Media Review

23 march, 2009 17:09


“In 2000, business did not feel any special pressure from the authorities. There were only two victims, and both were obsessed with politics – Berezovsky and Gusinsky,” a prominent businessman recalled. Even at that time, Boris Berezovsky himself believed that Vladimir Putin was obliged to send him to prison if he considered this a rational step.

"In 2000, business did not feel any special pressure from the authorities. There were only two victims, and both were obsessed with politics - Berezovsky and Gusinsky," a prominent businessman recalled. Even at that time, Boris Berezovsky himself believed that Vladimir Putin was obliged to send him to prison if he considered this a rational step.

There can be no economic progress if officials depend on business. How should officials build relations with the oligarchs in that case? The answer is, just like with everyone else. Like with the owner of a small bakery or a shoe repair stand," Mr Putin wrote in an open letter to the voters during his presidential campaign on February 25, 2000. This is how he formulated his new policy in relations with business.

At a meeting with his campaign managers three days later, he continued talking about "equidistant position of all participants in the market from the Government", having thereby given the name "equidistance of oligarchs" to his new policy.

The then Impex Bank President and Board Member of the Union of Industrialists and Entrepreneurs (RUIE) Oleg Kiselev recalled that this policy was discussed by the business community but did not cause any serious concern. "Everyone, even those who were closely entwined together with the authorities realised that this situation was wrong and should be revised," he said.

"In March 2000, Berezovsky confidently reasoned in Vedomosti's editorial office: "[Putin] said that the oligarchs should be made distant from the authorities just like everybody else. This is normal and absolutely correct but unfeasible." He added that "capital stands" behind Putin himself.

At that time the oligarchs could not even imagine how abruptly and resolutely the new authorities would start getting rid of their support". On May 11, four days after Putin's inauguration, Vladimir Gusinsky's Media Most was searched, and on June 13, he found himself in a detention facility. In the autumn, Berezovsky had to flee abroad to escape persecution.

Politics as the main reason

Why did "equidistance" start with Gusinsky? All versions converge on his interest in politics.

A former functionary of the Unity Party told Vedomosti that during parliamentary elections in the fall of 1999, the Gusinsky-owned NTV Channel played on the side of Putin's main political rivals - Yury Luzhkov and Yevgeny Primakov's bloc Fatherland-All Russia (or OVR in Russian abbreviation). Moscow Mayor Luzhkov and Gusinsky had been long-standing friends since the Soviet times. In early 1993, the Moscow City Government transferred to Most-Bank the accounts of its financial and economic department, department of finance, the Central Administrative District, the City Department of Internal Affairs, and the Traffic Police, to name but a few. Gusinsky headed the board of representatives of authorised banks under the Moscow mayor.

True, the then NTV Director-General Yevgeny Kiselyov maintains that the channel did not support the OVR, and that this widespread assertion was largely concocted by Berezovsky. Kiselyov explained the logic of events as follows: "In 1999, he decided not to share dividends from the election with anyone, in which case he had to get rid of his rival Gusinsky and NTV." Therefore, when the election race reached its peak, NTV lost information access to Unity, the Government, and Putin, and "we could only invite those who were not included in the blockade - the leaders of OVR, the Communists, and the Union of Right Forces with Yabloko." This is how Kiselyov explains how NTV received the reputation of a channel that "made a stake on Primakov and Luzhkov".

Another colleague of the oligarch, who preferred to remain anonymous, is convinced that "equidistance" started with media magnate Gusinsky because of his stubborn reluctance to coordinate the channel's information policy with the Kremlin, as the then head of the Presidential Executive Office, Alexander Voloshin, demanded. Gusinsky was convinced that his Media-Most, and particularly NTV, had become so powerful that nothing would have happened to them even if the channel refused to follow the Kremlin's instructions, he recalled in a conversation with Vedomosti.

At the same time, Gusinsky's friendship with the Moscow mayor began to show signs of strain. As Gusinsky's associate explained, after losing the elections Luzhkov "swore loyalty to the new authorities" and started distancing himself from his former allies. In February 2000, the mayor ordered the transfer of all city money to the Bank of Moscow and the Moscow Sberbank. The majority of banks were given the time for that move and only Most-Bank was told to return the money urgently, by March 1. At that time Most-Bank officials maintained that there would be no problem, but in May 2000 the Central Bank Board of Directors imposed temporary administration in Most-Bank. This happened on the day after the Central Bank's Chairman Viktor Gerashchenko met with Putin. However, Gerashchenko claims that he received no instructions about Most-Bank.

Gusinsky's media holding, another foundation of his political influence, was having financial problems because its development was mostly based on loans. "NTV's economic model was based on holding the IPO in September 1998 at the latest, but a financial crisis broke out in Russia and made this impossible. In late 1998 and early1999, NTV was the only federal television channel not to receive a government stabilisation loan. It had to turn for help to the then friendly Gazprom," Yevgeny Kiselyov recalled with a sigh.

