Tony Halpin in Moscow and Alexi Mostrous
January 28, 2010
The financial deal casts new light on the relationship between the Kremlin and Evening Standard owner Alexander Lebedev, above, usually viewed as one of its most outspoken criticsThe Russian billionaire bidding to buy The Independent newspaper is poised to gain a massive cash injection from the Kremlin in a deal personally sanctioned by Vladimir Putin.
Alexander Lebedev, who bought London’s Evening Standard for £1 a year ago, is selling his stakes in the airline Aeroflot and in Russia’s largest aircraft leasing corporation back to the Government.
He told The Times in an exclusive interview that the deals would earn him more than £450 million.
Mr Lebedev said that the cash was destined for new projects in Russia and that none would be spent on his burgeoning newspaper interests in Britain. However, the financial boost casts a revealing new light on the relationship between the Kremlin and a man usually viewed as one of its most outspoken critics.
The bank’s supervisory board, which is composed entirely of government ministers, will meet on February 17 to consider the sales formally but Mr Putin has already approved them. Mr Lebedev said: “The decision has been taken. My understanding is there is a written government decision on it with the word ‘agreed’.”
Mr Lebedev, 50, denied recent reports in London that he had been short of cash and laughed off suggestions that he was now being bailed out by Mr Putin at a critical moment in negotiations for The Independent, saying: “That’s pretty public. Couldn’t he give me a billion under the table?”
He said: “It doesn’t change anything in my business life, this extra cash. Anyway, I have committed it to a few other things; none of that will be ever used for newspapers because I am funding the Evening Standard out of my pocket.”
Asked whether he planned also to fund The Independent from his personal resources, he replied : “Yes, absolutely, yes.” Although he declined to discuss details of his negotiations with the current owners, Independent News and Media, he distanced himself from suggestions that he would turn the loss-making paper into a free-sheet as he had done with the Standard.
Mr Lebedev said: “If you claim that you are saving a good newspaper and that you want to reform it you don’t do that by hitting other papers.
“Let’s assume we make the Indy free, you’d affect seriously the business models of other newspapers and frankly, that’s a very important reason [not to do it].”
Mr Lebedev also played down suggestions that he had lined up Rod Liddle, the former editor of Radio 4’s Today programme, to edit the paper. He said: “I love Rod Liddle and hate him ... He’s a provocateur because he sometimes believes the opposite of what he’s saying. Whether he’d make a good editor-in-chief I don’t know.”
Insisting that he was a supporter of a free press in a democracy, he said that he would tap new readers among an estimated 5 million Britons who he described as “liberal democrats ... who really need The Independent in the way it used to be”.
It had lost a sense of purpose but had “a very good chance to be a global newspaper” campaigning on the environment and corruption issues, he said.
However, the extent of his business links with the Kremlin have raised concerns among some commentators about his own independence.
Granville Williams, a member of the national council for the Campaign for Press and Broadcasting Freedom and a specialist on media ownership, called on the Government to ensure that The Independent remained autonomous.
“These new deals with Putin raise concern that the quid pro quo would be for The Independent to draw red lines around its Russian coverage,” he said. “Although Mr Lebedev has a good track record on free speech, I’d want the Government to ask for firm guarantees that The Independent will not feel afraid of reporting Russia negatively under his ownership.”
Other media analysts, however, said that The Independent was a “natural fit” for Mr Lebedev. “It’s ideologically his true home,” said Lorna Tilbian, an analyst at Numis. “I don’t think he’s damaged the Standard and, indeed, he may have saved it. Maybe he’ll save the Indy as well.”
Mr Lebedev said that he knew President Medvedev and Mr Putin but found it easier to “treat them as one” rather than as separate political figures. He had not seen the latter for two years, after a Moscow tabloid that he owned printed a false story alleging that Mr Putin had secretly divorced his wife, Lyudmila, and married Alina Kabayeva, a former Olympic gymnast half his age.
Asked to characterise his relationship with them in light of the business deals, he said: “If they want me as an ally then I’ll be more than happy to call myself a modernisation force.”
Before now Mr Lebedev, who funds the Novaya Gazeta, the opposition newspaper where the murdered journalist Anna Politkovskaya worked, was regarded as one of the most vocal domestic critics of Mr Putin’s clampdown on political dissent.
He disclosed that his efforts to form a moderate opposition party with the former Soviet leader Mikhail Gorbachev had been blocked by the Kremlin’s shadowy chief ideologue, Vladislav Surkov, the man who coined the term “sovereign democracy” to justify Mr Putin’s growing authoritarianism as President until 2008.
