Washington Post - 06.25.2000

 

The Washington Post

Judging Putin
By Jim Hoagland

MOSCOW –– President Vladimir Putin has decided to follow the Korean model in rebuilding Russia. The problem is, he can't decide which Korea.

That barbed joke was being told in Moscow even before the jailing of media owner Vladimir Gusinsky blew up into a political storm that diminished Putin's reputation. The jokers portray Putin as representing the worst of all worlds: an inept would-be autocrat uninterested in strengthening Russia's rough-hewn democracy but incapable of stifling it.

"He may want to be a modernizer. But he doesn't seem to know how to do it," said one Russian political analyst who, citing Putin's KGB background and KGB governing style, requested anonymity. "You now have to wonder not only about what agenda Putin and his team have in mind, but about their ability to implement any agenda here."

The Gusinsky affair showed Putin and his aides to be out of touch with the society they have ruled since Boris Yeltsin resigned on Dec. 31. Most striking has been Putin's determined use of the Soviet-era tactic I call "implausible deniability"--the repetition of obvious lies that the public is told to accept and pretend to believe. Public acquiescence is then cited abroad as substantiation of the original lie.

Putin successively claimed that he did not know about Gusinsky's arrest, that he could not locate the prosecuting attorney who authorized it and that he would not intervene. But then he rattled off details of the case at a press conference in an attempt to blacken the name of Gusinsky, who was charged with fraud and released.

"This is a hangover from Soviet culture," said Vyacheslav Nikonov, a political consultant and former Duma member who once worked for Yeltsin. "The Soviet Kremlin could impose a view on the media and the public through simple assertion. And the bosses also knew that if they said something stupid their media people would print, or only show, the right parts. Putin's team is too weak to do that."

I asked Nikonov if the arrest of Gusinsky, the owner of the only important independent television network in Russia, had chilled freedom of speech. "Far from it," he responded, gesturing toward the 12 Russian newspapers he reads each day. "Only one of these papers supports the government. The others are full of condemnation."

Nikonov, Gusinsky and others told me they believe that Putin's aim is to drive Gusinsky's empire into bankruptcy and then grab the assets for his allies. "This is a political struggle," Nikonov said. "It is also a battle of clans."

But it is a battle that has consequences for Russia's relations with the world. Gusinsky happens to be the most internationalist (and probably the least corrupt) of Russia's oligarchs.

Behind Putin's staff stands Boris Berezovsky, the most protectionist and isolationist of Russia's big business owners. Putin was on state visits to Spain and Germany when the arrest occurred last week. Gusinsky's aides believe the former KGB colonel counted on media coverage of friendly receptions abroad to muffle any protests of the arrest at home. Exactly the opposite occurred: Chancellor Gerhard Schroeder's fawning over Putin in Berlin was eclipsed, here and abroad, by the Gusinsky uproar.

On returning to Moscow, Putin canceled a scheduled appearance at a major business conference that brought heavyweight foreign investors to Moscow. "His words about Russia wanting foreign investment will ring hollow in some ears for some time to come," said one conference-goer. "The gap between what he says and what he does grows all the time."

That is the sound of a jury coming in wearing frowns. The Clinton administration's protestations that the jury is still out on Putin--that he needs time to show that his promises to establish a stronger Russian state based on "a dictatorship of laws" do not mean a turning back of the clock here--wear thin in light of the Gusinsky affair.

Clinton and the other leaders in the Group of Seven industrial democracies need to focus on Putin's attempt last week to use the prestige they lend him to reinforce abusive power at home. Criticism of Gusinsky's arrest or of Russia's war on Chechnya did not rank on Schroeder's agenda during the Berlin visit, which was a free ride for Putin.

The word in Moscow is that Putin has instructed his envoys to demand full Russian participation in all phases of the group's Okinawa summit in July, although Russia's economy does not qualify it for such treatment. The trends here in Moscow strongly argue for a joint nyet to Putin's proposal.

edia heavyweight Vladimir Gusinsky spent three days in jail last week on accusations of having swindled the state out of at least $10 million worth of property, but it is still unclear what property the investigators have in mind and where the figure comes from.

Investigators with the Prosecutor General’s Office said in televised comments last week that Gusinsky had embezzled the property of Russkoye Video-Channel 11, a St. Petersburg television station that was spun off of the state-controlled television production company Russkoye Video in January 1997.

Media-MOST has denied the allegations, saying not a single nut or bolt could have been misappropriated from Channel 11 because it had no assets when Media-MOST put in some capital and became the majority shareholder in May 1997.

A statement issued by investigator Valery Nikolayev last Friday, the day Gusinsky was released from prison, did not clarify the allegations. Media-MOST posted the statement on its web site.

