A Journalist Unmuzzled! – A Private Communication

Unmuzzled e1293529721428 300x249 A Journalist Unmuzzled! – A Private Communication

T&B just received a forwarded e-mail exchange between a British MP who protests the conviction of Khodorkovsky and Lebedev, followed by a stinging reply from a prominent Western journalist who covered Russia for most of the past decade.

We requested permission to circulate his reply and were surprised to receive authorization, with the proviso that we removed his name and that of his employer; Menatep, and their hirelings, apparently still instil fear, and not just in Russia.

The journalist in question is certainly no Putin fan – quite the opposite (for fairness, though not germane to the issue at hand, we have included his list of people whom he considers to be true victims, although we think this be of limited relevance – most of them were gunned down by Chechen enforcers). The point is that, as regards Khodorkovsky, he says what every journalist who worked here in the 1990s knows, but is apparently not allowed to say!

First the letter (which could have been issued on Menatep letterhead – but wasn’t):

Richard Ottaway, Conservative MP for Croydon South and Chairman of the UK Parliament’s Foreign Affairs Select Committee said:

“I am dismayed by reports that Mikhail Khodorkovsky has been found guilty of further charges of Embezzlement. By all accounts the Rule of Law in the conduct of this trial has been abandoned. This has serious implications for the confidence of overseas investors and on British investment in Russia.”

Then the Reply:

Dear Mr. Ottaway,

I was bureau chief for a prominent western news publication in Moscow for most of Vladimir Putin’s presidency, which is, I assume, the reason why I am still on Khodorkovsky-related e-mail distribution lists.

My colleagues and competitors were routinely intimidated by Menatep and Yukos officials before Khodorkovsky’s arrest. The man himself sponsored a campaign of wholesale bribery of Duma deputies to ensure the failure of government legislation to ban “offshore” tax zones within the Russian Federation, even threatening to kill Economy Minister German Gref if he didn’t withdraw it (according to an interview with Gref in the German newspaper Die Zeit in 2004). His lawyer inadvertently admitted to me that he continued to try to bribe and intimidate potential witnesses even after his arrest, the threats being so effective that the prosecutors (whom I roundly despise) had little option but to bring charges on trumped-up technicalities.

There are, as I am sure you know, serious reasons to implicate him or his associates in murders related to:

a)     The privatization of fertilizer company Apatit;

b)     The take-over and subsequent management of titanium company Avisma;

c)     Tax avoidance in Nefteyugansk, where the mayor who complained about Yukos’ practices was the victim of a particularly sickening murder.

All of this makes me wonder why I am receiving an e-mail from your office now, after receiving no such communication on the occasion of far more disturbing evidence of lawlessness in Russia. I refer in particular to the murders of Stanislas Markelov, Anastasia Baburova, Natalia Estemirova, Maksharip Aushev and Mahomed Yevloyev, none of whom, to the best of my knowledge, would rank, like Khodorkovsky, among the worst gangsters and murderers of the last 30 years.

Can you please confirm to me that you have never, at any time, received money from Khodorkovsky or any lobbying or charitable organization related to him, and that you would have no qualms about my verifying your response through the usual channels?

Season’s greetings,

(Name withheld)

Commentary:

This exchange illustrates a point that we have made repeatedly over recent years: Whatever the weak point of the prosecution, whatever the problems with the Russian court system, press relations, or weather, everyone even vaguely cognizant of the situation in Russia in the 1990s knows full well that Khodorkovsky and Lebedev were guilty of massive theft, corruption and almost undoubtedly numerous murders. The rest is just details. Al Capone died in prison on a tax charge. Bernie Madoff received a savage 150-year sentence for simple financial fraud (albeit, on a huge scale), Khodorkovsky was put away any way possible. That does not make him any less guilty…

Why then, knowing this, are they defending him? He is such an unattractive, transparently hypocritical individual. There is no shortage of victims in Russia – why single out a murderous thug? The answer, of course, is money – and its handmaiden, politics.

