RUSSIAN OLIGARCHS CAN RUN, BUT CAN’T HIDE

In October of 1812, when Napoleon began his withdrawal from Moscow, the initial mood of the French troops was much more optimistic than we suppose today.

Of fighting men, the French army was down to 95,000; but opposing them was scarcely the same number in the surviving Russian army. Buoying the high spirits of the French columns, however, was the extraordinary volume of civilians and vehicles engaged to carry the Russian booty back to Paris – up to 50,000 porters and servants, and as many as 40,000 wagons and carts. As is now well known, the vast jam of men, horses, vehicles, and treasure ground up the roads; clogged the bridges; exposed the army to Russian attack, and as winter temperatures fell sharply, turned the evacuation into one of the most famous routs in history.

The problem is much the same for the half-dozen or so men who accumulated fabulous treasure during their occupation of the Kremlin under President Boris Yeltsin, These men, the Russian oligarchs, can feel the winter approaching, and no matter how optimistically the booty they have seized may encourage them to feel, they are far from sure that they can hang on to this treasure, and at the same time fight off the growing number of counter¬attacks from Kremlin officials, government ministries, the tax authorities, federal and regional prosecutors, and the humblest of policemen.

Napoleon too thought he could stage an orderly evacuation to safe haven across the Russian border. What direction to take for the Russian oligarchs is just as problematic.

In a recent prosecution involving the conviction on corruption charges of a former Ukrainian prime minister, the United States government demonstrated that Washington, viewed not long ago by Mikhail Khodorkovsky and Vladimir Potanin as easy to lobby with money, and a safe haven to hang on to it, may be anything but that. US law enforcement agencies have made it impossible for some of their colleagues even to cross the border; while sensitivity to US money-laundering and racketeering laws has made the US banking system a risky place in which to move, let alone deposit large amounts of money. Since he acquired the Stillwater Mining Company of Montana a year ago, Potanin has discovered that his cashcow, Norilsk Nickel, Russia’s largest mining company, is now more methodically and transparently regulated by the US nSecurities and Exchange Commission than by any Russian government body. From the SEC reports, it is even possible to spot where and when Potanin and his companies are in violation of their borrowing covenants.

Oleg Deripaska, the controlling shareholder of Russian Aluminium (Rusal); Mikhail Fridman; head of the Alfa banking group; Victor Vekselberg of Tyumen Oil Company and Siberian Ural Aluminium (SUAL); and Vagit Alekperov, CEO of LUKoil, have all won recent US court judgements dismissing civil charges and billion-dollar damage claims against them. However, the US judges have ruled only that, on the evidence submitted, there was insufficient jurisdiction for the US courts to decide the merits of the case. Many of those judicial rulings are now on appeal, and could be overturned. But even if they are not, the warning to the Russian oligarchs is quite clear – don’t enter US jurisdiction, even if, as in Vekselberg’s case, he holds a US residency card.

The United Kingdom has so far proved to be more hospitable to oligarchs on the run. Boris Berezovsky has secured political asylum; Potanin has engaged Prince Michael of Kent; and Roman Abramovich, the Sibneft owner, has purchased the Chelsea football club and a PR agent from one of the London tabloids. Abramovich is not the first foreigner to be lured by the combination of bank directors, media proprietors, rent-a-titles, and political party treasurers who form what is known as the British establishment. What he is about to discover is that the hospitality with which they greet the initial billion-dollar cheques tends to wane, as the forensic bureaucrats catch up with the evidence of law-breaking, Even football teams turn out to be a form of pyramid gamble, in which larger and larger sums of cash are required to keep up the impression of winning, and paying dividends. Not so long ago, one of Greece’s most powerful entrepreneurs thought that acquiring a well-known Athens football club would help generate popular support for his ill-gotten wealth. But that didn’t save him from indictment on massive fraud, nor did his US friends protect him from handover to the Greek prosecutors, and a long stretch in jail.

Deripaska and his partner, Alisher Usmanov, have also discovered that their ability to turn the proceeds of their metal export operations from cash into London Stock Exchange-listed securities is limited, not by their cash supply, as by the resistance of the forensic bureaucrats. Usmanov, who occupies something lower than oligarch status in the shadow of his better endowed friends at Gazprom and LUKoil, convinced the Financial Times that he could, and should, take a board seat at the Anglo-Dutch steelmaker Corus. But he couldn’t convince the management of Corus, or several other London-based companies he has either courted or attacked.

