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. Last Updated: 07/27/2016

Sberbank on Prowl for Negative News

Reporters with a scoop better think twice before publishing it or they may find themselves in court -- even if the story is well-sourced and accurate.

That's what two Moscow dailies, Vedomosti and Vremya Novostei, discovered last week when a court upheld a complaint by Sberbank, costing the newspapers 500 rubles each.

The crime? Printing what Vadim Kleiner had to say about alleged mismanagement at the state savings bank. Adding to the novelty -- and some say worrisome nature -- of the case is the fact that Kleiner is a member of Sberbank's board of directors.

What's more, as an independent director representing minority shareholder Hermitage Capital Management, Kleiner, by speaking out against what he says are practices bad for shareholder value, was just doing his job.

But the Moscow Arbitrage Court didn't see it that way. It ruled that Kleiner's opinions -- which were published by the two newspapers, as well as in others, including Vedomosti's sister publication, The Moscow Times -- were damaging to the reputation of Sberbank.

"That the court makes a decision on whether a certain opinion is right or wrong contradicts the practice of the European Court of Human Rights," said Vladimir Entin, director of the Center for the Defense of Intellectual Property Rights.

In a statement issued after the verdict, Sberbank said it "will not tolerate unjustified criticism and in the future will firmly and consistently defend its interests by all means, including legal actions."

As for Kleiner himself, the state-controlled bank went after him on three issues.

His first crime, Sberbank argued, was saying publicly that the bank was issuing loans at below-market rates. The second crime was that it had issued loans to senior employees. And the third was that the bank had too many employees and that it could increase its annual profit by $350 million if it cut 30 percent of its staffing costs.

Sberbank has some 200,000 employees and assets of roughly $26 billion, giving it an asset-per-employee ratio of about $132,000. Citibank, by comparison, has $3.9 million in assets per employee.

On the first count, the judge ruled that Sberbank had issued large loans to large companies at 18 percent interest instead of the 25 percent charged by other major banks because there were probably no other clients in the marketplace for loans of that size.

Kleiner, in the words of the judge, failed to prove that the bank could increase profits by lowering costs. She said the defendant provided no evidence of an improper balance between personnel expenses and workload.

"The judge is now applying a new type of economics in which there seems to be no relationship between costs and profits," Kleiner said after the verdict.

Finally, documents provided by the plaintiff did not indicate that it had given any loans to top executives in the amounts publicly stated by Kleiner, the judge ruled. Nor did Sberbank exceed the amount, as a percentage of its total assets, that it is legally allowed to lend to its own employees, she ruled.

In making the claims for which he was sued, Kleiner had cited Sberbank's annual report, audited to international accounting standards, and the comments of the auditor of that report, but he never accused Sberbank of violating the internal lending cap.

The two newspapers, which were co-defendants with Kleiner, were found guilty of "disseminating defamatory information."

However, the court did not order the newspapers to print a correction, according to Dmitry Shishkin, a lawyer for a division of Independent Media, which publishes Vedomosti.

"Sberbank's lawyers failed to properly file a corresponding claim," he said.

All three defendants plan to appeal, and Kleiner said he plans to take the case all the way to Strasbourg, France.

"We'll take it to the European Court of Human Rights if we fail to find justice in Russia," he said.

Vedomosti and Vremya Novostei both said they would join Kleiner in his quest.

"If we follow the logic of the court's decision, soon we will not be able to publish anything," said Anna Karetnikova, a lawyer for Publishing House Vremya.