily in Russia. Firstly, they have their production in Europe. This means import duties and increased delivery terms. Second, communication is not simple if, for example you want to change the design or circulation, the same situation on the caps. They also import caps from Europe. And in total summing all factors – they get product 10-15 percent more expensive compared to the "Tetra Pak". And this is only the commercial side. And customs duties also provide cost value ... The problem is that they have higher print quality because they have rotogravure printing. Hence, the production cost is also higher. And if the "Tetra Pak" has the average price of 100 Euros, then SIG Combibloc has 115. And what the “Milkman” or “Juiceman” will choose? Only large companies can afford such prices when they want to expand the range of packaging and improve the print quality.

DN: How are the things going with not aseptic printing?

- Unfortunately, when I took this loan then I put in pledge the whole plant. While it was supervision, we were still somehow working, and now of course it will be closed. We are currently working on the power of 10 percent of the possible. Previously I had 220 people in the company, now it’s 50.

I had to come to the terms with the loss of the plant in the end. I don’t know who will get it. Those who will pay the bank 300 million, those will receive it.

DN: And why is the bank in need of the plant?  Will it find a buyer?

- At the moment it’s 8 months of supervision: before the bankruptcy the managing director came and tried to raise the plant. We together with the bank haven’t found a single investor for 8 months. Probably the time is so, and it is necessary to “slave” at the factory from dawn to dusk.

The bank will not take the plant, it needs money. The bank's management understands that it is also their mistake; when the problems started there were first warning calls with the machine, I have sent to the bank several official letters asking to give me time to solve the issue with the machine. I offered to take only the interest for using of money, but not the body of the loan, while resolving the issue with the machine. The Bank didn’t agree, it had a bunch of its own questions, the sale and purchase of its assets by new shareholders, I wrote as much as 6 letters. When the bank “woke up”, I was left without working capital.

I asked for a new loan to restore working assets, with the promise to return all the money in 7 years. They answered they cannot, because the machine was on trial, there was a crisis, there were no guarantees. We wrote a letter to a government agency of guarantees, they promised to help us with a bank, but after 3 months they have said that there were no opportunities.

We have been building this plant for 14 years, started “on-the- knee" and reached a certain level and result. Our sad experience should be known. You should pay only after checking that everything has been done and everything works. The "Müller Martini" company really isn’t interested in our working. And customers must also understand all this. There is no a dairy plant in Russia, we had not worked with.


DN: Could it be that someone was trying to "push aside" your share of the non-aseptic packaging?

- In this market there are three companies: "Lambumiz", "Elopak" and "Rospak". "Rospak", so to speak, lives in its own world, with a strong desire and ambition to work in Europe but doesn’t want to develop actively, as the investments and modernization are necessary. The "Lambumiza" changed owners; they must have certainly big ambitions. We were a burr in a saddle, but not to that extent. We were selling more expensive than they were. We had a different product, we always positioned our packaging higher than the "Lambumiz"’s: by the price and by quality. We had different segments. Even common customers bought their package as budget product and our package as a premium product. Therefore, I doubt that they could somehow harm us, the more I appealed to all with a proposal to buy our company or for association of our assets and facilities, but alas I received refuse from everybody.

DN: So, you were removed from the "Pure-Pak" market?

- So it turns out. We had a large piece of the "Pure-Pak" packaging market. We've done half a billion of the packaging per year.

Many plants can remain negative due to the fact that we work with them no longer or we thwarted their orders. 99 percent of our equipment is pledged in the bank. With each earned ruble we invested  80 kopecks back into the company and did not think that 14 years after the opening of the plant we  began to write letters to the government with a request to solve our problems. During all time we never asked for subsidies or benefits at the government.

I want personally and from all our company to apologize to all whom we have caused inconvenience and loss. If we have the opportunity we will try to solve everything with every plant and every customer.

DN:  Do you think that this problem cannot be solved now?

- The problem is that at the end of February there will be the trial, and I think the court finds us bankrupt. A decision of the arbitral tribunal has not retroactive effect. All creditors, which we currently have, will come to the meeting on February 24, 2016 - this is the first meeting – and most of all I am consumed with a fact that  it will be 300 votes of a bank and 200 votes of MM Rusland, the company who led us into this abyss in this story !!!!!. These 200 votes is a Court mistake and they are out of thin air. It turns out, the company that owes me money, the company that brought me into this situation now will vote at the meeting  to make us bankrupt.

Interestingly, our adversaries would like another 150 million for the amortization of the machine’s use. Why don’t they say that they absorbed our money for 4 years, 7.5 million euros? The judges, to their credit, did not satisfy the desire of our opponents. They are generally judged as follows: this party wants, that party wants, - so - nobody. Why bother? The trial lasted 15 minutes only.