France has a long tradition of welcoming Russian nmigrns, not all of them destitute. Fridman has availed himself of the opportunity to set up a residence in Paris for his wife and family. He has also applied to the French courts to silence his critics in the French financial press. But the French courts have also rejected the attempt by Deripaska and his allies to secure the extradition to Russia of Mikhail Zhivilo, the former Novokuznetsk aluminium smelter owner who has promoted most of the damaging litigation against Rusal in the courts of the US, Sweden, and elsewhere. France, it turns out, is generous with prime vacation real estate, while French banks like Societe Generale, BNP Paribas and Natexis have been liberal with loans. But the heirs of the Napoleonic Code are tough at taxing, and much quicker than they used to be at spotting and indicting official corruption. They aren’t what the Russian oligarchs need.

Even the banks of Switzerland are getting nervous these days at the windfall business which Khodorkovsky, Potanin and others have delivered to their private banking suites. Freeze injunctions, magistrate orders, document and personal arrest, and all the apparatus of international fiscal crime-busting have put a dent in the confidence the Russians had a decade ago in Swiss “neutrality”.

It has thus proved much easier for the oligarchs and their advisors to set up residences for their accountants from Gibraltar to Guernsey and Liechtenstein, from Panama to the British Virgin Islands and Nauru, than to find a safe place to live and keep their money for themselves. The more exotic the location, the more difficult it is for the oligarchs to be confident. Take, for example, the recent moves which Potanin and Vekselberg have made in the direction of South Africa. Because of their prominence in international mining, South African companies, which enjoy dual listings in London or New York, have become a target of opportunity for the oligarchs, and plans are afoot to swap cash and Russian shares into South African companies. Such schemes may require not only more cash than the oligarchs are anticipating, but also more approvals from the South African government than they have planned for.

Potanin has already cottoned on to the idea of lobbying the black political leadership and leading black entrepreneurs, using the link established decades ago between Moscow and Russian-speaking, Soviet-trained South Africans in the fight against apartheid. Vekselberg has been quietly promising money to small black-owned mineral exploration companies. It is one of the more exotic paradoxes of the withdrawal of the oligarchs and their wealth from Russia that men who grew rich on the destruction of the Communist Party and state are appealing to the solidarity of men, whose national liberation was backed and armed by that state.

CITIBANK REVEALS A SECRET ABOUT POTANIN

MOSCOW (Mineweb.com) — Doveryai, no proveryai. It’s a hoary Russian maxim, meaning “trust but verify.” US President Ronald Reagan often used it, never managing to get the pronunciation right, during his scripted appearances with Mikhail Gorbachev, then the leader of the Soviet Union. It was Reagan’s way of convincing the diehards at home that even if it was good policy for the US to sign agreements with its arch-enemy, Reagan wouldn’t trust the Soviets to live up to their obligations — unless there was an effective mechanism for verifying compliance. Of course, Gorbachev thought the same of Reagan and the Americans. But then, he was too desperate for the appearance of goodwill to make the reciprocal claim. Reagan’s Russian was supposed to convince the Politburo that they could trust Gorbachev. But that’s another story.

Below the heads of state, and outside the walls of government, the maxim has had even more force. This was especially so when, in August 1998, a group of Russia’s most powerful businessmen, the so-called oligarchs, arranged for the state to default on its bond obligations; to cut the rouble adrift from its expensive dollar mooring; and to allow the oligarchs to slip away from billions of dollars of their obligations and failed foreign exchange wagers. Mikhail Khodorkovsky and Platon Lebedev, who in 1998 controlled the Yukos oil company and Menatep Bank, haven’t exactly got off scot free from Menatep’s collapse. They are now in prison, and on trial for a range of crimes, although the Menatep default isn’t one of them.

Vladimir Potanin’s bank, then called Uneximbank, was another of the defaulters. Potanin replaced it with the freshly painted Rosbank sign, and as the head of Interros and controlling shareholder of Norilsk Nickel, he is much wealthier today than he was before the 1998 collapse. He hasn’t been charged with any crime, and if the newspapers he controls, including the Moscow Times, are to be believed, he is as blameless as the driven snow.

Citibank, the flagship of the New York-based Citigroup corporate empire, is not an institution that believes in blame. But its credit committee and legal department don’t readily approve lending $800 million to Potanin without knowing and trusting him. Sanford Weill is the chairman of Citigroup, and Robert Rubin is his advisor, as well as a member of the Citigroup board; Rubin was a US Treasury Secretary dealing with Russia a decade ago. They refuse to say if they have been in touch with Potanin within the past six months; that is, in the period preceding the decision by Citibank to issue the $800 million loan on March 29. Potanin’s spoksmen also won’t say if he, Weill and Rubin have been on speaking terms lately.

