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Not waving, but drowning

Arnaud Laprévote became the CEO of Mandriva in the spring of 2010. He was appointed at a time of crisis when Mandriva was under court supervision and struggling to keep up with court mandated payments, which consisted principally of back payments of employer taxes. Laprévote was previously Mandriva's CTO. In another life he ran LinBox in Metz, which Mandriva acquired in 2006. LinBox was a small company with a handful of employees that had developed Pulse, an infrastructure product used by Renault, EADS, Arcelor and a number of French government agencies. Pulse has been under-marketed, but is a significant part of Mandriva's enterprise offerings.

Laprévote was now required to take on the unenviable task of rescuing a company that was in the midst of a severe financial crisis. Under French law the CEO, or président directeur général (PDG), is liable to the commercial courts for the decisions made by the company – in such a position "there is nowhere to run and nowhere to hide. And if you fail you're finished forever."

Mandriva had been in and out of the commercial courts, and was at the mercy of a fluctuating market. But dispensations were available for hiring engineers who were engaged in research, so over the years Mandriva had become very active in key research projects with European Agencies, (a prime example being Compatible One which claims to be "the first industry-grade open source cloud services broker"), and had developed a dependency on the income that came from them – or as one source put it, research projects "became like a methadone for them."

Mandriva employed good quality engineers and engaged in high quality research, but the research didn't always produce a benefit for the company beyond the direct income and dispensations that came from the projects themselves, partly because Mandriva had limited marketing skills and a small sales team (of only two people) who spent most of their time bidding into government projects. Mandriva was one of many companies in the market to provide open source service and support and has never been given preference as a French political and economic entity when bidding for contracts. The French parliament deployed Ubuntu rather than Mandriva when it moved its administrative systems onto Linux, but it is said that Ubuntu support contracts in France sometimes went to Red Hat, so Ubuntu may not have had much return from that move either.

Less than a month after Laprévote was appointed CEO, in May 2010, Mandriva applied for bankruptcy, and according to one unhappy contributor to the Mandriva Forum, the "Chamber of Commerce gave 65 per cent discount on the debt of Mandriva." Laprévote went looking for an investor to save the company, and brought in NGI, which took a minority shareholding that later rose to a 51 per cent share, in exchange for a €2 million investment through a Cyprus-based subsidiary, Townarea Trading and Investment.

NGI, and thus Townarea Trading and Investment, is owned by a Russian businessman, Leonid Reiman, who is a former Russian Minister of Telecommunications and a close associate of Vladimir Putin and Dmitry Medvedev. The other main shareholder in Mandriva was Occam Capital, which retained a 42 per cent stake in the company through a Luxembourg-based subsidiary, LinLux SARL.

Tell me the facts

At the time, the French magazine LeMagIT reported that Laprévote gave the promiseFrench language link, so often heard before by Mandriva users, that the (as yet unnamed) investor would "return the group to balance and find a good business model", and that "community and users" no longer need concern themselves. LeMagIT wrongly assumed that the mysterious investor was Linagora, a French open source software support company.

Reiman is a controversial figure but is described by those who have met him as serious, intelligent and competent – "a 'Tell me the facts, and I'll make a decision.' sort of guy, who really knows what he is doing." By all accounts, his decision to invest in Mandriva was made in a hurry "without thinking it through..." Mandriva, in an earlier guise, had formed the base of Alt Linux, the dominant Linux distribution in Russia, and to Reiman, buying Mandriva was a business opportunity. To solidify his investment in Mandriva Reiman created Rosa Labs, also owned by NGI, with the idea of selling a customised derivative of Mandriva in Russia as the real thing rather than a fork, as Alt Linux had been.

It is worth noting that Reiman also acquired the Russian free software support company PingWin SoftwareRussian language link, and in December that year Vladimir Putin issued an edict that all government agencies in the Russian Federation would make the transition from proprietary software to open source solutions by 2015.

Mandriva, in partnership with PingWin Software and Rosa Labs, was ideally placed to take advantage of this initiative.

Over the edge

But Mandriva was still in trouble. At about the same time as Reiman was negotiating a future for Mandriva, Edge-IT and its assets were sent into liquidation. And, although most of the Edge-IT staff were offered positions at Mandriva, (in dubious circumstances if some accounts are to be believed), a substantial part of the community, including the great majority of the Edge-IT developers, (19 in number), chose to leave and form Mageia, amid rumours of financial turmoil, unpaid staff and worse. The developers weren't in a mood to believe the promises that were being made to them.

The Mandriva community had always been Mandriva's most vital asset, and this mattered. The Edge-IT developers formed most of the development and support team for the Linux distribution. Some blamed the Russians, some blamed Laprévote or the French investors, but the decision to close Edge-IT was the upshot of years of mishaps, PR failures and mismanagement – and was forced on the company prior to the Russians' involvement with Mandriva.

The investment funding from NGI had to be given approval by the commercial courts. It came in installments after October 2010, a month after the closure of Edge-IT, and continued over the next six months, by which time the Russians had gained a controlling interest in the company. NGI's investment kept Mandriva alive, but was insufficient to revive a company that had "lost about 30 millions euros" in the 12 short years of its existence.

Next: On the brink

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