Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Izvestia Loses in U.S. Libel Judgment

A small-time U.S. court has hit the Izvestia newspaper with a big-time judgment of $33.5 million, on grounds that the paper besmirched the reputation of a young Russian banker with a spotty past.

A seven-person jury in Arlington County Circuit Court found that Izvestia libeled Alexander Konanykhine by calling him everything from a crook to a bigamist. The jury awarded Konanykhine $3.5 million in compensation for damages to his reputation and $30 million in punitive damages.

Konanykhine's Washington-based attorney, J.P. Szymkowicz, said the county court had jurisdiction because English-language editions of Izvestia are available in Arlington f One Stop News, an Arlington-based company, is Izvestia's official American distributor f and also because the articles can be read in Arlington, among other places, thanks to Izvestia's Internet web site.

Izvestia did not put forward any legal representation at the trial, although the paper's former U.S. bureau chief, Vladimir Nadeine, was named in the suit and mounted his own separate defense. Nadeine succeeded in having all libel charges against him dropped.

Izvestia's press secretary, Alexei Kovalchuk, said Wednesday the paper did not contest the suit because it had not received a formal summons to it.

As to whether Izvestia would appeal to a higher U.S. court, Kovalchuk did not say.

"At this moment, Izvestia recognizes no lawsuits against it in the United States or any other country," Kovalchuk said in a telephone interview Wednesday evening.

Szymkowicz disputed that. He said papers informing Izvestia about the libel case were hand delivered to its Moscow offices.

The newspaper now faces a seemingly serious legal challenge.

In an e-mail interview, Konanykhine said collection agencies were offering to bid for ownership of his court judgment, on the assumption they could use it to seize Izvestia's assets in Russia and the United States. He also said Russia's political clans were showing interest.

"I have already received a bid from a representative of a major Russian political force which was interested in acquiring my rights to collect," Konanykhine wrote. "It is my understanding that he is considering taking over Izvestia by enforcing the court order in Russia."

Asked if that powerful man might be media and intrigue master Boris Berezovsky f one possible candidate, as Berezovsky has in recent months busily consolidated his media holdings to include Kommersant newspaper f Konanykhine did not reply.

Such a scenario is eerily reminiscent of the events of 1997, when in a few months Izvestia went from being arguably Russia's best newspaper to a docile property run jointly by LUKoil, the nation's largest oil company, and the Uneximbank financial house.

In the earlier part of this decade, ownership control of Izvestia rested largely with the newsroom f a rare situation in any nation for a leading daily paper, and one that did not last.

Soon LUKoil had bought shares from some journalists and established itself as a major owner.

Then in April 1997, Izvestia reprinted a short, poorly sourced article from the French newspaper Le Monde to the effect that then-Prime Minister Viktor Chernomyrdin was worth $5 billion. Both Chernomyrdin and LUKoil were outraged, and the resulting battle set off a struggle for control of the paper.

Izvestia editor Igor Golembiovsky tried to bring in Uneximbank as a counter-balance to LUKoil's growing influence, but instead LUKoil and Uneximbank teamed up to purge much of the newsroom. Golembiovsky, after three decades with Izvestia, went on to launch Noviye Izvestia, apparently on Berezovsky's money; former Uneximbank vice chairman Mikhail Kozhokin is Izvestia's editor today.

Konanykhine said his lawyers would first pursue the assets of Izvestia's U.S.-based holdings. These include Izvestia-Russica-Information-USA, Inc., based in New Mexico, which translates the newspaper's contents online, and One Stop News.

If hitting those companies won't satisfy the $33.5 million judgment, Konanykhine said, his lawyers could also pursue Izvestia owner LUKoil, which owns gasoline service stations and other business interests in the United States.

If Izvestia has had a tortured and confusing time in the 1990s, so has Konanykhine.

According to The Washington Post, Konanykhine was such a high-flyer in the early 1990s that he attracted the attention of the CIA f where he was dubbed "The Kid" and identified as a friend of and fundraiser for President Boris Yeltsin.

The Post has also reported that U.S. and Russian law enforcement experts believe Konanykhine was in charge of moving billions of dollars out of Russia for the KGB, an allegation Konanykhine denies vehemenently.

The Post and Izvestia have linked Konanykhine, a former vice president of Bank Menatep, to various machinations. These range from an Antigua-based financial institution called European Union Bank that U.S. and British law enforcement agencies believed was involved in illegal activity, to the embezzling of $8 million from a commercial structure Konanykhine administered called the Russian Exchange Bank.

Konanykhine fled Russia in September 1992, saying KGB-connected thugs had taken over his business empire here. He turned up in the United States, where among other things he set up the European Union Bank. But in June 1996, he and his wife Yelena Gracheva were arrested in an unusual joint Russian-U.S. operation at their Watergate apartment.

In Konanykhine's account, "the Russian government fabricated a criminal case against me in order to conceal its own corruption and to penalize me for exposing its corrupt nature."

Konanykhine was charged with visa fraud and held without bond. Russian law enforcement sought his extradition, and both the FBI and the INS concurred.

But it is a far from clear-cut affair. After Konanykhine had spent a year in a Virginia jail, a U.S. district court judge ordered him freed.

In his August 1997 ruling, Judge T.S. Ellis III said he found "credible and somewhat disturbing" indications that the INS and FBI had a political agenda for getting Konanykhine sent back to Russia. He theorized that the INS and FBI were bending over backwards to please the Russians because the FBI had just opened a Moscow field office.

This week's Arlington court rulings, meanwhile, found that Konanykhine had been libeled in a December 1996 Izvestia report alleging embezzlement from the Russian Exchange Bank.

While Konanykhine was in jail, he was interviewed by Nadeine, Izvestia's U.S. bureau chief. The result of that interview was a September 1997 article under the headline "The Gambler" that accused Konanykhine of bigamy and bribery f the second Izvestia report on Konanykhine, which was also ruled libel by the Arlington court.