Moscow, 23 April 1997 (RFE/RL) - It is business as usual in Russia's economy in transition. At a recently privatized enterprise, two sides are waging a war. A powerful company, which became a major shareholder of the enterprise, pushes for its restructuring, while the management, on behalf of employees, tries to block the initiative, saying it is trying to defend the firm from outside dictate.
Similar conflicts take place in industries nationwide. Why did this particular war emerge so prominently on Russia's national level, causing widespread discussion in Moscow? Because the powerful company - the "rich investor," which became the major shareholder - is oil giant "LUKoil" - and the enterprise is one of the country's most respected democratic dailies, "Izvestia."
The war reached its new peak yesterday evening, as "Izvestia's" journalists, led by Editor-in-Chief Igor Golembiovsky prevented LUKoil officials from conducting a planned shareholders meeting at the paper's editorial offices. After an emotional standoff, LUKoil representatives convened an alternative meeting in a neighboring school building, and voted in a new board of directors that includes four LUKoil and three Izvestia representatives. LUKoil proposed an investment plan for Izvestia. The paper's employees boycotted the meeting. Golembiovsky later said "Izvestia employees do not intend to conform to LUKoil's decisions."
LUKoil's stake in the newspaper, acquired step by step since 1993, totals 41 percent. During the last few weeks, LUKoil managed to obtain in trust two packet of shares from minor holders, and Golembiovsky claims the oil company now controls more than 50 percent of the shares. Golembiovsky said he questions the legality of the procedure concerning one of those transactions. Nown the newspaper's leadership is trying to prevent LUKoil's attempts to purchase shares owned by Izvestia journalists. Golembiovsky is attempting to concentrate those shares, believed to total more than 40 percent, in his own trust. Meanwhile, it is now reported that Golembiovsky himself, as well as his deputy Eduard Gonzales, had sold their own shares to LUKoil before the dispute started.
Currently, LUKoil's declared objectives are to make changes in the Izvestia's existing board of directors, and to replace Golembiovsky, who is currently president of the board. It is not clear whether the oil company intends to insist on Golembiovsky's removal also from the position of Editor-in-Chief.
Izvestia considers the dispute essentially a freedom-of-speech issue. For more than one week now, the newspaper has run front page articles accusing the Government, and particularly Prime Minister Viktor Chernomyrdn, of tightening its grip on the media. Izvestia has repeatedly accused LUKoil of trying to act as censor on the Government?s behalf. The majority of LUKoil's stakes are state-owned.
The dispute erupted early this month, when Izvestia reprinted an article from the French daily "Le Monde," alleging Chernomyrdin had amassed a personal fortune of $5 billion during four years in power. "Le Monde" later printed a correction to its story. Meanwhile, Chernomyrdin denied the allegations and LUKoil's president, Vagit Alekperov, said the publication damaged LUKoil's reputation. Alekperov said the company would move to assert its control of the newspaper.
LUKoil vice-president Leonid Fedun said the oil company plans to invest $40 million over several years to expand the paper's regional distribution. He said that if such a program is not implemented, Izvestia would lose about $2 million next year.
Few Russian publications are profitable, and Izvestia is not an exception. The paper, is currently losing money and its leadership acknowledges this fact. Like most publications, Izvestia depends from outside funding for its survival and development. In recent months the paper, aiming at a wider audience, adopted a more sensationalist approach, as well as a more critical position toward the Government.
Izvestia maintains a high profile among the traditional Russian intellectual public, who demonstrate a pro-democratic orientation, but is disillusioned by the social consequences of economic reforms.
Last week, Izvestia published an appeal signed by 37 Russian writers and performing-arts figures. They said Izvestia's situation was a "cynical demonstration of the the almightiness of the powerful bureaucracy, which manipulates big capital." This week, world-famous Russian cellist Mstislav Rostropovich added his voice with a statement, also published in Izvestia's front-page. Rostropovich said that "for all of us the preservation of democracy is hugely precious -above all, freedom of speech and of the press."
The dispute between Izvestia and LUKoil comes as concern is growing that a small circle of press barons and powerful financial groups are using their stakes in Russian newspapers and television broadcast channels to exert political influence.
The majority of Izvestia's journalists clearly support Golembiovsky, but editors acknowledge, in private conversations, that within the newspaper there are dissenting voices on Golembiovsky�s positions.
Moscow's media are also split on the issue. This week, editors of 13 popular publications, among them the editors of "Nezavisimaya Gazeta," "Obshaya Gazeta," "Ogonyok" and "Literaturnaya Gazeta," sent an open letter to President Boris Yeltsin, urging him to intervene on Izvestia's side. But other, liberal and business-oriented publications as "Kommersant-daily," and the weekly "Profile" pointed out that LUKoil acts in accordance with existing legislation, defending the rights of shareholders.
Tatyana Malkina, a former political commentator for the daily "Segodnya," says that, in her view, Golembiovsky and other editors do not appreciate that "one cannot ask a big investor to bail out a sinking newspaper and later ignore his say."
Malkina should know what she is talking about. She quit "Segodnya" a few months ago, along with almost all leading journalists of the daily, following a restructuring plan imposed by MOST financial group, the 100 percent owner of the paper. Segodnya's restructuring plan started with the replacement of the editor in chief. Former Segodnya journalists have told our Moscow correspondent that they strongly disagreed with the plan, but they never doubted that MOST had the legal right to carry it out. Therefore, they say, the only choice they had was to comply or to quit.
Everyone loses in this dispute. LUKoil will certainly lose prestige for not being able to keep its publication in line. Izvestia also loses its campaign for a free-and-independent press, as it appeals to the President to solve the situation, thus giving the head of Russia's executive a direct say in the dispute. During last year�s presidential campaign the majority of Russia�s media said they were supoporting Yeltsin "temporarily," in order to oppose "the Communist danger." But if Yeltsin takes action in the dispute on Izvestia�s side, the paper, and all those other publications supporting it, will prove that their quest for independence is quite a confused concept.