President Boris Yeltsin on Friday issued a decree closing down the state-owned Ostankino television company and transferring its tax privileges and equipment to Russian Public Television, or ORT, just weeks after auditors uncovered serious financial wrongdoing at Ostankino.
Legislators in the State Duma, who have long protested the creation of ORT to take over the nationwide Channel 1 from Ostankino, saw the decree as no more than an attempt to cover up theft and corruption at the television station.
"This is like a thieving store manager setting his store on fire to cover up the tracks," said Igor Yakovenko, head of the Duma's press subcommittee and a member of the liberal Yabloko faction, linking Yeltsin's decree to the report. "The corruption in ORT is 100 times more serious than it was at Ostankino -- the whole scale is different."
The merger of the two companies will effectively recreate the television monolith that was split up April 1, when the broadcasting side of Os ORT what ultranationalist Vladimir Zhirinovsky recently called "a nuclear weapon" when it comes to political campaigning, and many deputies have been concerned that banks with ties to pro-government parties have seized control of the channel.
That nervousness increased recently, when ORT pulled off the air both the hard-hitting "Versii" nightly news program and a semi-monthly spot by Alexander Solzhenitsyn.With the acquisition of Ostankino's production facilities, ORT's ability to control the airwaves can only grow further.
Yeltsin's decree came just as the Duma was about to ask the Prosecutor General's Office to open criminal cases against current and former Ostankino managers mentioned in a report by the Counting Chamber, Russia's top auditing body set up last year to keep the government's budgetary spending under control.
The chamber's chairman, Khachim Karmokov, wrote in a Sept. 13 letter to the Duma that billions of rubles of budgetary funds allocated to Ostankino from 1993 to 1995 were unaccounted for, had gone to private production companies set up by Ostankino officials or had been spent on junkets for Ostankino managers.
The accusations ranged from charges that Alexander N. Yakovlev, former president of Ostankino and now chairman of ORT, abused expense accounts to ones that Ostankino officials in charge of program purchasing bought shows from private companies they themselves set up.
"I would not link the dissolution of Ostankino to the audit," said Anatoly Sosnovsky, ORT's deputy director for public relations. "ORT was set up to do away with corruption at Ostankino, and now certain politicians are trying to tie the audit to ORT for the purposes of their election campaigns."
But the auditors hit out at ORT as well as Ostankino, saying that when ORT was set up in December 1994, the state lost financial control of the station. Although the government is supposed to hold 51 percent of the ORT stock, the audit showed that Natsionalny Kredit bank, technically a 5 percent shareholder, paid for 50 percent of the company's charter capital of 10 billion rubles ($2.2 million), bringing the state's share down to a non-controlling 50 percent.
Sosnovsky said in an interview Friday that Natsionalny Kredit, owned by Oleg Boiko, a financier who actively supports Prime Minister Viktor Chernomyrdin's electoral bloc, Our Home Is Russia, put in money for the other shareholders with loans that have since been repaid.
Yet the other ORT shareholders are companies whose reputation precludes the need for such small loans: the natural gas monopoly Gazprom, which also backs Our Home, Stolichny Savings Bank, Alfa Bank, Bank Menatep, United Bank, LogoVaz and Mikrodin trading companies and a number of other firms.
Sosnovsky confirmed that Natsionalny Kredit put in more than 49 percent of the charter capital, but that had been a "technical mistake" and the extra money was used as an "additional credit" to ORT rather than part of the charter capital.
Sosnovsky said, the state-owned shareholders, including the now-defunct Ostankino, Itar-Tass, the Moscow TV center and the State Property Committee, did not receive a bank credit and have not paid for their stock.
"A private television company that is no longer controlled by the state has a monopoly on [Channel 1] airtime," auditor Pyotr Chernomord wrote in his report. "However, it works mostly by illicitly using state property and budgetary funds."
