CRIME	PROFILE	TECHNOLOGY

Loutchansky, Beating The Times

By Sandris Tocs (Neatkariga Rita Avize)

Labdien - an ordinary but at the same time stylishly dressed gentleman greeted us in clear Latvian. I shook Grigori Loutchansky's hand. There are so many legends and rumors about him in the world that I even feel ashamed to repeat them. He is a person whom many know and respect in Latvia. Possibly he is the richest man in the world who speaks Latvian. Yet Loutchansky has always paid for his happiness expensively and painfully.

Loutchansky in Latvia

Mr. Loutchansky, what do you actually own in Latvia?
Nothing, except for shares in Kalija Parks [chemicals terminal] that do not bring me any return. We are a kind of sleeping shareholder in Kalija Parks. I haven't been to Ventspils for some five or six years. When developing a philosophy of the transit business a time ago, I wrote about it very much, but I myself didn't go in for it. I was hoping I would manage to do it with Softwarehouse; my plans in Latvia were bound with this firm. They offered me cooperation, and we did much to establish SWH, but in the end the company failed. They owed me large sums of money. And it ended with nothing - all the money went somewhere on the side. Borovkovs, Forsts, Gulbis -this company has also split. De facto I have no impact and no serious presence in Ventspils.

Are you interested in Latvia as a place for business?
Latvia was interesting for me in a certain sense - when there was a mutual understanding. Once I proved to the Russian Fuel and Power Engineering Minister, Shafrannik, that a part of the Transnefteprodukt oil company shares should be given to Latvians. Two Latvian companies, one of which was SWH, received shares. Even today I can directly influence decisions made by large Russian corporations to direct their transit business to Latvia, for these questions are not actually connected with politics and it is possible to solve them within the field of economics. My interest to business here was lost on the emotional level. When Riga was freezing in 1991, I presented three train-loads of heating oil, handing them over to a Latvian firm so that it could gratuitously give the city 18,000 tons of fuel. As far as I heard, the company sold it to the city! Another time I sent a kindergarten presents for Christmas, but some newspaper in Jurmala wrote that these presents were only for Russian-speaking children. This was a downright lie.

Would you say that you reject closer contacts with Latvia only because of articles in newspapers?
In 1997 I came to Riga, privately - on the 90th birthday of my mother, who is buried now in the Second Forest Cemetery in Riga. President Ulmanis started to worry, he tried to call the Deputy Prime Minister Chevers - asked him what Loutchansky is doing in Riga. I do not consider myself as an enemy of Latvia. I was hurt here painfully. I have never played political games and I will not start to now.

But wasn't it you who gave money to Clinton and Gaidar?
The beginning of 1993 was a hard time, and I gave money to the party of Gavriil Popov and Yegor Gaidar. I couldn't do otherwise, because this was important for the question of whether there will be a democracy in Russia or not. But I didn't get anything from this for myself. I haven't met Gaidar ever since, but Popov is an old friend of mine.

But didn't you provide funding for parties in Latvia, for instance the party led by Kauls?
When Kauls wanted to take a loan at Parex Bank for the needs of his election campaign, I tried to dissuade him from this. Later I called Kargin [head of the bank] and said that I would take it on me, and added - only promise that you will never give money to Kauls for politics. Actually, I owe Kauls a lot, and I respect and love him as a person very much. But he behaved very weirdly while in politics, however he had the right to do so. To my mind material interference in politics is absurd, stupid and frivolous. If Latvia and Russia had a normal economic relationships, everything would also be in order in politics. The one-way integration of Latvia into Europe is as incorrect as the full dependence of Belarus on Russia.

Does this mean that you are opposed to Latvia joining the European Union?
I am for it with all three hands. But for example, Austria and Germany - members of the EU -have a huge turnover in trade with Russia. The one-sided orientation of Latvia is a big mistake of Latvian politicians.

But why do those who finance politics tolerate such mistakes then?
Objectively the big economic powers both in Latvia and Russia are interested in normal political relationships. I think they are doing their best to improve this situation, but they are not succeeding because of the fact that Latvia is distancing itself from Russia politically.

