‘It sounds silly and lame, but it’s true’ Dissecting the response to the joint investigative report about the newspaper Vedomosti’s head-spinning ownership structure
Several days after the release of a joint investigative report by Meduza and three other news outlets about the situation at Vedomosti, the newspaper’s de facto owner, Demyan Kudryavtsev, responded in detail to journalists’ findings. In an interview with the television network Dozhd on May 14, Kudryavtsev offered his own version of events and tried to refute certain information in our joint investigation. With assistance from The Bell and Forbes, Meduza summarizes and responds to Kudryavtsev’s main claims.
Read the investigative report
Meduza warns about a potential conflict of interest
The authors of this text — Meduza first deputy editor-in-chief Tatiana Lysova and Meduza special correspondent Anastasia Yakoreva — previously worked at Vedomosti. Yakoreva wrote for the paper in 2018 and 2019, and Lysova was one of the publication’s pioneers, serving intermittently as editor-in-chief between 2002 and 2017. From 2017 until March 10, 2020, Lysova was also a member of Vedomosti’s board of directors.
Additionally, at Demyan Kudryavtsev’s request, Tatiana Lysova — together with Vladimir Voronov and Martin Pompadour — became one of the directors of “Delovoi Standard Ltd.” on December 31, 2015. Months later, Delovoi Standard Ltd. sold “Business News Media” to another company called “Arkan Investment.” On the day that deal was reached, Lysova was in the hospital and she never saw or signed any documents related to the sale. When she returned to work on March 11, 2016, she formally resigned from the board of directors at Delovoi Standard Ltd.
How much Kudryavtsev spent to buy Vedomosti
What Kudryavtsev says
In 2015, Demyan Kudryavtsev and his two business partners, Martin Pompadour and Vladimir Voronov, spent 13 million euros ($14.1 million) to buy the newspaper Vedomosti — or rather they bought the newspaper’s publisher and trademark owner: the Cypriot offshore company “Delovoi Standard Ltd.” (which until 2015 was co-owned equally by the foreign enterprises “FT Group,” “Dow Jones & Co.,” and “Sanoma”).
In his interview with Dozhd, Kudryavtsev says 10 million euros of this money went toward buying Delovoi Standard Ltd. and the remaining 3 million euros was spent to purchase other assets sold within the same agreement.
Meduza’s response
This is simply untrue. Documents show that absolutely everything connected to Vedomosti cost Kudryavtsev a total of 10.4 million euros (now roughly $11.3 million). He and his partners paid 3.7 million euros for full ownership of Delovoi Standard Ltd., plus another 6.7 million euros to pay off Vedomosti’s licensing debts to its foreign shareholders.
When Kudryavtsev mentions “other assets,” he is clearly referring to the 3.2 million euros he spent to acquire Sanoma’s rights to the magazines Season, Menʼs Health, Womenʼs Health, National Geographic, and The Harvard Business Review, and the newspaper The Moscow Times. Demyan Kudryavtsev did buy these publications in the same deal where he acquired his initial third of Vedomosti, but he did so through another company — MoscowTimes LLC — and even now the magazines he still owns belong to another company called “Yasno Publishing.” These assets have no connection to Vedomosti.
How much could Kudryavtsev have earned on deals involving Vedomosti
What Kudryavtsev says
“We bought Vedomosti and everything connected to it for 13 million euros and ‘outweighed’ it [from one company to another] not for 24 and 25 [million euros]. With the exchange rate, we correctly valued Vedomosti at 20 or so million. The difference was 7 million [euros],” Kudryavtsev told Dozhd, explaining how the Cypriot offshore company Delovoi Standard Ltd. (now owned by his wife) sold its shares in Vedomosti to the Russian company “Arkan Investment” (also owned by Kudryavtsev’s wife), in order to comply with a Russian law that took effect in 2016.
Meduza’s response
Again, this is untrue. Documents show that the total cost of acquiring Vedomosti “and everything connected to it” was 10.4 million euros. When Delovoi Standard Ltd. sold its stake in Vedomosti to Arkan Investment, paperwork filed by the latter enterprise clearly valued the newspaper at 24.2 million euros — roughly twice the appreciation Kudryavtsev claims (14 million euros, not 7 million euros).
What Kudryavtsev says
“Here’s why [there was a price difference]: the company had objectively appreciated and we wanted to get this on the record, either to attract investors in Vedomosti or for its future sale,” Kudryavtsev told Dozhd. He named several reasons why the newspaper was suddenly worth so much more money. For example, before it was sold, Vedomosti paid licensing fees to its foreign shareholders in the amount of 18 percent of its revenue. “After getting rid of the royalties, the asset was worth more,” explained Kudryavtsev, saying that he estimated 18 percent of revenue would amount to 160 million rubles (now roughly $2.2 million) annually. He and his partners intended to own Vedomosti for about three years and then put it up for sale.
In other words, the absence of licensing fees would be worth about 480 million rubles (now $6.5 million) for the time that Kudryavtsev planned to own the newspaper. Kudryavtsev says an outside appraiser used these criteria to reassess the value of “Business News Media” (Vedomosti’s publisher).
