June 17 (Bloomberg) -- Oleg Deripaska, the Russian billionaire rebuked by Prime Minister Vladimir Putin for wage arrears, said the government should do more to improve the economy if it wants businesses to succeed.

The onus is on state officials to help revive demand as the economy shrinks for the first time in a decade, Deripaska told Associated Press Television in an interview yesterday. Russian industrial production contracted a record 17.1 percent in May from a year earlier.

“The government better focus” on stimulating growth and “we will run our company,” Deripaska said during a tour of his OAO GAZ light-vehicle maker’s main factory in Nizhny Novgorod, where production has been curtailed to one shift a day. “I would like the government to fix the economy.”

Putin, 56, publicly criticized Deripaska, 41, earlier this month for wage arrears at his cement plant, warning that the state would take over where private owners failed. Dmitry Medvedev, who succeeded Putin as president last year, said this week that owners who idle factories on slumping sales should be “educated” by local governors and helped to reorganized the business so it can make a profit.

Pressure on Business

The state is ramping up pressure on business to share the social burden of unemployment at an eight-year high, with more than 600 Russian industrial towns dependent on one company’s factory for heat, power and their municipal budget as well as jobs. One in 100 Russians are economically reliant on Deripaska’s business empire.

“You made thousands of people hostages of your ambitions, lack of professionalism and perhaps simply greed,” Putin told Deripaska and other owners of idled factories in the northwest town of Pikalyovo on June 4. Deripaska was then filmed signing cheaper raw material contracts for his factory with suppliers.

Deripaska, speaking at the GAZ factory that may help to produce Opel brand cars after Russia’s OAO Sberbank and Magna International Inc. agreed to buy the German unit of General Motors Corp., said his companies can “do our job” when the economy recovers. Putin said this month he backed the state-run Sberbank’s plans with Canada’s Magna, under which GAZ would make Opel cars without owning any shares in the German company.

“I don’t care: dependence or independence for GAZ” from the state, Deripaska said. “The people you see here are well- trained and good enough to work in line with demand. And demand should be generated from the economy itself.”

‘Peak’ of Crisis

Medvedev told more than 2,000 executives and guests at the “Russian Davos” in St. Petersburg earlier this month that the “peak” of the crisis has been reached and that Russia would recover faster than expected by outside observers. German Gref, CEO of Sberbank, told the forum the economic slump was slowing “sharply” and further declines were “unlikely.”

A week after the forum, the Moscow-based Federal Statistical Service said the economy of the world’s biggest oil producer shrank an annual 9.8 percent in the first quarter, more than Russia earlier forecast and the most in 15 years.

Deripaska is Russia’s largest non-state borrower, with companies he controls seeking to renegotiate more than $20 billion of debt to banks including Barclays Plc and BNP Paribas SA. The billionaire’s United Co. Rusal, the world’s biggest aluminum producer, has until July 28 to renegotiate $7.4 billion of foreign debt. Russian bailout bank VEB agreed this month to extend a $4.5 billion loan to Rusal by at least a year.

Rusal, in which Deripaska owns 54 percent, may get lower interest rates on bank loans than ArcelorMittal received for its bonds this month, Vedomosti said today, citing two unidentified bankers involved in negotiations.

To contact the reporter on this story: Yuriy Humber in Moscow at yhumber@bloomberg.net

Last Updated: June 17, 2009 05:47 EDT