Anti-Corruption Force Searches Mikhailovsky

By Galina Stolyarova

The St. Petersburg Times

Published: January 30, 2013 (Issue # 1744)

The eyes of the city’s cultural community were on the Mikhailovsky Theater on Jan. 25, as the company presented the Russian premiere of Benjamin Britten’s 1961 opera “Billy Budd,” which features an all-male cast and is set on board a ship. But the venerable institution, established as an imperial theater back in 1833 by the decree of Tsar Nicholas I, was also the focus of public and media attention that night for a less illustrious reason.

As the theater’s opera division was putting the final touches to the opera premiere, a collaboration with the respected Vienna State Opera, investigators from the economic crimes division and special anti-corruption task force of the Russian Interior Ministry were busy seizing documents from the Mikhailovsky’s offices — as well as from the offices of JFC, a large fruit import company that once shared its general director, businessman Vladimir Kekhman, with the theater.

The confiscation of the documents, which took more than five hours, was linked to a criminal case concerning the large-scale embezzlement of 10 billion rubles ($332 million) in bank loans during the period from 2010 to 2012.

The prosecutors have alleged that the management of JFC submitted fictitious contracts to several banks, including Bank of Moscow, Sberbank, Raiffeisenbank and Uralsib in order to obtain loans.

“Upon receiving the loans, the company showed no intention of paying the money back, and filed for bankruptcy instead,” reads an official statement of the Interior Ministry on the JFC case.

Kekhman personally is not currently facing any charges.

The tycoon, who made his fortune importing fruit, was nicknamed the “banana emperor” of Russia. Kekhman has actively sought to heighten his public image and forge ties with the authorities, and was approved as director of the Mikhailovsky Theater, funded by the federal government, in 2007.

During his five years in charge of the Mikhailovsky, Kekhman’s financial injections into the company have totaled a mighty $40 million, according to the businessman.

Although the theater hosted the world premieres of Shostakovich’s “Lady Macbeth of the Mtsensk District” in 1934 and Prokofiev’s “War and Peace” in 1946, the works of these composers are now absent from the repertoire, which focuses heavily on 19th-century classics, although it has recently added works by Leos Janacek and Benjamin Britten to its performance list. For decades, the company has been deservedly rated the second-best in town, after the Mariinsky Theater.

While artistically the company has been producing hit-and-miss operatic and ballet fare, with the productions even at their best being unable to rival many of those at the Mariinsky, its publicity campaigns have seriously rivaled the media attention enjoyed by its “big brother.” The Mikhailovsky has lured dance talent from both the Mariinsky and Moscow’s Bolshoi Theater with lucrative contracts, and has also hosted meetings of the cultural and political elite that have featured on prime time news shows.

While his supporters call him an efficient arts manager — under his leadership, the Mikhailovsky Theater has been able to afford expensive renovation, Western coaches, star guest soloists and internationally established advisors — Kekhman’s critics accuse him of lack of vision, pointing to the frequent reshuffles of the theater’s management, including heads of the opera and ballet divisions. For instance, the internationally acclaimed former Mariinsky Theater soloist Farukh Ruzimatov did not last as head of the company’s ballet division, and opera diva Yelena Obraztsova also failed to stay long as head of the theater’s opera department. Kekhman can offer generous salaries, but because he does not really have a clear idea of where his theater should go, he is easily manipulated by the various camps, hence the frequent staff reshuffles, his opponents say.

After Kekhman began running the Mikhailovsky, he delegated his director’s duties to his two deputies, Andrei Afanasiev and Yulia Zakharova. After the news about document searches reached the press, Kekhman made a statement in which he said that his company had provided all the necessary documents to the investigation, and that all the enquiries had been satisfied.

“I have been fully informed about the course of the investigation, and I am willing to know the full truth about what has been going on in the company [JFC],” Kekhman said in a statement distributed to the media. “Personally, I am deeply disturbed and outraged by the scale of misappropriations in the company.”

He also pointed out that he had not been JFC’s director since 2007.

If the prosecutors prove in court that the bankruptcy was carefully planned in order to avoid paying back the loans, the top management representatives of JFC involved in the deals face up to 10 years in prison.

In October 2012, London’s High Court of Justice officially declared Kekhman bankrupt. The entrepreneur has thus protected his personal assets: British law protects the accounts of bankrupt businesspeople from their creditors. The case was acknowledged as the biggest personal bankruptcy case in the U.K. during the past decade.