Alexander Lebedev cashing out of Russia

By bne IntelliNews November 9, 2012

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Russian tycoon and owner of the UK's Evening Standard and The Independent newspapers Alexander Lebedev has been selling off assets recently in a move that looks like he is leaving Russia.

The flamboyant Lebedev, thought to be worth $1.1bn by Forbes magazine, is maybe best known for a punch-up when he knocked real estate businessman Sergei Polonsky off his chair during a live TV debate on Russia's NTV channel in September 2011.

The former professional boxer and ex-KGB spy was later charged with hooliganism for that incident, but has never been close to the Kremlin, which sees him as a quisling and has pressured him to sell some of his more strategic assets. In August, he seemed to give in, announcing that he was pulling out of Russia due to the "relentless pressure" by the Kremlin. "I simply have no other choice, because over the past three years my business was being purposefully and deliberately destroyed by Directorate K of the Federal Security Service (FSB), the Economic Security Service of Russia," Lebedev wrote on his blog post at the time.

On November 5 Lebedev announced he will shut all the regional offices of his cash cow, the National Reserve Bank (NRB), sell off the real estate as well as 75% of the bank's loan portfolio, worth RUB16.8bn ($542m), according to Russian business daily Vedomosti citing Lebedev.

The same week he sold a 1.5% stake in Russian national air carrier Aeroflot on the open market for a reported RUB40 per share, and also told the Russian press he intends to unload his remaining 11% stake if he can. Lebedev already sold part of his holding in the airline last summer, but the speed of his retreat from Russia seems to be gathering pace.

At the end of 2011, Lebedev's National Reserve Corporation (NRC) agreed to swap its 25.8% stake in aircraft leasing company Ilyushin Finance for several aircraft and a debt restructuring, starting his withdrawal from the aviation sector. He then sold his two radio stations, Pioner Radio and Dobriye Pesni, to billionaire Mikhail Gutseriyev for $14m in March this year. And in October this year he sold his 49% stake in failed budget carrier Red Wings to an unnamed company registered in Cyprus. Coincidently, within weeks of the deal the state announced new rules that will make it significantly easier for budget airlines to operate in Russia and EasyJet is supposed to add a Moscow-London route starting next year.

Lebedev's TV punch-up may be the catalyst that has accelerated his selling after the state brought charges earlier this year of "a politically motivated grave violation of public order" that could earn him a long spell in prison.

The outsider

Lebedev's years as a senior KGB officer should have been a golden pass into Russia's ruling elite and while it got him started, he has always remained a Kremlin outsider.

His career began in banking when NRB was a client bank of state-owned gas monopolist Gazprom in the early 1990s. However, despite his good connections with Russia's elite, he never benefited from these ties overtly. As a fluent English speaker he was often on TV in the 1990s overtly criticising Boris Yeltsin's government, much to the Kremlin's chagrin.

The 1998 financial crisis nearly wiped Lebedev out, but once the boom got going in about 2004 he re-emerged on the national stage and became very active in the aviation industry, taking a large minority stake in Aeroflot and setting up aviation leasing company Ilyushin Finance.

He also told this correspondent in an interview at the time he personally suggested to Vladimir Putin, then as now president, setting up the United Aviation Company, Russia's aviation national champion - an idea the Kremlin picked up but without Lebedev's participation.

Later in the decade he made a nuisance of himself as a Duma deputy between 2003 and 2007, again vocally criticizing the government, especially through his co-ownership of liberal Russian newspaper Novaya Gazeta. He is also a contributor to opposition leader Alexei Navalny's Anti-Corruption Fund, which has received donations from other reform-minded senior businesspeople.

But seeing the writing on the wall, Lebedev began actively preparing an escape route. In January 2009 he bought the troubled Evening Standard for £1 and began his move to London, adding the Independent a year later for the same price.

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