Sosnovsky confirmed the auditors' report that since ORT went on air April 1, it has run up a debt of 10 billion rubles to the television center for the use of its equipment and at least 25 billion rubles to Ostankino, a 9 percent shareholder in ORT, for production equipment and programs. But the Yeltsin decree appears to write off the debt to Ostankino and simply hand over its resources to ORT.
The report also says Yakovlev failed to repay about 2,000 French francs (less than $400) in company funds he drew as an advance in February 1995 to go to Portugal and France where he attended a function called "The 4th Session of the Independent Commission for Population Matters and Living Standards."
But peccadilloes like Yakovlev's junket were nothing compared to the corruption the Counting Chamber report uncovered in the program purchasing practices of Ostankino. The auditors said Ostankino bought the lion's share of its programs from private production companies set up by the very officials responsible for purchasing.
An Ostankino arm called Experiment, the report says, bought programs from the VID production company, where Andrei Razbash, head of Ostankino's purchasing group, was one of the founders and shareholders. Razbash, who later left VID, is now an official at ORT.
The auditors said Ostankino paid up to $60,000 per program to such outside producers, while its own programs never cost more than 24 million rubles. The audit also pointed to manipulations with the currency rates used in paying outside producers.
Yakovlev, a renowned politician who is now among the top 12 candidates for Duma seats for the liberal bloc Russia's Democratic Choice, issued a written statement in response to the auditors' report. He called the Counting Chamber "incompetent" and said Ostankino's best producers had set up their own companies because of Ostankino's low salaries and bad creative climate.
?President Boris Yeltsin on Friday signed a decree increasing government support for electronic media, AP reported.
The decree gives the status of national companies to the three largest television stations in Russia and to three radio stations, the news agency said quoting Itar-Tass.
The government-owned Petersburg-Channel 5 TV station and two large radio stations will be allowed to become semi-private companies, a step expected to enhance broadcasters' independence and improve funding, it said. Smaller, government-owned regional stations got the status of "culture organizations," which entails various economic benefits, the report said.
The decree also instructed the government to set special low tariffs for the transmission of television and radio broadcasts.
Legislators in the State Duma, who have long protested the creation of ORT to take over the nationwide Channel 1 from Ostankino, saw the decree as no more than an attempt to cover up theft and corruption at the television station.
"This is like a thieving store manager setting his store on fire to cover up the tracks," said Igor Yakovenko, head of the Duma's press subcommittee and a member of the liberal Yabloko faction, linking Yeltsin's decree to the report. "The corruption in ORT is 100 times more serious than it was at Ostankino -- the whole scale is different."
The merger of the two companies will effectively recreate the television monolith that was split up April 1, when the broadcasting side of Os ORT what ultranationalist Vladimir Zhirinovsky recently called "a nuclear weapon" when it comes to political campaigning, and many deputies have been concerned that banks with ties to pro-government parties have seized control of the channel.
That nervousness increased recently, when ORT pulled off the air both the hard-hitting "Versii" nightly news program and a semi-monthly spot by Alexander Solzhenitsyn.With the acquisition of Ostankino's production facilities, ORT's ability to control the airwaves can only grow further.
Yeltsin's decree came just as the Duma was about to ask the Prosecutor General's Office to open criminal cases against current and former Ostankino managers mentioned in a report by the Counting Chamber, Russia's top auditing body set up last year to keep the government's budgetary spending under control.
The chamber's chairman, Khachim Karmokov, wrote in a Sept. 13 letter to the Duma that billions of rubles of budgetary funds allocated to Ostankino from 1993 to 1995 were unaccounted for, had gone to private production companies set up by Ostankino officials or had been spent on junkets for Ostankino managers.
The accusations ranged from charges that Alexander N. Yakovlev, former president of Ostankino and now chairman of ORT, abused expense accounts to ones that Ostankino officials in charge of program purchasing bought shows from private companies they themselves set up.