An avowed Anglophile, Mr Lebedev spied for the KGB in the late 1980s at the Soviet Embassy in London, rising to lieutenant-colonel in the foreign intelligence service — the same rank as Mr Putin. He went into business after the collapse of Communism, becoming rich on complex banking deals.
The Evening Standard was losing £10 million a year when Mr Lebedev bought a 75 per cent stake from Associated Newspapers last January, becoming the first Russian owner of a British newspaper. He said that he had honoured pledges of financial support without interfering in editorial decisions, adding: “I have built walls higher than the Chinese and I am strictly observing this principle.”
There were “positive trends” financially after the Standard abolished its cover price and almost tripled the print run to 600,000 as a free newspaper. Mr Lebedev said: “The positive trend comes from additional revenues from advertising, which is linked to increased circulation.”
Sources close to Independent News and Media said yesterday that they were optimistic about concluding a deal with Mr Lebedev by February 15, when exclusive talks between the parties expire.
“Some issues have yet to be decided and the ball is not in our court,” Mr Lebedev said. One sticking point could be what to do with a long-standing printing contract with Trinity Mirror, which would cost Mr Lebedev a lot to cancel.
Empire and connections
Alexander Lebedev’s personal worth was estimated to be $3.5 billion (£2.2 billion) before the financial crisis, which he says has cost him $1 billion
In 2008, the National Reserve Corporation, Mr Lebedev’s holding company, estimated the value of its assets at $5.5 billion
In Britain he owns a 75 per cent stake in the Evening Standard and is negotiating to buy The Independent and The Independent on Sunday
In Ukraine he has stakes in Energobank and an insurance company and owns a 235-room spa, the Almond Grove open-air water park and the four-star Glory Resort. He also owns boutique hotels in France, Italy and Switzerland
In Germany he owns 48 per cent of the low-cost airline Blue Wings
In Switzerland he owns the aircraft leasing company Airstream
In Russia he owns 49 per cent of the opposition newspaper Novaya Gazeta with the former Soviet leader Mikhail Gorbachev. He is selling his 26 per cent stake in Aeroflot to the Russian government for $550 million and his 26 per cent holding in the aircraft-leasing company Ilyushin to state-owned bank Vnesheconom Bank (chairman Vladimir Putin) for $177 million. He owns a large stake in state-owned Gazprom. His National Land Company owns 45,000 hectares of farmland. He wholly owns the National Housing Corporation
Alexander Lebedev, who bought London’s Evening Standard for £1 a year ago, is selling his stakes in the airline Aeroflot and in Russia’s largest aircraft leasing corporation back to the Government.
He told The Times in an exclusive interview that the deals would earn him more than £450 million.
Mr Lebedev said that the cash was destined for new projects in Russia and that none would be spent on his burgeoning newspaper interests in Britain. However, the financial boost casts a revealing new light on the relationship between the Kremlin and a man usually viewed as one of its most outspoken critics.
Mr Lebedev told The Times that he had agreed to sell his 26 per cent stakes in Aeroflot and in the Ilyushin Finance Corporation at a 20 per cent discount. Both will be bought by the state-owned Vnesheconombank, which is headed by Mr Putin, the Prime Minister.
The bank’s supervisory board, which is composed entirely of government ministers, will meet on February 17 to consider the sales formally but Mr Putin has already approved them. Mr Lebedev said: “The decision has been taken. My understanding is there is a written government decision on it with the word ‘agreed’.”
Mr Lebedev, 50, denied recent reports in London that he had been short of cash and laughed off suggestions that he was now being bailed out by Mr Putin at a critical moment in negotiations for The Independent, saying: “That’s pretty public. Couldn’t he give me a billion under the table?”
He said: “It doesn’t change anything in my business life, this extra cash. Anyway, I have committed it to a few other things; none of that will be ever used for newspapers because I am funding the Evening Standard out of my pocket.”
Asked whether he planned also to fund The Independent from his personal resources, he replied : “Yes, absolutely, yes.” Although he declined to discuss details of his negotiations with the current owners, Independent News and Media, he distanced himself from suggestions that he would turn the loss-making paper into a free-sheet as he had done with the Standard.
Mr Lebedev said: “If you claim that you are saving a good newspaper and that you want to reform it you don’t do that by hitting other papers.
“Let’s assume we make the Indy free, you’d affect seriously the business models of other newspapers and frankly, that’s a very important reason [not to do it].”
Mr Lebedev also played down suggestions that he had lined up Rod Liddle, the former editor of Radio 4’s Today programme, to edit the paper. He said: “I love Rod Liddle and hate him ... He’s a provocateur because he sometimes believes the opposite of what he’s saying. Whether he’d make a good editor-in-chief I don’t know.”
