CPJ disturbed by ruling that Russian newspaper must pay millions

New York, January 4, 2005—The Committee to Protect Journalists is disturbed by a Moscow court’s finding that Kommersant, Russia’s leading independent business daily, must pay millions in damages for a July article that described long lines of customers withdrawing money at a major bank.

An appellate court ruled last week that Kommersant (Businessman) must pay plaintiff Alfa-Bank 300 million rubles (US$10.8 million) in damages for allegedly causing the bank financial problems by publishing the article, according to local press reports. News accounts described the ruling as unprecedented in its severity.

“Journalists must be given the leeway to report on matters of public interest, and clearly Kommersant was simply doing its job,” CPJ Executive Director Ann Cooper said. “This exorbitant award is bound to have a chilling effect on the Russian press, and reinforce the already widespread practice of media self-censorship.”

On July 7, 2004, Kommersant published an article titled “Banking crisis takes to the streets,” which described lines of customers making withdrawals at Alfa-Bank’s cash machines during the country’s banking woes last summer. The newspaper published the article a day after Alfa-Bank released a statement on difficulties in the Russian financial market, and two days after other newspapers had reported on financial problems at Alfa-Bank and other banks, local reports said. Alfa-Bank’s management filed a lawsuit against Kommersant claiming its article had hurt the financial market and drove citizens to make large withdrawals from the bank.

“Everything that was printed in the article was true, and Alfa-Bank’s managers know it,” Andrei Vasiliyev, director general of Kommersant Publishing House, told the Russian news agency Interfax in August. Kommersant published a chronology of events leading to the July 7 article, including information from a July 1 Alfa-Bank financial statement indicating an outflow of private deposits from the bank throughout June.

On October 20, 2004, the Moscow Arbitration Court ruled that by publishing the article, Kommersant had violated Article 39 of the Russian media law, which prohibits “falsifying information of public interest and disseminating rumors in the guise of valid statement,” and sentenced the newspaper to approximately 320.5 million rubles (US$11.5 million) in damages payable to Alfa-Bank.

On December 27, 2004, a Moscow appeals court reduced the fine to approximately 300 million rubles (US$10.8 million), according to local press reports. Vasiliyev said the newspaper would appeal the decision in higher courts.

Russian press freedom activists criticized the ruling against Kommersant as politically motivated. Oleg Panfilov, director of the Moscow-based Center for Journalism in Extreme Situations, called it “a political act,” Reuters reported. The Moscow-based Glasnost Defense Foundation characterized the ruling as an attempt to bankrupt the daily, according to the Moscow daily Izvetia (News).

Following the October 20 court verdict, Vasiliyev accused Alfa-Bank owner Mikhail Fridman of trying to bankrupt Kommersant because the newspaper’s owner, exiled tycoon and Kremlin critic Boris Berezovsky, previously refused to sell the publication to him, the English-language Moscow Times reported.

Alfa-Bank’s vice president, Aleksandr Gafin, disputed claims that Alfa-Bank had targeted the newspaper and said the October court decision would teach Russian media a lesson in social responsibility, the private radio station Ekho Moskvy (Echo of Moscow) said.