Skip to main content

Featured Post

Atlantic Yards/Pacific Park graphic: what's built/what's coming + project FAQ (pinned post)

Prokhorov, Round 2: more insight from the Bloomberg TV interview, which barely lays a glove on him

Well, 60 Minutes got to him first, but Russian mogul Mikhail Prokhorov's other TV profile/long interview, with Bloomberg TV (excerpted below) and the print Bloomberg Markets/Bloomberg Business Week, is well worth watching.

Here are some of the takeaways:
  • It's possible to interview Prokhorov without a Steve Kroft grin on your face
  • It's possible to ask Prokhorov semi-tough questions but avoid bigger ones
  • Prokhorov, despite his insider connections, considers himself a "self-made man"
  • He claims not to have political power but is "just a businessman"
  • As with the Barclays naming rights deal, Prokhorov seeks to leverage Brooklyn to gain himself a platform in the United States ("we can create excellent business unit")
  • Prokhorov was well-prepped for the media blitz, calling money just "a side effect" of business and floating the same reference to Sinatra's "New York, New York"
  • Still, he claimed not to remember spending some $19,000 on lunch at Nello in New York
  • When asked about the four days he was jailed in France on suspicion of bringing in prostitutes, he didn't assert (as on 60 Minutes) that it was fun but explained he'd been in the Soviet Army
  • Prokhorov invites footage of his kickboxing workout
  • He installed a basketball court just for the sake of his Bloomberg interview
  • A basketball was strategically placed on the shelf behind him
  • The Internets--not for him; he uses neither a cell phone nor a computer
  • The more impressed by Prokhorov, the taller he is reported to be (6'7" to Bloomberg/BW, 6'8" to 60 Minutes, 6'9" to New York Magazine's Will Leitch)
On video

Below is an excerpt. Bloomberg TV offers a profile as well as a full interview, about a half-hour. (Note that the Bloomberg TV pieces didn't work for me on Firefox.)

The NBA effect

True Hoop blogger Henry Abbott concluded that, however much like a segment of "Lifestyles of the Rich and Famous," the 60 Minutes piece would help Prokhorov attract players to the Nets.

Prokhorov's already provoked a man-crush from fans on the NetsDaily blog. "This Guy is Awesome!" wrote corey447. "How could LeBron [James] say “no” to this guy?" Responded Net Income, the lead writer for the site (and unflagging advocate of the Brooklyn move), "I surely can't."

He also asserted that Prokhorov displayed "the same winning personality he did with 60 Minutes," a partial echo of the Rev. Herbert Daughtry's Brooklyn Standard endorsement of Bruce Ratner's customary "humble, winsome" manner.

Yahoo's Adrian Wojnarowski gave fans even more of a buzz, writing that "sources say they expect his private plane to land with him and minority owner Jay-Z at Akron-Canton Airport at midnight July 1 on the start of free agency" to try to recruit Cleveland Cavaliers star James.

Yeah, there's a lot of momentum.

I also agree with Abbott's observation that NBA Commissioner David Stern was hardly convincing in claiming that the league's investigation found no dirt on Prokhorov, given that the NBA wasn't even able to find "the degenerate gambler on their referee staff."

On the merits?

But I part ways with Abbott when he concludes that watching Prokhorov is "the best evidence there could be that he's above board. Watching him speak, it's easy to understand how a guy like this would have become a billionaire on his own merits."


Prokhorov is obviously very sharp, and full of backed-by-bucks self=confidence, but Russia was and in many ways remains the Wild West when it comes to business.

Despite its generally softball nature, the 60 Minutes piece at least noted that a key source of Prokhorov's wealth, Norilsk Nickel, came via an "insider's opportunity," a process "probably not even legal under Western standards."

The Bloomberg profile glides over that complication.

Criticism from Helmer

John Helmer, the controversial independent reporter and critic of oligarchs, bypassed the easy-to-dissect 60 Minutes piece and posed critical questions for the Bloomberg print reporters in a Dances With Bears post headlined THE CAT’S PAW AWARD No. 4 – BLOOMBERG PLAYS MIKHAIL PROKHOROV’S BALL, IS SLAM-DUNKED.

Helmer's graphic directly connected Prokhorov and the billionaire owner of the Bloomberg media properties, who just happens to be New York City's mayor. While it's hardly likely that Mayor Mike Bloomberg interferes directly with his publications, it's not out of the question that Bloomberg editors, ushering in the owner of a team and project Bloomberg has welcomed, would only go so far.

After all, the profile portrays Prokhorov as an enormously successful businessman, while Helmer suggests there are some missing elements to the story.

Among Helmer's questions:
--in your report of the January 2007 Courchevel arrest and the subsequent imprisonment of Mr Prokhorov in Lyon, and the investigation that followed for two further years, you appear to have ignored the evidence of obstruction of justice and blocking of efforts of the French investigating magistrates to question witnesses and pursue evidence? Are you unaware of the documented French evidence, published in the French press, suggesting that Mr Prokhorov used influence with Russian officials to prevent the French investigation from being undertaken and completed?

