Editor’s note: This profile is part of a series ‘Women in Business in Ukraine’ about female business leaders in Ukraine.
Like many big players now in business in Ukraine, Luba Michailova was in her 20s when the Soviet Union collapsed. Donetsk-born Michailova said she had no choice but to “try something” in business. Her companies would later control more than 10 percent of the global carbon products market.
Michailova’s chemical plants, along with her famed Donetsk art platform, Izolyatsia, are now in the hands of the Russian-backed forces. Taking what they could carry, she and 70 Izolyatsia employees relocated to Kyiv’s Podil riverside area in 2014. She now dreams of redeveloping the entire stretch of Kyiv’s old docklands.
Starting in 1990s
Michailova is one of a relatively small number of women who have made it into Ukraine’s business elite. Asked how she survived the bloody gang wars of the 1990s in Donetsk and the subsequent coming of the oligarchic order, she described a mixture of creating a robust business model and childhood connections.
Her father was a well-known Donetsk “red director,” a Soviet-era factory manager, and through his connections, she started a barter business in the early 1990s. She would exchange byproducts from the major Donbas industrial plants and supply workers with desperately needed consumer goods. Once she had a grasp of how to export and import goods, she decided to develop her own chemical manufacturers.
“All the boys chose coal or steel because that’s what they grew up with. But chemicals required a little bit more imagination and there was less competition, so we chose the chemicals field,” Michailova told the Kyiv Post.
First plant
Her first success was with the Kremenchug Carbon Black Plant, which she privatized with a partner using profits from her barter business.
At the plant, Michailova changed the production standards originally designed for Soviet Zhiguli cars and implemented ISO and ASTM systems. The plant became a supplier for Michelin and Pirelli, two of the world’s largest tire manufacturers.
The business was valued by Ernst & Young at $80 million in 2012, but the deal to go public fell through after Michailova’s partner pulled out. In total, Michailova redeveloped four plants with around 1,000 employees.
“My specialty was to take over old Soviet industrial places that had not been taken by the big guys, because it was not obviously easy to make a business out of them when it wasn’t producing steel or mining ore,” she said. “(Instead), it required some technological processes, changing the standards.”
Donbas gang wars
In the late 1990s, the violent war for assets in the Donbas peaked. The new Donbas elite were of a different background to the men of her father’s generation, according to Michailova: “They came from problem families, and this was reflected in their attitude towards business.”
“A lot of young businessmen were killed,” she recalled. “And in the end we saw that two or three business empires had been built… Then later these businesses converted with (the help of) some ‘McKinsey’ into something nice and beautiful with ‘social responsibility.’ Then they cut this ‘90s period out as if it never happened.”
The issue with the “monopolists” who now controlled the Donbas region, said Michailova, was not that they didn’t like women, but that they didn’t like the idea of a person not being part of a gang.
Michailova decided she would be better protected by developing a name for herself and contacts in the West. She became a Greek citizen through ancestry in 1999, which means she is considered a foreign investor under Ukrainian law. She also joined dozens of international trade and chemicals associations. Slowly, the monopolists’ need for legitimization overtook their desire for control, she said.
“You (as a woman) have to not be afraid of being threatened. Because you are threatened by the tax authorities, local men, the local State Security Services, the police, the prosecutors,” she said. “I went to court against the prosecutor, the tax authorities. My strongest (asset) was that I did it legally and loudly.”
Art benefactor
A tower installation by Pascale Marthine Tayou called ‘Make Up…Peace,’ the phallic resemblance of which stirred controversy among Donetsk’s residents.(Courtesy) (Ruslan Semichev)
By the time of the Russian-backed separatist takeover of the Donbas in 2014, Michailova had two plants in Ukraine and several international chemicals trading companies. She also had Izolyatsia, which was housed in one part of her father’s seven-hectare derelict insulation materials factory.
Michailova started collecting socialist realist art in 1990s, some of which was given to her by Donetsk factory bosses in lieu of cash. If she could have studied anything, she said, it would have been culture, not macroeconomics.
Izolyatsia brought several internationally acclaimed artists to Donetsk and has continued to do so since it moved to Kyiv. It also supports more than 70 active Ukrainian artists who work in house.
The separatists have since destroyed all the art installations in Donetsk, said Michailova, and burnt their books.
Izolyatsia’s former home in Donetsk is used by the separatists as a place for keeping prisoners and executions, according to Michailova.
New elites
Michailova laments Ukraine’s political elites for their inability to change.
Though she and other businesspeople are forbidden from operating their factories in the Donbas, “a chosen few,” namely companies like Rinat Akhmetov’s Metinvest, are allowed to continue because they are close to the “king,” she said.
If she could write one book, Michailova said it would be about the post-Soviet Ukrainian elites, told through her experiences of traveling business class from Kyiv.
When a new elite comes to power, she said, they start off in tracksuits and vyshyvanki (traditional Ukrainian embroidered shirts), then they move to Louis Vuitton bags. Next, according to her, is to have three babysitters seated in business class, and finally they upgrade their tennis partner and start to use laptops.
“And flip again, and again there are new elites. And we start again with the tracksuits. And when I fly now… I say poor Ukraine. If we’d stopped with the first elites, their children would have already graduated from Oxford and our elites would know how to behave. And it’s like this every time. And I almost cry. Because every next elite is worse than the previous. That’s my opinion from (flying) business class.”
Women in business
For now, Michailova’s operational assets in Ukraine are limited to Izolyatsia and its commercial initiative Izone which she hopes are just the starting point of a larger development and conservation project in the capital’s historic Podil district.
But meanwhile a huge part of Kyiv’s old shipyard is widely believed to have been privatized by a company close to Ukrainian President Petro Poroshenko and will be used to build a business and shopping complex, according to Ukrainian online newspaper Ukrainska Pravda.
“It’s like my business class flight. I don’t want to come back and go in a circle again… All my companies failed because the environment was not ready, it was too fast compared to the environment. So I’ve decided we will do it a different way – we will grow together with the community and people.”
Ukrainian women have made some headway in politics, said Michailova, but little in business. Part of the reason, she said, is because men like to promote men who are just like them.
“The women’s community is not developed enough. There is almost no movement.”
Interview conducted by IZOLYATSIA employees with the separatists forces who took over the arts platform in 2014 (Courtesy)
