The author is the longest serving foreign correspondent covering Russia. He published his fascinating memoirs in December of 2018. They are full of insights into what has really been going on in Moscow over the past 30 years. RI wrote about it here. He is the author of 12 books, 3 of them about Russia.
Stephen Adler (image below), the American chief executive of Reuters news agency, has ordered into publication three US Government-directed stories targeting the Russian oil company Rosneft — the first in mid-April, and two published over the past week. Adler’s operations support US coup plans in Venezuela and US sanctions against Rosneft and its chief executive, Igor Sechin.
The three publications — the first already corrected by the news agency; the second commissioned from a writer outside the company; the latest missing its byline or author’s name — have triggered dismay among Reuters’ reporters worldwide. A New York source claims Adler’s promotion of US Government-sourced propaganda violates the Reuters Trust Principles which have regulated the international news agency since 1941.
The first two Reuters principles Adler is accused of breaking are that “Reuters shall at no time pass into the hands of any one interest, group, or faction; [and] that the integrity, independence, and freedom from bias of Thomson Reuters shall at all times be fully preserved.”
Bloomberg sources, commenting privately, say they are delighted at the damage to their rival’s reputation. A Bloomberg reporter, briefed by the same sources as Adler’s, repeated one of the Reuters stories against Rosneft last week.
A US investment banker says he’s thinking of shorting his shares of Thomson Reuters, the parent media corporation listed in Toronto and New York, on the calculation that their 63% growth over the past year is now peaking.
On June 14 Reuters published a lengthy report on the use of Rosneft corporate jets to fly Chief Executive Sechin to seaside holiday locations over the past four years. “Using publicly available data, Reuters tracked 290 Rosneft flights between January, 2015 and May, 2019. Of those round trips, 96 took place during Russian public holidays or between Friday lunchtime in Moscow and Monday morning. Since the start of 2015, Rosneft corporate jets traveled eight times to Sardinia’s Olbia airport, 15 times to the Maldives and seven times to Spain’s Palma de Mallorca, according to the flight tracking data from planefinder.net, flightaware.com, opensky.network.org and flight-data.adsbexchange.com.”
Reuters headlined the report “exclusive”. No reporter’s name was identified.
The report found that 42 of the 290 tracked flights “correspond[ed]” to Rosneft events but “Reuters found no public information released by Rosneft or the Russian authorities about official events at those destinations, although the company does not always disclose information about its meetings.” Sechin himself was not detected on any of the flights, “but Reuters did photograph a man closely matching his description boarding a Rosneft plane at Palma da Mallorca airport on Aug. 6 last year.”
Photographs at Palma de Mallorca, Spain, taken, Reuters says, by a staff photographer from “a public thoroughfare”, showing a Rosneft-operated Bombardier-6000 and Sechin. The photographer’s name is not published.
The sting in the publication is the accusation that it is “part of a pattern of wasteful spending by Rosneft, said Vladimir Milov, Russian deputy energy minister until 2002. Milov is now a critic of the Kremlin, arguing that Putin’s circle is using Russia’s natural resources wealth for their own benefit.” The Rosneft code of conduct is also cited for prohibiting “the use [of] its property and assets for purposes other than intended or for personal ends or gain.”
Through private social media accounts which Reuters opened, Sechin’s former wife Olga Sechina, a friend of hers, and a senior Rosneft executive, his wife, son and friend were identified at the same holiday locations at the same time as the corporate aircraft records show landings and takeoffs.
Investigations of Sechin’s compensation, apartments, houses, and tastes in other luxuries, including motor yachts, have appeared often in the Russian press. Sechin has sued in local courts to obtain retractions and deter further reporting.
In its latest report, Reuters said “a source close to the Rosneft board of directors said no clause in Sechin’s contract allowing private flights had been put before the board for approval.” In April, when Reuters says it was working on the story, the company replied that “no private transport of family members was carried out at the expense of the company.”
Rosneft reacted to the Reuters report in press releases issued on June 11 and June 14. Both are in bureaucratic Russian; they have not been translated on the company’s English website. Sechin’s press spokesman, Mikhail Leontief (right, with Sechin), a ex-journalist himself, does not speak English. In his first statement, Leontief said the company’s “administrative expenses are carried out according to the approved corporate standards”. He also said “the [Reuters] ‘news agency’ has stopped being mass media and turned into a disinformation group serving the tasks of the intelligence agencies of interested states. This, in fact, exempts the Company from the need to respond to the requests of ‘pseudo-media’.”
