Akhmetov flexes muscle via lawyers

As the richest of Ukraine’s rich, Rinat Akhmetov’s life today is unquestionably bright. But the 44-year-old businessman’s past – or rather, reports of a questionable past – keep popping up. When they do, they threaten to spoil the pretty public storyline of an enlightened billionaire philanthropist who puts his nation’s interests first.

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But there is no need to worry too much about Akhmetov. He is well-stocked with PR specialists and litigation-minded lawyers to keep his public image sparkling and to stamp out bad publicity. His legal team is quick to pounce on reports about Akhmetov that they consider to be libelous, scandalous or merely inaccurate. The lawyers also have a good track record of obtaining retractions, public apologies or libel settlements.

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As a result, many news reports that delved into unflattering aspects of Akhmetov’s past have been pulled off the Internet, with or without a retraction.

 

Members of the media gather outside of London’s High Court of Justice on Dec. 16, 2010. (AFP)

He is not the only one of Ukraine’s elite to use threats and legal action to keep his image polished. Ukrainian billionaire Dmytro Firtash, for instance, has a pending libel lawsuit in London against the Kyiv Post for a July 2 front-page article involving allegations against him by former Prime Minister Yulia Tymoshenko.

But Akhmetov is by far the richest and the most powerful. In that sense, he leads the club of Ukrainian millionaires and billionaires who seek to improve their reputations while trying to sanitize or airbrush their pasts.

Akhmetov says he is justified in protecting his personal and business image from unfair, inaccurate and libelous attacks. But some critics think the true aim is to frighten journalists off investigative reporting that contributes to better understanding of public issues and public figures.

 

Akhat Bragin, a former associate of Ukrainian billionaire Rinat Akhmetov, is a symbol of the nation’s lawless capitalist era of the 1990s. His murder – in a 1995 bomb blast near Donetsk’s soccer stadium – remains unsolved. (UNIAN)

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Akhmetov is a kingpin – a major backer of President Viktor Yanukovych, a leading member of the president’s Party of Regions and a member of parliament. He has a fortune estimated recently at nearly $24 billion.

He is sole owner of Ukraine’s leading industrial and financial group, System Capital Management, with interests spanning from mining and energy to communications, media and football. Akhmetov controls Ukraine’s leading Russian-language daily, Segodnya, and one of the top television channels, TRK Ukraine. In 2009, his football club Shakhtar Donetsk won the prestigious Union of European Football Associations cup.

But details remain sketchy about how Akhmetov got his start in business during the lawless capitalism of the 1990s, when great wealth was up for grabs following the collapse of the Soviet Union.

And so questions linger.

You know … what you say about my criminal circle … I run an absolutely legal business with an absolutely transparent structure of ownership.”

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– Rinat Akhmetov, businessman.

Ironically, one of the few places on the Internet where Akhmetov addresses a key question about his past is the pro-presidential Party of Regions website.

In a 2006 interview posted on the website, Akhmetov is asked point blank: “There is lots of talk about your past, about your [alleged] connection with the criminal world. Will this not affect your work in parliament?” At the time of the interview, the once publicity-shy Akhmetov had just made the leap into politics after his election to parliament.

In his response, Akhmetov denied having a criminal past or links to criminal elements. He said no evidence has been discovered by law enforcement to back up such allegations. He said: “You know … what you say about my criminal circle … I run an absolutely legal business with an absolutely transparent structure of ownership.”

That interview came months after a senior Ukrainian law enforcement officer publicly described Akhmetov as a gangster.

In 2005, Serhiy Kornich, then head of the Interior Ministry’s economic crimes department, was quoted by Russian daily Kommersant and other journalists as saying that Akhmetov was “the head of [an] organized crime group.” Kornich left office without ever proving his sensational claims.

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The controversies mainly involve one decade of Akhmetov’s life, during his rise to the top, from 1985 and 1995.

 

Mark Stephens, the noted London media lawyer, represents the Kyiv Post in a libel lawsuit.

It was a bloody, violent time in Ukraine as rival groups battled for control of businesses and industries. For example, Akhmetov’s close associate, Akhat Bragin, was killed in what looked like a mafia-style assassination.

Bragin, president of the Shakhtar Donetsk soccer team, died when a bomb exploded at the stadium. The crime is unsolved. Akhmetov eventually took over the soccer club and created a holding company for the industrial empire that belongs to him.


Rhode Island case

A recent chapter in the “How did Akhmetov get his start?” saga took place in, of all places, the tiny American state of Rhode Island during last fall’s election campaign for state governor.

“I remember listening to the Buddy Cianci Show [on local 630 WPRO radio] and there was Ukrainian expert Taras Kuzio going on and on about [Akhmetov] … the man in charge of the foundation that Lincoln Chafee was on the board of,” said Betty Galligan, owner of Providence, Rhode Island-based PR and marketing firm Newberry. To put it mildly, Galligan recalls Kuzio’s references to Akhmetov as unflattering.

