He owns London's leading newspaper, which today goes free, and has been a guest at No 10, but who is Alexander Lebedev? We talk to those closest to him about his rise to prominence
The Guardian, Monday 12 October 2009
Alexander Yevgenyevich Lebedev's first foray into the British social scene, with his cheeky smile and laceless Converse trainers, was like a breath of fresh air to a nation that tended to associate visiting Russian businessmen with assassination bids and hyper-inflation in the football transfer market. A former KGB spy he may have been, but he was so charming that his first major social outing – a £1.3m party he hosted for the Raisa Gorbachev Foundation at Althorp, the childhood home of Princess Diana – attracted Salman Rushdie, Elle Macpherson, Quincy Jones and a smattering of minor royals.
Last year his white-tie charity gala dinner switched to Hampton Court Palace, and guests included Lady Thatcher, Naomi Campbell and Elton John. And how he loved all the fuss: "When you're sitting at a dinner with Tom Wolfe on one side and Tom Stoppard on the other, then obviously it's enjoyable."
In the last 12 months Lebedev has bought the London Evening Standard, been invited to No 10 to meet Gordon Brown, and is said to be considering the purchase of both the Independent and the Independent on Sunday. But who is this man? Why did he join the KGB and what did he do when he was an agent in London? Is it true, as the Russian saying goes, that there is no such thing as an ex-spy? How did he make so much money in the 1990s in Moscow, a time and place that so closely resembled the Wild West? And what is the nature of his relationship with Vladimir Putin and the modern Russian state?
In an attempt to answer these questions, the Guardian has traced and questioned people who have known Lebedev for many years, including some who were very close to him. We have also put a series of questions to Lebedev himself and, although he has spoken many times of the value of transparency, for months he attempted to avoid answering most of them.
Lebedev was born in December 1959, the son of two members of the Soviet nomenklatura: Evgeniy Nikolaevich, a professor at the Bauman Technical University, and Maria Sergeyevna, an English professor at Moscow's elite State Institute of International Relations. Lebedev graduated from the Institute in 1982 after studying English, economics and finance. In 1984 he graduated from the KGB's Krasnoznamenniy Institute. Asked why he chose to join the KGB, Lebedev suggests he had little choice. "Choose is not the right word – agreed," he says.
Lebedev was posted to London in 1988, ostensibly as a third secretary at the Soviet Embassy in Kensington. One of his contemporaries recalls: "He came as a junior diplomat. After a few days it was easy to establish that he was from the service, and that he didn't come from our usual department, because he didn't have the usual training."
Lebedev, this man recalls, was a quiet and earnest individual, remaining serious even during the boozy parties that the Soviet envoys and spooks regularly threw at their apartments in Earls Terrace, a row of Georgian townhouses off Kensington High Street. "He had a brilliant memory, like a computer. As a little show he would recite from memory whole pages of a satirical novel called The Twelve Chairs. But he always wanted to prove that he was the best, that he was more intelligent than other people, more cultured, better educated. I had a sense that he always felt undervalued. And he was lonely."
One of Lebedev's KGB contemporaries – a man who was eventually expelled from the UK – recalls him as "a very average" spy. "He was not a remarkable or influential agent. He was just doing his stuff: some financial or economic analysis. He is very talented in business, and as an economist, but as a person he is somewhat maverick and eccentric." On the other hand, Leonid Zamyatin, who was the Soviet Union's last ambassador to London, from 1986 to 1991, says: "I remember Alexander Lebedev very well. An extremely diligent, very clever man. It was a pleasure to work with him. I do not know what he did in intelligence, it is something you had better ask him. As a diplomat, he was responsible for following the political situation in the UK."
Lebedev has always insisted that he did little more than prepare economic analyses. Pressed about this he eventually conceded that his work in London also involved monitoring British "political forces" and "high level meetings", arms control negotiations, trade talks and Nato. He still maintains, however, that he was "too small a fish" to have rubbed shoulders with past or current British politicians. What Lebedev does not mention is that some of his contemporaries say he left the KGB under something of a cloud. For reasons that remain unclear, he is said to have come under investigation by the agency's counter-intelligence division, both in London and in Moscow. He was recalled to Moscow and resigned from the KGB a short while later.
His contemporaries offer various explanations for this. One person says that he expressed his anti-Soviet views a little too forcibly. "It was his big mouth. He was too critical, too liberal – and too arrogant." Another possibility is that he had embarked upon a business career while still serving in the KGB.
