Alexander Lebedev – the billionaire owner of Russia’s Novaya Gazeta and Britain’s The Independent – is leaving business for politics because he has grown tired of battling corrupt officials.
It’s not as hard as you might think to organize an interview with Alexander Lebedev, a permanent occupant of the Forbes magazine rich list (No. 448, $2.1 billion), especially in Russia. His web site includes the direct number of his press-secretary, and Lebedev understands how to work with the media, both Russian and Western. He is himself a media machine. He owns the influential opposition newspaper Novaya Gazeta in Russia and The Evening Standard and The Independent in Britain. His personal site, alebedev.org, is virtually a one-man newspaper featuring sensational stories and investigations. The most recent include an attempt to reveal corruption in the FSB.
Lebedev’s excellent relationship with the press is unusual among Russian billionaires, practically all of whom keep powerful PR agencies on retainer. Their main purpose is to protect their patrons from what is known in Russia as "uncontrolled media appearances" – articles on which the subject hasn’t signed off beforehand. Lebedev is more professional, and more successful. He explained his motivations in a 2008 interview with The Times of London: "You need to understand how the Russian state works. Only by raising publicity in the West can you force it to do something."
Evidently it was a desire to force the bureaucracy to "do something" that compelled Lebedev to re-enter politics. Last week he announced that he was mostly leaving business and would join the People’s Front, a union of political parties headed by Vladimir Putin (and presumably guaranteed victory in the parliamentary and presidential elections in 2011 and 2012).
In reality, however, Lebedev has long been a politician. He’s probably more a politician than many Russians who define themselves as such. The country’s major political figures, such as President Dmitry Medvedev, have almost never said openly that they wanted to be elected to their posts. Lebedev, by comparison, has an entire political program, namely battling corruption, supporting social and charitable organizations and independent media (he funds the latter through his New Media holding).
In 2003, Lebedev took part in the Moscow mayoral race, losing to Yury Luzhkov, though he won a solid 13 percent and found a longtime political and business enemy in the all-powerful Moscow strongman. Later Lebedev became a member of the State Duma and systematically promoted bills in which he believed and which he tried to implement on his return to business in 2007 (yet again proving the Russian saying "if you don’t do it, no one else will").
Through his firm Dream Home, which makes modular, typically Western cottages and houses that won’t look out of place in Russian villages and cities, he has helped create affordable housing. He supports the Russian aviation industry with his company Red Wings and a major share in the Russian flag carrier, Aeroflot. Lebedev also introduced the popular Duma bill on banning gambling and moving casinos to special gaming zones.
Since his return to business Lebedev has essentially lived in two cities, London and Moscow, and continues to pursue a political agenda, though he is now on the attack. He urges the authorities to rein in corruption and the security structures, and accuses them of trying to seize his most important assent, the National Reserve Bank. In an exclusive interview with RUSSIA! magazine he said, "I’ve never had any conflicts. I’ve devoted my time to earning money on the financial market and investing it. What can they take from me? My potato? But I’m the biggest potato producer in Russia. Or my aviation firm Red Wings? Everything depends on me there. So what can they take from me? Only the bank."
It is obvious why Lebedev doesn’t want to lose it. Not only is NRB his keystone asset and one of the top 30 financial institutions in Russia, he also built it from a small company into a powerful financial conglomerate after making his fortune on securities transactions in the 1990s, thanks to his then-rare understanding of financial markets that stemmed from his dissertation and life in London as an intelligence officer. In a video interview with The Guardian, he spoke with not a little pride about how he managed to avoid bankruptcy in 1998, along with only about 10 other banks in the entire country. Later, amid the maelstrom of the 2008 financial crisis, NRB was one of the first banks to receive the go-ahead from the Finance Ministry to sanate the Russian banking system.
Last week, when Lebedev announced his return to politics, the decision itself was the least-interesting part. In today’s Russia, billionaires often become politicians. The day before, another Russian businessman who is famous in the West, Mikhail Prokhorov, revealed that he would head an opposition party created by the Kremlin (yes, really) called The Right Way. What is curious about Lebedev’s move is his motivation: He has grown tired of "fighting to vainly save my business from corrupt schemes hatched in the security structures." In other words, one of Russia’s most powerful businessmen is clearly unable to defeat corruption in Russia from the outside and has been forced to find a way to defend himself from the inside.