Rosneft did respond again — after Reuters put its story in print. “Reuters Agency has lost signs of mass media and turned into a serving division of the interested foreign intelligence agencies,” Leontief’s second release declared. “Information published by the ‘news agency’ contains strong indications of comprehensive shadowing with use of technologies of the special services [and] the hacking of closed accounts in social networks not only concerning the Chief Executive Officer of the Rosneft Company I.I. Sechin, but also members of his family and even their social circles; that is intervention both in official activity of the Company and in private life whose inviolability is guaranteed by the Constitution of the Russian Federation.”
On the issue of whether Sechin is violating his employment contract by taking holiday trips on the company tab with family and friends, Leontief’s statement said: “The labor agreement of the Chief Executive Officer of Rosneft I.I. Sechin provided [him] with transportation service and family members accompanying him on official trips and issues. Besides, the protocol of a number of actions with partners of the Company provided for the participation of family members with them.”
Leontief added the company is now “considering the issue of legal protection of the rights which have been violated.” No lawsuit has been issued yet.
Reports of spending abuses by executives of public companies are common in the international business media. The most notorious of the current ones is the Japanese prosecution of Carlos Ghosn, the former chief executive of Renault and Nissan. In April 2015, during President Vladimir Putin’s Direct Line national broadcast, he replied to a question about Sechin’s salary, he started by defending confidentiality but ended by recommending voluntary income disclosure from senior executives of state-controlled companies in line with the required income and asset reports of state officials; click for that story. Sechin then released details of his income.
Putin will be addressing the country again in his Direct Line broadcast later this week. Sechin and Leontief believe the timing of the Reuters reports is part of the US-directed campaign to sanction the company and Sechin, and to intensify pressure on European and other governments not to do business with them, nor allow Sechin to take holidays abroad. In his June 14 release, Leontief noted “the pressure placed on the Chief Executive Officer of Rosneft I.I. Sechin is synchronized with activation of [US] sanctions actions involving the countries in which the Company works.”
Inside Reuters, journalists don’t doubt the accuracy of the reported holiday trips on Rosneft aircraft. Most Russians are in no doubt either, as reported in Levada Centre polls, that oligarch-led companies and figures like Sechin exploit their political and economic power to benefit themselves. Most Russians also believe the domestic courts have been corrupted by Kremlin-allied figures and will not enforce unlawful enrichment provisions in the statutes.
At the same time, in the open warfare conditions commenced by the US against Russia since 2014, Russian public opinion is firm in its hostility towards the US, foreign mass media, and their information war campaigns.
Reuters journalists acknowledge that whether or not there is truth in the recent series of Reuters reports on Rosneft and Sechin, there are also signs of the info-war campaign by Washington against Moscow. Adler, the chief executive at the New York headquarters, is thought responsible. Adler’s growing compensation has also been a point of conflict with his reporters whose pay and benefits have been trimmed or who have been laid off. Cost-cutting measures, transferring traditional US editorial and rewriting work to low-paid Asian offices, have also been blamed on Adler. Adler’s pay has been doubling since he first joined Thomson Reuters in 2010.
No report of executive and directors’ pay can be found in the most recent financial report filed by Thomson Reuters with the US Securities and Exchange Commission. This report indicates that in 2018 revenues earned by the Reuters News division of the parent corporation came to $370 million; after a reorganization of its news and financial service units, there was a 3% decline in “organic revenues reflecting lower custom content and news agency revenues.” The total amounted to just 7% of the corporation’s total revenues; only 2% of its earnings.
Source: https://www.sec.gov/ The report also breaks down by geographic region where Reuters is making its money as a news publisher. Out of $370 million in its total revenue, $158 million (43%) was drawn from the US; $59 million (16%) in Asia; $30 million (8%) from the UK; and $141 million (38%) from Europe, Middle East and Africa. In revenue terms, Reuters has become a much more American than an international news agency; last year the US revenues more than doubled over $74 million reported for 2017.
The pattern which has drawn Rosneft’s charge of pseudo-media, and is now splitting the roughly two thousand Reuters news agency staff between the American and non-Americans was first investigated in this April report. This was the culmination of a series of publications by Reuters, purportedly from a Venezuelan reporter, Marianna Parraga, who is based in the US and Mexico. Here is her November 2018 report, headlined: “Exclusive: Rosneft’s Sechin flies to Venezuela, rebukes Maduro over oil shipments.”