But for gosh sakes! If Doveryai, no proveryai. was good enough for Ronald Reagan, it is the least Weill, Rubin, their head of credit, and their legal counsel could do for Potanin, when he needed the cash in a hurry.

This is why the wording of the loan facility agreement between Citibank and Norilsk Nickel makes a textbook case of how American bankers aim to verify that a Russian oligarch like Potanin will pay his debts. Fortunately, US law and the regulations of the US Securities & Exchange Commission (SEC) require that Potanin and his corporate group, now the controlling shareholder of Stillwater Mining, a US company, require timely and comprehensive disclosures of their financial operations. That is why, for the first time, one of the largest Russian offshore transactions, and the largest-ever Russian borrowing from Citibank, have been disclosed in great detail to the US Government, and everyone else.

For those who want to read on, trust, but verify for themselves, here is the link to the SEC website where the documents, filed on April 7, can be read in full: Click here.

Potanin’s intention has been plain for some time. He is trying to move the mining assets he secured by rigged privatization almost a decade ago, beyond the reach of the Russian government to tax or retrieve. He has learned from Khodorkovsky’s fate – after the latter tried to float Yukos shares on the New York Stock Exchange and sell a near-majority to an American oil company. Potanin’s approach has been piecemeal: to raise the indebtedness of Norilsk Nickel; and to prepare some of his assets – the gold-mines, for example – for swapping with a foreign company. If President Vladimir Putin decided to go after Potanin, as he has done Khodorkovsky, then Potanin’s strategy was to ensure himself blue-chip foreign company shares, protected from a Kremlin raid; and to arrange that Norilsk Nickel would foot the bill. If Putin left Norilsk Nickel alone, and in Potanin’s hands, then the defensive manoeuvre would cost Potanin himself nothing.

Accordingly, in the last ten days of March, a shrewd South African offered Potanin a 20-percent stake in Gold Fields Ltd., the large South African goldminer, for a price of $1.16 billion. The terms were take it or leave it, with a deadline of five days to say yes, and another five days to pay. After saying yes, Potanin asked Citibank, which was officially advising the seller, not the buyer, to lend him $800 million for the deal. The rest of the cash, $316 million, came directly from Norilsk Nickel.

Citibank had never loaned Norilsk Nickel more than $50 million before. That earlier loan of February 2003 was tightly secured by the export sale of nickel. Also, it had been the object of a due diligence effort over many months by no less than ten other banks, all of them with far greater exposure to Russian risk than Citibank. Privately, Citibank executives have now admitted that they secured the $800 million by taking Norilsk Nickel’s guarantee to repay out of metal sales. Publicly, however, Citibank insists “the loan to Norilsk for the purposes of buying a stake in Gold Fields was unsecured.”

Norilsk Nickel has insisted on the same thing, explaining through investment relations spokesman Sergei Polikarpov: “”there is NO his emphasis security of the loan:, which he attributed to “good negotiations skills”.

What the text of the loan agreement between the two reveals is that Norilsk Nickel agreed to repay the bank $300 million within 30 days, and then two tranches of $100 million each, in the months of May and June. By July, the contract calls for Norilsk Nickel to owe just $300 million, and to repay that by the end of September. $300 million has been the limit of Norilsk Nickel’s foreign borrowing capacity until now. The Citibank bankers and lawyers didn’t exactly lend them more for the announced term of the loan. Such large amounts of cash payable each month testify to the fact that nickel, copper, platinum and gold prices are very advantageous to producers and sellers right now; and Citibank put into its loan contract very specific accounting ratio requirements that Nolilsk Nickel would have to meet, month by month. In practice, Norilsk Nickel guaranteed repayment out of its monthly export cashflow. It was also obliged to pledge: that its monthly export metal sales could not be collateral for another borrowing; they could not be sold circuitously back to itself; nor could Norilsk Nickel divert the funds out of the accounts being monitored by Citibank for purposes other than those approved by Citibank’s auditors and lawyers.

The provisions of their agreement illustrate how well Citibankers know the structure of the typical Russian corporate trading scheme, according to which title to exports of oil or metals is passed from one dummy entity to another, from one offshore registered company to another, while the funds are transferred by accounting sleight of hand to hidden fronts of the controlling shareholders. What is left over to the company as profit is then taxed, and after taxes are paid, returned to another set of dummy entities as dividends for the shareholders. Citibank’s agreement disallows Potanin and his co-shareholder, Mikhail Prokhorov, CEO of Norilsk Nickel, to engage in double-dipping.

