#6023 #6024
[Second Issue of the Day]
#8
Wall Street Journal Europe
January 14, 2002
Editorial
Law and Pravda
How could a minority shareholder ostensibly representing pension interests shut down a profitable, popular television network on the basis of a law that is no longer even on the books?
Welcome to the Alice-in-Wonderland world of Russian media politics. Here, to mix our fictional metaphors, the Press Ministry has taken on many of the attributes of Orwell's Ministry of Truth, and the Kremlin is the 600-pound gorilla in the courtroom.
TV6 was shut down by a Russian court on Friday. It was the last independent television network in the country, which ought to worry those who believe that Russia's value as a contributor to international stability, and reliable Western ally, bears some relation to its progress toward becoming a free, democratic state.
Reflecting this concern last month, U.S. Secretary of State Colin Powell told Kremlin leaders the U.S. wished to see TV6's fate decided without political interference. Mr. Powell granted an on-air interview to TV6 managing director Yevgeni Kiselyov to show his support for the network. But his intervention didn't help.
TV6's demise is a sequel to the saga of NTV, which fell under the sway of the Kremlin last year. Security forces stormed the network's offices to seize control. A key feature of that takeover was the infamous Protocol 6 in which Press and Information Minister Mikhail Lesin promised jailed NTV owner Vladimir Gusinksy freedom from prosecution on government charges if he would just sign over his stake in the television network. Once freed, Mr. Gusinsky denounced the deal, saying he was coerced. But state-owned Gazprom, a creditor of Mr. Gusinsky's media company, took over NTV nonetheless. Mr. Gusinsky fled the country.
Many of NTV's best-known journalists, including television star Kiselyov, moved to TV6. Another self-exiled oligarch, Boris Berezovsky, was two-thirds owner of TV6. But Lukoil-Garant, the pension-fund arm of oil giant Lukoil, owned a minority interest. Unlike the natural-gas giant Gazprom, Lukoil is not state-controlled (the government is a minority shareholder). But it has close Kremlin ties and relies on Kremlin beneficence for both its revenue flows and the settlement of its tax obligations.
Lukoil-Garant accused TV6 of violating a Russian law that required a company's assets to balance out its debts over a period of time. Much of corporate Russia would be in the grave were the law widely applied. In fact, the law was so blatantly out of keeping with international standards and common business sense that the Russian parliament repealed it last year. The repeal took effect Jan. 1, which is why many thought TV6 was out of the woods. But the court ruled for Lukoil anyway.
What are the implications of all this? One is a decline in the robustness of TV journalism. NTV may get to call itself "independent" again soon. NTV director Boris Jordan, a one-time investment banker and fund manager with close Kremlin ties, is putting together a consortium to negotiate a buy-out from Gazprom. Mr. Jordan told the Financial Times this weekend that he met Mr. Putin in July to persuade him to tell Gazprom to sell NTV. But whatever its new incarnation, you can bet that NTV's editorial policy will tip-toe around Kremlin sensitive spots such as Chechnya.
If it fails any further appeals, TV6 too will likely get reincarnated. Lukoil-Garant on Saturday announced that it would be a bidder for the broadcasting license made available by TV6's dissolution and indicated it would offer a home in a new Lukoil-owned company to TV6's journalists. In an interview with Russian newspaper Commersant, Mr. Berezovsky claimed that press czar Lesin and presidential administration chief Alexander Voloshin had called TV6 directors to promise TV6 journalists continued employment and shares in the new network providing it had no involvement by Messrs. Berezovsky and Kiselyov.
While no one could accuse Messrs. Berezovsky or Gusinsky of being slaves to journalistic ethics or truth-in-reporting, they nevertheless represented independent voices and competition in the marketplace of ideas. The state, through its back-room role in their downfall, has put a chill on that competition. It is a measure of the cynicism bred by decades of state control under communism that few in Russia find it odd that the Kremlin conducted such an exercise.
In all this President Vladimir Putin has portrayed himself as a disinterested observer of obscure legal battles between private actors before an independent judiciary. Western leaders ought to know better and say so. Whatever credit we give Mr. Putin for responding (in his own interests) cooperatively in the war on terror, the Kremlin has not been a force for judicial independence or media freedom in Russia. Without those two key elements, democracy is a chimera.
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