The Reuters allegation in Parraga’s sequel story in April was that Rosneft was illegally violating US sanctions against the Venezuelan state oil company, PDVSA. The Reuters management was obliged to correct its claims on April 19.
Rosneft had called that Reuters report an “outright lie…purposeful misinformation, legalization of rumours…invent[ed] information fabricated for the purpose of causing damage to the Russian economy, Russian companies, and the Russian state.” Welcoming the correction in Moscow, Rosneft called it “an unprecedented admission that we were right in our evaluation of Reuters’ article.” Reuters’ spokesmen in New York and London were asked to clarify the sources and veracity of Parraga’s coverage of Rosneft in April, as well as her earlier report on Rosneft in Venezuela, published last November. They refused to answer. For more details of the Rosneft business in Venezuela, read this.
Left to right: Marianna Parraga, Reuters reporter based in Houston and Mexico City; Heather Carpenter, Thomson Reuters spokesman in New York; and Joel Ivory-Harte, Reuters PR manager for Europe. The two spokesmen were asked to clarify sources and evidence for the November and April stories by Parraga. About the November story, they were asked: “Reuters claimed that Rosneft chief executive Igor Sechin had secretly visited Caracas. The claim was published that this information came from ‘two sources briefed on the conversation’. Mr Sechin says the report was untrue; other evidence suggests he was elsewhere. Since you do not characterize your sources; since your reporting now appears to have originated in Washington; and since the US is at war with Venezuela, please clarify if the ‘two sources’ were providing US war material, and how Reuters verified the material before publishing.” The two spokesmen refused.
The Reuters retreat from its Venezuelan publications was followed on June 10 by a story headed “Exclusive: American banker and Putin ally dealt in access and assets, emails reveal”. This was a lengthy report by Catherine Belton.
A British national who lives in the UK, Belton was a reporter for the Moscow Times and then the Financial Times (FT) Moscow Bureau for several years. Her closeness to Oleg Deripaska and Suleiman Kerimov was reported at the time. She went on to defend in print runaway banker Sergei Pugachev who has been charged with fraud, embezzlement, perjury and bail-jumping in Moscow and London; follow the two of them here.
Belton last reported for the FT in January 2017. She was not a Reuters staff reporter when commissioned to do the newly published story; that was a “one-off”, an informed source has explained. Belton had reported on the same case in 2008; then as now, Belton took the side of Mikhail Khodorkovsky and his managers at Yukos against Rosneft, and in the fight between two groups of US businessmen over billions of dollars of assets, which remained in The Netherlands after Khodorkovsky was convicted and sent to prison, and after Yukos’s oil production assets in Russia were nationalized and taken over by Rosneft. For the earlier story, read this.
Left: Catherine Belton in a 20-year old photograph she publishes on her Twitter site; right, Bloomberg reporter Stephanie Baker. On June 10 – the same day as Belton’s story appeared in Reuters – Baker published an almost identical story with the same sources. In 2010 Baker’s reporting on Mikhail Prokhorov won her a Cat’s Paw award “for the athletic feat of reporting Mikhail Prokhorov’s all-win business career without detecting a single foul, penalty, or loss,”. Two years later, Belton won her Cat’s Paw award for “a presentation of the affairs of Suleiman Kerimov at the very moment he has been trying (failing) to cash out his stake in Polyus Gold with a merger into Polymetal.” Click to read.
The Reuters report by Belton attempts to revive the Khodorkovsky claims that he was illegally stripped of his Yukos business by Putin and Sechin, when the latter was Putin’s deputy chief of staff and the dominant policymaker for the oil sector. But the story itself focuses, not on the Yukos-Rosneft fight, but on $1.5 billion in cash and central European pipeline assets held by Dutch-registered Yukos Finance and associated trust entities, all of them under the jurisdiction of the Dutch courts. An auction in Moscow conducted by the Yukos bankruptcy trustee and liquidator, Eduard Rebgun, on August 15, 2007, drew the bidding of three Americans – Robert Foresman, Stephen Lynch, and Richard Dietz. The source of the money for their bid is uncertain, and may never have been paid over. Belton’s Reuters report intimates that Rosneft was the master conspirator behind the scheme.
