United Company Rusal chief legal officer: Metal guru

Becoming legal boss at the world’s biggest aluminium producer and dealing with plants in far-flung locations was a change and a challenge for Igor Makarov


As the world’s biggest aluminium producer, United Company Rusal has ridden the ups and downs of the market in the past few years.

With more than 40 assets in 19 countries on five continents, Rusal has an extremely broad geographical remit, so it comes as no surprise that it needed a head of legal with wide-ranging experience.

Igor Makarov joined Rusal as chief legal officer in March 2011 from Jones Day’s Moscow office, but he previously led the corporate and M&A department at TNK-BP as well as working as Russia general counsel for BP and legal counsel for Conoco International Petroleum.


Global view

Although Makarov had considerable experience under his belt, he was ready for a change and Rusal seemed the right challenge.

“I had worked a lot in the M&A and oil and gas sectors, and felt I needed a change – I was ready for something completely different to focus on, so it was a challenging move for me,” he enthuses.

Rusal has more than 100 lawyers worldwide, of whom 41 are based in its Moscow headquarters. As Makarov notes, the company’s acquisition of a number of mines and plants in recent years has allowed the company to become a truly global player in the aluminium industry. Much of this came about as a result of the 2007 merger between Rusal, Sual and the alumina assets of Glencore to form United Company Rusal, as it is known today.

“In the early 2000s we acquired assets in Guinea, then we founded a mining company in Guyana and acquired a stake in Australia’s QAL,” he comments. “Our global expansion continued in 2007 when Rusal completed a merger with Russia’s Sual and international alumina assets of Glencore. Through the merger we acquired other plants in Jamaica, Ireland, Sweden and Italy, so this really has created the basis for our international expansion.”

Hand-in-hand with international expansion there has been the inevitable flood of new legal issues.

“Several of our mines and plants are located in challenging jurisdictions,” says Makarov. “There are lots of legal issues related to these countries as well as the production and even the freighting of bauxite and alumina – the raw materials used to make aluminium,” he adds.

Indeed, as with any mining company, Rusal has to contend with legal issues surrounding its employees worldwide, including illegal strikes.

“Some of the jurisdictions we operate in are not very settled so there are occasional disputes, such as over the privatisation of plants, and we have to deal directly with local governments on issues such as the level of royalties and local tariffs,” Makarov comments.


Local links

As a result of these issues on the ground in these challenging jurisdictions Rusal’s legal team has established close working relationships with a large number of local law firms.

“We work a lot with local law firms and I have to admit that we have to put some effort into interpreting their advice to get to the bottom of ­issues and obtain a better picture of the legal risks that we’ll be facing in each of the jurisdictions in which we operate,” he says.

“Many of these local firms work in a very different way from firms in the US, Europe and even Russia, so this in itself provides a challenge.”

As well as local firms, Rusal works with many major international firms. Although it does not have a formal panel of external legal advisers, it regularly reviews the firms it uses.

As for looking to the future, Rusal made its interest in China and the wider Asian market clear when it opted to go public on the Hong Kong Exchange (HKEx) in 2010. Although Makarov was not working at Rusal at the time, the ensuing legal issues have been particularly complex, he comments.

“A year before I joined, the company had the IPOs on the HKEx and the NYSE Euronext in Paris, as well as placing depository receipts in Russia, so there have been a number of challenges in terms of complying with multiple listing requirements,” he adds.

Interestingly, the HKEx has proved to be the most difficult exchange in this respect.

“They monitor the activities of companies particularly closely,” notes Makarov. “There are all sorts of requirements applicable to issuers. One of the most recent changes to the rules requires at least a third of the issuer’s board to consist of independent directors.”

Another priority for Makarov has been bringing the company into line with anti-corruption legislation.

“When we deal with trading partners such as Belarus we have to be careful not to breach any sanctions, he says. “Anti-monopoly laws often vary in different markets.

For a company that works in many markets, compliance will always be a big issue.”

Valery Sidnev, head of legal, MCC EuroChem


The fertilizer industry is driven by the need to provide food for a growing global population. As a result, MCC EuroChem, Russia’s largest mineral fertilizer producer, is implementing a strategy combining organic growth and disciplined M&A activity.

2012 will be a remarkable year for the company. It started with acquiring a Russian gas production company with an annual capacity of a billion cubic metres of natural gas and 220,000 tons of gas condensate.

Then in March it acquired nitrogen fertilizer production assets from BASF. Located in Antwerp, Belgium, these assets will provide the company with value-added production in the key market of Western Europe, our second home market after Russia. As a natural extension to the Antwerp operations, in May the company signed an agreement to buy the assets of K+S Nitrogen, a supplier of nitrogenous fertilizers, that will provide EuroChem, upon completion, with a world-renowned platform.

Every M&A transaction – especially outside your home market – is extremely complicated and poses real challenges to the company’s in-house lawyers involved in the transaction.

Mental and cultural barriers, strengthened by the rigidity of complex European competition rules and the varied requirements of Russian law, all impede negotiations and can delay completion.

Nevertheless, if you’re as confident in your team’s ability to overcome any obstacle as I am you can tackle any problem and push the matter through.


Alexandra Nesterenko, president, Russian Corporate Counsel Association

I used to be legal director of the Russian Rusnano State Corporation, which was set up in 2007 as an investment fund with the purpose of facilitating the innovation process and to promote the nano industry in Russia.

In fact, Rusnano was dedicated to finding a co-investor with a nano idea and investing in the project on a 50/50 basis.

In my early days at Rusnano I had the task of setting up a legal function capable of dealing with the investment process, infrastructure issues and all other legal questions (labour, administration and so on).

One of the first things we discovered was that the legal framework in Russia was unfriendly to investors, particularly for start-ups. There were not such legal tools in Russian law as warranties and guaranties, indemnities, put and call options, transactions under conditions, irrevocable powers of attorney and so on.

Therefore, co-investors insisted that we structure investment transactions under English law although Rusnano, as a state initiative, had to follow Russian law. My role was to contribute to the modification of Russian law to make it more comfortable for investors.

As president of the Russian Corporate Counsel Association, which has more than 100 corporate members – both Russian and multinational – together with members I initiated amendments to the Russian Civil Code, which will give investors more freedom and responsibility.

We are persisting in this process and expect the modified code to be adopted by the end of the year.

Igor Makarov Rusal

Position: Chief legal officer

Industry: Aluminium

Reporting to: CEO Oleg Deripaska

Assets under management: $12.3bn (£7.9bn)

Employees: 74,000

Global legal capability: 41 in Moscow, more than 100 worldwide

Main external law firms: Ashurst, Bredin Prat, Bryan Cave, Cleary Gottlieb Steen & Hamilton, Egorov Puginsky Afanasiev & Partners, Jones Day, Sidley Austin, Squire Sanders