Thus, Citibank made sure it had security over Norilsk Nickel’s metal sales revenues and trade cashflow, and much more besides. The difference between what the bank and borrower admit to, and the reality, is in the small print. This leaves little doubt that Citibank’s requirements were so tightly drawn on paper that, if there were to be a payment default, Citibank could launch legal action for recovery within a month against Potanin’s offshore trading company, Norimet, and all of $1.16 billion worth of Gold Fields shares which were in its possession. The legal system chosen was the UK. After the first repayment of $300 million, Citibank thus had effective security against a debt that was shrinking fast. The big default risk existed for just 30 days. And knowing Potanin as well as the bank did, the calculation was that there was little risk that he would default in so short a time, when his strategy for cashing out of Russia was just beginning.

Citibank also appears to have agreed with Norilsk Nickel that no asset acquisition or disposal can be made by the group, including affiliated Potanin companies, until the entire loan has been paid off. Sect.20.7 (b) of the contract stipulates that, other than buying the 20% stake in Gold Fields, Potanin and his group cannot buy further shares in Gold Fields or any other company for the duration of the loan period if it might “cause a material deterioration in the creditworthiness of the Borrower or the Group.”

But did Citibank know as much as it should have about President Vladimir Putin’s attitude towards such deals in general, and Potanin in particular? The small print also reveals something never seen before in the department of Doveryai, no proveryai.

According to the text of the sale-purchase agreement, for Norimet, a Norilsk Nickel unit, to acquire the Gold Fields shares from Anglo South Africa Capital, an Anglo American unit, the Russians had to declare that “all consents, concessions, approvals, filings, registrations, authorisations and orders, governmental, regulatory, corporate or other, necessary for the execution, delivery and performance by the Purchaser of this Agreement and the consummation of the transactions herein contemplated and for the purchase from the Selling Shareholder of the Sale Shares in the manner set out herein, have been obtained and are in full force and effect.”

This was signed on March 29. Within days, Russian government and Central Bank sources announced that they had begun investigating the transaction. The Central Bank has up to six months in which it may disapprove NorNickel’s offshore purchase. In retrospect, it is now evident that Potanin did not make an informal enquiry of the government or the President. He went ahead with his deal, and subsequently Norilsk Nickel has claimed that no application or approval was necessary. That isn’t, however, what Norimet claimed when it signed on March 29.

The next day, when the loan documents were signed, Norilsk Nickel signed a separate undertaking that “all Authorisations required: (a) to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Finance Documents; and (b) to make the Finance Documents admissible in evidence in its jurisdiction of incorporation, have been obtained or effected and are in full force and effect.”

It also averred that “any factual information provided by or on behalf of any member of the Borrower Group was true, complete and accurate in all material respects as at the date it was provided or as at the date (if any) at which it is stated.” According to the borrowing agreement, Norilsk Nickel claimed that there were “no administrative proceedings of or before any court, arbitral body or agency which is reasonably likely to be adversely determined and, if so adversely determined, would reasonably be expected to have a Material Adverse Effect” on the loan or the Gold Fields transaction.

Citibank’s legal advisors are identified in the documents as the UK firm, Linklaters. Their drafting put the entire responsibility for complying with Russian law, and disclosing what it had done, on Potanin’s men. They underlined that responsibility by including Section 21.9, defining among many instances of default on the loan agreement if “it is or becomes unlawful for an Obligor to perform any of its obligations under the Finance Documents.”

And just in case something unexpected happened, the agreement requires Norilsk Nickel to pledge notification of any administrative proceeding affecting the loan within 45 days of the end of each calendar quarter. This first reporting deadline fell on May 15. By then Russian officials had publicly acknowledged that their investigation was under way.

In addition, in the loan contract, Citibank warned Norilsk Nickel against misrepresenting any details of its undertakings, and gave the company 15 days to correct any statement that “is or proves to have been incorrect or misleading in any material respect when made or deemed to be made.”

