Did Sweden's Bonnier Group inadvertently pump cash into Latvian political faction's black war chest?

I have written this as a "dream" on my Latvian language blog, but in fact it is credible version of what may have happened in the controversial divestment by  Sweden's  Bonnier Group of the Latvian media group AS Diena and the business newspaper Dienas bizness (my employer for 11 years up to 2006).
The version I have heard is as follows:

By early 2009, Bonnier realized that its newspapers in Latvia had been loss-making for some years and it had to decide how to stop the losses. There were a few options. First, to declare the newspapers bankrupt. This could be a dragged out process and perhaps would require a restructuring of the Diena group to separate out some profitable and potentially profitable parts. It would also cause some bad PR for Bonnier, who came into the Latvian market in the early 1990s under the banner of bringing a free, independent press to the post-Soviet country;

Another, similar alternative would be to close the newspapers. This (also probably the bankruptcy proceedings) would require dismissing the entire staff, paying severance pay, etc. There would also be bad PR.

The third possibility was to divest the newspapers. However, with at least Diena making serious losses (both papers lost a total of LVL 2.7 million in 2009), it was unlikely to get a buyer for any reasonable price. Also, it didn't look like the media market in Latvia would recover in the foreseeable future with the country in the midst of a very severe recession.

It was then, according to a version I have heard, that the Bonnier Group decided to use a means of divestment that may have been used when the Swedish Social Democratic media group A-Pressen fell apart in the early 1990s. Then, in order to divest unprofitable regional and small-town newspapers, A-Pressen made some deals in which the "buyer" was actually paid to take over the asset. In other words, there was reimbursement for at least the first year of predictable losses that the paper would make.

For the "buyer", this meant little or no cash out of pocket  and vastly reduced risk, at least for a while. The method is said to have also been used in non-media related transactions, for instance, filling the cash on hand of a company, then "selling" it for a roughlt equivalent sum.

Of course, I may have some of this wrong, there is some huge Swedish government study of the A-Pressen case I have yet to read. But should this version be reasonably accurate, it means that the "buyers"  of Diena and Dienas bizness were compensated with a pretty good sum, that the Bonnier Group could show as an expense, not further losses from its Latvian subsidiaries.

To make a long story short, after the initial "sale" of the newspapers to a company founded by former Diena executive Aleksandrs Tralmaks, it appears that ownership of the newspapers came into the hands of the British Rowland family, who had little or no previous contacts with Latvia and with investments in media. There is consensus among observers in Latvia that the Rowlands were probably a front for political interests in Latvia, most likely the party alliance between oligarchs Andris Šķele and Ainars Šlesers, with Ventspils mayor and accused money-launderer Aivars Lembergs also probably involved.

Once the reimbursement for taking the two newspapers off the Bonnier Group's hands passed through the Rowlands (with some fee deducted), it may have found its way into the black (underground) or grey (hidden influencers, support organizations) war chests of the oligarchs.

It now appears to have turned up again in the latest bizarre twist in the decline and fall of both formerly Swedish-owned newspapers. On August 5, the Diena group announced that 51 % of its shares had been purchased by Viesturs Koziols, a Latvian entrepreneur, friend and former business associate of Ainārs Šlesers.  Koziols said he had bought the shares with his own money, but also said he had no vision of how to develop the media group and bring it back to profitability.

If there is a Mrs. Koziols or other significant other, I would imagine that Viesturs would face her wrath for blowing a significant part of the family fortune on a loss-making, seemingly hopeless investment (hopeless if you have no idea what to do with your "purchase"). Koziols is listed as a Latvian millionaire and he didn't get to be that by being a foolish investor.

This leads one to believe that perhaps Koziols is spending a part of the money paid " through" the Rowlands from the Bonnier Group. Which is not to say, by any means, that the Bonniers intended for any of this to happen, nor that they can be held responsible, anymore than I can be blamed for spending a 20 lat bill that passes through a number of people and is, say, spent to buy liquor for an underaged alcoholic.

Circumstances strongly suggest that Koziols investment in Diena is a "risk-free" project since it is money entrusted to him, with sole purpose of keeping the weakened and discredited media group alive and inactive politically until after the October 2 parliamentary elections. Then it may be allowed to go under by the New Year, just as another Koziols media project, Republika.lv, did before and after the 2006 elections (I have no content analysis, but others say it was a short-term, election year project).

Indeed, there may have been no actual transfer of funds, merely a shift of front men from 100 % Rowlands (with people still WTF'ing their presence) to 51 % for a local boy with at least some entrepreneurial credibility. One sign that no new money is coming into Diena is that journalists are not being paid their per-item honoria any more, just basic (as little as LVL 180) salaries. Since the Latvian media job market is very limited and depressed, this will not set off a stampede away from Diena, but will very seriously demoralize the already confused and demoralized reporting staff.

What does this have to do with freedom of expression in Latvia? It is not directly on point, there is no state authority repressing the media. However, there are political interests undermining the quality and independence of the press. These political forces, especially the First Party of Ainārs Šlesers, are homophobic and have a hidden authoritarian agenda. There will be less freedom of the press, a kind of Russia Lite, if these political forces win. So, ultimately, it is a freedom of expression issue.

Freedom and confidentiality in media transactions

I thought for a while about where to put this and decided to post, initially, to the Free Speech Emergency blog because media are one of the most important vessels of free speech. I don't, presently, see any serious free speech issues in the sale of the Latvian media group Diena and the business newspaper Dienas bizness by the Swedish Bonnier Business Press to what will eventually be a mutual fund with investments in Baltic media.