Lebedev insists that he left Russia's foreign intelligence service because "there seemed to be no interest in foreign intelligence product inside the country", and the world of business offered greater challenges. Oddly, when asked whether he embarked upon his business career while serving in London, Lebedev emphatically insists he did not. Yet he also says that he left the Russian foreign intelligence service at the end of 1992. And Companies House records show that the young spy was setting up a company in London as early as May 1992. Boris Pankin, the first post-Soviet Russian ambassador to London, who now lives in Stockholm, says: "I know nothing about any of my employees at that time having any business interests. This would be a violation of diplomatic rules. Of course, I would not approve it either now or then."
Even amid the collapse of the Soviet Union, this would have been a serious matter. Another of Lebedev's former associates insists: "He told me that his problem was that he had set up a business while serving in the KGB. He said he was very frightened when he was recalled to Moscow. He thought he might be going to jail."
In the event, any internal KGB's investigation was quietly shelved. According to some contemporaries, Yevgeny Primakov, the future Russian prime minister, who was then director of foreign intelligence - and who knew Lebedev through his daughter — intervened to protect him, although Lebedev denies this.
Whatever the reasons for his departure, Lebedev has remained close to his old friends in the KGB. Not only have some become close business associates, but he also, until recently, attended the KGB's annual get-together at the Kremlin on Chekist Day, 20 December. Asked why he never publicly condemns the Soviet KGB that he served, he avoided the question for more than two months before eventually insisting that there was a difference between the KGB's crimes in the Stalinist era and foreign intelligence work in the 80s and 90s. "There is nothing I did during that time of which I have any reason to be ashamed."
Almost immediately after leaving the KGB, Lebedev turned up in Lausanne, where he had been offered work with a Swiss bank.
The Guardian has asked him why his switch from intelligence work to finance appears to have been so seamless, whether he was helped by contacts made during his KGB service, or whether he was still officially a spy when he began his business career. Lebedev responded by insisting that his early business ventures had not been a success.
What is clear is that Lebedev made a lot of money on the bond market: he was one of the few people in Russia after the collapse of the Soviet Union who possessed a clear understanding of highly complex debt security deals. Perhaps unusually, he had gained a PhD dedicated to such deals while serving in the KGB.
After making money buying and selling South American and African bonds – high risk, high rewards deals which, by his own estimates, earned him around half a million US dollars in commissions – he bought his own small finance house, the National Reserve Bank (NRB) in 1995.
He teamed up with two of his old neighbours from Earls Terrace: Andrei Kostin and Anatoliy Danilitskiy, who had both been diplomats at the Soviet embassy, just as the starting pistol was being fired on a race to transform Russia. The current chairman of the NRB, Yuri Kudimov, is another veteran of London, although he had returned to Moscow three years before Lebedev's arrival in the UK, after being unmasked as a KGB spy, masquerading as a journalist.
Old Soviet enterprises were being snatched up by a small number of private individuals; people were experimenting with capitalism for the first time – and some were making extraordinary fortunes. One company that they formed in London was called The Milith plc.
Lebedev, Kostin and Danilitskiy quickly forged highly profitable alliances with some of the emerging economic potentates of this new order. One of them was Andrey Vavilov, the deputy finance minister, who was later found to have embezzled hundreds of millions of dollars from state funds.
There is no suggestion that Lebedev, Kostin, Danilitskiy or Kudimov were involved in this matter – and Lebedev insists: "I did not pay any commissions to Vavilov." Nevertheless, according to a report by the Russian parliament's anti-corruption commission, Vavilov played a key role in the deals that allowed the bank to expand.
NRB also worked closely with one of its major shareholders, Gazprom, the gigantic Russian gas company – so closely that a former bank executive says it was effectively launched to serve the company's interests. "We had a privileged position vis-a-vis the Ministry of Finance in this particular area of foreign debts trading," one close former colleague adds.
That position changed almost overnight, he added, when Lebedev and Vavilov fell out. Some time after this falling out – as was perhaps inevitable in the world of 1990s Muscovite business – a number of problems arose for NRB. During 1996 and 1997, for example, there were gun and grenade attacks on Lebedev's offices, in which one man was wounded. The police never identified the perpetrators.
"Lebedev never dealt with criminals," the close former colleague insists. "It was a matter of principle. We never had a relationship with organised crime, because once you ask for assistance you can never get out of it. As Lebedev and other colleagues near to him were ex-service, we would rather go to them and ask for help because it was much easier."