T&B has enjoyed some sharp exchanges over our last article where we discussed the issue of corruption – and perhaps some clarification is in order. It was never our intention to suggest that the individual journalists on the ground in Moscow are corrupt! They most certainly are not. They work hard, for niggardly wages, trudging through the slush in search of a story while their colleagues in Investment Banking drive about in Mercedes. Most of them truly believe in what they are doing. And yet, after a few drinks, prodded by T&B as to why they did not write what they knew full well to be the truth, one after another they have told us that they did, repeatedly – but that it never made it into their paper. The senior editors clip away anything which does not fit with party line. T&B does not envy them that loss of freedom – thanks to our clients we have the luxury of not having to work for the bulge bracket…

Having been threatened with legal action, T&B is happy – delighted really – to restate our assertions:  The Western press, including the FT, is deeply “corrupt” – not corrupt in the sense of accepting envelopes of cash in return for favourable coverage, but corrupt in the sense of lacking totally in independence, objectivity, or indeed more recently, any sense of decency.  They are following a party line – decided from above – and woe betide the FT journalist who fails to report enough “bad stuff about Russia”!

More generally, the facts speak for themselves without our help: The Menatep machine has successfully managed to steer Western coverage of the trial of a murderous thug to the point that he was being compared to the saintly Andrei Sakharov. Bluebeard and Mother Theresa in the same sentence! Need we say more?

This sort of disinformation is, of course, not confined to Russia.

Colombian President Alvaro Uribe has received fawning coverage in the international press for defeating the FARC guerrillas, with any inconvenient stories about the methods used to do so being systematically suppressed. This fits well with the major diplomatic initiative by the State and the Pentagon to shore up his government, with a need to drum up as much international political support as possible as a counterweight to Chavez’s Venezuela – this despite the deeply unsavoury characteristics of the Uribe regime.

With Uribe now out of the presidency, the local pressure demanding prosecution for the massive human rights abuses has become overwhelming (see: http://www.newstatesman.com/south-america/2008/11/human-rights-uribe-colombia) and his main henchman and former head of intelligence was encouraged to make a run for it before being arrested for attempting to subvert the Supreme Court.

Besides the widespread use of torture, arbitrary arrest, and denial of basic rights by right-wing militias close to the regime, the Uribe family is being investigated for massive corruption – running into the billions of dollars. Several close family members have been accused. Little if any of this is reported on by the international press – one has to go to the fringe to get the story…

At the same time, any perceived misdeeds by those leaders who are less compliant with the “Washington Consensus” – not just Chavez or Castro, but also Ortega and Kirchner – get the full coverage. Again, like for Transparency International or Freedom House, the treatment meted out to any given government is a direct function of its closeness to Washington.

The Dogs Bark – The Caravan Passes

Those of us old enough to have watched the American press coverage of their holocaust in Vietnam, or more recently, the run up to the invasion of Iraq (where the FT was an honourable exception), the Orange Revolution, the Georgian war, etc. should not be surprised… And yet, so prevalent is the myth of the “Free and Fair Western Press” that we are wont to forget the sad reality of spin management and disinformation in the service of financial and political interests.

Happily, the Khodorkovsky headlines on Bloomberg were accompanied by another series of flashes announcing a major investment by GE in Russian medical technology, this after the multi-billion dollar PepsiCo takeover of WBD. The Yukos case is vitally important – but only in the minds of the Western chattering classes. T&B speaks with investors every day, and it has been two years since we fielded a single question on Yukos. Khodorkovsky apparently overestimates his own importance – this is not his first miscalculation, by a very long way…

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15 Responses to A Journalist Unmuzzled! – A Private Communication

  1. T&B says:

    One of our correspondents wrote us, copying an article by By Vladimir
    Ryzhkov, published in The Moscow Times (the commitment of which to balanced, fair coverage of Russia is well-known), telling of all the terrible things which were just about to happen to Russia.

    Given the position of our correspondent, he has asked for confidentiality.
    Therefore, we simply post our reply.

