Russians’ Ship Comes In in Irvine : Political Uncertainty Motivates Firm’s Move to California

IRVINE —  Almost every day, Mikhail Gura and his partner, Eugene Kalakoutski, go on a shopping spree.

They buy cars by the dozen, cigarettes by the carload, vodka by the liter and ship the goods to their home base in Moscow. Even before the sedans or cigarettes reach their homeland, the products already are claimed by private Russian companies and that nation’s new class of wealthy entrepreneurs.

Gura, 37, and Kalakoutski, 30, have become so enamored with Southern California--the site of most of their buying binges--that they decided to move the international headquarters of their 5-year-old trading company to Irvine. The new offices open today.

But even as it opened its doors, Ort International drew pointed questions from Russian and French journalists attending the company’s grand opening.

Vladimir D. Nadeine, deputy editor of Izvestia in Moscow, suggested that Russia could lose to the West many of its young, talented entrepreneurs--and needed local investments. He also was concerned that Russia and other members of the Commonwealth of Independent States could lose what little tax they now collect from the private enterprises that first sprang up six years ago under perestroika.

Ort International, known in Europe and the Commonwealth of Independent States as Ortex Trading & Finance, is the first major commonwealth company to move its headquarters into the United States since the end of the Cold War.

The move to Orange County, Gura said, is to escape the political uncertainties in the former Soviet nation and to expand his company’s economic ties with the West.

“Our company was established in Russia under an extremely difficult market environment and we need a very positive climate for our trading company to grow,” said Gura, who occasionally pauses to search for the right words to express himself in English.

“We don’t want to be locked in (in) Russia,” he said. “We’re here to capture more business in the United States for our company, not to escape Russia.”

Indeed, the two entrepreneurs are seeking out new ventures in Russia.

In November, they expect to introduce Russia’s first ruble-based credit card--the Ortcard--and, at the same time, they will open a financial institution to oversee the credit card business. Eventually, they plan to use the bank to make consumer loans, hopefully to those who buy imports from Ortex stores.

Ort International is among a handful of Russian companies that took advantage of reduced government restrictions on international trade, said Tim Bruinsma, chairman of the California-Russia Trade Assn. in Los Angeles.

“All the CIS companies that are privatizing are trying to generate hard currency and they find it prudent to use their profits to invest abroad,” said Bruinsma, an international law specialist at the law firm Fulbright & Jaworski in Los Angeles.

Ort International is the largest commonwealth company to move its headquarters to the United States, Bruinsma said. Its Ortex subsidiary had revenue last year of more than $10 million. Its advertising is ubiquitous in Russia, the Ukraine and other commonwealth countries. Ortex is where Russia shops for American and other Western goods.

Gura and Kalakoutski started their business by offering video copying and rental services in Moscow in 1987. Gura said that like many entrepreneurs operating under a corrupt Communist regime, they were hampered by government red tape and sometimes had to pay bribes to officials to get their products sold.

The following year, they expanded into trading as the Soviet government loosened its restrictions on imports and exports.

To escape the bribes and red tape, as well as to expand internationally, they formed a holding company in Berlin, along with a branch, in 1989. Last summer, they came to the United States, starting a subsidiary called Ortam Inc. in Irvine.

Just weeks before the ill-fated coup by conservatives against then-Soviet President Mikhail S. Gorbachev, Gura and Kalakoutski moved their families from Moscow to Orange County.

Since then, they have enjoyed an opulent lifestyle, although they say they don’t plan to give up their Russian passports.

Gura recently bought a $1.5-million house with a swimming pool in the exclusive, gated Big Canyon community in Newport Beach. His wife and two sons study English with a private tutor. He drives a black 1992 Mercedes 500SEL, wears $1,000 suits from Germany, shoes from Italy and checks the time from his gold Rolex watch.

“I love Big Canyon,” he said from his spacious living room adorned with contemporary Expressionist paintings that stand out against the white walls, carpeting and furniture. “In Russia, you can only see tall buildings and no open space.”

Kalakoutski has bought a $350,000 condominium a few blocks away for himself, his wife and daughter. He said he still has mixed feelings about California, which is why he didn’t buy a large house.

The 50 employees that Ort International expects to hire by the end of this year will work in an 8,000-square-foot, 19th-floor office in a Park Plaza building in Irvine.

Currently, 15 Russian and American employees work at the Irvine office. There they pick through wads of brochures and catalogues looking for consumer products that would likely sell in the commonwealth. Hot items include microwave ovens, radios and audio- and videocassette recorders, typewriters, TV sets and food products.

Elizabeth Knobel in Moscow and Chris Woodyard in Orange County contributed to this story.