– in your report of the founding and operation of Mr Prokhorov’s Uneximbank, you report: “Doing business in Russia in the 1990s came down to survival of the fittest”. You also report that “the Soviet banking system began collapsing with the fall of communism”. Is there a reason you omit to report that Uneximbank collapsed in 1998, defaulting on an estimated $1 billion in liabilities? To whom should the responsibility, fault or credit for that bank failure go? Why do you withhold from your readers the evidence that such a milestone venture in Mr Prokhorov’s career went bankrupt?

– you report that “Prokhorov and Potanin profited from the crisis by exploiting the dollar-ruble exchange rate”. Why have you omitted to report that Mr Prokhorov’s wager on the rouble-dollar exchange rate in 1997-98 helped push Uneximbank into bankruptcy?

– there are two other omissions of the record of Mr Prokhorov, which your article reveals. Have you omitted recent statements by high-ranking Russian and US officials, casting negative light on Mr Prokhorov’s character and business practices, because you were intending to do, or had agreed with Mr Prokhorov, to do a promotion? Or because you were unaware of the officials and their criticisms? . The first of the criticisms of Mr Prokhorov came from the Prime Minister of Russia, Vladimir Putin, who criticized him for his management of the utility company TGK-4 for what might — in another country or in another medium than Bloomberg Markets — be called investment contract violations or cash stripping. Mr Putin made his statement on February 24. Also, according to Admiral Dennis Blair, the US Government’s Director of National Intelligence, Mr Prokhorov’s line of business in precious metals makes him susceptible to, or a witting party to, the “growing nexus in Russian and Eurasian states among government, organized crime, intelligence services, and big business figures. An increasing risk from Russian organized crime is that criminals and criminally linked oligarchs will enhance the ability of state or state-allied actors to undermine competition in gas, oil, aluminum, and precious metals markets.” Admiral Blair made this and related statements in testimony to the US Senate Select Committee on Intelligence on February 2. Did you miss it?
Note that Blair's testimony did not specifically mention Prokhorov. But Putin's comments did, and were reported by Bloomberg.

(Business Insider also linked to Helmer's critique.)

More from the profile

The profile involves reporter Ryan Chilcote (who also sat down for the one-on-one interview) following Prokhorov around to (natch) his home, his gold mine (via Prokhorov's private jet), and an exclusive nightclub in which the mogul's VIP area is populated by attractive young women.

Chilcote at least knows that he might be used. "Russian billionaires don't tend to share much with journalists," he says in his narration, "but Prokhorov believes it's time for some glasnost. Buying the Nets is the first step to building his profile in the U.S."

"As far as I know, all the NBA owners, they are very important people in their cities," Prokhorov tells him. "And I don't want to be different. And maybe in my case, I need to be much more open."

Chilcote, after experiencing the "parallel universe" of the billionaire's world--a convoy to clear traffic in Siberia--follows Prokhorov back to some madeleines: the now-abandoned factory where he profited by stonewashing blue jeans and the two-room apartment that he left only five years ago.

"It's kind of a miracle," Prokhorov says, recalling his traveling father bringing back tokens of the West, including "Brooklyn chewing gum." Unmentioned: it comes from Italy.

"Have you ever given a bribe?" Chilcote asks.

"It was like, 15 years ago, last time," Prokhorov responds, his syntax indicating it wasn't a first.

Near the end of the piece, Prokhorov gets his money line: "Do you remember the song, Frank Sinatra, 'New York, New York.'? If I make it there, I'll make it anywhere."

And Chilcote/Bloomberg stick with the story line: "The NBA is about to welcome its first Russian billionaire to the league. Prokhorov is about to get his shot."

More from the interview

Prokhorov is nothing if not diplomatic. Chilcote attempts to point out mysterious deaths of important people in prison: "That doesn't happen everywhere, lawyers just die in jail."

"It is true, for the time being, we have awful conditions in jail," says Prokhorov, essentially changing the subject.

"How much cash do you have?" Chilcote asks.

"If I told you, I'll have to kill you," Prokhorov responds, displaying the insouciant attitude that permeated the 60 Minutes piece.

Chilcote points to conditions at the mines, with "hard-working very poor people… Do you feel like you're giving enough back to them?"

"In Norilsk… my staff… they receive the biggest salary in Russia, ever," Prokhorov responds. "You saw the quality of the food, it's free of charge."

The Bloomberg article reports it more ambiguously:
Prokhorov took the helm in 2001 and radically restructured the company. The number of workers shrank to 58,000 in 2007 from 125,000 in 2001, as miners and pensioners were taken off the payroll and resettled in different parts of Russia, says Olga Golodets, who ran human resources at Norilsk under Prokhorov.