Citibank showed just how well it has learned from a study of Potanin’s old tricks, as well as how closely it is following the Khodorkovsky case. In Section 21, titled “Events of Default”, the bank’s lawyers spelled out what might trigger an immediate call for repayment. In addition to non-payment on schedule, these “events” include a debt claim of more than $20 million against any member of the Norilsk Nickel group; a court insolvency action; government action to “displace” or “curtail” management of the group’s companies; government tax claims; government-ordered actions to “seize, nationalise, expropriate or compulsorily acquire” group assets; a repeat of the August 1998 debt repayment moratorium; or changes in the existing shareholding or shareholders’ capital.

Citibank has claimed through Spiro Youkim, one of the loan negotiators, that the transaction did not require Central Bank or Russian government approval. Norilsk Nickel was emphatic on the same point. Sources close to the Central Bank say they are mistaken. The Central Bank itself is non-committal so far, but is reviewing the deal. Several agencies of the Russian government, including the Security Council advising the President, say the same thing. Whether Citibank and Norilsk Nickel are right or not, an investigation is an investigation, just as Potanin discovered that a Kremlin warning is a Kremlin warning. When they happened, they ought to have triggered Section 21.4 of the contract, regarding the start of administrative investigations.

When asked about this, Citibank has said through a spokesman: “We cannot comment further.” Norilsk Nickel’s Polikarpov also did not respond to questions.

At May 31, Norilsk Nickel should have repaid half the loan, and owe $400 million. Were a serious default “event” to occur now, and Citibank have a problem extracting the cash from Norilsk Nickel, its legal claim for Norimet’s Gold Fields shares in the UK courts would almost certainly give it the collateral required. All the same, the cost would be to slash the Gold Fields share price. Still, for Citibank there must be confidence that it could realize at least $400-million worth of value from what was $1.16 billion worth of stock on March 29. By advising one side, and then lending to the other, Citibank has done well out of the deal.

Its debut as the free-to-air advisor to the world, including the Kremlin, on the risks of doing business with Potanin has been unexpected, however.

AND THEN THERE WERE NONE

By John Helmer, Moscow
  @bears_with

Agatha Christie’s whodunit entitled And Then There Were None – the concluding words of the children’s counting rhyme — is reputed to be the world’s best-selling mystery story.    

There’s no mystery now about the war of Europe and North America against Russia; it is the continuation of Germany’s war of 1939-45 and the war aims of the General Staff in Washington since 1943. Defense Minister Sergei Shoigu (left) and President Vladimir Putin (right) both said it plainly enough this week.

There is also no mystery in the decision-making in Moscow of the President and the Defense Minister, the General Staff, and the others; it is the continuation of the Stavka of 1941-45.  

Just because there is no mystery about this, it doesn’t follow that it should be reported publicly, debated in the State Duma, speculated and advertised by bloggers, podcasters, and twitterers.  In war what should not be said cannot be said. When the war ends, then there will be none.  

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RUSSIANS RAISE THEIR GLASSES – THE TOAST IS TO BEATING THE BLOCKADE OF MOSCOW



By John Helmer, Moscow
  @bears_with

Alas and alack for the Berlin Blockade of 1948-49 (Berliner Luftbrücke): those were the days when the Germans waved their salutes against the unification of Germany demilitarised and denazified; and cheered instead for their alliance with the US and British armies to fight another seventy years of war in order to achieve what they and Adolf Hitler hadn’t managed, but which they now hope to achieve under  Olaf Scholtz — the defeat of the Russian Army and the destruction of Russia.

How little the Germans have changed.

But alas and alack — the Blockade now is the one they and the NATO armies aim to enforce against Russia. “We are drawing up a new National Security Strategy,” according to Foreign Minister Annalena Baerbock. “We are taking even the most severe scenarios seriously.”  By severe Baerbock means nuclear. The new German generation — she has also declared “now these grandparents, mothers, fathers and their children sit at the kitchen table and discuss rearmament.”  

So, for Russia to survive the continuation of this war, the Germans and their army must be fought and defeated again. That’s the toast of Russian people as they salute the intrepid flyers who are beating the Moscow Blockade.  

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THE INTERNATIONAL ATOMIC ENERGY AGENCY GOES TO WAR — GORILLA RADIO GOES NUCLEAR

By John Helmer, Moscow
  @bears_with

Last week the International Atomic Energy Agency’s (IAEA) board of governors voted to go to war with Russia by a vote of 26 member countries against 9.

China, Vietnam, India, Pakistan, Egypt, Senegal and South Africa voted against war with Russia.  

