Oao Alfa Bank v. Center for Public Integrity
| Decision Date | 27 September 2005 |
| Docket Number | No. CIV.A. 00-2208(JDB).,CIV.A. 00-2208(JDB). |
| Citation | 387 F.Supp.2d 20 |
| Parties | OAO ALFA BANK et al., Plaintiffs, v. CENTER FOR PUBLIC INTEGRITY et al., Defendants. |
| Court | U.S. District Court — District of Columbia |
Plaintiffs are two Russian businessmen and their companies who have sued the defendants, a public interest organization and its reporters, for defamation for publishing an article alleging that plaintiffs have connections to organized crime and have engaged in narcotics trafficking. Defendants have filed a motion for summary judgment in which they argue, among other things, that plaintiffs are limited public figures, and that the evidence demonstrates as a matter of law that defendants did not publish the piece with actual malice. The Court agrees. Although defendants' actions are not beyond reproach, they do not rise to the level of actual malice that the Constitution demands in order to preserve a vibrant exchange of ideas on issues of public concern. For this reason, the Court grants defendants' motion for summary judgment on all plaintiffs' claims.
This case traces its lineage to the turbulent days of the dissolution of the former Soviet Union. When Boris Yeltsin assumed power in 1991, Russia lacked many of the institutions of a market economy and was in desperate need of capital. The United States and international financial institutions such as the International Monetary Fund were willing to provide Russia with financial aid, but only on the strict condition that the country agreed to implement a series of rapid market reforms. Yeltsin turned to a group of young economists and academics to implement the necessary changes to the Russian economy.
These reformers crafted a set of radical policies designed to privatize and liberalize the Russian economy at a quick pace. As the privatization campaign went into effect, it became evident that the transition of the Russian economy had been sabotaged by corruption and collusion. A group of individuals with close political connections to the Yeltsin government amassed enormous wealth and power through the wholesale transfer of prized state assets and shady deals with government officials. These tycoons, known as "oligarchs," rose to power based in large measure on their ability to navigate and manipulate the rules of a corrupt and lawless post-Soviet Russian economy. The government evinced little desire to enforce the rule of law, and organized crime syndicates rushed to fill the void, assuming a prominent presence in the new Russia.1 As the oligarchs grew their wealth through back-room deals, the rest of the country was thrust into a period of rampant poverty.2
The rise of the oligarchs and the deterioration of the Russian economy was the subject of intense discussion in the United States and the rest of the world. Policy makers debated the causes and the potential cures of the various problems gripping Russia. Western intelligence agencies grew increasingly concerned that the country was becoming a haven for money laundering, arms trafficking, and gun smuggling.3 The Director of the Federal Bureau of Investigation estimated in testimony before Congress that the Russian mafia had taken control of more than 70% of all Russian commercial enterprises and that most of the 2,000 banks in Russia were "controlled by organized crime."4 Private investors lost billions upon the devaluation of the ruble, reports surfaced that billions more in foreign aid had been diverted to private accounts overseas, and many called for a reassessment of the United States' and the International Monetary Fund's policies regarding the country. Russia's devolution into a "criminal-syndicalist state" and the proper response from the West was at the fore of policy discussions in the White House,5 the halls of Congress,6 think tanks,7 and in the press.8
Plaintiffs Mikhail Fridman and Pyotr Aven were two of the key players in the economic transformation of Russia.9 Fridman is the founder and Chairman of the Alfa Group, a business conglomerate that includes plaintiffs OAO Alfa Bank and ZAO Alfa Eco. Fridman was involved in the privatization of the Russian economy from the very beginning, when Alfa Bank won the first auction for a state-owned company, acquiring the Bolshevik Biscuit Factory. On the heels of Yeltsin's re-election in 1996, the Russian government placed the Tyumen Oil Company on the auction block. Alfa Group obtained 40% of Tyumen at a fraction of the company's value, allegedly relying on the company's allies at the highest levels of the Russian government.10 Several years later, Fridman obtained the remainder of Tyumen in another auction. Fridman leveraged his Tyumen holdings in a series of deals that expanded his fortune and his power, and Alfa Group now possesses significant interests in the oil and banking sectors as well as Russia's largest television network and a series of supermarkets. Aven Bank is the single largest privately owned bank in Russia. According to Forbes magazine, Fridman is the third wealthiest man in Russia, and one of the hundred richest people in the world.11