It said Gusinsky and two other former Channel 11 officials, including its now imprisoned director, Dmitry Rozhdestvensky, "unlawfully and without any payment acquired the rights to someone else’s property — the property complex of Russkoye Video-Channel 11, worth not less than $10 million, which subsequently was used by them for personal commercial purposes." No concrete properties were identified.

Media-MOST put up 25.5 million rubles ($4,400) in charter capital for Channel 11, which gave it 75 percent of the shares of the formerly state-controlled station.

In a cynical tone, the statement said Gusinsky had launched "a row of companies to create the impression of active entrepreneurship and the impression of attracting investments."

"I say for the second time that in using this case, Russkoye Video, representatives of the authorities are trying to discredit me, Media-MOST and journalists who are conducting investigations into the affairs of top officials," Gusinsky said in a statement also posted on the web site.

Pavel Astakhov, one of Gusinsky’s lawyers, said in a statement also posted on the web site that investigators are obligated to define the property in question. He said the investigators’ "abstract formula" of at least $10 million is not sufficient under criminal law.

Nikolayev was not available to clarify the property issues of the charges against Gusinsky. A spokeswoman for the Prosecutor General’s Office, Natalya Vishnyakova, said the details will only be available at the trial. No trial date has been set.

Rozhdestvensky has been in prison for 21 months, and this week, the prosecutor’s office put off his case for another six months, implying investigators are still sorting out the evidence against him. He has been accused of misappropriation of state property and tax evasion.

The Audit Chamber published an extensive report on Russkoye Video in September but even it contains no information about any property Media-MOST may have received from Channel 11. The report makes clear that when Channel 11 was founded in January 1997, its parent company was in financial trouble. Russkoye Video’s losses had reached 289,400 rubles ($85,000) and it "did not possess any cash to pay into the charter capital of Russkoye Video-Channel 11," the audit report said.

Alexei Kedrin, the new executive director of Channel 11, said in a telephone interview Wednesday that there was "almost nothing" in the company when Media-MOST joined it in May 1997.

"I got the balance sheet of 1997," said Dmitry Ostalsky, Media-MOST spokesman. "There were only three cars, a Panasonic mobile phone and a TV transmitter — all on lease.

"We effectively bought a brand called Russkoye Video-Channel 11," Ostalsky said.

The Audit Chamber report, however, details dozens of violations of laws and decrees during the registration and operation of Russkoye Video and its subsidiaries, including Channel 11. The report also says the television channel provided wrong, out-of-date documentation when obtaining its broadcast license; the documents described state-controlled Russkoye Video as the majority owner instead of Media-MOST.

The violations included Russkoye Video’s creation of 18 private affiliates without the agreement of the State Property Committee. The Audit Chamber alleged the embezzlement of 5 million rubles ($900,000) of state funding and objected to 490,000 rubles in state money that was put into the equity of Russkoye Video affiliates. The report said 3.7 million Finnish marks ($585,000) and $88,600 was lost by the company in an advertising campaign in Finland.

In addition to the $10 million Gusinsky is accused of embezzling , tax police have accused Channel 11 and Russkoye Video of violations totaling about $10 million.

Two months before Media-MOST entered Channel 11, in March 1997, the local branch of the federal Tax Police raided the offices of Channel 11 and Russkoye Video. They said they found about 57 million rubles (then about $10.3 million) in alleged violations in both companies.

It is not clear how this $10 million fits in with the $10 million Gusinsky is accused of embezzling from Channel 11.

Meanwhile, Channel 11 continues to operate. "Nothing has happened to the channel and it is still 75 percent owned by Media-MOST," said Kedrin of Channel 11 on Wednesday.

Although the Audit Chamber recommended canceling Channel 11’s registration and withdrawing its license, Kedrin said neither has been done.

According to Gallup Media, last month 5.7 percent of St. Petersburg viewers watched Channel 11, which put it at No. 7 among the 19 channels received in the city.

Anna Kachkayeva, who teaches in the journalism department of Moscow State University, said the market price of Channel 11 is estimated at $4 million to $5 million.

"The property issues at this channel are really very complicated and the history of the creation of Russkoye Video is dark and confused. It inherited about $11 million worth of property from the federal filmmaker Videofilm back in 1993-94 through a series of court cases," she said in a telephone interview.

"I believe that Media-MOST started in St. Petersburg from a blank page," Kachkayeva said. "And as for licensing, the procedures at that time were so foggy and confused that probably everyone who was obtaining licenses then could be imprisoned. And I could assume that Gusinsky, when he joined 11 Channel and afterward, might have been misinformed by the Russkoye Video management. NTV was so popular that they just did not pay much attention to all those legal tricks or believe that anything could happen to them," she said.