Tuesday, May 11, 2010

As expected, NBA approves Prokhorov as Nets' majority owner; Brooklyn officials release belated call for NBA caution on Zimbabwe issue

Today, the National Basketball Association Board of Governors, as expected, approved Russian billionaire Mikhail Prokhorov as majority owner of the New Jersey Nets.

Here's the NBA's statement, via the Observer:
"We are pleased that the NBA's Board of Governors approved Mikhail Prokhorov's purchase of majority ownership of the Nets, welcoming into the NBA ownership ranks the league's first majority investor from outside of North America," said NBA Commissioner David Stern. "We anticipate that his passion for the game and business acumen will be of considerable value not only to the Nets franchise but to the entire NBA."
Here's Develop Don't Destroy Brooklyn's comment:
We are fairly certain that this ownership structure—had it been in place prior to the attenuated political approval process—would not have flown.
Objections from Brooklyn officials

And five Brooklyn elected officials, led by Council Member Letitia James, sent a letter (below) to NBA Commissioner David Stern urging the league to postpone the decision and look seriously into charges that a company Prokhorov partly owns is connected to sanctions-busing in Zimbabwe.

Given that Stern had previously brushed off the charges raised by New Jersey Rep. Bill Pascrell, there was little chance that the Brooklyn officials' concerns would be taken seriously.

Still, they released the letter just after the NBA vote and might have gotten more attention had they sent the letter earlier.

The letter

Mr. David J. Stern
Commissioner
National Basketball Association
645 Fifth Ave
New York, NY 10022

Dear Mr. Stern:

This letter is being sent to express concerns about the National Basketball Association's pending agreement with Mikhail Prokhorov, who seeks to buy the New Jersey Nets basketball team. In a recent interview, you anticipated that Mr. Prokhorov could be sitting among the NBA's team owners during the draft lottery on May 18, despite the possibility that he may have violated United States sanctions against Zimbabwe that have been in place since 2003.

Brooklyn elected officials are disappointed that you are so eager to close the deal with Mr. Prokhorov, as your statement implies, rather than vet the details of a prospective team owner's dealings in a nation run by Robert Mugabe's oppressive dictatorship.

The Nets basketball team is an integral part of the Atlantic Yards redevelopment project - a project that was sold to the public as one that would provide many benefits to New Yorkers, including the creation of thousands of affordable housing units. As elected representatives of the community, we have a significant responsibility to ensure that the public is served through the most honorable means possible.

Congressman Bill Pascrell of New Jersey has asked you to keep your stated commitment to perform due diligence of Mr. Prokhorov and he has called upon the Treasury Department to investigate whether sanctions have been violated. The signers of this letter share Congressman Pascrell's belief that the NBA should hold a higher standard for its business partners than simply avoiding doing business with convicts.

Rep. Pascrell wrote to you explaining that as a 50 percent owner of Renaissance Capital, Mr. Prokhorov is directly connected to the firm's reported sponsorship in June 2009 of an economic forum in Harare, Zimbabwe. Renaissance Capital offered foreign investors special access to government officials, including those on the United States' sanctions list, and is also reportedly a shareholder in CBZ Holdings, one of the largest banks in Zimbabwe. The Government of Zimbabwe is the bank's largest shareholder.

The congressman also made you aware of his findings that Renaissance may have long-standing working relationships with major Russian fraud scheme, based on documents filed last year in the Southern District of New York. The court filings detail Renaissance's connection to a complex tax rebate fraud in Russia through which it is believed at least $106.9 million in taxes paid from a Renaissance-managed investment fund was later embezzled from the Russian treasury through the payment of fraudulent tax refunds.

The public benefits of Atlantic Yards will be hollow if they are achieved with the help of profits gained through fraudulent schemes or a regime that holds no regard for human rights.

We ask that you postpone the NBA owners' vote to ratify Mikhail Prokhorov as owner of the New Jersey Nets until his business background is thoroughly understood.

Sincerely,
Letitia James
Member of City Council, 35th CD

Brad Lander
Member of City Council, 34th CD

Joan L. Millman
Member of State Assembly, 52nd AD

James F. Brennan
Member of State Assembly, 44th AD

Velmanette Montgomery
Member of State Senate, 18th SD

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