Editor's note: The following investigation was conducted by the Washington-based Organized Crime and Corruption Reporting Project, a Kyiv Post partner. The project was coordinated by Kyiv Post staff writer Vlad Lavrov. First it appeared on TVi channel April 30, and has also been published by the OCCRP here. The authors are former members of the channel's investigative team working on Tender News and Exclamation Mark programs. A video version can be seen here: https://www.youtube.com/watch?v=F8xdFRKVxOo&feature=youtube_gdata_player
A new team abruptly took over programming at TVi, one of Ukraine’s last
remaining independent media outlets, and journalists are crying foul. Security
personnel barred TVi’s former owner and managers from entering the building.
Meanwhile, over five days in April, insiders say, a dizzying series of
transactions involving companies registered in the British Virgin Islands and
United Kingdom took place amid allegations of fraud and forgery. The barred
managers say their station has been taken over by raiders who have literally
stolen the company. The truth is more complex.
The upheaval culminated on April 29 when more than 30 journalists quit the
station, citing the new management’s attempts to pressure them and a lack of
transparency over the way the new owners obtained control over TVi.
“We don’t see any prospects for fulfilling our professional
responsibilities at the channel, because we cannot guarantee our audience fair
and unbiased reports and we think that people calling themselves owners and
managers of the channel have destroyed TVi’s reputation,” TVi journalists argued
in an online statement.
Prior to the takeover, the station was widely considered to be the only
television outlet in Ukraine investigating corruption at top levels of
government and openly criticizing Ukraine’s authoritarian President Viktor
Yanukovych.
The journalists’ concerns were echoed by international media watchdog
Reporters Without Borders, which in a statement dated April 26, condemned the sudden change of management at the
opposition TV station TVi. “We are disturbed by the lack of financial
transparency surrounding certain media owners in Ukraine and the increasing
concentration of ownership in few hands, which threatens diversity in the
provision of news and information.”
A team of former TVi reporters, independently from both sides of the
conflict, investigated the ownership of the station and the various changes. The
new management agreed to both air and post their findings on TVi. The story’s
trail took a number of twists and turns through the murky world of
offshore structures amid allegations of fraud, forgery, threats, massive
credit-card debt and near-bankruptcy.
Round One of the Big Fight
The battle over TVi started five years ago, in March 2008.
At that time, Vladimir Gusinski, a media mogul who in the nineties
established Russia’s NTV channel, formed a partnership with his friend, Russian
businessman Konstantin Kagalovsky, to create and manage a television network to
be known as TVi.
Gusinski had been through some tumultuous times with NTV, which began in
1993 as an independent (and some said anti-government) news organization. In
2001, after a series of reports critical of Russian leader Vladimir Putin,
Gusinski was squeezed out and replaced by state-owned gas giant Gazprom.
Despite their friendship, the partnership between Gusinski and Kagalovsky
did not last long. Within three years they were suing each other in the Supreme
Court of New York State. The case came to trial in late 2011, and in August
2012 the judge issued a 108-page
decision in Gusinski’s favor.
The decision sheds light on how Kagalovsky used offshore entities to wrest
control of TVi from Gusinski:
When the partnership was formed in 2008, Gusinski
controlled a company called New Media, registered in Delaware, and
Kagalovsky a company called Iota LP, registered in Jersey in the Channel
Islands off the coast of the UK. Each of these companies had a 50 percent
stake in Delaware registered Iota Ventures LLP, and finally of the TVi channel.They appointed Mykola Knyazhitsky as the
channel’s CEO.In the spring of 2009, the partners fell into a
dispute. Kagalovsky suspected that Gusinski’s company NMDC, which licensed
programming content to their partnership, was charging too much for movies
TVi was airing.Knyazhitsky recalled that: “Gusinski wanted to
sell movies to this channel, way overpriced, at $20,000 per hour” when the
going rate was $400-500 per hour. The court documents say NMDC was
charging $15,300 for premiere movies and $8,000 for repeat airings.Instead of renegotiating costs, Kagalovsky moved
to take the channel away from Gusinski.
According to the court decision: “In the summer of 2009, Kagalovsky invited
Knyazhitsky to his house on the French Riviera. Kagalovsky
admitted he made a deal with Knyazhitsky – in case
Gusinski doesn’t step out from the channel voluntarily, Kagalovsky will squeeze
him out of TVi, using the ‘traditional Russian-Ukrainian method’ – diluting
Gusinski’s share in TVi.”