"I would not link the dissolution of Ostankino to the audit," said Anatoly Sosnovsky, ORT's deputy director for public relations. "ORT was set up to do away with corruption at Ostankino, and now certain politicians are trying to tie the audit to ORT for the purposes of their election campaigns."
But the auditors hit out at ORT as well as Ostankino, saying that when ORT was set up in December 1994, the state lost financial control of the station. Although the government is supposed to hold 51 percent of the ORT stock, the audit showed that Natsionalny Kredit bank, technically a 5 percent shareholder, paid for 50 percent of the company's charter capital of 10 billion rubles ($2.2 million), bringing the state's share down to a non-controlling 50 percent.
Sosnovsky said in an interview Friday that Natsionalny Kredit, owned by Oleg Boiko, a financier who actively supports Prime Minister Viktor Chernomyrdin's electoral bloc, Our Home Is Russia, put in money for the other shareholders with loans that have since been repaid.
Yet the other ORT shareholders are companies whose reputation precludes the need for such small loans: the natural gas monopoly Gazprom, which also backs Our Home, Stolichny Savings Bank, Alfa Bank, Bank Menatep, United Bank, LogoVaz and Mikrodin trading companies and a number of other firms.
Sosnovsky confirmed that Natsionalny Kredit put in more than 49 percent of the charter capital, but that had been a "technical mistake" and the extra money was used as an "additional credit" to ORT rather than part of the charter capital.
Sosnovsky said, the state-owned shareholders, including the now-defunct Ostankino, Itar-Tass, the Moscow TV center and the State Property Committee, did not receive a bank credit and have not paid for their stock.
"A private television company that is no longer controlled by the state has a monopoly on [Channel 1] airtime," auditor Pyotr Chernomord wrote in his report. "However, it works mostly by illicitly using state property and budgetary funds."
Sosnovsky confirmed the auditors' report that since ORT went on air April 1, it has run up a debt of 10 billion rubles to the television center for the use of its equipment and at least 25 billion rubles to Ostankino, a 9 percent shareholder in ORT, for production equipment and programs. But the Yeltsin decree appears to write off the debt to Ostankino and simply hand over its resources to ORT.
The report also says Yakovlev failed to repay about 2,000 French francs (less than $400) in company funds he drew as an advance in February 1995 to go to Portugal and France where he attended a function called "The 4th Session of the Independent Commission for Population Matters and Living Standards."
But peccadilloes like Yakovlev's junket were nothing compared to the corruption the Counting Chamber report uncovered in the program purchasing practices of Ostankino. The auditors said Ostankino bought the lion's share of its programs from private production companies set up by the very officials responsible for purchasing.
An Ostankino arm called Experiment, the report says, bought programs from the VID production company, where Andrei Razbash, head of Ostankino's purchasing group, was one of the founders and shareholders. Razbash, who later left VID, is now an official at ORT.
The auditors said Ostankino paid up to $60,000 per program to such outside producers, while its own programs never cost more than 24 million rubles. The audit also pointed to manipulations with the currency rates used in paying outside producers.
Yakovlev, a renowned politician who is now among the top 12 candidates for Duma seats for the liberal bloc Russia's Democratic Choice, issued a written statement in response to the auditors' report. He called the Counting Chamber "incompetent" and said Ostankino's best producers had set up their own companies because of Ostankino's low salaries and bad creative climate.
?President Boris Yeltsin on Friday signed a decree increasing government support for electronic media, AP reported.
The decree gives the status of national companies to the three largest television stations in Russia and to three radio stations, the news agency said quoting Itar-Tass.
The government-owned Petersburg-Channel 5 TV station and two large radio stations will be allowed to become semi-private companies, a step expected to enhance broadcasters' independence and improve funding, it said. Smaller, government-owned regional stations got the status of "culture organizations," which entails various economic benefits, the report said.
The decree also instructed the government to set special low tariffs for the transmission of television and radio broadcasts.