Meduza’s response
From a business point of view, this is a logical explanation for Vedomosti’s revaluation. Forbes asked an analyst who appraises similar assets to estimate how much Vedomosti appreciated after the cancelation of its licensing fees, and the analyst concluded that the newspaper likely gained between 800 million and 1 billion rubles (today roughly $12.3 million).
Arkan Investment paid the offshore company Delovoi Standard Ltd. an extra 740 million rubles ($10.1 million) for its shares in Vedomosti (an amount that compares to the 10 million euros Kudryavtsev spent to buy the newspaper from its foreign owners in 2015). In other words, when it sold Vedomosti to Arkan Investment in early 2016, Kudryavtsev’s offshore company recouped the money spent to buy the publication from its foreign owners and simultaneously earned an additional 1 billion rubles from the newspaper’s revaluation.
What Kudryavtsev says
He also told Dozhd that Business News Media (Vedomosti’s publisher) received at no additional charge the rights to The Harvard Business Review and a conference-organization business held by The Moscow Times.
Meduza’s response
The Harvard Business Review and the conference-organization business in question were transferred to Business News Media in May and December 2016, several months after the 24-million-euro deal and could not have influenced the valuation used in this transaction.
What Kudryavtsev says
“We didn’t pocket the difference in costs. We paid the money to Delovoi Standard Ltd. and during its liquidation the Western company transferred this money to us [as its shareholders], and we returned this money to Arkan Investment as a property contribution,” Kudryavtsev told Dozhd.
Meduza’s response
Delovoi Standard Ltd. was dissolved in 2017. Both that year and the next year, Arkan Investment reported no property contributions. Throughout this time, Arkan Investment’s debts only grew, never once decreasing.
The origins of the loan issued by Rosneft’s bank
What Kudryavtsev says
Kudryavtsev confirmed to Dozhd that his family’s company Arkan Investment borrowed money from Gazprombank in 2016. He says he needed the money not to acquire Vedomosti but to develop it: “The purpose of this loan was to buy or create something that would make Vedomosti a platform, either for advertising or finances or services. [...] When I came to Bosov with this idea, he said he would arrange financing for this development.” Kudryavtsev and his partners considered buying “Premium Publishing,” which had purchased the rights to the Russian editions of Cosmopolitan, Good Housekeeping, Esquire, Grazia, and other publications from the Finnish company Sanoma in early 2016.
Meduza’s response
Documents obtained by Meduza show that Arkan Investment immediately spent the lion’s share of its Gazprombank loan (1.74 billion rubles of 2.6 billion rubles) to acquire the rights to Vedomosti from Kudryavtsev’s offshore company. Records also show that Arkan Investment repaid 740 million rubles (about 10 million euros at the time) of its loan before the end of the year. The loan may have been received as funding for the failed acquisition of Premium Publishing, but most of the money was nevertheless used to buy Vedomosti.
What Kudryavtsev says
Regarding the loan from Rosneft’s Russian Regional Development Bank, to which Arkan Investment (Vedomosti’s current owner) is now pledged through the company “Konstanta LLC” (which bought the debt from Gazprombank), Kudryavtsev says he personally didn’t see a difference, though he attributes the idea to Dmitry Bosov.
“Dmitry restructured the debt from one bank to another affiliated company, to another state-owned bank. Gazprom owns one bank [note to readers: this is not technically true] and Rosneft owns the other. I didn’t pay any attention to this. It sounds silly and lame, but it’s true. From my point of view, there was no difference,” Kudryavtsev told Dozhd, saying that RRDB’s interest rate was low “but it wasn’t in exchange for any political influence.”
Kudryavtsev says the loan was repaid in 2019: “We didn’t spend it. The interest ran up and it grew to 30 million euros [about $32.5 million]. But the way we used it allowed us to repay it. [...] The debt is closed and that will be reflected in the next financial statement.” At the same time, Kudryavtsev says Arkan Investment repaid its debt to Konstanta LLC, but he does not know if that company in turn repaid its loan to RRDB. “If Bosov didn’t settle with RRDB, that’s another issue and I don’t know,” said Kudryavtsev.
Meduza’s response
Sources close to Vedomosti’s potential new buyers told the journalists who prepared the joint investigation about the newspaper’s ownership structure that they received no evidence that Arkan Investment has paid off its debts. Arkan Investment CEO Alexander Karpov and Konstana LLC CEO Igor Lavrukhin declined to speak to reporters about their companies’ loans. On May 15, however, Karpov confirmed to Meduza that Arkan Investment has in fact repaid its debt to Konstanta LLC, saying, “The information Demyan reported is [accurate].” Journalists at Meduza, The Bell, Forbes, and Vedomosti will review and verify these claims.
Demyan Kudryavtsev appears on the television network ‘Dozhd’
TV Rain
Who else might have purchased Vedomosti but “couldn’t reach an agreement with the newsroom”
What Kudryavtsev says
A month ago, when the deal to sell Vedomosti to Konstantin Zyatkov and Alexey Golubovich was already underway, Kudryavtsev went to Bosov and asked him to buy the newspaper. “Maybe you can intervene. I mean you see the nightmare that’s happening,” Kudryavtsev says he told Bosov, who allegedly agreed to acquire the newspaper and was supposedly ready to let the newsroom choose its own new editor-in-chief. But Kudryavtsev says Bosov intended to impose certain editorial restrictions “because he was a patriotic businessman and wasn’t ready to suffer.”