Aven was one of the handful of elite academics who Yeltsin chose to steer the country on a course to privatization.12 Yeltsin appointed Aven to be his first Minister for Foreign Economic Relations. Aven Dep. at 38:8-51:7. Aven was tasked in particular with addressing the considerable problem of Russia's foreign debt, and he used his position to speak out on economic issues and the administration's reform agenda. The Russian and international press reported on his words and actions closely.13 Following his departure from the ministry post in December 1992, Aven became the president of Alfa Bank, a position he continues to hold today. He owns a 15% ownership stake in Alfa Bank, Tyumen, and two telecommunications companies. Aven continues to write articles and speak to international bodies on economic reform in Russia, and he is approached twice a year with proposals to write a book about his time in the Yeltsin government. Aven Dep. at 62:20-63:25.
Fridman and Aven are recognized as two of the most powerful Russian oligarchs.14 They have maintained a close relationship to the highest reaches of the Russian government, and forged a series of friendships and alliances with Russian luminaries and politicians.15 In Fridman's words, they were "players in the oligarch games," amassing wealth and influence at an unprecedented rate.16 At critical points in Russia's history, they have stepped forward to direct the course of the nation's events. When Yeltsin was confronted with a coup attempt in the fall of 1993, Fridman and the other oligarchs were called to the Kremlin.17 Several years later, with privatization deeply unpopular and Yeltsin in danger of losing his bid for re-election to a communist, Fridman, Aven and the remainder of the oligarchs banded together to save the Yeltsin re-election campaign, installing a new campaign manager and (it is alleged) backing the re-election bid with money and support in the media outlets owned by the oligarchs.18 Two years later, Yeltsin recruited the oligarchs to serve as a sort of economic advisory counsel, and during a market crash several months later, the oligarchs backed the government and reassured a concerned public.19
In short, Aven and Fridman have assumed an unforeseen level of prominence and influence in the economic and political affairs of their nation.20 Russian newspapers coined a name for the leading oligarchs (Aven and Fridman among them) and the power they wielded: "semibankirschina," or the "reign of the seven bankers."21 The Financial Times in 1996 named Aven and Fridman as among the "group of seven businessmen and bankers that, according to one of their number, is now running Russia."22 As the Moscow Times put it: Sullivan Decl., Ex. 135 (June 3, 1998 Moscow Times article).23
Aven and Fridman have widespread access to the media and other channels of communications. They have given numerous interviews to Russian and international press, have published articles in Russia's leading newspapers, and have spoken to international audiences on the subjects of reform, corruption, and the Russian economy. Their media presence extends to the United States. Aven and Fridman have spoken to numerous influential organizations in the United States (such as the Keenan Institute and the Carnegie Endowment for International Peace), and Aven has been interviewed by American television news outlets, including ABC's Nightlight and CNN. Phillips Decl., Ex. 226, 227. The Alfa Group has also devoted millions to developing a public relations strategy that includes in-house press departments, an external public relations agency, a litany of press releases, and an English-language web site on which plaintiffs post their own articles as well as favorable press coverage.24
As a result of their positions of prominence and their media strategy, plaintiffs are the subject of extensive media coverage. An October 2003 search of an online news database for English language articles revealed more than 1,100 English language articles since 1990 that mention the name Mikhail Fridman, and more than 1,400 articles that include the name Petr Aven. Likewise, Alfa Bank has been the subject of 7,900 English language articles available...
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