The foundation in question was Akhmetov’s Foundation for Effective Governance, whose board of directors included then-independent candidate for Rhode Island governor, Lincoln Chafee, who went on to win the November election. Chafee, a former U.S. senator, disclosed that he earned up to $100,000 in consulting fees in 2009 from Akhmetov’s foundation.

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Rhode Island journalists started checking into Akhmetov’s past and took particular note of the sensational 2005 remark about Akhmetov’s alleged “organized crime” ties made by Kornich.

 

In this Nov. 2, 2010 file photo, independent candidate for Rhode Island governor Lincoln Chafee celebrates his victory with his wife, Stephanie, at his campaign headquarters in Warwick. Chafee, a former U.S. senator, came under attack during the campaign for his association with Ukrainian billionaire Rinat Akhmetov as a board member of Akhmetov’s Foundation For Effective Governance. (AP)

As Rhode Island journalist Jim Baron describes it, this bit of pre-election news was greeted by Chafee’s main opponents, Democratic Frank Caprio and Republican Robert Robitaille, as an early Christmas present, while local media began exploiting this issue like “children who found a new toy.”

Yet all the attempts by local journalists to find evidence of wrongdoing by Akhmetov led to nothing, not least because he has never been charged or convicted of any wrongdoing. Nor did the publicity and mudslinging prevent Chafee from winning the race. Immediately after his election, Chafee resigned from Akhmetov’s foundation.

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“The Ukrainian incident,” as local experts refer to it, came to nothing also in a literal sense. Stories about the controversy have been scrubbed from public view.

Within weeks, the original investigative article “International Intrigue: Lincoln Chafee Consults Controversial Ukrainian Billionaire” disappeared from the GoLocalProv website. Also missing was the audio file of the radio show featuring Kuzio, the Ukrainian-focused political analyst who publicly discussed the controversy surrounding Akhmetov. Two related news items also disappeared from the website.

Josh Fenton, publisher of GoLocalProv, told the Kyiv Post on Nov. 24 that the articles disappeared for technical reasons. But the Akhmetov’s articles still hadn’t reappeared months later. The representatives of 630 WPRO radio station wouldn’t return the Kyiv Post’s repeated requests to comment.

While not directly saying whether Akhmetov’s lawyers got the reports retracted, the billionaire’s spokeswoman, Elena Dovzhenko, said: “Perhaps the managers of the media outlets … realized that their reporting was wrong, and took responsible action?”

In January, Akhmetov got the French daily newspaper Le Figaro to retract an unflattering description of him. In 2007, the Swiss daily Neue Zuricher Zeitung did the same.

London ‘libel tourism’

On Dec. 2, the Foundation for Effective Governance held a conference on freedom of speech. Attendees included Kim Campbell, former prime minister of Canada and also a board member of Akhmetov’s foundation, as well as Joe Lockhart, former U.S. President Bill Clinton’s press secretary.

The event discussed definitions of freedom of speech to its limits in different nations, also mentioning libel, an issue that Akhmetov could speak about with expertise.

With the assistance of lawyers from Washington-based Akin Gump Strauss & Feld and London-based Shillings, Akhmetov has filed two libel lawsuits in London’s High Court of Justice against Ukrainian publications.

Only resorted to legal action when statements that are clearly false and harmful for his reputation are broadcast, for example, on the Internet and the [news media outlet], even after competent lawyers have shown their evidence, refuses to correct the record and remove the false statements.”

– Elena Dovzhenko, Rinat Akhmetov’s spokeswoman.

In 2008, a London court awarded Akhmetov $100,000 after he objected to stories in the Ukrainian online publication, Obozrevatel, whose journalists investigated his early years by talking to his former classmates and neighbors in Donetsk. Earlier in 2008, Akhmetov used the Schillings lawyers to get a public apology from the Kyiv Post (then under different ownership with a different editorial team) for an opinion article.

Akhmetov’s United Kingdom libel lawsuits against Ukrainian media are singled out by the Center for International Media Assistance as defying jurisdictional logic. The report on libel tourism explains that the Kyiv Post had barely 100 subscribers in Britain, and Obozrevatel had almost no visitors in the United Kingdom and wasn’t even published in English.

Dovzhenko, Akhmetov’s spokeswoman, said he has “only resorted to legal action when statements that are clearly false and harmful for his reputation are broadcast, for example, on the Internet and the [news media outlet], even after competent lawyers have shown their evidence, refuses to correct the record and remove the false statements.”

But these lawsuits, Dovzhenko said, do not mean that Akhmetov is hostile to a free press. To the contrary, his spokeswoman said: “Mr. Akhmetov has expressed many times his position regarding the value of the freedom of speech for a democratic state and the responsbility for the use of information.”

Dovzhenko also said that Akhmetov’s press office “regularly talks and deals with all media, including … Obozrevatel and the Kyiv Post. Therefore, the conclusion about ‘chilling effect’ for the Ukrainian media is not confirmed by actual communications of Mr. Akhmetov with journalists.”

Justice for rich?

