November 16, 2010 at 13:23

Alexander Lebedev: I’ve had enough

Alexander Lebedev: I’ve had enough

Recently, officers of the Security Service of Ukraine confiscated the documents of Holiday Center “More” Public Corporation (Alushta), a subsidiary belonging to a well-known Russian businessman and politician Alexander Lebedev.

However, as Interfax Ukraine was told at the SBU press center, the confiscation was carried out within the investigation of a criminal case concerning an illegal decision passed by the city council of Alushta. The press center specified that the case was opened following the Alushta city executive committee’s decision to decrease the revenue side of the city’s budget by almost five million hryvnias.

“The SBU has no claims to the sanatorium proper. It is a matter of corruption at the city council,” emphasized the officers of the press center. Meanwhile, British media, The Guardian and The Financial Times in particular, recently wrote that Lebedev, known in England as the owner of The Independent and The Evening Standard, has had problems with his business in Ukraine — the recreation centers belonging to this Russian businessman were searched on November 4 and 5.

The Day contacted Mr. Lebedev by phone and asked him several questions.

Mr. Lebedev, in Ukraine you have come to be known as a long-time, renowned, and moreover, large-scale investor. There is a picture online where you are sitting at an investors conference next to Ukraine’s Deputy Prime Minister Serhii Tihipko. But rhetoric is not everything. Can you sense any positive changes in Ukraine?

“I will be brief. In my opinion, it could have never been worse than it used to be. Yet it turned out that the investment climate has become even worse. I think it is largely due to those funny actions by the tax administration, the police, the attorneys, and the SBU — even the environmental service and firefighters have their own interests.”

At a certain point you invested a lot of money and effort in the “More” Holiday Center. It has even become one of the most popular topics for discussion in Ukraine, in particular, in what concerns investment problems. Can you somehow account for what has happened?

“There is nothing new there. It is simply that, as this coincided in time with the events in Moscow (searches at the NRB bank. – Author), someone was able to spot a connection. It is outright ridiculous. Surely there is no connection. It’s a whole new ball game. And I can only feel sorry that the largest hotel complex in Ukraine, with nearly 200 million dollars of investments (not counting the Chekhov Theater in Yalta, the Chekhov Museum, and the church/lighthouse in Malorechenske), who is the largest tax-payer and employer in the raion, should be pestered each year…”

How can you respond to that?

“I cannot, because even now commenting on the situation I am speaking as an outsider, an expert. I will have nothing to do with investments in Ukraine. I’ll explain: this was an investment made by several Cypriot companies, and there is also West European and American money there. So from now on it is going to be the problem of the country’s investment climate, and of the system of relations between Ukraine’s government and real international (‘non-Muscovite’) investors — American and European. So let them sort it out on their own now.

“I myself see that it is an absurdity, to say the least. If Ukraine desires to bring in investments, and this is a must as it has no raw resources, unlike Russia, then it makes no sense stripping investors of the results of their work. Besides, I have never repatriated a single penny from my Ukrainian profits.

“As for the rest of the story, that someone would teach me a lesson and take away 50 percent shares of Hotel Ukraina, that is all lies. Total nonsense. I won’t be surprised if the owners of SPA Resorts in Alushta, after the confiscation of their servers, accounting records, and all other papers, will decide that the hotel cannot work like that anymore. We are a chain of hotels scattered along the quay in Alushta, SPA centers, restaurants, swimming pools, and a water park — all in a single complex. It is quite likely that it will be closed down. And it will no longer receive 100,000 vacationers each year. No more conferences, no more taxes, no more jobs.

“There is a plan to convert it all into condominiums. They can be offered to Europeans. I don’t know, maybe it can succeed, when the investment climate in the country is more or less normal. In any case, no one will find faults with such a model. All those petty local inspectors, who often pretend to be executors of somebody else’s political will, in fact are plainly corrupt and are grafters. They will come, find a pretext to bring an action against the owners, and then they start demanding bribes. Nothing new to be seen here. This practice has existed for many years.

“In the Crimea and in Ukraine we have won more than one hundred court cases. Can you beat that? Now, I’ve had enough. I’m done with it now. Let them deal with Europeans then. There have been the others’ investments, too, but I have ceded everything now. ‘More’ will now belong to the English, or Germans, or French, or Americans. Their lawyers will now be solving all the problems, as it is international jurisdiction.

“I reiterate again that I have not repatriated a single penny from Ukraine, never received profits from my Ukrainian investments, which run into hundreds of millions. Why should I, if there are other countries in the world? England, Italy, France, Switzerland, Botswana. There is Russia, too. But Lebedev is done performing on the Ukrainian investment stage.”

