The media holding of former billionaire Serhiy Kurchenko – who is now facing criminal investigations into his finances and freezes on his assets – has lost its license to publish the local version of Forbes magazine.
Forbes Media, which controls the iconic global media brand, revoked the licensing agreement, citing damage to its reputation.
Kurchenko, who may be hiding out in Moscow, is suspected of being the front man to conceal assets of fugitive ex-President Viktor Yanukovych and his inner circle. He is accused by Ukrainian authorities of costing the state $1 billion through tax evasion and other corrupt schemes blessed by Yanukovych’s administration.
The 28-year-old Kharkiv native has repeatedly denied the charges, maintaining that he is “an honest businessman” who has invested significant amounts of money into Ukraine’s economy. Kurchenko is currently on a list of 18 individuals consisting mostly of former senior officials whose assets the European Union has frozen “for involvement in crimes in connection with the embezzlement of Ukrainian state funds and their illegal transfer outside Ukraine.”
Part of Kurchenko’s Ukrainian Media Holding, Forbes Ukraine’s official circulation is 20,000 and it claims to be one of the few profitable media outlets on the local market.
“The association with Forbes Ukraine under Serhiy Kurchenko has damaged the goodwill of the Forbes brand and has tarnished Forbes’ trademark both in the Ukraine and worldwide,” reads a March 7 letter that Forbes Media lawyer Maria Rosa Cartolano wrote to VETEK, billionaire’s conglomerate.
Pending criminal charges against Kurchenko and violation of editorial independence rules are among the reasons mentioned for revoking the license.
However, Forbes Ukraine chief editor Mikhail Kotov told the Kyiv Post that UMH is still negotiating with the licensor. Yuriy Rovensky, who directs Kurchenko’s media business within VETEK Media, went to New York City, reportedly to meet with the parent company’s management. Forbes Media spokesperson Mia Carbonell said that the legal process of revoking the license agreement is still ongoing.
Forbes family scion Miguel Forbes, who oversaw Kurchenko’s acquisition of the license amid protests from its local editorial staff, left his position as company vice president in the end of 2013. Carbonell emphasized that Miguel Forbes’ departure was “unrelated to his role in international licensing.”
Kurchenko announced the acquisition of UMH, the license holder for publishing the Ukrainian edition of Forbes, in June 2013 and closed the deal five months later, in November. The oil and gas tycoon reportedly paid UMH founder Borys Lozhkin $360-$400 million for his media business. In subsequent interviews, Kurchenko wouldn’t say how much he paid but hinted that it was less than the publicized amount.
Analysts noted that the hefty price tag was a worthy tradeoff for Kurchenko’s intentions. He would use the media outlets, also including news weekly Korrespondent, soccer weekly Futbol and daily Komsomolskaya Pravda, to polish the reputation of the ruling administration led by Yanukovych and to propel him to a re-election in 2015. Both were close associates, and the former president’s older son, Oleksandr Yanukovych, was suspected of being the ultimate beneficiary of businesses controlled by Kurchenko.
Incidentally, before Kurchenko purchased Forbes Ukraine, the publication investigated him in-depth and uncovered suspicious business schemes that today have led to 11 criminal cases being opened against him for tax evasion and the sale of counterfeit gasoline. “If you don’t like what the press is writing about you, buy the press,” Forbes.ua ex-chief editor Leonid Bershidsky told Bloomberg in June.
In November, a dozen prominent Forbes Ukraine journalists left the publication, accusing its newly installed editor-in-chief Mikhail Kotov of censorship. He allegedly didn’t allow an investigative article about then-First Deputy Prime Minister Serhiy Arbuzov – a Kurchenko ally – to be written. The chief editor prior Kurchenko finalizing the deal, Vladimir Fedorin, resigned as chief editor in June since he did not want to cooperate with the disreputable oligarch.
In the beginning of December, managers from Forbes’ global headquarters called Forbes Ukraine’s editorial office in Kyiv and asked key local editors if they had been experiencing any kind of censorship and external influence on editorial decisions. The license could have been revoked then or even earlier, said Bershidsky.
“If Forbes would (have) read (its) Ukrainian magazine and website, they would read there the
same things about Kurchenko that the current government is saying about him,
namely the truth,” he added.
Then in November, Forbes Media was put up for sale in
November. Sales documents prepared by Deutsche Bank
revealed that while the Forbes’ asking price was more than $400 million, its 2012
earnings before taxes were only $15 million.
Still, the scandal surrounding the Ukrainian edition
is not that significant to impact the price of the deal, commented Bershidsky.
Besides, Forbes has 25 licensees around the world and some of them are
criticized for their editorial policy too.
“(The Forbes) brand is on the brink of demise. Its
heyday was in the 1980s and 1990s, followed by a long period of slow decline,
and now the last vestiges of its former fame are being eaten up. It is still
possible to revive the brand, of course, but not through a partnership with
people like Kurchenko,” summarized Bershidsky.
Various sources told the Kyiv Post that Forbes Media
is looking for another publisher in Ukraine. The parent company is very dependent
on its licensing revenues and can’t afford to lose the Ukrainian market.
Financial Times is another Western media brand present
on the Ukrainian market, though not through a direct license, but through
syndication. Business daily Capital had the right to re-publish translated
material from the Financial Times. Its owner allegedly was Arbuzov whose assets
Austria, Lichtenstein and Switzerland have frozen. Capital suspended publishing
the print version on Feb. 28.
Weekly magazine Ukrainsky Tyzhden has a similar
partnership with The Economist, while Esquire has a full-scale local licensee –
Sanoma Media Ukraine. Another well-known global media brand – Vogue – provided
the license to Ukrainian Media Holding and has not revoked it so far.
“It’s necessary to develop own (media) market, own products,
though there’s nothing bad about bringing Western brands to Ukraine,” media
critic Natalia Ligachova said.
Kyiv Post
associate business editor Ivan Verstyuk can be reached at
[email protected].
