Publication: Monitor Volume: 7 Issue: 32

The embattled Media-Most group won a round yesterday in its legal battle with its main creditor, Gazprom, the 38-percent-state-owned natural gas company, when the Moscow Arbitration Court postponed hearing a case involving a disputed 19-percent stake in NTV, Media-Most’s flagship television channel. In that suit, Leadville Investments Ltd., a Cyprus-based Gazprom affiliate, accuses Media Most Capital and Management Ltd., a Gibraltar-based affiliate of Media-Most, of violating a November 17, 2000, agreement between the two sides. According to Gazprom, that agreement required Media-Most to hand over the 19 percent stake in NTV–which Media-Most put up as collateral for a US$261 million Credit Suisse First Boston (CSFB) loan guaranteed by Gazprom–to Gazprom if the media holding failed to uphold an agreement with Deutsche Bank AG London to sell the NTV stake in the West. Media-Most refused to hand over the stake, claiming that the agreement with Deutsche Bank AG London contradicted the November agreement. After Leadville sued Media-Most Capital and Management, courts in both London and Moscow froze the disputed 19 percent stake, and Alfred Kokh, head of Gazprom-Media, the gas giant’s media arm, began acting as if Gazprom, which presently controls 46 percent of NTV, had already acquired a controlling share of the channel. Kokh even named the new board of directors Gazprom intends to install at NTV, one which would be dominated by Gazprom officials and include Vladimir Kulistikov, the former NTV deputy director who now heads the state’s RIA news agency. Gazprom CEO Rem Vyakhirev subsequently declared in a full-page Wall Street Journal Europe ad that he was tired of negotiating with Gusinsky and reiterated his company’s plans to take full control of NTV. The arbitration court’s decision yesterday to postpone the case was based on a technicality: According to Russian law, if the defendant in such a case is a foreign company, it must be informed of the impending court hearing six months before the hearing is to take place.

The significance of the Moscow Arbitration Court’s decision yesterday to postpone the case until October is that the CSFB loan comes due in June, and if Media-Most manages to pay it off, Gazprom could lose out in its bid to take over NTV. A consortium headed by CNN founder Ted Turner, which includes the American financier George Soros, has promised to invest more than US$300 million in Media-Most, while the tycoon Boris Berezovsky has promised to undertake negotiations with CSFB to buy out Media-Most’s debt. All three men have said that their offers are aimed at maintaining the independence of Media-Most and NTV.

Meanwhile, Gazprom’s position received a report from the Russian Union of Industrialists and Entrepreneurs (RSPP), the group founded and headed by Arkady Volsky which includes many of Russia’s leading industrial barons and oligarchs. The RSPP statement, while insisting that NTV’s independence should be maintained, said it was “absolutely natural” for Gazprom to seek getting its money back from Media-Most and indirectly criticized the media holding for spending on luxury items like villas, jets and yachts. It also rejected Boris Berezovsky’s recent appeal to the RSPP to help him raise money to assist Media-Most (Vedomosti, February 15; see the Monitor, January 9, 25, 30, February 8).

Gusinsky and other top Media-Most officials charge that the holding is a victim of political persecution by President Vladimir Putin’s administration and/or a vendetta by the Prosecutor General’s Office, several of whose top officials, including Prosecutor General Vladimir Ustinov, have been the targets of NTV reports on high-level corruption. Media-Most founder Vladimir Gusinsky is under house arrest at his villa on Spain’s Mediterranean coast awaiting possible extradition to Russia on charges of large-scale fraud. Anton Titov, Media-Most’s financial director, was jailed on the same charges in mid-January. He was subsequently moved from Moscow’s Butyrka prison to another notorious jail in the capital, Matrosskaya Tishina. This week he was moved from an eight-man cell in the latter facility to one holding thirty-two men. While in Butyrka, he was reportedly transferred from a private cell to one holding thirty men. Titov’s wife this week called his incarceration not mere “psychological pressure,” but “planned torture” (Moscow Times, February 14; see also the Monitor, January 30; Fortnight in Review, February 2). Such reports, along with the disruption of Media-Most’s operation caused by recent law enforcement raids on Imidzh Bank, which holds Media-Most accounts, has increased concerns in the West that the Kremlin is aiming to destroy Media-Most. The Washington Post reported last week that U.S. Secretary of State Colin Powell and James Collins, the U.S. ambassador to Moscow, stressed during private meeting with Russian officials the importance of maintaining NTV’s independence and suggested they consider the investment deal offered by Ted Turner. In addition, U.S. National Security Adviser Condoleezza Rice met with Igor Malashenko, Media-Most’s first deputy chairman (Washington Post, February 10).