But businessmen give money to politicians.
Then that means they give too little. The rich Latvians with economic ties to Russia spend too little money on creating a favorable attitude towards Latvia in Russia. If speaking about the economic hub of Ventspils, Mr. Lembergs [Mayor of Ventspils] and Stepanovs [Ventspils Trade Port] do very much, but I don't think that everything is possible. In both Latvian and Russian political environments it is advisable to lobby the understanding of bilateral relations. Actually, Latvia has done much to regulate its relationship with Russia: the procedure of naturalization has been simplified; discrimination has more a social than political nature, like for instance the racism of the former Soviet Union was. But the populists continuously radicalize this policy. Those who think that all the problems Latvia has at the moment will be solved after joining the EU are uneducated in economics. Of course, Latvia has to join EU. And Russia needs this too. But I am in favor of developing a new united Eurasian economic area - on the basis of the former soviet republics, except for the Baltic States.

Do you think the CIS is going bankrupt politically?
The CIS is not an economic union. This is a political likeness. It's not a permanent house but a makeshift hut, which should have been destroyed long ago. The CIS has no economic foundation. One cannot say "let's be friends!" and at the same time disconnect Ukraine from the gas-mains. "Let's be friends!" and not allow the import of Azerbaijani vegetables and Georgian fruits into Russia. Or create customs barriers. Introduce duties that place many countries - Tajikistan, Kirghizstan, Armenia and Georgia - in a disastrous situation. The 12 former republics have to create a Eurasian union. The economics of these states are historically integrated. The president of Kirghizstan, Nazarbayev publicly spoken of this idea many times. I completely support his macro-economic ideas. But such a military union like NATO will die off in the coming 10-15 years. But if in case it won't die off, territories in the world should not be divided like NATO its members being from different continents. But if Putin makes an initiative to join NATO, it would be very good I think.

But is this possible?
Why not? Putin does not exclude such a possibility.

Latvians think this is a flirt with the West, a play with words.
The Soviet Union collapsed because economically it was much weaker than the USA. We cannot afford to lose billions on arms. Let the USA lose trillions. Military resistance is a suicidal idea. Clearly, the rich countries, the Great Seven (let's forget about the G8 and Russia) would withstand it. If we really want to save Russia, we have to disarm. Russia has two ways out - make do with a second-grade role in the world or join NATO. The fact that the Baltic's and Russia do not believe in each other would drop away. Why do the Baltic's now trust Germany that had once also occupied the Baltic States?

To me it seems that it is a psychological phenomenon.
No. The Baltic States understand that German economics and military doctrine are in the hands of democratic powers. Russia is going the same way, but with great difficulty. In order to not to lose its military potential Russia has to join NATO. Then the military industry will get orders from NATO. It is clear that Europe needs a military structure. There are still such off-cast countries such as China, which in 20 years will have the largest economy in the world. What would the West do in such circumstances? Push Russia into the arms of China? It is sad for me to predict what this would lead to in some 50 years.

Loutchansky today

In what business are you engaged at the moment, in what sectors do you work?
In 1995 I stood before a choice - to continue the business of Nordex or not. We lost 150 million in Ukraine, a serious sum of money. The special agencies and mass media drew their attention to us, and that destroyed our reputation.