The result was that Kagalovsky used lawyers, offshore jurisdictions and
Knyazhitsky to insert two Cyprus-based offshores – Aspida Ventures Limited and
Seragill Holdings Limited – into the channel’s ownership
structure, the decision says.
Then, between Sept. 22 and 24, 2009, Kagalovsky and Knyazhitsky conducted a
series of transactions by which Gusinski’s share in TVi was reduced to 1
percent. Meanwhile, Kagalovsky’s Cyprus-based offshores ended up controlling 99
percent of TVi, the decision notes.
“This was done with my own hands,” Knyazhitsky said in an interview. “Back
then I didn’t fully understand those things, but I had a fully legitimate power
of attorney from Iota Ventures LLP.”
According to the 2012 ruling of the New York court, Kagalovsky owes
Gusinski $25 million plus interest, but not TVi itself. In 2009, the station
was firmly in Kagalovsky’s hands.
Getting Back in the Game
Four weeks ago, Kagalovsky was still in control of TVi, after even more restructurings
that further muddied the picture. At that point, according to documents
obtained by the Organized Crime and Corruption Reporting Project (OCCRP),
Ukraine-registered Teleradiosvit held the station’s license. Teleradiosvit, in turn, was owned by
another company called Media
Info, also registered in Ukraine. And – completing
the complicated set-up – Wilcox Ventures, registered in the British Virgin
Islands, owned 99 percent of Media Info.
Kagalovsky owned 99 percent of Media Info, with the last 1 percent in the
hands of Oleh
Radchenko, who was also the CEO.
Then everything got turned around.
On April 23, a new set of TVi owners and managers showed
up at the channel accompanied by some 20 security guards.
They barred Kagalovsky and Director General Natalya Katerynchuk from
entering the building. The new controllers replaced Katerynchuk with Artem
Shevchenko, TVi’s host who also directs the channel’s investigations unit.
Soon, the new management introduced the channel’s newest owner: Alexander
Altman, an American businessman of Ukrainian descent.
How to Change Owners
As it turned out, the latest changeover was accomplished over five days.
Radchenko, who was a CEO and held one percent of Media Info shares, told
OCCRP reporters that he “assigned” his share in the company to Altman and that
enabled the ownership changes that followed.
Radchenko says that around April 17, Kagalovsky instructed him verbally to
transfer his shares to UK-based Balmore Invest Limited.
Altman, Balmore’s beneficiary owner, got those shares.
Then, Altman claimed to have a power-of-attorney letter from Wilcox, the
BVI-based company owned by Kagalovsky that holds 99 percent of Media Info. With
it he took
over 94 percent of the company’s shares, giving
him a total of 95 percent in TVi, including Balmore’s piece. The remaining five
percent were owned by Kagalovsky.
Altman has so far refused to make this critical power-of-attorney document
public. It is allegedly signed by the proxy director of Wilcox, Orthodoxia
Nikia, a native of Cyprus.
Asked how he came to get such a powerful letter, Altman said during a press
conference that it came in the mail.
“(The power-of-attorney) letter came addressed to me by a courier mail and
I took it,” Altman said. “You know those (offshore) companies have directors,
there are holdings. There is (Nikia) that you will be talking with for sure.
So, you ask here if she signed this power of attorney, if its real or
fictitious.”
However, Nikia instead flew to Kyiv amid the conflict and denied that she issued a power of attorney to Altman. On April 30, Nikia asked
Ukrainian and Cyprus law enforcement agencies to investigate the theft of TVi
from Wilcox.
Likewise, Kagalovsky denies any dealings with Altman regarding TVi. “There
have been no agreements between myself and Altman regarding TVi,” Kagalovsky
says. “Altman never had any links to the TVi channel. He wasn’t a shareholder
there.”
However, Kagalovsky did acknowledge in a meeting with OCCRP reporters that
he was Altman’s and Gusinski’s partner in an energy project established through
Cyprus-based Wain Holdings, but claimed the project is no longer active and has
no connection to TVi.
Kagalovsky said his business partners have taken over TVi using a forged
power-of-attorney letter.
“There was no power of attorney like that. That’s why my hypothesis is that
it’s fake,” said Kagalovsky. “It’s called forgery of documents, and it is
considered a crime in all countries.”
Balmore Invest, the London-registered firm which now controls 95 percent of
TVi, appears to have its own credibility problems.
Its Australian nominee director and shareholder, Rachel Amy Erickson, is
listed in the UK company registry as running 139 active companies. When
contacted by OCCRP, Erickson denied that the signature on Balmore’s
incorporation documents was hers.