The IAEA Secretary-General Rafael Grossi (lead image, left) has refused to tell the press whether a simple majority of votes (18) or a super-majority of two-thirds (23) was required by the agency charter for the vote; he also wouldn’t say which countries voted for or against. The United Nations Secretary-General Antonio Guterres then covered up for what had happened by telling the press: “I believe that [IAEA’s] independence that exists and must be preserved is essential. The IAEA cannot be the instrument of parties against other parties.” The IAEA vote for war made a liar of Guterres.

In the IAEA’s 65-year history, Resolution Number 58, the war vote of September 15, 2022,  is the first time the agency has taken one side in a war between member countries when nuclear reactors have either been attacked or threatened with attack. It is also the first time the IAEA has attacked one of its member states, Russia, when its military were attempting to protect and secure a nuclear reactor from attack by another member state, the Ukraine, and its war allies, the US, NATO and the European Union states. The vote followed the first-ever IAEA inspection of a nuclear reactor while it was under active artillery fire and troop assault.

There is a first time for everything but this is the end of the IAEA. On to the scrap heap of good intentions and international treaties, the IAEA is following the Organisation for the Prohibition of Chemical Weapons (OPCW), and the UN Secretary-General himself.  Listen to this discussion of the past history when the IAEA responded quite differently following the Iranian and Israeli air-bombing attacks on the Iraqi nuclear reactor known as Osirak, and later, the attacks on Pakistan’s nuclear weapons sites.

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INTERNATIONAL ATOMIC ENERGY AGENCY TAKES UKRAINE SIDE IN WAR IN SEPTEMBER 15 VOTE, MAKING UN SECRETARY-GENERAL GUTERRES EITHER A LIAR OR A FOOL

By John Helmer, Moscow
  @bears_with

The International Atomic Energy Agency (IAEA) decided this week to take the side of Ukraine in the current war; blame Russia for the shelling of the Zaporozhye Nuclear Power Plant (ZNPP); and issue a demand for Russia to surrender the plant to the Kiev regime “to regain full control over all nuclear facilities within Ukraine’s internationally recognized borders, including the Zaporizhzhya Nuclear Power Plant.”      

This is the most dramatic shift by the United Nations (UN) nuclear power regulator in the 65-year history of the organisation based in Vienna.

The terms of the IAEA Resolution Number 58, which were proposed early this week by the Polish and Canadian governors on the agency board, were known in advance by UN Secretary-General Antonio Guterres when he spoke by telephone with President Vladimir Putin in the late afternoon of September 14, before the vote was taken. Guterres did not reveal what he already knew would be the IAEA action the next day.  

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THE RUSSIAN SITUATION COMEDY IS NO LYING MATTER – THE JOKE IS ON THE OFFICE OF FOREIGN ASSETS CONTROL

By John Helmer, Moscow
  @bears_with

Never mind that King Solomon said proverbially three thousand years ago, “a merry heart doeth good like a medicine.”  

With seven hundred wives and three hundred concubines, Solomon realized he was the inventor of the situation comedy. If not for the sitcom as his medicine, the bodily and psychological stress Old Solly had to endure in the bedroom would have killed him long before he made it to his death bed at eighty years of age,  after ruling his kingdom for forty of them.

After the British sitcom died in the 1990s, the subsequent stress has not only killed very large numbers of ordinary people. It has culminated today in a system of rule according to which a comic king in Buckingham Palace must now manage the first prime minister in Westminster  history to be her own joke.

Even the Norwegians, the unfunniest people in Europe, have acknowledged that the only way to attract the British as tourists, was to pay John Cleese of Monty Python and Fawlty Towers to make them laugh at Norway itself.   This has been a bigger success for the locals than for the visitors, boosting the fjord boatman’s life expectancy several years ahead of the British tourist’s.  

In fact, Norwegian scientists studying a sample of 54,000 of their countrymen have proved that spending the state budget on public health and social welfare will only work effectively if the population is laughing all the way to the grave. “The cognitive component of the sense of humour is positively associated with survival from mortality related to CVD [cardio-vascular disease] and infections in women and with infection-related mortality in men” – Norwegian doctors reported in 2016. Never mind the Viking English:  the Norwegian point is the same as Solomon’s that “a sense of humour is a health-protecting cognitive coping resource” – especially if you’ve got cancer.  

The Russians understand this better than the Norwegians or the British.  Laughter is an antidote to the war propaganda coming from abroad, as Lexus and Vovan have been demonstrating.   The Russian sitcom is also surviving in its classic form to match the best of the British sitcoms, all now dead – Fawlty Towers (d. 1975), Black Adder (d. 1989), You Rang M’Lord? (d. 1988), Jeeves and Wooster (d. 1990), Oh Dr Beeching! (d.1995), and Thin Blue Line (d. 1996).