Why do you think the special agencies were directed towards you? For the press you are a juicy morsel.
My meeting with Clinton was presented as an appointment between Clinton and the Russian mafia. Entry into England was bared. All these stories in the press were said to be information leaks from special agencies. The bank accounts of Nordex were closed; our partners were given information that ruined our reputation. American agencies failed tens of our contracts, the value of which amounted to millions of dollars: exploitation of the largest gold mines in the world in Kazakhstan together with a Canadian company; maintenance of the largest Kazakhstan metallurgy complex in Karagada together with American company US Steel. We had to gather 500 million dollars for these projects. I gave 75 million, Aisenberg and US Steel had to provide the rest. Eximbank said: we won't give money to projects that Nordex is involved in. Ukrainians, taking advantage of the situation, refused to return my money. Why should we pay, if Nordex is such a bad company!
My deputies - many of them are friends since childhood - were put under great pressure. In 1995 I turned 50. There were only relatives, close friends and colleagues at the party. This was my best birthday. Right after the party, newspapers in Israel published information that it was a gathering of the Russian mafia in Eilata. I understood that I wouldn't get out of this, that my train is heading into a wall at high speed. After the birthday I called all of my deputies and said - you no longer work in Nordex. They were shocked. Some tried to dissuade me, some rejoiced. All of them were millionaires, rich people. I also lived for the team. So Nordex closed in April 1995. At Easter. I stayed. I had enough money and health to fight for my own reputation for the rest of my life, even to spend millions on this goal.
Nordex had lost its reputation. Launching a company of the same kind had no sense. I left the trade business. As of 1995, I was a student of the Israeli millionaire Shaul Aisenberg, who sometimes is called an engineer of money. He dealt with financing projects. We worked together in Kazakhstan, China. We established 17 joint companies. A person who finances projects doesn't care what he is financing - it can be a metallurgy engineering plant or a cinema. My task was to find the money. I worked with him up until 1997; after that I created a center for investment programs and projects in Moscow. Nordex continued its existence as a dormant company since it had many debtors, amongst them even states: Ukraine, Kazakhstan, Belarus, the sum totaled 400 million dollars. My business today is investment projects.

You were working in an offshore business which many consider suspicious.
Imagine that you're a Latvian businessman, I am an American, and we have a third partner - from China. We all together want to open a business in Russia. How can we do so if Russia has no agreements on double taxation? Moreover, in Latvia the tax is 25%, in China - 50%. The only way out is to register the investors off shore and to carry out all accounts through them. This is practiced in the whole world. Shevron, a large American company, works in Kazakhstan exploring an oil deposit in Tengiz, but company Tengiz Shevron Oil which represents Shevron and has a Kazakhstanian management, is situated off shore.

Loutchansky beats The Times

You won a legal case against The Times newspaper recently. In your opinion, will you manage to renew your reputation?
Seven years ago the world started a fight with the so-called Russian mafia. In 1994 I was forbidden to enter England, I was detained at the airport. That was a lesson for me, because before then Nordex had a positive image. Today it is clear for me why this was done. I was detained in the London airport ten days after Times had published information, that the budget for English special agencies had been diminished. In relation to my case, England adopted a new law which provided for situations when the Home Office had to pass information on to the court. Only now, seven years later, after digging through piles of documents I managed to achieve legal proceedings over the bar to my entry. The fact that the Austrians have acknowledged that my reputation is clear means nothing yet. In the very beginning of Perestroika, two Latvian police officers - Apelis and Trautmanis - tried to ruin my reputation, before them - Soviet officers. They thought I wouldn't find out anything on them. But Austria is a democratic country. Austrians checked the absurd information the officers spread about me, and the police came to a conclusion that nothing of it was true. Nothing like I pushed tanks onto the embankment of Riga together with Kauls, like I was hiding money belonging to the communistic party together with Gorbatchov through Adazi - all this passed from one newspaper to another. The proceedings I won in Germany and Austria -countries in which I worked - are very important but not decisive. Court decisions in Great Britain and the USA are of principle for me, these countries determine global policies today - what will be said in London in the morning, will be repeated in Washington in the evening. In my situation it was fundamentally important to win the case in England - not against the magazine but against the state or the Home Office. By this I can also renew my reputation. During these seven years the accusation has changed - if once I was accused in the trade of arms, now only the thing that I was charged for in Riga 20 years ago is left.

How much did it cost to sue The Times?
Two million English pounds, or more than three million dollars.
Accusations of money laundering through the Bank of New York are absurd, I didn't even have a corresponding account in that bank. If the journalist was honorable, he would have met me, and we wouldn't have to meet for the first time in court. This journalist is very clever, strong; he graduated from Cambridge.