The legal right of Foresman, Lynch and Dietz to take the Dutch assets was disputed at the time, and ever since, by the Khodorkovsky group, led by his former American managers Bruce Misamore, Steven Theede and David Godfrey. Rebgun himself declared after the auction: “The new buyer has got this share with all existing judicial disputes, possible financial and economic risks and other costs, that is, he has bought what is called a special situation. Now he will solve all the problems arising.”
The Khodorkovsky group and the Foresman group have been litigating against each other in Amsterdam. The Khodorkovsky group has also gone to the High Court in London to charge the latter with conspiracy to rig the August 2007 auction and to defraud the Khodorkovsky beneficiaries of the Yukos assets. The London case started in November 2015. Serving the writs and other procedural obstacles have delayed a trial and judgement on the evidence. Only one court record has been published so far; that’s a judgement to confirm that Lynch, who had been chased with court papers from Florida to Lebanon, had been properly served.
In the court report of that judgement, issued almost two years ago in July 2017, the English judge said “it is unnecessary to say much about the underlying claim. The claim concerns the sale by auction of assets of Yukos Oil. It is said that Mr. Lynch and others acted unlawfully with regard to that auction and are liable to compensate the Claimants. Mr. Lynch accepts that he participated in the auction but has not addressed the claim against him because his application is not concerned with the merits of the claim but with the question of service.”
Left to right: Mikhail Khodorkovsky; Steven Theede; David Godfrey. Theede and Godfrey represent the Yukos entities in The Netherlands as confirmed here. Khodorkovsky appears to be financing their litigation. Sources say it is unclear who is financing the legal expenses of Foresman and his colleagues.
The Reuters publication by Belton appeared just before the High Court was scheduled to start hearing the contending claims. Her report is based on emails which have been gathered in evidence by the Khodorkovsky side’s lawyers. Belton’s report does not identify either Rosneft or Sechin as involved; Sechin did not move from the Kremlin to the company until May 2012. It is by a network of association and influence that Belton and Reuters try to implicate them in the auction for the Dutch money. Belton’s target is Matthias Warnig; at one time he employed Foresman in Moscow. The email evidence supplied to Belton suggests Foresman and his associates worked with Warnig to prepare for the Dutch asset auction and then rewarded him with direct cash payment and shares in the Renaissance Capital investment bank.
“Warnig”, reported Belton, “served as an officer in East Germany’s Stasi secret police at the same time as Putin was a KGB officer in Dresden in the late 1980s. Warnig [right] has said they first met in the early 1990s in St Petersburg, when Putin was that city’s deputy mayor. Today Warnig is chief executive of Russia’s Nord Stream 2 gas pipeline to Europe. He also sits on the boards of several Russian state-controlled firms, including oil giant Rosneft. He served for 12 years on the board of Bank Rossiya, sanctioned by the U.S. Treasury as the ‘personal bank’ for senior Russian officials.” Like Rosneft, Nord Stream-2 is a current target of US Government sanctions operations.
In the Reuters publication, Warnig was, and still is, the lynchpin connecting Rosneft, Sechin, and President Putin to the Dutch asset takeover, employing Foresman, Lynch and Dietz as front-men. “In 2007,” Belton wrote, “Warnig helped broker crucial backing from Rosneft for a consortium that was bidding for Yukos’ Dutch assets in an auction…documents in the email cache and depositions of [Foresman] consortium members indicate that Rosneft was closely involved with the consortium in the deal.”
According to Belton, “the suit alleges Foresman, as vice-chairman of Renaissance Capital, played a key role in paving the way for the consortium to knowingly participate in a rigged auction for the Yukos subsidiary. It alleges the foreign investors who formed the consortium stood to make enormous personal gain, and seeks tens of millions of dollars in damages.”
In the Bloomberg version of the same evidence provided by the Khodorkovsky group’s lawyers, Baker reported: “Foresman played a key role in a Kremlin effort to mask Rosneft’s attempted takeover of Yukos assets by involving foreigners to make the auctions look legitimate, according to court documents in the upcoming trial.”
No press reports have followed from the London court proceedings. Rosneft was not asked for comment by either Reuters or Bloomberg.
Russia Insider's Summer Fund Drive is LIVE!
The more you give, the bigger our impact. It's that simple.