The Russian situation comedies, alive and well on TV screens and internet streaming devices across the country, are also increasingly profitable business for their production and broadcast companies – not despite the war but because of it. This has transformed the Russian media industry’s calculation of profitability by removing US and European-made films and television series, as well as advertising revenues from Nestlé, PepsiCo, Mars, and Bayer. In their place powerful  Russian video-on-demand (VOD) streaming platform companies like Yandex (KinoPoisk), MTS (Kion),  Mail.ru (VK), and Ivi (Leonid Boguslavsky, ProfMedia, Baring Vostok)  are now intensifying the competition for audience with traditional television channels and film studios for domestic audiences.  The revenue base of the VOD platforms is less vulnerable to advertisers, more dependent on telecommunications subscriptions.

Russian script writers, cameramen, actors, designers, and directors are now in shorter supply than ever before, and earning more money.  “It’s the Russian New Wave,” claims Olga Filipuk, head of media content for Yandex, the powerful leader of the new film production platforms; its  controlling shareholder and chief executive were sanctioned last year.  

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RUSSIAN AVIATION INDUSTRY CORRECTS YELTSIN YAW – BOEING, AIRBUS DITCHED



By Olga Samofalova, translated and introduced by John Helmer, Moscow
  @bears_with

It was the American humourist Mark Twain who didn’t die in 1897 when it was reported that he had. Twain had thirteen more lively years to go.

The death of the Russian aerospace and aviation industry in the present war is proving to be an even greater exaggeration – and the life to come will be much longer. From the Russian point of view, the death which the sanctions have inflicted is that of the US, European and British offensive against the Soviet-era industry which President Boris Yeltsin (lead image, left) and his advisers encouraged from 1991.

Since 2014, when the sanctions war began, the question of what Moscow would do when the supply of original aircraft components was first threatened, then prohibited, has been answered. The answer began at the Federal Aviation Administration (FAA) in 1947 when the first  Supplemental Type Certificate (STC) or Parts Manufacturing Approval (PMA) was issued by Washington officials for aircraft parts or components meeting the airworthiness standards but manufactured by sources which were not the original suppliers.   

China has been quicker to implement this practice; Chinese state and commercial enterprises have been producing PMA components for Boeing and Airbus aircraft in the Chinese airline fleets for many years.  The Russian Transport Ministry has followed suit; in its certification process and airworthiness regulations it has used the abbreviation RMA, Cyrillic for PMA. This process has been accelerating as the sanctions war has escalated.

So has the Russian process of replacing foreign imports entirely.

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FOR WANT OF A NAIL THE KINGDOM WAS LOST – ENGLISH PATHOLOGIST GUY RUTTY FACES CHALLENGE TO THE RELIABILITY OF HIS NOVICHOK EVIDENCE



By John Helmer, Moscow
  @bears_with

The weakest link in the British government’s four-year long story of Russian Novichok assassination operations in the UK – prelude to the current war – is an English medical expert by the name of Guy Rutty (lead image, standing).

A government-appointed pathologist advising the Home Office, police, and county coroners, Rutty is the head of the East Midlands Forensic Pathology Unit in Leicester,  he is the author of a post-mortem report, dated November 29, 2018,  claiming that the only fatality in the history of the Novichok nerve agent (lead image, document), Dawn Sturgess, had died of Novichok poisoning on July 8, 2018. Rutty’s finding was added four months after initial post-mortem results and a coroner’s cremation certificate stopped short of confirming that Novichok had been the cause of her death.

Rutty’s Novichok finding was a state secret for more than two years. It was revealed publicly   by the second government coroner to investigate Sturgess’s death, Dame Heather Hallett, at a public hearing in London on March 30, 2021. In written evidence it was reported that “on 17th July 2018, Professor Guy Rutty MBE, a Home Office Registered Forensic Pathologist conducted an independent post-mortem examination. He was accompanied by Dr Phillip Lumb, also an independent Home Office Registered Forensic Pathologist. Professor Rutty’s Post-Mortem Report of 29th November 2018 records the cause of death as Ia Post cardiac arrest hypoxic brain injury and intracerebral haemorrhage; Ib Novichok toxicity.”  

Hallett, Rutty, Lumb, and others engaged by the government to work on the Novichok case have refused to answer questions about the post-mortem investigations which followed immediately after Sturgess’s death was reported at Salisbury District Hospital; and a cause of death report signed by the Wiltshire Country coroner David Ridley, when Sturgess’s body was released to her family for funeral and cremation on July 30, 2018.  