Akhmetov has explained his choice of the London venue for lawsuits in a way that doesn’t flatter Ukrainian courts: “I don’t want the process to be political. I want all parties of the case to be confident in the fairness and impartiality of the procedings.”

Yet, according to the Center for International Media Assistance and other free-speech groups, London is a favored destination for libel lawsuits because of England’s notoriously weak speech protections.

In the United Kingdom, the good reputation of the claimant is valued more than the freedom of speech of the defendant. The burden of proof, moreover, is reversed in England: News organizations have to prove their stories are true, whereas, in many other nations, the subject of the story has to prove that the claims are false. Moreover, in America, for example, public figures cannot prove libel unless they show that the news organization deliberately and maliciously spread false information.

The libel law is two communication revolutions out of date.”

– Robert Sharp, London-based PEN charity.

Moreover, the high costs of litigation in London make it almost impossible for small publications to defend themselves: Libel cases in London on the average cost 140 times more than in the rest of European Union.

According to Robert Sharp, who is with the London-based PEN charity, the U.K. libel framework originated two centuries ago and persists today.

“The libel law is two communication revolutions out of date,” Sharp said. He traced original defamation laws as meant to prevent young aristocrats from dueling in response to slanderous accusations against them. In the 18th century, those accusations were often printed on leaflets. A system of fines had been established and, most bizarrely, true allegations were considered by the law as having more damage than false ones. In the United States, by contrast, truth is a defense against libel.”

According to Sharp, the current libel laws are based on discredited principles: The claimant is automatically considered to have a reputation and the chances of getting a favorable verdict are high, even if the allegations by the news organizations have substance. In addition, Sharp said, most lawyers in media lawsuits would work on a “no win, no fee” basis. As a result, being on the losing end of a libel lawsuit costs $200,000 on average and can exceed $1.5 million.

Sharp, whose PEN organization supports the rights of writers, said the cases against Ukrainian media stood out even by London standards, where international libel litigation is quite common.

“People think it’s bizarre and counter-intuitive… Why would a dispute between Ukrainians [in Ukrainian publications] take place in the U.K.?” Sharp said. “One could argue that the Ukrainian legal system might be inadequate, but after analyzing the cases and the statistics, it becomes clear that it’s the U.K. system that’s at fault.”

Sharp said a campaign is under way to amend the defamation laws governing libel and slander. Among the proposed changes: Removing the automatic assumption that a claimant has a reputation in the U.K. capping the legal costs that the defendant has to cover in case of losing and introducing the term “public interest,” which would allow journalists to publish unfavorable information about public figures such as wealthy businessmen, as long as the publication does its due diligence and gives people they investigate the opportunity to respond.

I wish I could give a checklist of how to avoid being sued in London, but I am afraid, there is none.”

– Robert Sharp, London-based PEN charity.

Meanwhile, some countries have started countering “libel tourism” on their own.

In August, U.S. President Barack Obama signed the so-called Freedom of Speech Act. It protects U.S. writers and journalists from overseas libel tourism by making impossible to enforce libel judgments that conflict with First Amendment guarantees of freedom of speech.

The United Kingdom amendments are expected to be voted on later this year. In the meantime, journalists can do little to protect themselves from English courts. “I wish I could give a checklist of how to avoid being sued in London, but I am afraid, there is none,” Sharp said.

Keith Smith, a former U.S. Ambassador to Lithuania and an analyst with Washington-based Center for Strategic and International Studies, might agree.

In 2007, Smith – who researches European energy issues – was approached by Akin Gump on behalf of Dmytro Firtash, a Ukrainian billionaire who co-owns the Swiss-registered gas-trading company RosUkrEnergo.

As Smith recalled, the lawyers discussed the possibility of a lawsuit in London for an interview published in Hungary where he discussed Eural Trans Gas, a gas trader incorporated on behalf of Firtash. In 2003-2004, this Hungarian-registered company served as an intermediary selling Central Asian gas to Ukraine.

To Smith, the damage the article could have caused in the United Kingdom was doubtful, since the interview was in Hungarian.

“The whole idea is to intimidate scholars and journalists from looking closer inside this company,” said Smith, who fought the case and hired a lawyer. In the end, he avoided a court case by admitting that he only had a copy, but did not see the original documents backing up his claims. Smith said the lawyers demanded that he admit a lie, which he refused to do.

The whole idea is to intimidate scholars and journalists from looking closer inside this company.”

– Keith Smith, a former U.S. Ambassador to Lithuania.

Unlike Sharp from English PEN, Smith is more optimistic about the prospects for investigative journalism. He cites changes in the U.S. laws and plans to amend the libel laws in the United Kingdom, as well as growing public distaste for wealthy people hiring expensive lawyers to go after media and non-governmental organizations, many of modest financial means.

Unless changes in the English libel law happen, people the world over may have to live with less information, which is the lifeblood of democracies. Or they can somehow hope that public figures will someday write truthful tell-all autobiographies.

Kyiv Post staff writer Vlad Lavrov can be reached at [email protected].

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