The fate of Russian company is being decided now, import substitution, new equipment, nanotechnology,  - and there is no one to protect it. So, if on February 26, 2016 court takes a decision, there is no turning back. At least, for "Molopak".

I do not cry that I will lose something, I just want the justice and the truth will come out. It's the most important. In my old age I will write a book, I will call it "How we produced " Tetra Pak ",  Ijust really want to tell everyone that the notorious foreign companies from around the world  also make  dirty with their clients. We created and produced aseptic packaging of "Tetra Pak" type"on-the- knee" . We had to bypass variety of patents, to create new and to develop our technology. And we did it.

DN: What do you do now?

- For a year I have been occupying practically by the courts only, trying to maintain the plant and our employees. The staff is 14 years; there always was a family approach in our company. Why we were loved by the customers? We have always worked for clients and their interests were always in the first place , and after that our own.

DN: What does the staff think about the situation?

- The team understands everything. We must pay tribute to the people: they come, support me and each other. They even ready to stand near the new office of "Muller Martini" with posters. Though what do we achieve by this?

When there was an appeal, my lawyer, a very decent woman, came out and said that she was disappointed in the advocacy because of all that was happening in the hall, because of the judges who didn’t want to  understand and delve into who was to blame and why. And I also cannot understand where the justice is. All the time the recent movie "Spy Bridge" comes to mind; it's about our legendary spy Abel and a very decent lawyer. So in the US they caught our intelligence man and want to judge him to the very maximum, the lawyer is trying to convince  the court and jury that a lot of things were not proved!! A judge answered him: “The intelligence man was working against us, against our country and he has no mercy, and the law!! “  And what about us?! It seems we have proved to everybody that  the truth is on our side, we raised the Russian business, we just a little strangled import and carried out the country's leadership covenants , and where is our protection?

I understand if it was a yard company, which would be able to afford it ... And several thousand people work all over the world in "Muller Martini". And most interesting is that this printing machines plant (it is in Germany, on the border with Switzerland) was closed in a year, and all the people were get fired after we won the court. I do not know if it’s an irony or our situation played a role. That is, now they don’t produce the printing presses at all. Our machine was the first and still maybe there are two or three of such machines. It looks like "Muller Martini" has recognized that they cannot produce such a machine. But they will not talk about it. It’s impossible to find the truth.

When all this began, I slept for 2-3 hours a day the first year. I could not fall asleep, worried, was thinking, was looking for some opportunities. Now I understand that life goes on, and I just want the truth to be made public.  I do not want such errors to anybody. We trust these companies, because their names and experience close our minds and push to the decision to trust them. But it turns out that you cannot trust them, because it may happen that the business (as in our case) will fly away. Because of one mistake we, the company with a turnover of half a billion rubles, are being closed. And I, as a director, am responsible for the error, though at that time, "Muller Martini" was the best and we wanted to trust them.

When they opened a new office here, there was an exhibition in the "Crocus" exhibition centre, where they held a presentation of their new company. My lawyers came there with a camera. And they asked: “How  can you open a new company, if nothing was decided with "Molopak"? They were so confused: how could "Molopak" come to the exhibition? And the President of the whole “Muller Martini” holding said :”We will solve all the problems, it's a matter of time”.  You can see how they solved it.

When a day remained before our break, they took me and our lawyers to "White Rabbit", an expensive restaurant on Smolenskaya Square. There they offered us:  “Let us make renovation of the machines or give you spare parts for 500 thousand Euros, and you will sign a document that there is no claims”. I said: “ I want you to fix my machine, I have to run it. I am ready to sign the document, but if your renovation has no effect, you take your machine back”. They looked at me and asked: “Why do we need to do so? “But the machine is not working. As a result, neither they nor we accordingly agreed to do so.

The procedure of "Molopak" bankruptcy begins on 26 February. This road is one way. It is still possible to make external control, to sign the settlement agreement, to extend the supervision, but the creditors, of course, are not interested in this. The Bank is not interested because it needs money, MM Rusland in the face of its owner of “Muller Martini” Holding for 200 million rubles, want to beat us. I understand that the management of the holding stated "Baker & McKenzie" to cut off my head, because I am the truth generator in Europe. We should not open our mouth in Switzerland, no one in Europe has to find out the truth about the “Muller Martini” Holding and how it solves the problem on its obligations.

We will continue to fight and try to achieve justice, but in the European courts. Thank you for your support and kind words. We make our apologies to all of our customers and we ask to give us the time and opportunity to resolve all open issues and liabilities.

Documents on the case:
1/ Judgement
2/ Resolution
3/ Resolution
4/ Decision