    I heard very much the same thing in 1998…

    Some of his point, are of course, valid. As usual, they are totally
    unbalanced and political.
    He could have mentioned the fact that Russia has macro indicators better
    than almost ANY of its European neighbours.

    That the recovery from the crisis,though plodding, puts it among the best on the continent. That infrastructure is still creaking, but is improving slowly and steadily.
    That the metals and oil industries, at least, have been revolutionised by comparison with the 90s.

    That the often predicted collapse of the electricity system, pipelines and railroads simply has not happened.

    Russian corporate governance is improving – by and large.
    Disputes are now resolved in the courts, not with gunfire.
    Dividends are paid. Abuses are now more Western-style – well, MOSTLY…

    The stock-market is bouncing nicely – debt spreads are close to fair value.
    It is NOT China, of course. But looking at Europe, it looks pretty good.

    And of course, one of the worst of the thugs has been put away for another 7 years.
    Had he been released on nothing more than Western pressure, I would have been horrified.

    As for the Chinese diagnosis – THAT is nonsense.
    I speak with reasonably well positioned Western academics in China, and while the Chinese think of us all as barbarians, the Russians are a better class of barbarians than, say, the Americans – who are now viewed with thinly-veiled contempt.

    More to the point, Russians love nothing so much as to declare that the
    end is nigh. They have been doing so for as long as either of us have been
    here – and are not likely to change anytime soon.

    This is one of the main problems – the lack of public faith in their country. I guess this is the legacy of the last 100 years.

    As for Ryzhkov, he is no more interested in finding the truth than in finding the
    Northwest Passage to China! It is a political screed by someone who is totally marginalized, and sings for a Western audience.

  2. Mattias Westman says:

    I fully agree on the absurdity of coverage regarding Khodorkovsky and Lebedev. The charge of stealing oil is clearly true. We as minority shareholders of Yuganskneftegas, Samaraneft and Tomskneft were clearly robbed of most of the value of the oil produced by these companies through the trading schemes designed to move value from companies with minority shareholders to others without them. Also, with regards to their business practices, I can just say that in my more than 15 years of investing in Russia, these people are the only ones who have made physical threats in my presence. They adviced a collegue of mine that he should desist from what he was doing and that they “by the way, know where his parents live”. It is inconceivable that journalists would not know that they are crooks, not martyrs for democracy. On the other hand, it is also inconceivable that a professional journalist would not know that the Ossetian conflict was started by Georgian troops.

  3. Dimitri Kryukov says:

    “Happily, the Khodorkovsky headlines on Bloomberg were accompanied by another series of
    flashes announcing a major investment by GE in Russian medical technology, this after the
    multi-billion dollar PepsiCo takeover of WBD. The Yukos case is vitally important – but only in
    the minds of the Western chattering classes. T&B speaks with investors every day, and it has
    been two years since we fielded a single question on Yukos. Khodorkovsky apparently
    overestimates his own importance – this is not his first miscalculation, by a very long way…”
    ——-

    My experience is completely the opposite. Not one potential investor meeting goes without discussing the Yukos case.

    The fallout of the Yukos case is greater than the fate of Khodorkovsky, who is probably guilty of most charges. He may have even wanted to dig the underground tunnel to the Kremlin and kill VVP. The issue is the destruction of the Russian court system and the fact that the cronies who are currently in charge are no better than the cronies that are being sentenced.

    • T&B says:

      If that were the case, I would expect to see some objective effect – I.e. A weakening of the rouble, a fall in the markets, a widening of debt spreads.
      None of these have occurred. My friends in corp fin tell me that business is brisk, and the various investments I cite are a matter of record.

      I do not think that the Russian court system has been much affected by the trial. It was badly in need of reform before Khod. Went down, and it still is.
      No sane person can deny that Russia still needs a great deal of reform – but I do not think that this case says very much about anything.

      I certainly disagree with your last statement – judging upon results, whatever the shortcomings of the Putin decade, it has been infinitely better than the oligarchic era.