The controversy about this in the Latvian media has arisen from the apparent structure of the transaction. The Bonniers were so eager to sell their Latvian assets that they wanted to do it before the buyer came into legal existence. That is, the Luxembourg-based Catella Media Investment Fund has not been legally founded yet. In order to seize the opportunity, the Estonian financier Kalle Norberg and the Latvian former executive of Diena some years ago, Aleksandrs Tralmaks, organized a temporary arrangement to buy and hold the assets until the final ownership structure was in place.

They also needed to fund the transaction, rumored to be around LVL 9 million, and what they seem to have done is a variation on when an ordinary citizen is offered a chance to buy something two weeks before payday. She doesn't have the cash on hand, but borrows it from several neighbors. They then, technically, become "investors" in "today only" discounted flat-screen television until the end of the month, when our real buyer is paid and pays off her neighbors. Is it important to know who these neighbors are?

OK, I am simplifying the process with Diena and Dienas bizness, but as I understand it, two of the future owners and investors are already known -- Kalle Norberg and Alexandes Tralmaks. They have put up some of their own money. The other investors, who have, for various reasons, wanted to remain anonymous, but both their and Norberg and Tralmaks' shares in the media assets will change when the mutual fund is set up. As more money comes into the fund, which, presumably, will become owner of all shares in the Latvia media assets, the relative ownership proportion of the initial investors will be diluted and will change on a day-to-day basis, as will the identities and number of all owners of shares in Catella Media Investment. Mutual funds trade on a daily basis.

Let us make a wild guess and say that a certain Niklas Z of Skype fame lent USD 500 000 to the transaction entity. When the mutual fund becomes operational, Niklas Z' s loan will be changed into shares of Catella, and the asset that he and all the other mystery men and women will directly own will be shares in a mutual fund. In the short term, of course, most or all of Catella's capital will be invested in Diena and Dienas bizness, but there could be additional purchases of media assets in the future.

Mutual funds are pure instruments of financial investment -- I put my money in fund A, whose managers and investment strategy I trust, and expect to see growth of, say, 40 % when I sell my fund shares in five years. In the interim, the fund, for all I care, can finance chipmunk races and crocodile choir contests, as long as I get my expected return on investment. I am not interested in owning or influencing the management and strategy of any of the fund' s assets, otherwise I would buy those shares directly, in sufficient amounts and put myself or my representative on the board of Chipmunk Racers R Us.

If and when someone in the Latvian media gets a leaked copy of the transaction related investment agreement, it will probably include a rather dull list of Estonian, Danish, Swedish and British names -- Veiko, Tarmo, Niklas, Samantha, whatever. And, certainly, the media will have full freedom to publish this "scoop" and should be protected from lawsuits or prosecution should that happen.

In short, I think the uproar over who the mystery investors in the transactions is overblown and too much energy is put into exploring conspiracy theories. It is certainly necessary to have transparency in media ownership, but things should shortly fall into place. Of course, I could be wrong and the real owners of Diena and Dienas bizness are Elvis Presley, Borat and three Russian oligarchs.

Fools' speech is free speech too, especially for Latvian-Americans

Correct me if I am wrong, but it seems that a Chicago-area (the USA, the land of the First Amendment) emigre (or the fashionable diaspora) Latvian group supporting Ainars Šlesers for mayor of Riga has been hounded out of existence by elements of the American Latvian community. This was to a large extent triggered by a somewhat indignant story in the Latvian daily Diena, which apparently is read and respected by the diaspora 

Don't get me wrong, there is no way I support Šlesers and his theocratic, holy-roller cryptofascist Latvian First Party/dessicated corpse of the once-liberal Latvian Way (LPP/LC). But that does not mean that people don't have the right to think and say that Šlesers is the greatest fuckin' thing since machine-sliced cheese. That is what free speech and a diversity of opinion are all about. As for the American Latvian Association "distancing" itself from the pro-Šleseristas in Chi-town, well, Maryland is already pretty distant. It would have been better to say: "we make no political endorsements and urge all Latvian citizens, be they in Latvia or abroad, to vote for the candidates of their choice." (SEE AMENDMENT BELOW)  As for others who had objections to the Šleseristas -- well, organize a debate, put up a website, go to www.latviansonline.com or some such place and argue against Šlesers of for one of the other candidates. Yo, like the States is a democracy and has plenty of room for wacko opinions! And if  the diasporistas really follow what is going on here, down at the grass roots, they should know that this place is a real political Wackostan. Supporting Šlesers pales beside some of the crackpottery available here.

And finally, to the lawyers Blumbergs and the grab-bag of Latvian-American accountants, public servants, salesmen etc, WTF are you so chickenshit? If you really believe in Bro Ainars, don't fold the first time the wind blows against you. Tell ALA to ... well, I am reminded of  T-shirt I saw at the American Latvian Song Festival in 1978 -- it was worn by a friend of my from Germany and his brother as a protest against an ultraconservative relative of theirs. The custom shirts said Arvīd, ej tu dirst! The best translation I can come up with is  "Arvid, go fuck yourself!" 

So guys and gals from Chi-town, come out from under the table or bed or wherever you went after the first round of criticism, and put on your Arvīd T-shirts (aimed at those diasporistas who hounded you) on the front, and a picture of the stone-faced (ķieģelpurns) Ainārs on the back.

ADDED June 2, morning, Latvian time: 

It seems that ALA did make the kind of statement I mention above, a kind reader informs. I was basing this on the Diena report, where to "distance one's self" suggests disapproval and disagreement, like when football team X says "we are glad about winning the championship, but distance ourselves from those fans who decided to burn down the town hall and 20 cars in celebration."