A Russian Media Mystery

In Boris Yeltsin's post-communist Russia, there is nothing that is not for sale, but the most valuable commodity of all is influence. Boris Berezovsky, Russia's uber-oligarch, has always known that better than most. Now, just one year from the next presidential election, he is trying to ensure that his influence extends beyond the Yeltsin era. "Let's not be hypocritical," Berezovsky said in a newspaper interview on June 11. "Information is about politics; and politics is a huge part of today's Russian reality."

Three days after the interview there was a reality shift. The country's best and most influential print-media property, Kommersant Publishing--whose flagship daily newspaper is a must-read for Russia's elite--changed hands. The question of the moment in Moscow: who bought it? The answer is surrounded by controversy, and is anything but trivial. Who controls Russia's media will help determine the outcome of December's parliamentary elections and next year's presidential race.

In Russia's raw political culture, nearly every institution is discredited, but the press still retains some credibility. Polls indicate it is trusted far more than the president, the government--even the Russian Orthodox Church. Competition for control of the media is intense among the country's so-called "oligarchs," a half dozen or so superwealthy tycoons who, before last year's crash, dominated the economy. Some have unabashedly used their media properties to undercut rivals and further their own political influence. The increasing concentration of media ownership made the Kommersant, with its classy newspaper and slick magazines, a jewel.

Its independence was its greatest asset. Until its sale in June--which was publicly announced just last week--it was owned neither by the central government, which remains the biggest media owner, nor by an oligarch. Its founder was Vladimir Yakovlev, a 40-year-old practicing Buddhist who last year left Moscow for Los Angeles. He entrusted the flagship newspaper to its talented editor, Raf Shakirov, and it continued to flourish. A Russian hybrid of The Wall Street Journal and The New York Times aimed squarely at the emerging professional class, it covered Yeltsin's Russia with unrivaled vigor.

But last year's economic crash put Kommersant's cherished independence at risk. Yakovlev and his company came under serious financial pressure. He prepared to sell, and in so doing triggered a fierce--and ultimately surreal--ownership struggle. Fierce, because everyone from Berezovsky to Anatoly Chubais (Yeltsin's former economic czar) and Moscow Mayor Yuri Luzhkov (a likely presidential contender) sought control. Surreal, because the ostensible winners were two young investors, Iranian-born and British-educated, who run an unknown fund-management firm called American Capital (USA), LLC. Kia Joorabchian, 27, and Reza Irani-Kermani, 31, said last week that their emerging-market fund, registered in the tax haven of the British Virgin Islands, took an 85 percent stake in the prestigious but money-losing Kommersant.

On the eve of the election season, was it possible that two unknown outsiders had trumped some of the most powerful political and business interests in Moscow? And if so, how, exactly, had they managed to pull that off? High-level sources in Moscow's business and journalism communities insist that they hadn't, claiming that American Capital was simply a front for Berezovsky. "Whoever is named [as owner], the face is all the same--Boris Berezovsky," says Leonid Miloslavsky, the former general director of Kommersant, who, before the sale, was the company's third largest shareholder. NEWSWEEK's sources believe it was Yakovlev, not Berezovsky, who may have wanted the true nature of the deal concealed, because he knows his former colleagues at Kommersant would feel betrayed if he sold to the controversial media baron. Many are already nervous about American Capital's lack of footprints; the company shows up in virtually no business databases or press archives, and records show that it registered in New York only on May 27, just as one of Berezovsky's deputies was trying to conclude a deal with Yakovlev.