Wait a minute, didn't Times speak to you before publishing its information? The same Times which is set as an example of objectiveness to all journalists!
Absolutely. I will give you the verdict of the British court, it should be studied at faculties of journalism. I was once asked if I would like to give lectures at the university I graduated from. I answered in saying - I would like to lecture at the faculty of journalism. The basic mistake made by The Times was that they published two articles without calling or talking to me. In the court they justified themselves by saying they could not find me, but this is a naïve apology. Such magazines as the New York Times, the Washington Post, the Independent, Suddeutche Zeitung all found me. I didn't want to sue The Times and I asked my lawyers to write them a letter. Then suddenly The Times declared that the case with Loutchansky was a matter of principle. After this I could not refuse the proceedings, otherwise it would have looked like I admitted that The Times was right.

So in fact The Times provoked the proceedings it lost itself?
The instigation was based on a conviction made by The Times that it is easy to win a man who has been barred to enter the country, a man with a reputation connected to organized crime. Times new nothing about me - if they had known, they would have never come to proceedings in which it lost much more money than I did. They visited all the countries connected to my activities.
They did unique things - they met with journalists who had worked with the cases I won in Austria. They sent a journalist to Latvia, and he met with people who knew me since the time I was deputy dean at the University of Latvia. They again re-opened the 20-year-old case from Soviet Latvia, the initiator of which was the popular Latvian communist Boris Pugo, a leader of the KGB. They forgot about what England - a pillar of democracy during the 70ies - had declared: in the Soviet Union there was no legitimacy, one can be arrested even for crossing the street at a green light. And the same England, the same Times believed that the basic argument in favor of my discrimination is that I was accused 20 years ago. The journalist from The Times specializing in research and sent to Latvia promised to pay those who would present evidence against me. This was recorded in the case. The Times sent people to Belgium, Israel. They employed Croll, a popular private investigation bureau in the USA, which by the request of Gaidar searched for money of the Soviet Union's Communistic Party across the whole world. The Times spent millions of pounds. They did not know that I had turned to Croll when I was accused in money laundering in order to find out if I really was. After they were unable to present evidence The Times newspaper started to emphasize that if I won the case it would be a restriction against the freedom of press. The Times used a new rule for British legislation called qualified privilege. After that The Times tried to strike out - prove that Loutchansky is a person whom no one in Britain takes seriously and that is why there is no public interest in the proceedings. The Forbes magazine managed to do this with Berezovsky who was named a representative of the Kremlin mafia.

But this is  illogical, that The Times about you and Forbes about Berezovsky would write at all if you are nothing.
I had to gather a lot of evidences to claim that I was somebody in England. Evidence included many honors in the biographical center of Cambridge, large contracts signed with British companies, and the court didn't walk them, because the newspaper had no right to use the materials they gathered after publishing the articles. They could use only those materials the articles were based on. This was a terrible blow to The Times, since 90% of the information they had against me was recognized as invalid.
Then The Times refused their claim for justification of truth. They did not try to prove that what they had written is true, but asked to give the newspaper immunity in connection to qualified privilege. Before me this rule in Great Britain was applied only once - when The Sunday Times sued Reynolds, the former Prime Minister of Ireland. This would mean that everything I could prove in my favor lost any meaning. Before then, the case had looked at how conscientiously the journalist did his job.
I speak English like Latvian - it is enough to chat, but it is not enough to speak in court! This was a court with a jury- The Times requested this, but this meant that people from the street, who know of Russians only that they have a mafia, tried me. But the rich Russian soul was not taken into account at all. I, with my crippled English, stout and half-bald - all this creates an image as to what kind of a person I am. And the English fellow who worked as a popular David Copperfield. For three days they watched and three days astonished at how he hypnotized the jury. My lawyers suggested that I don't go to court. First, because I myself could not persuade the jury. But the thing is that I am like a mule - I  am a very stubborn person. So after loosing a lot of money and a lot of time, I got temporary admission and was allowed to visit England.
A novel could be written about the case: for the first time in the history of England a person who has an exclusion order on him is allowed to enter the country to attend court. I won 6 to 5. For you, the press, the court decision is important - even a thousand fragments from newspapers can not be considered as basis for conclusion on the object of any investigation.

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