      Best Regards,

      Eric

  4. Anonymous says:

    Eric, I appreciate your continued outspokenness on this issue. It
    sometimes seems like I’m the only one who sees the hypocrisy in all of this, until,
    that is, I receive your latest missive.

    I think the liberal opposition’s decision to rally around this particular
    case, as opposed to so many others where they could actually make a
    difference and have much more of a moral ground to stand on, is a tactical
    mistake that’s going to cost Russia at least a decade’s worth of political
    development.

    As for Mr Ottaway – you might enjoy this site on Facebook:
    http://www.facebook.com/home.php#!/group.php?gid=117363544957914. There
    is a Richard Ottaway Appreciation page, with a hilarious introduction, but, somewhat embarassingly, it’s got only one member:
    http://www.facebook.com/home.php#!/group.php?gid=2234875465 .

    Keep it up!

  5. Anonymous says:

    Dear Eric,

    While I think sometimes you overbeautify the Russia case, perhaps drawn to the Pulp Fiction romantika of the country, i am very pleased that you have sent round those last few reports on Khodorkovsky. I found it pretty sickening the attention he received while still at Independent Media. I mean, to report on the front page on the trial every single day for 2-3
    years was alarmingly overplaying what was nonetheless a very important case. Though I think looking back (and I wasnt there/in Moscow for a lot of the action) it wasnt a ‘corruption’ thing. It was more a case of the instinctive, almost gut American/British reaction to a businessman being persecuted by the state, whether for good reasons or bad. Especially,
    since that businessman had considered tying up with such respectable and venerable U.S. companies as Exxon etc. and since he gave interviews and was at times approachable. Whereas the state was not. It never really allowed the foreign media to come up and “touch” the flesh, being afraid and paranoid, mostly, and perhaps busy, or ignorant of the psychological significance. In a football match, or any match of two sides, one has to
    pick a side to support or it loses all interest. In reporting the Yukos match to the world, the foreign media had to endear the world either to the Russian state (which as I said the foreign media was not close to or endeared to either) or an oligarch. At least with an oligarch, it could describe him as a businessman and a man who had “turned a corner”, a man
    who had been in talks with Exxon, etc, all those things that people overseas could understand. What was there to understand about the player called “the Russian state”?

    China has some similar issues, though it’s A) a lot tougher on the critics and silences a lot of their fire before they get a global following (yes, see even the Google case, the Noble Prize case) B) it’s Asia outright and can always be categorized or categorize itself as different from the outset, with its own 5,000 year history C) has such undeniable, unanimous
    industry might and significance to the western world that it cannot be rankled too much, otherwise who will stitch our $10 sweatshirts?

    What I’ve always said and thought is that Russia misunderstands what I call the Tetris factor. Tetris won more Russia fans in the 1980s and 1990s than any PR it could have hoped to buy and manufacture. And it was luck. The game somehow leaked out of the Soviet Union to Hungary and onto the UK, and though it wasn’t properly licensed it started selling in the U.S. to rave reviews and then spread around the world. The programming origins of the game translated into some Russia-themed graphics and music, especially on the Gameboy console. Now it regularly rates as the best or second-best game of all time. The world accepts China…

    • T&B says:

      I have very little to add.
      You have an inside understanding of how the press work.
      I am personally a bit bewildered – and as cynical as I thought myself to
      be – very disappointed to witness such blatant bad faith.

      I DO sometimes overbeautify the Russia case.
      I try to inject some balance in my own views, so as not to do like the
      Economist, but perhaps at times I fail.
      I do it as an instinctive reaction against the totally one-sided coverage
      elsewhere.
      If you remember, in the 90s, when the coverage was unbalanced in the other
      direction – I was frequently pretty acerbic.

  6. Former bureau chief of another prominent western news organisation says:

    Dear Eric, I have never agreed with your politics but have long respected your independence and originality. My loyalty is to journalism as the profession in which I grew up, in every sense of the word. I almost never take part in public discussions and do so today only because your writings help relieve the general greyness and you therefore deserve a well-meant word of advice. You are unusually intelligent so please stop making a fool of yourself by ranting at journalists. Your language degenerates as soon as you start writing about the western press. It leaves a bad taste in your readers’ mouths and seriously damage your credibility. Stick to what you know best and

    • T&B says:

      To begin with, I find it striking is that journalists consider that they have the right to criticize everyone (indeed, an essential part of their job) yet somehow consider themselves to be above criticism.