“This document is bearing my name and not my signature!!!” Erickson said in
an email. “I have put in several enquiries into Balmore Invest and have no
results as of yet. I need to find out who the registered agent is who lodged
the paperwork for the company’s incorporation and registered the office address
of 8 Shepherd Market, as there are of course 100’s of companies all registered
at the same address and this address is causing me big headaches with all
companies registered at this address being not companies to my knowledge!!!”
Whoever registered the company does not appear to have paid close attention
to the paperwork. Between April 16 and May 3, The UK company registry notified
Balmore that it
would be dissolved unless its annual return
was filed. It was filed and the firm was not liquidated.
Erickson claims her signature was forged on that return, and also on
Balmore’s “declaration of trust” that names Altman as the beneficiary of this
company. This document raises additional questions as it lists Altman’s US
passport, which was expired before Dec. 9, 2011, when the document was issued.
Erickson is the former girlfriend of Ian Taylor. Taylor is co-founder of GT
Group, a business registration firm based in Auckland, New Zealand, that
specialized in setting up untraceable offshore companies, fronted by proxies.
Many of the firms businesses have been used by organized crime including the
Sinaloa Drug cartel, Russian officials who stole $230 million in tax money, the
North Korean government and others, reports indicate.
In the aftermath
of the scandal, New Zealand authorities
removed 1,800 companies from the New Zealand Companies Register, all of them
established by GT Group. Erickson denied to OCCRP having any links with GT
Group and claims to have split with Taylor in 2009.
Altman wouldn’t respond to OCCRP request for comments emailed to him on May
13. Eight days later Balmore’s corporate structure underwent drastic changes.
On May 21, Balmore’s filings with the UK registrar of companies showed that
Erickson was
replaced as Balmore’s director by Altman. Likewise, ownership of Balmore was transferred to five
UK companies. All of them were registered
on April 23, the same day when new management and owners showed up at TVi.
Also effective April 23 was the transfer of Balmore’s shares from nominee
holder Erickson to the four UK companies in equal shares: Invest
Info One, Invest
Rating Two, Invest
Media Three, Invest Creative Four and Invest
Active Five. In four companies the proxy
shareholders and directors resigned on the same day – May 21 – and Altman took
over.
The nomine in Invest Active Five is still Erickson, while Invest Info One
was established by Ian Taylor. Invest Creative Four lists Angelique Elizabeth
Lilley as a director and shareholder.
The New Managers
On April 23, the channel’s new top management expressed optimism that it
would flourish thanks to the inflow of investments Altman will bring with him.
Artem Shevchenko, the newly appointed general producer, said while presenting
Altman in the editorial room: “I have an internal conviction that this will be
to a certain extent a second breath for the channel, connected to Mr. Altman’s
investments.”
Altman himself insists he can sustain a money-losing television channel.
“Don’t you start indirectly questioning me ‘where will I get the money?’”,
said Altman. “I have the money. Period.”
According to US court records, however, Altman has not been paying his
debt. And it’s not about the debts accumulated by his businesses, but about
debt from credit card and consumer loans.
For example, the New York State Supreme Court ruled in Westchester County
that Altman must pay $31,400.22 to the credit card company FIA Card Services, $11,208.21 to Hann Financial Service Corp (car loans) and $3,105.22 to Ford
Motor Credit Co also for car loans. In
addition, Altman has an ongoing court case with Citibank, with the most recent session held on April 3.
All of these court cases are dated between October and November of 2012.
Prior to that, Altman was also not paying his debt – all because of bad consumer
loans.
The US courts database PACER shows more lawsuits involving Altman.
In 2006, he is mentioned in a complaint filed at the US District Court of the Southern District of New York.
It was filed by Ingalls & Snyder, a New York-based investment advisory
firm, against the companies B2BITS, Ltd. and B2B ITS Corp. and their president,
Alexander Altman.
An out-of-court settlement resolved the matter, but the complaint
illustrates Altman’s methods.
He was charged with fraud over the development of $590,000 in commercial
software a company called I&S ordered from his companies. According to the
complaint, a dispute developed between Altman’s software developers and
I&S, during which Altman’s companies allegedly found a way to illegally
access the I&S computer system, changed access codes, copied confidential
customer information and then threatened I&S that unless they got paid more
for the software, the information would be used in a manner “detrimental to
I&S.”
The plaintiffs claimed that Altman used two fictitious companies – B2BITS.Ltd
(in the U.S.) and B2B ITS Corp. (in UK) – that existed only on paper, while
Ukraine-based programmers did all the work.