After another three years, Ridley was replaced as coroner in the case by Hallett in March 2021. Hallett was replaced by Lord Anthony Hughes (lead image, sitting) in March 2022.

The cause-of-death documents remain state secrets. “As you have no formal role in the inquest proceedings,” Hallett’s and Rutty’s spokesman Martin Smith said on May 17, 2021, “it would not be appropriate to provide you with the information that you have requested.” 

Since then official leaks have revealed that Rutty had been despatched by the Home Office in London to take charge of the Sturgess post-mortem, and Lumb ordered not to undertake an autopsy or draw conclusions on the cause of Sturgess’s death until Rutty arrived. Why? The sources are not saying whether the two forensic professors differed in their interpretation of the evidence; and if so, whether the published excerpt of Rutty’s report of Novichok poisoning is the full story.   

New developments in the official investigation of Sturgess’s death, now directed by Hughes, have removed the state secrecy cover for Rutty, Lumb, and other medical specialists who attended the post-mortem on July 17, 2018. The appointment by Hughes of a London lawyer, Adam Chapman, to represent Sergei and Yulia Skripal, opens these post-mortem documents to the Skripals, along with the cremation certificate, and related hospital, ambulance and laboratory records. Chapman’s role is “appropriate” – Smith’s term – for the Skripals to cross-examine Rutty and Lumb and add independent expert evidence.

Hughes’s appointment of another lawyer, Emilie Pottle (lead image, top left), to act on behalf of the three Russian military officers accused of the Novichok attack exposes this evidence to testing at the same forensic standard. According to Hughes,  it is Pottle’s “responsibility for ensuring that the inquiry takes all reasonable steps to test the  evidence connecting those Russian nationals to Ms Sturgess’s death.” Pottle’s responsibility is to  cross-examine Rutty and Lumb.

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KILLING IS CHEAPER — THE US ARMY SPECIAL OPERATIONS COMMAND WEAPONIZES TWITTER, FACEBOOK, INSTAGRAM, WHATSAPP, TELEGRAM

By John Helmer, Moscow
  @bears_with

The US Army’s Special Operations Command (SOCOM) has been firing several hundred million dollars’ worth of cyber warheads at Russian targets from its headquarters at MacDill Airforce Base in Florida. They have all been duds.

The weapons, the source, and their failure to strike effectively have been exposed in a new report, published on August 24, by the Cyber Policy Center of the Stanford Internet Observatory.  The title of the 54-page study is “Unheard Voice: Evaluating Five Years of Pro-Western Covert Influence Operations”.

“We believe”, the report concludes, “this activity represents the most extensive case of covert pro-Western IO [influence operations] on social media to be reviewed and analyzed by open-source researchers to date… the data also shows the limitations of using inauthentic tactics to generate engagement and build influence online. The vast majority of posts and tweets we reviewed received no more than a handful of likes or retweets, and only 19% of the covert assets we identified had more than 1,000 followers. The average tweet received 0.49 likes and 0.02 retweets.”

“Tellingly,” according to the Stanford report, “the two most followed assets in the data provided by Twitter were overt accounts that publicly declared a connection to the U.S. military.”

The report comes from a branch of Stanford University, and is funded by the Stanford Law School and the Spogli Institute for Institutional Studies, headed by Michael McFaul (lead image).   McFaul, once a US ambassador to Moscow, has been a career advocate of war against Russia. The new report exposes many of McFaul’s allegations to be crude fabrications and propaganda which the Special Operations Command (SOCOM) has been paying contractors to fire at Russia for a decade.

Strangely, there is no mention in the report of the US Army, Pentagon, the Special Operations Command, or its principal cyberwar contractor, the Rendon Group.

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MARIA YUDINA OUT OF THE DARK – THE RUSSIAN CLASSICAL PIANIST PLAYS AGAIN

By John Helmer, Moscow
  @bears_with

Maria Yudina (lead image) is one of the great Russian pianists. She was not, however, one who appealed to all tastes in her lifetime, 1899 to 1970.

In a new biography of her by Elizabeth Wilson, Yudina’s belief that music represents Orthodox Christian faith is made out to be so heroic, the art of the piano is diminished — and Yudina’s reputation consigned again to minority and obscurity. Russian classical music and its performers, who have not recovered from the Yeltsin period and now from the renewal of the German-American war, deserve better than Wilson’s propaganda tune.

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