In an interview with RUSSIA! magazine, Lebedev said that attempts on his bank began in 1996. He wrote about one such occurrence in an open letter to Prime Minister Vladimir Putin: "A person bearing a resemblance to Prosecutor General Skuratov tried to seize my business and send me to prison. This harassment continued for four years and was initiated, on one side, by the highest command of the Attorney General and individual ‘werewolves’ from the FSB and, on the other, by the Yegiazaryan brothers and the Orekhovskaya criminal gang. The former fabricated criminal cases, overwhelmed the National Reserve Bank with searches and interrogated its employees for thousands of hours, while the others used small arms, grenades and plastic explosives to take relatives of NRB directors as hostages. This is a mechanism of criminal repression."
Lebedev has described in detail the attacks on NRB – the same attacks that likely forced him to re-enter politics.
Here’s an excellent example: At the end of the 1996 we had a client who had money in the bank, and then went bankrupt, or rather was deliberately bankrupted. As a result of some securities deals the client was able to steal $7.5 million from us. He was called Igor Fyodorov; he died a few years ago. He was a resident of the United States and had Russian citizenship. We turned to the law enforcement authorities, but this was 1996… We had to hire a detective agency abroad, Interfor, and it found the money in a Swiss bank. It was called FondErnest. We froze this money via a Swiss court and were due to begin prosecuting the case in two countries – the United States and Britain.
Instead of paying us for the shares in line with the agreement, Fyodorov transferred the money from another bank to his private account in Switzerland. He later began to work with the Yegiazaryan brothers, Ashot and Suren, and by this time they already had a close relationship with the Russian Prosecutor General’s Office. They worked from several safe houses, one of which, the famous ‘Crow Village On Polyanka,’ even appeared on TV.
The case described by Lebedev was made famous in Russia by a video shown on central television in which the prosecutor general – or rather "a person bearing a resemblance to the prosecutor" – relaxes in the company of several women. The cameras had likely been installed in an apartment that the Russian media linked to Yegiazaryan brothers.
The Yegiazaryans probably forced Fyodorov to write two statements. We have both of these documents. Fyodorov wrote to the prosecutor general from America that we stole all the money, which could only be stolen in the Russian Federation, and that we threatened him. In other words, everything that usually appears in false denunciations. In addition, Fyodorov accused us and Chernomydrin (the former Russian prime minister) of planning illegal political activities, and of forcing Fyodorov to flee to America, and he asked that we be brought to justice.
The statements were sent by U.S. mail. And in accordance with the Racketeer Influenced and Corrupt Organizations Act (RICO), usage of the postal system and telephones on U.S. territory is cause for the act to be enforced. It provides a basis for bringing a case in the U.S. courts under RICO. We’re looking into this. RICO has never been successfully applied to a Russian before, and moreover the U.S. Supreme Court last year imposed limitations on how foreigners could use U.S. legislation. Right now we’re still working with lawyers on creating a case.
We possess a huge amount of [supporting] documentation: Fyodorov’s payments, transferring $2 million to Suren Yegiazaryan on Cyprus via the Louis D’Or Bank. His brother Ashot Yegiazaryan cleaned a minimum of $1 billion using the same bank on Barbados. The Yegiazaryan brothers obtained control of two banks in Moscow, the Moscow National Bank and UnikomBank. They withdrew several hundred million dollars. Moreover they’ve done deals with the Ministry of Finance and cleaned the money through the Louis D’Or Bank on Barbados. Fyodorov paid the Yegiazaryans to order the Prosecutor General’s Office to investigate us based on the false statement. That’s basically what happened.
The Lebedev of 1996 differs in many ways from the Lebedev of 2011. Today the businessman - we’re avoiding the term "oligarch" on purpose because he is not an oligarch in the usual Russian sense of the word, and doesn’t like to be called one - is a major international figure, owns influential British newspapers, and organizes a prestigious annual charity ball in London (the proceeds go to a foundation created by Lebedev’s friend Mikhail Gorbachev). But even now Lebedev doesn’t know whether he can defend his business. As he wrote on his blog, "I don’t think it’s possible to remain in banking… I intend to leave the sector within two months and become a normal citizen, and will work on social causes. What’s business if it only exists in a state of battle with the FSB?"