Incidents such as the gun attacks were rare, he says. "Everyone knew the NRB shouldn't be touched because of its involvement with the intelligence service. Ordinary gangsters would say: 'Ah, better not to go there'."
There was one particularly messy dispute, however, with a business associate in the US. Igor Fyodorov was a former officer in the Soviet Union's submarine fleet who had settled in Virginia. When Fyodorov ran off with more than $7m of the NRB's money, Lebedev pursued him through the courts. But at the same time a number of Russians, and American private detectives, also began looking for him in the US. Fyodorov and his wife went into hiding in Texas, with the help of a private detective called Donald Danielson.
Fyodorov counter-claimed against Lebedev and the bank in the US courts, and also contacted the FSB, one of the successors to the KGB, to complain that his life was being threatened. In an attempt to help Fyodorov and his wife, Danielson swore an affidavit which was sent to the Prosecutor General of Russia, Yury Skuratov, in which he said: "I became convinced that these two people were genuinely fearful for their lives." He retained an English barrister practising in New York, William Pepper, who said in another affidavit, lodged with the New York state supreme court: "I have reluctantly formed the opinion that this activity by Defendant (NRB) is very much business as usual. I believe this to be the case because in a recent visit to Moscow, I spent five hours in the office of the General Prosecutor of the Russian Federation, where I learned that the chairman of the defendant — Alexander Lebedev — and another senior officer ... were under investigation for criminal activity. At the time, hereof, that investigation is continuing." That investigation never resulted in charges being brought.
A Russian journalist called Yulia Pelekhova began to make her own inquiries about the dispute, travelling to the US to question Fyodorov, and subsequently complained that employees of a security firm called Konus, which was working with the NRB, were making threatening telephone calls to her newspaper, Kommersant. Shortly afterwards, while she was away from home, a 7.62 sniper round was fired through her living room window, lodging in the opposite wall. Lebedev is dismissive of any suggestion that he was involved in any attempt to intimidate Pelekhova, pointing out – correctly – that she was later convicted of blackmail over an unconnected matter.
"This respected journalist Yulia Pelekhova was in fact arrested and spent a year in jail. I never fired at her apartment. She accused me of various crimes, amongst them poisoning her horse and stealing her car."
Lebedev then suggested that elements within the FSB were behind the affair. "The case is the typical of way the law-enforcement structures here work: they protect felons, not their victims," he said.
Skuratov and his staff pressed on with their inquiry into the dispute with Fyodorov, who died earlier this year, despite Lebedev's protestations. Skuratov recalls that the investigation began with Fyodorov's complaint but quickly expanded. "Once one case started, other episodes come into the circle of attention too. Soon after my resignation the case was stopped. What I can say for sure is that Mr Lebedev used significant resources to counteract the investigation. His acquaintance with work for the special services let him use various methods." Some of his investigators realised they were being followed, he says, and information about his son, his home and a firearm that he possessed appeared on the internet. Technicians from the Ministry of Internal Affairs were asked to find out who was behind the posting, says Skuratov, and "due to a glitch on the part of those who were spreading this information on the internet", it was traced back to servers used by NRB's security advisors at Konus.
In the event the investigation went nowhere. Early in 1999 a government-controlled TV channel aired a grainy video which purported to show Skuratov cavorting in bed with a couple of prostitutes. Shortly afterwards the head of the FSB – one Vladimir Putin – held a televised press conference at which he announced that expert analysis had concluded that the man in the picture was Skuratov – an allegation that Skuratov denied.
Nevertheless, the country's chief law enforcement official, a man who had made clear his determination to shed light on wrongdoing in high places, was forced from office. At the time of his resignation he had far more weighty matters filling his in-tray than the NRB case, not least a probe into alleged corruption among some of Boris Yeltsin's close relatives. But the inquiry into Lebedev and Fyodorov was one of many that were quietly shelved, never to be reopened, once he departed.
Ten years on, Skuratov is something of a fan of Lebedev. "He gives quite a precise and unbiased description as far as the economic and political situation in Russia is concerned," he says. "I think I share certain opinions of his, for example he was saying that the results of the last elections were totally distorted." But does he believe Lebedev was involved in the video that triggered his downfall? "I can't confirm Lebedev was the man who organised the video. But as for his involvement in shadowing me and my family via Konus – this fact was proved during the investigation."