Kudryavtsev says Bosov and Vedomosti’s editor-in-chief, Dmitry Simakov, spent four days discussing the terms, but they failed to reach an agreement and he ultimately declined to buy Business News Media (Vedomosti’s publisher). “The newsroom said it wouldn’t compromise, even a little bit. Bosov called me and said: sell it to anyone you want,” Kudryavtsev told Dozhd.
Meduza’s response
Simakov says he was never part of negotiations to sell Vedomosti. He told Meduza that neither he nor the other editors are even capable of such bargaining. The “small compromise” that Bosov demanded from the newspaper’s journalists, it turns out, was to prohibit criticism of figures like Vladimir Putin. “Of course, it was impossible to accept such conditions,” says Simakov. “I’m grateful to Bosov that he understood this and didn’t insist.”
Why it’s impossible to sell Vedomosti “on the open market”
What Kudryavtsev says
Vedomosti can’t be sold on the open market right now because of Roskomnadzor, Russia’s federal censor, Kudryavtsev told Dozhd: “We can’t sell Vedomosti to anyone who can’t get approved by the authorities to buy it. It’s physically impossible because the deal has to be confirmed and formalized by Roskomnadzor.” Ultimately, only the Kremlin can determine the newspaper’s next owners.
Meduza’s response
Russian law has no official procedures for “confirming and formalizing” the sale of newspapers (Meduza verified this with a source close to Roskomnadzor). According to the source, the only regulatory procedure for such deals is a review of the publication’s ownership structure to corroborate compliance with Russia’s limits on foreign ownership. This audit happens after a deal is complete, however, and cannot be an obstacle to concluding the transaction.
“Nobody knows who” is responsible for the Vedomosti investigation
What Kudryavtsev says
In his interview with Dozhd, Demyan Kudryavtsev complained repeatedly that no one knows who owns Meduza or The Bell (two of the four outlets responsible for the joint investigation about Vedomosti’s ownership structure) and said it’s unclear how these media outlets are financed.
Meduza’s response
Galina Timchenko owns Meduza and Elizaveta Osetinskaya owns The Bell. This is public information. Both news outlets are funded from commercial and non-commercial sources. Forbes Russia, which also took part in the joint investigation, belongs to the businessman Magomed Musaev. Vedomosti, both the subject of the story and a participant in this investigative work, formally belongs to Yvette Voronova, an employee of the television station TNT.
Read more
- ‘Conspiring with these people’ How Rosneft trapped one of Russia’s top business newspapers and left the nominal owner with $15.1 million in profits. A joint investigation.
- It's business time: Max Seddon dissects the controversy at ‘Vedomosti’ and reviews the nature of financial reporting in Russia today
- Journalism, not heroism ‘Vedomosti’ editor-at-large Maxim Trudolyubov reviews the fate of his own newspaper and other authoritative news outlets
- The Kremlin’s man at ‘Vedomosti’? Sources say the controversial new chief editor at a top business newspaper was handpicked by the Putin administration
Text by Tatiana Lysova and Anastasia Yakoreva with assistance from The Bell and Forbes
Translation by Kevin Rothrock
Kudryavtsev’s partners
Martin Pompadour is a former top executive and current adviser at Rupert Murdoch’s “News Corp.” From 2000 to 2008, he chaired the board of directors for News Corp’s Central and Eastern Europe division, when the company invested in Russia. At the time, Vladimir Voronov was president of “News Media,” a joint venture between News Corp. and the Russian oligarch Boris Berezovsky.
Russia’s 2016 media law
Adopted by the State Duma in 2014 and implemented two years later, the law restricts foreign ownership of mass media outlets (print, television, and radio) to 20 percent. Prior to this legislation, print publications were exempt from any foreign ownership limits and the ceiling for foreign ownership of television and radio outlets was 50 percent.
Licensing fees
Vedomosti paid this money to FT, WSJ, and Sanoma for the use of its own trademark, which those companies owned.
Dmitry Bosov
The late president of “ALLTECH GROUP” and co-owner of the “Sibanthracite Group,” and one of the world’s largest metallurgical coal producers. Forbes ranked him the 86th richest person in Russia with an estimated worth of $86 billion. On May 6, 2020, he was found dead at home with a self-inflicted gunshot wound. Investigators believe he either committed suicide or mishandled his firearm.
Zyatkov and Golubovich
Konstantin Zyatkov is a senior executive at the “Nasha Versiya” publishing house and Alexey Golubovich is the managing director of the “Arbat Capital” investment firm. In late April, Golubovich backed out of the deal to buy Vedomosti, leaving only Zyatkov. In an interview on May 1, Kudryavtsev vowed to follow through on the sale to Zyatkov, who later confirmed to Forbes that he’ll do what is necessary to complete the transaction as agreed.