      They see themselves as sacred cows – anyone who points out their misdeeds – or, more relevantly, the misdeeds of their organisations, is perceived to be attacking “Freedom of the Press.” Bollocks, I say! The only thing sacred is free debate itself – and political correctness simply wastes precious time.

      First of all, the overwhelming majority of those readers who choose to reply to my last papers are delighted to see someone finally call a spade a spade – and deeply dishonest coverage identified as such. FT coverage has been, to put it charitably, straight disinformation. I stand by my views.

      As for tastes in mouths, we have received an unprecedented outpouring of mail – I am struggling to reply personally to all my correspondents – and to date we have received precisely three letters sharply critical of our work (all of them from journalists or former journalists…)
      We have, of course, posted them on our website; indeed, we are always quick to post comments such as yours critical of our work – reserving the right to reply to them with equal vigour.

      That is, of course, neither here nor there. I am not running a popularity contest!
      If someone can prove me wrong, then I will still have made a useful contribution.
      Until now, however, I have been attacked on matters of style, and of detail – no one has, as yet, undertaken an attack upon the substance of what I write.

      The substance of my attack on the FT (and, by extension, on the rest of the Western press) is as follows:

      -No journalist who was in Russia in the 1990s can fail to be aware of the criminal nature of Yukos/Menatep.
      Selected journalists (including the Moscow Times) and investors (including Prosperity) were threatened often enough by these people so that they remember them well.
      NONE of the coverage I have read to date reflects this knowledge.

      -Yukos-Menatep’s true business enemies were not simply threatened – in the worst case they were murdered outright.
      There is a pattern of killings which cannot be attributed to chance alone. Again, no one has seen fit to refute this assertion.

      -There is no arguing that there were serious lacunae in the Russian prosecution of this matter.
      This does not change the fact that the defendants are clearly and obviously guilty.
      While the press is justified in pointing out the problems with the Russian system of justice, equally, coverage of the problems with the prosecution’s case should be counterbalanced with a simple explanation of how the off-shore trading entities functioned, how a large part of the cash flows were effectively stolen and banked abroad, and about the ultimate effects upon the stability of the Russian state (i.e. The financial crisis of 1998)

      -If it can be correctly asserted that Khodorkovsky was singled out for prosecution because he refused to cede to the Russian state, it should be made very clear what this meant.
      This was NOT Western-style political opposition, nor an attempt to run for office.
      Yukos-Menatep openly owned a block of about 50 Duma deputies – with another 50 or so who could be rented ad hoc.
      By combining their votes with those of the wide “opposition” (from hard-core Communists, to liberals, the LDPR, nationalists and independents) they could block any legislation they disliked using thoroughly corrupt means.
      It was this – not his support of a weak and fragmented opposition, that brought down Khodorkovsky.
      His attempts to sell control of Yukos to an American oil firm, and to raise support among the hardline neocon elements in Washington, merely hastened his demise.

      -The (very real) problems he now complains of in Russia certainly did not appear to pose any problems for him in the 1990s, when he and his fellow oligarchs reigned supreme.
      He was clearly one of the half-dozen men most responsible for the catastrophic events of the last decade, and his sudden conversion to political liberalism seems deeply suspect.

      -Prosecution has, of course, been selective. The other oligarchs ceased to pose a threat to the Russian state, accepting the deal proposed by Putin: Pay your taxes, stop stealing from the state, and get the hell out of politics. The results of this deal, however imperfect, represent a sea change over the very dire situation of the 1990s.

      -Although there are numerous individual instances of injustice in Russia (and, I would add, not only in Russia – any US prison will have numerous innocent men) the choice of a gangster as the standard bearer for Western values is patently absurd. If the press needs to find a martyr, there are far more credible candidates. What is unfortunate is that those martyrs do not have well-oiled PR machines.