The previously quoted high-ranking official said that Gusinsky was by no means going to return the loans, and when the time to repay them came, "he simply demanded their extension".

With President Boris Yeltsin's departure, NTV's requests were not heeded because Media-Most failed to repay Sberbank and Vneshtorgbank's loans. "Why should the Government have helped a private television channel, particularly one that was acting against it?" queried the official. By June 2000, Gusinsky's companies owed $1.3 billion, but the only bad debt was the $211.6 million owed by Media-Most to Gazprom.

Hopes and Disappointments

"Needless to say, if you take out a loan you have to repay it. From a business viewpoint Volodya [Gusinsky] was not doing the right thing, and the majority of his colleagues admitted this. But when he was arrested, solidarity prevailed," Oleg Kiselyov recalled. In the evening of June 13, the entire Russian business elite visited the Alpha Group office on Academician Sakharov Prospekt to sign a letter in Gusinsky's defence. As Vympelkom founder Dmitry Zimin recalled, it was not important that many people did not have any sympathy for him. First of all, they wanted to get him out of prison. Another participant in the Alpha meeting, who also preferred to remain anonymous, said: "Nobody feared that they would suffer the same fate as Gusinsky; they just wanted to restore justice." The press published an open letter to Prosecutor-General Vladimir Ustinov signed by 17 businessmen, including Anatoly Chubais, Rem Vyakhirev, Pyotr Aven, Mikhail Khodorkovsky, and Vladimir Potanin. They demanded that the measure of restraint against him should be changed, and offered to stand bail for him.

All of a sudden, Putin spoke out in Gusinsky's defence. Answering a question from a representative of Germany's Jewish organisations in Berlin on June15, he said: "I don't think Gusinsky should have been arrested." He specified that it would have been sufficient to place Gusinsky "under house arrest." On the following day, the oligarch was released, and immediately gave an interview to Newsweek: "I have reliable information that the Kremlin is considering further arrests. LUKoil's Vagit Alekperov and some executives from YUKOS [another oil company] are being considered."

However, this subject was not discussed at the new President's first meeting with the Russian business leaders from RUIE. Zimin recalled: "Putin was the first to start the conversation in the following spirit: Thanks for coming, first let's discuss Russia's WTO entry... in other words, he set the agenda himself." Oleg Kiselyov said: "At first, the mood was uneasy but in the end all apprehensions were gone. The young President took responsibility for a dozen of major reforms, and told us in detail what he was going to do. We were all ‘very excited,' as they say."

Gusinsky had not been invited to the Kremlin although he had already signed an agreement on settling his debt to Gazprom. Gazprom-media bought all Media-Most companies for $773 million, out of which $300 million were paid in cash, and $473 million were considered debt repayment. This agreement included scandalous protocol No. 6 that guaranteed to Gusinsky cessation of criminal prosecution. Its content became public only in the autumn, when the businessman, as it followed from Gazprom-Media's letter to the Prosecutor General's Office, "refused to implement the contract of July 20, 2000 [on selling his business] without explaining the reason". Gusinsky explained: Protocol No. 6 shows that the contract had been signed under pressure, and hence, was invalid. "The authorities wanted to take everything from Gusinsky for free. He understood this and did not want to implement any agreements with them. When these essentially political agreements became public, another criminal case was started against him on large-scale fraud [on Gazprom-Media's complaint]," Yevgeny Kiselyov claims. The oligarch began to be taken in for interrogation.

In November he visited his family in Spain and did not come back. Since then he has not given a single interview, and, as his assistant said, is not going to give any in the future. He is still involved with the media: Eventually Media-Most went to Gazprom, but he has a blocking stake of the Israeli Maariv media group and the RTVI satellite television channel.

The Most Politically-Motivated Oligarch

Gusinsky's foe Boris Berezovsky started having serious problems after the former had been placed at an "equidistance". His empire was somewhat different from Gusinsky's. Possessing minority shares in big companies, Berezovsky lobbied the appointment of his people there, and established control over financial flows. Aeroflot, AvtoVAZ, the ORT Channel, and, through partnership with Roman Abramovich, RusAl and Sibneft, got into his sphere of influence.

Berezovsky's influence was seriously questioned in 1999, when the oligarch's political opponent Yevgeny Primakov was appointed Prime Minister. In his interview to Vedomosti, Berezovsky mentioned that Primakov "nearly put him behind bars". In January, the Prosecutor General's Office initiated criminal proceedings against his Aeroflot colleagues, and in the spring of 1999 Aeroflot's General-Director Valery Okulov, who was President Boris Yeltsin's son-in-law, made them leave the company. Before long, Yeltsin demoted Berezovsky from the position of the CIS Executive Secretary.