Asked whether he played any part in Skuratov's downfall – and about the way in which the prosecutor and his family were "shadowed", the Evening Standard's new owner says: "I wish I could boast about bringing down [Skuratov] bare-handed. I hope to have played a modest responsible citizen/journalist role in ferreting out facts, evidence, giving interviews and making public statements." In any case, the former KGB agent went from strength to strength once this episode was safely behind him. His business empire now embraces housing, boutique hotels, airlines — he owns around a third of Aeroflot, the part-privatised national airline — textiles, tourism, telecommunications and newspapers.
According to one ex-colleague, the assets under his control are now probably worth around $2bn. He says he has no liquidity problems, although earlier this year there were reports – which he denied – that he had been unable to pay journalists working for Novaya Gazeta, a newspaper he part-owns, and the German aviation authority withdrew his local airline's licence, citing "business problems". Those problems are now thought to be resolved, and most of his empire is said to be good shape.
In recent weeks he is said to have abandoned plans to dispose of a number of his assets. In particular, the NRB bank – whose registered London office, curiously, is the north London home of Alastair Tulloch, a solicitor who acts for him – is understood to be thriving, despite the recession. Although he spends most of his time in Moscow, he owns a stately home in the grounds of Hampton Court Palace, homes in Italy and France, and travels only by private jet.
Today Lebedev remains close to Kudimov, one of the original gang of four from Earls Terrace, Kensington, who helped him launch his business career, although he has fallen out with both Kostin and Danilitskiy. One person who knows all four men says that Lebedev's capricious nature makes him a difficult person with whom to maintain close business links. Indeed, when making inquiries about Britain's latest press baron, words like "erratic", "unpredictable" and "uncontrollable" crop up as frequently as "smart" or "astute".
"Alexander Yevgenyevich is a very talented and gifted man," said one person interviewed by the Guardian, "but sometimes he is very inconsistent in his actions."
Lebedev is widely reported to be close to Mikhail Gorbachev, who is the co-owner of Novaya Gazeta, and whom he hails as "one of the greatest politicians in the history of mankind", but Gorbachev seems a little cool at times. Asked whether he would make a few comments about Lebedev, Gorbachev's chief press secretary replied that the former president's "schedule is too full", and that although he was well disposed towards the Guardian, he would be more likely to talk to its journalists "if you had a more serious subject". Pressed further, the press secretary says: "They have some interests together, but not that much that Mikhail Sergeyevich would give an interview specifically about him. This is not interesting for him."
Nor is Lebedev any longer close to Putin, according to those who know him well, although they are said to have been allies during the time when Putin rose to power. Nevertheless, he remains one of the few prominent Russians who seems able to make personal attacks on Putin in public without fear of recrimination and, because of this, some have speculated that he is at the centre of some sort of double bluff: that he is actually the Kremlin's man, a licensed opposition figure who knows that he can say what he likes, within limits.
Not so, according to some who have been close to Lebedev. "Putin doesn't care too much what he says," says one. "Lebedev's regarded as being like a child in school trying to get attention," says another. "Or like a small dog barking — it's so childish."
This, according to some sources, partly explains his decision to buy the Standard, and may explain any purchase of the Independent titles. "Putin is always telling the oligarchs that they should go and invest in the west, and in Ukraine, instead of waiting for the west to come to Russia," one close associate says. "He says we should have footprint in the west. Lebedev wants to prove to Putin that he can control parts of the western media, in order to project a better image of Russia. He has said to me many times that this is his motive. It is not a commercial investment. It's all about proving a point to Mr Putin. He's saying: 'I've achieved it, you should commend me.'
"You have to understand that Lebedev is a liberal, but in reality he's not a supporter of the west. He's a typical Soviet person: he's a product of Soviet society."
So will this work, using his money to participate in Russia's strategic investment in key western industries? Will it win him the approval of Putin and the Kremlin that he is said to crave? Or could his high profile in the west have the opposite effect?
Lebedev says he has twice been offered protection by the FSB, once in 1997, and again last year, although he adds he remains untroubled by thoughts of any serious threat to his safety. Oddly, Lebedev is also under investigation by the FSB. It is said to be a discreet inquiry, which may come to nothing, but which may escalate.
Lebedev says he is aware that he is under investigation. "These things are standard here. It may mean nothing, it could be business games of some FSB mavericks, could be something more serious, for example 'the big man', irritated by my outspokenness. Qui vivra verra."