It has been reported recently that you advised that Ukraine take over your shares in the leasing company Iliushin Finance Co. Was there a response to this proposal? And what do you think of our countries’ intention to create a joint venture in the aviation industry? Who will benefit from it?

“I have indeed made such an offer to the Ukrainian government. Moreover, I went further still and found one of the major European banks that agreed to credit this purchase. They sent their proposal to Ukraine’s minister of finance, which says in black and white that at the request of the NRB we are prepared to lease a loan for purchasing the Iliushin Finance shares. Then the situation might develop as follows: contact the IPO in China, get the necessary funds, and buy Ukrainian and Russian planes. But this is not in my competence now. This is where the two governments come in.

“Should Ukraine find the monies, I am prepared to sell Iliushin Finance. Then we might settle the matter for good and stop the spat around Hotel Ukraina on Maidan Nezalezhnosti. That’s what I mean. Well, if someone loves someone else’s property in Kyiv, what can I do?

“As far as a joint aviation leasing enterprise goes, I can say offhand that both our countries will profit from this. It is the main tool that can help develop the aviation industry in both countries. It will ensure the manufacturing of Ukraine’s and Russia’s own planes. You are well aware that it is no easy thing to unite the manufacturing complex but, using an effective leasing company, its history, expertise, and professionalism, we might contact the IPO in Hong Kong, indeed. It’s a good idea. If it worked, I would give up 50 percent of Hotel Ukraina shares. Anyway, I am not allowed to do anything, and will only see a miserable shack.”

It is common knowledge that you invest in the English media industry. Do you plan to expand your media empire to Ukraine as well? Is your choice of England based on the analysis of freedom of speech in Russia, Ukraine, and Great Britain?

“No, I’m not going to expand anymore. What I have is enough: Novaya Gazeta, The Independent, The Evening Standard. Like I said, I’m not going to do anything in Ukraine. I have a great service record, I was awarded a decoration ‘For Merits’ by president Kuchma, and I consider my mission in this country complete. The theater in Yalta — I was given a lease on it for 49 years, on condition that I reconstruct and maintain it, and it is working now. I invested 12 million euros in its renovation, which ate up all the little profit I made from the “More” Holiday Center. There also is a 65 meter tall St. Nicholas church/lighthouse in Malorechenske, to commemorate those who have drowned, with the museum of shipwrecks. They also need help. I do not refuse to render it.”

You still haven’t mentioned if your decision not to buy mass media in Ukraine is somehow connected with the level of freedom of speech.

“It is connected with the government’s bad treatment of Russian investors.”


Oleksandra KUZHEL, deputy chairperson, member of Strong Ukraine, ex-chairperson of the State Committee of Ukraine for Regulatory Policy and Entrepreneurship:

“I met Mr. Lebedev at this very hotel on October 22, during an investment forum. There were very many investors from abroad (German, French, Turkish, and Georgian), and we were discussing ways to implement the task set by President Viktor Yanukovych, i.e., to create an attractive investment climate in the Crimea.

“Speaking after Serhii Tihipko, Mr. Lebedev said the following, ‘For the first time I have heard a different approach to the concept of an investor. I’ve kept offering a billion dollars to build a quay in Alushta, but I am not allowed to do this because they want bribes.’ After those words I saw a man who had been investing for 11 years and was prepared to go on investing into the development of Alushta and the Crimea as a whole, even if it didn’t always pay. And I was very upset by the news about this investor. What kind of investment climate can one talk about if this is happening to someone who invests in Ukraine.

“I will definitely get in touch with the MPs in the Verkhovna Rada of the Crimea, find out about this situation, and stand up for the investor’s rights. Any investor, regardless of his place of residence, has to be protected by the law in this country. Otherwise, we will not see any investments at all.

“In my opinion, to make sure business is not afraid to invest in Ukraine, we must fight corruption and perfect the judicial system. For if in this country the findings of a court can be used to deprive people of ownership, no wonder that investors are reluctant to bring money.

“The main sign of a successful investment climate in a region is the number of new jobs, and the volume of investments per annum. If this index is high, it means that in this region business can work honestly.

“I think there is only one way to exterminate corruption in Ukraine, via stricter control over officials. How can you do that? Well, in Russia a certain governor gave all the investors his mobile phone number and asked them to call him any time officials demanded bribes. In one year business structures invested six billion dollars in this region. That is the result. If only there was political will and desire to do something like this in all the regions of our country. And it is not worthwhile hoping that the president or prime minister will do this. It is the heads of local councils who have to deal with this every day, and be held accountable for what they have done.”

Tags: Corruption, National reserve bank, Ukraine


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