Special Report: The bluebloods and the Russians
Ben Laurance, Daily Mail
11 December 2008, 1:15am
As heavyweight members of the establishment go, few are more heavyweight than this. Take one former foreign secretary who now sits in the House of Lords. Take the former head of GCHQ, the government's secret international listening-post and now with a knighthood.
Add in a one-time member of America's National Security Council who advised three consecutive US presidential administrations.
And to give even more gravitas to this already heavyweight gathering, recruit a couple of figures who have played leading roles in the European telecoms industry.
Respectable? Certainly. Blueblooded? Without a doubt. These are just the sort of chaps whose names one wants on a corporate letterhead, just the types to open doors in corridors of power around the globe.
And they are just the types who have been recruited by Russian billionaire oligarch Mikhail Fridman.
Former foreign secretary Douglas Hurd, Sir Francis Richards who used to head GCHQ, Peter Watson who had the ear of both George Bush senior and Bill Clinton, plus Sir Julian Horn-Smith who was a leading figure in Vodafone and Kurt Hellstrom who headed telecoms hardware giant Ericsson - all sit on the 'international advisory board' of Fridman's telecoms group Altimo.
Another part of Fridman's empire, Alfa Capital Partners, boasts as one of its luminaries Lord Powell of Bayswater who, as plain Charles Powell, was a foreign affairs and defence to the Thatcher and Major governments.
Now, this clutch of worthies find themselves fronting for a business empire that:
• Has been castigated by a judge for trying to wriggle out of its legal obligations putting a number of its businesses in contempt of court;
• Has distributed fake documents as part of a campaign against one of its business rivals; had the documents been genuine, they would have dealt a devastating blow to the reputation of Altimo's opponent; and
• Played a key role in the bitter dispute with Britain's BP earlier this year, a dispute so ferocious that BP's man in Moscow chose to go into hiding because he feared that his every conversation and phone call was being bugged.
And now, the saga has taken a further, curious twist. The Daily Mail has obtained a recording and transcript of what appears to be a speech by one of Fridman's key lieutenants.
According to the transcript, the blue-bloods who sit as 'international advisers' to Russian companies are being used as little more than window dressing.
They need know little or nothing about the business they represent - but can be useful in diverting the media's attention from a Russian company's 'bandit' origins. The eminently respectable figures who give their imprimatur to big Russian businesses are effectively 'selling their name'.
What is the price put on those names? How much do these greybeards of international politics and business receive for lending their support to Fridman's group?
That information is never made public. But no one disputes that the individuals concerned do get paid. Being an adviser can be a nice little earner. Lord Powell holds paid positions on the advisory boards of no fewer than ten international companies.
For Fridman - and for other Russian oligarchs eager to show that, despite having their fortunes rooted in the chaos of the Yeltsin era, they are now legitimate and play by internationally-accepted rules - the support of these grandees is invaluable.
So who is being so dismissive of the real power wielded by 'international advisers'? Who is suggesting that they are no more than window-dressing? This is where the tale becomes murky.
Kirill Babaev, head of international communications for Altimo, the huge telecoms arm of Fridman's Alfa group, gave a speech in Moscow in October at a conference about public relations. That much is beyond question. But Babaev disputes the contents of what appears to be a transcript of his speech.
According to the account obtained by the Daily Mail, Babaev said: 'How does one make a link between a Russian company and a western audience? Very often one hires Western advisers. It is a well-proven strategy. A grey-haired internationally-connected Western adviser is good at communicating and is able to tell his friends what your company is all about... If you need to send someone to initial talks with an investment bank, or with some business partner or a government agency, you can easily send your Western adviser. He will be much better at it than you - even if he doesn't know anything at all about your company's real work.
'But, you see, this is exactly how the so-called advisory boards are established, and generally they work quite well. These people...are trading on their name...the name does play a role and does matter to the reporters, and to any other audience. Therefore, when the bandit origins of your company's capital are discussed in the media, the very next paragraph will say "but then again, they have a former US secretary of state or some expresident of the World Bank as their adviser".'
Babaev disputes the account of what he said. 'The words attributed to me are partly falsified, partly altered,' he said this week.
In a statement, Altimo said: 'We are aware that various materials are in circulation which relate to Altimo, its executives and its International Advisory Board.
'We understand that such materials may contain false information which is intended to damage the reputation of Altimo and its advisers through its publication in the media.'
Babaev issued a further statement to the Daily Mail: 'We consider this claim to be more of a PR nature than of a legal nature, and we will defend ourselves vigorously'. Babaev repeatedly said that the account of his comments had been given to the Daily Mail by a public relations company, PBN. This is untrue.
Whether or not Babaev's conference comments have been correctly reported, do these 'international advisers' not feel that they are being used?
Those on the Altimo advisory board have consistently declined to talk to the press about their involvement. But it is known that at least some of those involved with Alfa and its offshoots are beginning to feel uncomfortable that they are being linked to companies whose reputation for good corporate governance is, to put it mildly, scarcely blemish-free.
As the Daily Mail reported earlier this month, Fridman's telecoms company Altimo published a dossier of material that it said indicated dirty dealings by Telenor of Norway. The two companies are locked in a battle over control of Russia's second-largest telecoms company.
Altimo said the dossier of material proved that the Russian group's emails had been intercepted and that the company had been the target of a black propaganda campaign. There was a problem with Altimo's dossier - parts of it were demonstrably faked.
It included emails sent on dates that didn't exist. For example, one was marked Wednesday, November 17 2007. In fact, November 17 was a Saturday. And Altimo claimed that its dossier showed that the campaign against it, involving hiring private eyes, was being masterminded by an American law firm, Marks & Solokov.
The law firm now says that emails purportedly from it were forged and it is suing for defamation. Marks & Solokov is demanding a retraction and apology from Altimo itself - and, significantly, from the board of international advisers.
Separately, a New York judge has imposed huge fines on Alfa companies for failing to comply with previous rulings. The Alfa offshoots are being fined $100,000 a day. Alfa had argued that it could not comply with the New York rulings because it was prevented from doing so by separate court rulings in the Ukraine.
A New York judge has now accused Alfa of hiding behind Ukraine legal opinions that are 'nothing more than a sham, a pseudo-legal excuse... to refuse to do what they have all along refused to do. It is outrageous'.
Outrageous? Maybe. But will it be enough to put off the establishment figures who are still giving Fridman their seal of approval?