A former high-ranking Kremlin official recalled: "Berezovsky himself seriously exaggerated the extent of his influence. Yeltsin strongly disliked him. During the entire history he met with him only twice, and these were cold conversations through clenched teeth - when he [Berezovsky] was appointed Deputy Secretary of the Security Council on the wave of gratitude to big business for the 1996 elections, and when Berezovsky lobbied his appointment to the CIS Executive Committee."

However, by the end of the year, when Primakov had already been dismissed, and the election race was in full swing, the oligarch's influence grew again. Investigation of his Aeroflot case was stopped and he was elected to the State Duma. The former Kremlin official recalled that Berezovsky had played a tangible role in Unity's election campaign, and Putin's attitude towards him was quite favourable, "because he considered the oligarch an extraordinary man with a creative mind, and found communication with him very useful."

The official specified that they had met before Putin became President, and after that until a serious conflict over the Kursk submarine disaster in August 2000 strained their relations. This tragedy became a serious trial for the new President: The military did not immediately admit it, and Putin, who was on vacation in Sochi at the time, allowed them to accept help from foreign rescuers only several days later. It was too late for saving the submarine crew. During these days, the Berezovsky-controlled ORT Channel broadcast reports fiercely critical of the authorities, showing the sobbing wives of the dying submariners and Putin driving a waverunner in Sochi.

The president qualified this as a betrayal and gave instructions to deprive the oligarch of his influence on the channel.

Former ORT commentator Sergei Dorenko explained: "The Kursk submarine was just an excuse. Relations between Berezovsky and the Kremlin started heating up since the spring 2000 because of a number of his daring open letters to Putin. I think that at least 40 people in the President's entourage were whispering to him that Berezovsky was inadequate and it was time to get rid of him."

In one of those open letters to Putin in September, Berezovsky reported: "... A high-ranking official in your Executive Office has presented me with an ultimatum: To transfer my ORT shares to the Government or follow in Gusinsky's footsteps."
Berezovsky's colleague Badri Patarkatsishvili maintained that after the Kursk disaster, Putin decided to make Berezovsky sell his media assets, using the resumed investigation into the Aeroflot case as a means of pressure on him. In December 2000, his Aeroflot partner Nikolai Glushkov was arrested, but the oligarch himself had left the country before that.

"Today, I made a painful decision - not to return to Russia for interrogation. I made this step because I am under the permanently growing pressure from the authorities and President Putin personally," he declared in November. In his lawsuit against Roman Abramovich in London's High Court (it is not yet over), he also refers to pressure and threats. Berezovsky claims that in early 2000, Abramovich forced him to sell for a song the ORT shares, 43% of Sibneft shares, and 25% of RusAl shares.

Gradually, Berezovsky sold or lost his other Russian assets - the United Bank, the MNVK television company, Transaero and AvtoVAZ shares, and the Kommersant Publishing House, and focused on politics. He succeeded in getting the status of a political refugee in the United Kingdom, and tried to play a noticeable role in the 2004 presidential election in Russia and in the Ukrainian Orange Revolution.

In late 2007, the Savelovsky District Court sentenced him in absentia to six years for embezzling Aeroflot's money. The business community did not intervene on his behalf even once. Oleg Kiselyov explained: "We never considered Berezovsky our colleague. He was not a member of the business community. He was a man of power and did not conceal this fact, and politicians have their own games."

In his interview to Vedomosti in the spring of 2000, when asked whether Putin could send him to prison when he came to power, Berezovsky replied: "Of course, he can, why not? If he considers this a rational step, if he is a normal politician, he must send me to prison. He's obliged to do this." Vedomosti tried to contact Berezovsky for a week, but his phone was switched off.

* * *
Person of the Year
Man's Destiny
In 2000, Roman Abramovich presented the public with several surprises in one go. A partner of Berezovsky and a State Duma deputy representing Chukotka, he became a co-owner of the biggest aluminium company RusAl, and shortly after won the elections for the Chukotka Governor with more than 90% of the votes. In 2005, he was reappointed Governor for another five years, although he asked President Putin to let him step down more than once. He finally managed to resign only in 2008 under President Dmitry Medvedev. By that time, Abramovich spent almost no time in Russia, sold his RusAl shares, bought Evraz Group shares, and was enthusiastically funding soccer projects in Russia and the United Kingdom.

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Six criminal cases with eight charges against Berezovsky were initiated in 2002-2007 (for embezzling $18 million from the SBS-Agro Bank and a state country residence in Zhukovka, and appealing for a forced seizure of power, among other things). The cases are suspended until his arrest.

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Andrei Babitsky's Case
In January 2000, Radio Freedom correspondent Andrei Babitsky, famous for his statements in defense of the Chechen militants' leaders, went missing in Chechnya. It transpired in February that he had been detained by secret services and exchanged for two POWs held by the militants. Later, Babitsky was arrested in Dagestan with a false passport. He was released after Acting President Putin declared that he did not deem it necessary to keep him under arrest. "He got into a predicament, and is totally confused," Putin added.

Olga Proskurina