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By John Helmer in Moscow

Laundering a man’s reputation is a little like laundering money. The more you churn the facts, the harder it is to remember them; the less damage they can do; and the whiter the outcome.

It is for this reason that Russia’s oligarchs have spent so much effort bringing defamation cases against their critics and investigators in the courts of foreign countries. The countries chosen are those where the oligarchs have set up their homes and families; and also where their bankers issue their loans, or where an oligarch can leverage his local business interests against advertising-dependent newspapers. As defamation law varies from country to country, favouring the press in the United States, and the oligarch in the United Kingdom, the preferred choice for a reputation laundering operation is London. There, it is not only the courts, but also the English newspapers, not to mention the English prime ministry, which specialize in reputation laundering.

The greatest disadvantage that a certified Russian oligarch has in the libel courts of the United States is that he is a public person, not a private figure. According to US defamation law, the free-speech provisions of the constitution, and the way in which the US courts have interpreted both, if a good man is deemed to be so well-known in his activities, through government, market or media, a great deal that is bad about him may be reported but not qualify as libel, according to the US standard. For oligarchs who have spent small fortunes at American public relations companies to promote themselves in the US as internationally respected public figures, it is difficult for them to turn around and confide to a US judge that they are nothing but humble individuals unseeking of fame, and undeserving of notoriety. One oligarch, who will argue this before a judge in a US federal court very soon, has amassed the voluminous record of 11,500 pages of English-language press reportage, not to count the Internet, in the last four years. If the judge rules that a man with that record is a public person, then the truthfulness of the bad that has been published about him need not be proven by those who have reported it. Rather, the bad but good oligarch must prove malice in the reporting about him, or reckless disregard for the truth. For oligarchs accustomed to paying for good reports, and assuming that bad reports must be paid for by a rival or enemy, this is a legal standard that is next to impossible to meet. Accordingly, no oligarch is likely to be libeled, according to a US court. But on the other hand, no US judge is likely to get around to adjudicate the truthfully bad from the truthfully good in an oligarch’s reputation.

While England and the US are the countries which the Russian oligarchs depend on the most, there are a handful of other places where they like to live, make and spend their money. In Germany and France, for example, Russian oligarchs have applied for courts to adjudicate libel in their favour against newspapers, generally business newspapers influential in the bank suites. The mere threat of litigation is often enough to persuade even the most respectable of media managements to avoid informing their readers about the risks – real, perceived, suspected, rumoured — of doing business with Russian oligarchs.

This public form of due diligence is serious and problematic enough for at least one oligarch to have gone to the trouble, two years ago, of hiring an internationally reputed detective agency to prepare a report on his reputation. While the contract documents show that the oligarch agreed to pay a large sum of money for the job, the cost of his bankers’ suspicion that he might be a bad man to lend money to was substantially greater, as the detective agency pointed out in the correspondence. And so, the detective agency was hired; a code name was coined for the project; and a large advance payment was invoiced.

To be sure, the detective agency had a reputation of its own to guard. And so, there was a certain awkwardness, on the detective agency’s part, in taking pay from the oligarch for what was mutually agreed to be an “independent” evaluation of all the bad the man was reputed to have done; and for the oligarch to then distribute the detectives’ report to those he suspected of believing he was a bad man. Enquiries were therefore promised of officially independent law enforcement and intelligence agencies around the world, to which the detective agency claimed access. Unfortunately, for the reputation of the detective agency and its report, the latter must have resisted the enquiries that were sought. They told the detectives nothing the latter managed to include in their report.

The internationally reputable detective agency could hardly be drawn into a US court, because the effect of its report would be to substantiate the very point an oligarch must try to deny – that he is a public person with international notoriety. As a private foreign enterprise purporting to investigate official Russian agencies of government, the report would be inadmissible as evidence in a Russian court.

And so, when the report was dispatched recently to a French court, its existence begged the question of what the French government and its intelligence agencies knew about the subject matter. Even if French jurisprudence is inclined to be generous to oligarchs on the distinction between public persons and private individuals, and strict in the requirements for veracity by reporters in print, many centuries have passed since a French court accepted as evidence the opinion of a private foreign enterprise gathering and selling information for money.

For any man to put his reputation on trial in a court of law, there is always the risk of adding to his notoriety, and thus, win or lose on the legal issues, to reinforce the impression that he is the very bad man he has been made out, so wrongly, to be. After all, it is not the exoneration, or esteem, of the man in the street, or the reader of newspapers, that an oligarch is seeking when he goes to court. His target is a bankers’ head of risk, the chairman of the credit committee, the insurer of officers and directors’ liability, the independent auditor, and the legal drafter of his next prospectus for an unsecured Eurobond or American Depositary Share. That’s a small, sophisticated audience, who know the unprintable truth. They are not greatly influenced by guilty or innocent verdicts in libel cases.

Note to readers : on November 22, at the 17th Court of Paris, Mikhail Fridman will present his case for defamation against Les Echos, France’s business newspaper. On December 21, Judge John Banks of the federal US district court of Washington, DC, will hear oral argument on a defendants’ motion for summary judgement in the case of OAO Alfa Bank, ZAO Alfa Eco, Mikhail Fridman and Pyotr Aven v. Center for Public Integrity, Knut Royce and Nathaniel Heller.

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