He also removed from his books social enterprises like nurseries and hospitals, which were part of every big company under the Soviet system.
The Nello exchange

While Chilcote doesn't push too hard on Prokhorov's business issues, he does press regarding the notorious lunch.

Did Prokhorov spend $19,000?

"I don't remember," says Prokhorov. (Check his body language.)

Was there a $5000 bottle of wine?

I don't know," Prokhorov says, grinning. "I need to check."

What about $825 for three orders of truffle taglioni?

"Maybe," allows Prokhorov.

Oligarchs and business

"Are you an oligarch?" Chilcote asks.

"No. For sure not," responds Prokhorov.

"Why not?"

"Oligarch is a person--he's rich and he has a political power," responds Prokhorov.

"You don't have any political power?"

"No," responds Prokhorov, with a shrug. "I'm just a businessman."

"But you have a relationship with the Kremlin," Chilcote follows up. "You know the president."

"Every businessman has a relation with government," Prokhorov responds.

He goes on to acknowledge that "sometimes you need the help of government" in setting up meetings and sometimes lobbyist-type people must be deployed "to make some amendments to the law."

In other words, non-oligarchs have political power.

The shady side

Chilcote recalls seeing "countless so-called 'contract killings.'... You yourself said this was a country of cowboys and there was no sheriff. Did you have to deal with gangsters?"

"No," declares Prokhorov, shaking his head solemnly.

"You lived in a vacuum somewhere," Chilcote responds skeptically.

"My career was a little bit very specific," Prokhorov says, noting his work with a bank.

Chilcote cites an encounter Prokhorov once had with the mafia.

"I explained my view and there was nothing after," Prokhorov responds.

"Russia's one of the most corrupt countries in the world, as you know," Chilcote notes. "Were you able to completely sidestep that?"

Prokhorov pauses. "Do you know the difference between a rat and a hamster?" he asks, pausing for a smile. "A hamster has better p.r.… Maybe we are suffering from lack of explanation."

In other words, he dodged the question.

"Do you think Russia has an unfairly bad reputation in the West?" Chilcote asks.

"I hope not, but if you ask, maybe we have some problems," Prokhorov responds.

The Nets and Brooklyn

"Give me your five-year plan for the Nets," Chilcote asks.

"We checked thoroughly, what is the potential income for the club, and for the arena," he says, displaying a train of thought that might not have been on-message for the "Brooklyn" groundbreaking he missed March 11. "Maybe we add some other ideas to this business plan, in the future. But this plan showed to us that we can receive profit, compared with so-called "charity support" business in Russia and Europe. I like to win NBA cup, and at the same time create not only great team, but a great business."

Someone surely will tell him it's a team, not a "club," and a championship, not a "cup."

Chilcote says a fellow Russian billionaire says the team's a toy. Prokhorov says no, it's not a toy.

Chilcote says Prokhorov will go a half a billion dollars in debt. Prokhorov says no, it'll be less than $200 million.

(Prokhorov is putting up $200 million to buy 80% of the team and 45% of the arena, and absorbing current and future losses, as well as putting in equity--perhaps $500 million, even more, but most if not all borrowed.)

The Chilcote throws a softball question, pointing out the team's current losses, and losing streak, and "here's how you can make a lot of money."

"As soon as team moves to Brooklyn, it will be absolutely another business model," Prokhorov says, with an excellent grasp of the team's prospects and marketing opportunities. "As soon as arena has been built, and I'm confident… we can create excellent business unit."

"What is it about Brooklyn, that it adds so much?"

"It's New York City," Prokhorov responds.

Chilcote brings up the Knicks.

"New York City suffers from the lack of great competition between two teams," Prokhorov responds. "I am absolutely confident that, as soon as we create a real championship contender, using our competitive advantage, excellent draft picks over the next two years, and 14 excellent top players that are free agent, and we have the lowest salary cap in the league."

"How much money are you prepared to spend building your dream team?" Chilcote asks.

"Dream team is not only a question of money," Prokhorov responds. "It's also management and team spirit. All these three facts together--it's a great team."

And, perhaps, the political advantage that Prokhorov has left to his American partners in Brooklyn.

Prokhorov goes on to talk about wanting to bring NBA training to Russia and to help globalize the game.

The last question involves, natch, business. Will Prokhorov sell stock in the Nets and list the team on a stock exchange?

Prokhorov says maybe.

"If you list it, you cash out."

I hope I would have 80%," Prokhorov responds. "Maybe 51 is enough."

"Are you buying the Nets forever or is this a short-term business deal and in five years you're going to flip the company?" Chilcote asks.

"For me, it's a strategic investment," Prokhorov says.

"Bridge your way into America," Chilcote adds.

"If you buy a business forever, that means it's not a business. It's a hobby," says Prokhorov with a smile. "And if your business reaches the peak, you sell. But it's not high time to speak about that."