      -The reason for the lionisation of Khodorkovsky lies in the very professionally conducted, and hugely expensive PR campaign funded by Yukos-Menatep.
      No journalist we have spoken to is unaware of this – yet for whatever reason they do not object to being accessories for an egregious distortion of the truth.

      -Any reasonable reader, unaware of the specific Russian context, would draw a totally misleading impression from the coverage of this story: that Khodorkovsky was some sort of a martyr, that the charges against him are baseless, and that he is being punished for what would qualify as normal political opposition in the West. While there is much to criticise in the Russian handling of this matter, there has been a total lack of balance or fairness in the coverage. Most foreign readers are totally unaware that there even is another side to this case.

      -Press coverage has been pernicious, knowingly misleading, and has contributed to a renewed deterioration in relations between Russia and the West. Whatever the virtues of the case, it is not up to Russia to inflect its criminal justice system in order to please Western opinion makers. I am deeply relieved that it has refused to do so.

      -I reiterate the accusation of “corruption” – NOT in the sense that any prominent journalist is receiving payment for their writings, but that the major Western media have once again adopted an editorial line highly unfavourable to Russia, that they report the facts selectively to the extent of outright distortion, and that they are seeking to advance a political agenda – with no attempt made to present a realistic picture of the complex Russian reality.

      I am, as always, happy to debate the issue in any public forum. I am still awaiting some substantive replies to my discussion points.

      Best Regards,

      Eric Kraus

  7. Anonymous says:

    Dear Eric,

    I always enjoy reading your notes since you are one of the few people out there who seem to be able to see through the workings of the Western (specifically, Anglo-American) “brainwash-machine”. However, whilst you are absolutely right in your analysis, I think that on this occasion you are taking things rather too personally and getting too “hot under the collar” about any dissent you may be facing amongst your readers. I would not want to be named by you in any way, but I can tell you from my own personal experience that, as an investment banker in the mid-nineties, I spent about a year discussing a potential fund-raising with Menatep based on certain assets they had acquired in a specific sector of Russia’s industry. The project was stopped at the last minute when, through certain contacts in the British secret services, we found out how these and other assets had been acquired (ie. mostly murder and extortion). I also know that one of my counterparts in Menatep at the time of these negotiations subsequently went on to manage a billion dollar pool of funds syphoned out of Yukos after he had moved to London, and that some of the profits made from these funds were used to fund Khodorkovsky’s “PR campaign” in the US and Europe.

    I believe that anyone with at least half a brain knows what Khodorkovsky and his associates were all about. I also believe that anyone with less than half a brain is usually not worth arguing with or worrying about. For the sake of your peace of mind, I would recommend you to follow the same policy and treat fools either with Swiftian sarcasm or silent contempt – it has served me well in the past.

    On this note, I wish you a Happy New Year!

    Best,
    XXX

  8. Anton says:

    Ha, the question isn’t why Khodorkovsky’s in jail. The real answer to all Western mediabitching about the case, and freedom of doing business in Russia, and such, would be to start putting to jail EVERYONE ELSE who did essentially same things in 90s/2000s.

    The only obstacle is that it includes all powerplayers of today…

  9. Lois J. DuPey says:

    The fact that when Pavlov says slobber the western press upchucks is reason enough to disregard anything at all published about Russia. Why do they insist on making a hero out of a common theif? Well, the reason is simple minded enough. Due to the takeover of the US by a gang of eight (head crooks) in charge of a congress of theives, well, as they say, “ryba gneet s golovy”. Enough is enough. SXhvatitj!
    Lois DuPey
    aka Lois White Buffalo
    Mid Columbian Sin Cayuse Nation
    is a political asylum seeker and former US patriot. (ex-”patriot” act).

  10. Lois White Buffalo says:

    White man speak with forked tongue! (You must be part RED MAN Eric!)

  11. hi, that’s a fastidious job. There is few mistakes but the primary is here.

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