Insisting that he was a supporter of a free press in a democracy, he said that he would tap new readers among an estimated 5 million Britons who he described as “liberal democrats ... who really need The Independent in the way it used to be”.
It had lost a sense of purpose but had “a very good chance to be a global newspaper” campaigning on the environment and corruption issues, he said.
However, the extent of his business links with the Kremlin have raised concerns among some commentators about his own independence.
Granville Williams, a member of the national council for the Campaign for Press and Broadcasting Freedom and a specialist on media ownership, called on the Government to ensure that The Independent remained autonomous.
“These new deals with Putin raise concern that the quid pro quo would be for The Independent to draw red lines around its Russian coverage,” he said. “Although Mr Lebedev has a good track record on free speech, I’d want the Government to ask for firm guarantees that The Independent will not feel afraid of reporting Russia negatively under his ownership.”
Other media analysts, however, said that The Independent was a “natural fit” for Mr Lebedev. “It’s ideologically his true home,” said Lorna Tilbian, an analyst at Numis. “I don’t think he’s damaged the Standard and, indeed, he may have saved it. Maybe he’ll save the Indy as well.”
Mr Lebedev said that he knew President Medvedev and Mr Putin but found it easier to “treat them as one” rather than as separate political figures. He had not seen the latter for two years, after a Moscow tabloid that he owned printed a false story alleging that Mr Putin had secretly divorced his wife, Lyudmila, and married Alina Kabayeva, a former Olympic gymnast half his age.
Asked to characterise his relationship with them in light of the business deals, he said: “If they want me as an ally then I’ll be more than happy to call myself a modernisation force.”
Before now Mr Lebedev, who funds the Novaya Gazeta, the opposition newspaper where the murdered journalist Anna Politkovskaya worked, was regarded as one of the most vocal domestic critics of Mr Putin’s clampdown on political dissent.
He disclosed that his efforts to form a moderate opposition party with the former Soviet leader Mikhail Gorbachev had been blocked by the Kremlin’s shadowy chief ideologue, Vladislav Surkov, the man who coined the term “sovereign democracy” to justify Mr Putin’s growing authoritarianism as President until 2008.
An avowed Anglophile, Mr Lebedev spied for the KGB in the late 1980s at the Soviet Embassy in London, rising to lieutenant-colonel in the foreign intelligence service — the same rank as Mr Putin. He went into business after the collapse of Communism, becoming rich on complex banking deals.
The Evening Standard was losing £10 million a year when Mr Lebedev bought a 75 per cent stake from Associated Newspapers last January, becoming the first Russian owner of a British newspaper. He said that he had honoured pledges of financial support without interfering in editorial decisions, adding: “I have built walls higher than the Chinese and I am strictly observing this principle.”
There were “positive trends” financially after the Standard abolished its cover price and almost tripled the print run to 600,000 as a free newspaper. Mr Lebedev said: “The positive trend comes from additional revenues from advertising, which is linked to increased circulation.”
Sources close to Independent News and Media said yesterday that they were optimistic about concluding a deal with Mr Lebedev by February 15, when exclusive talks between the parties expire.
“Some issues have yet to be decided and the ball is not in our court,” Mr Lebedev said. One sticking point could be what to do with a long-standing printing contract with Trinity Mirror, which would cost Mr Lebedev a lot to cancel.
Empire and connections
Alexander Lebedev’s personal worth was estimated to be $3.5 billion (£2.2 billion) before the financial crisis, which he says has cost him $1 billion
In 2008, the National Reserve Corporation, Mr Lebedev’s holding company, estimated the value of its assets at $5.5 billion
In Britain he owns a 75 per cent stake in the Evening Standard and is negotiating to buy The Independent and The Independent on Sunday
In Ukraine he has stakes in Energobank and an insurance company and owns a 235-room spa, the Almond Grove open-air water park and the four-star Glory Resort. He also owns boutique hotels in France, Italy and Switzerland
In Germany he owns 48 per cent of the low-cost airline Blue Wings
In Switzerland he owns the aircraft leasing company Airstream
In Russia he owns 49 per cent of the opposition newspaper Novaya Gazeta with the former Soviet leader Mikhail Gorbachev. He is selling his 26 per cent stake in Aeroflot to the Russian government for $550 million and his 26 per cent holding in the aircraft-leasing company Ilyushin to state-owned bank Vnesheconom Bank (chairman Vladimir Putin) for $177 million. He owns a large stake in state-owned Gazprom. His National Land Company owns 45,000 hectares of farmland. He wholly owns the National Housing Corporation
