Really Rocket Science

Путін Хуйло.

Remember that $50 billion arbitration award to Yukos? Well, as with any judgement award, the tougher next step is actually getting paid. If you expect Russia to simply write a checks to a former Yukos shareholders, then go fly a kite.

They threatened to start seizing assets outside of Russia, so Putin’s commanding everything they own get a diplomatic property plate slapped on it. Afterwards, many buildings in Paris became part of the Russian consulate.

So now we find a couple of asset seizures from two Paris-based entities: Eutelsat and Arianespace. The Eutelsat assets seized were related to 15-year lease on the Express AT2 spacecraft, which launched in 2014, at $400 million. The Arianespace assets are related to rocket launch service, likely related to Soyuz launchers out of Kourou, and worth $300 million.

Would you be surprised if Luxembourg was next on the list?

Not at all, given Gazprom’s involvement with SES S.A.

Here’s the story by Michael D. Goldhaber, in American Lawyer (subscription)…

The Russian social contract rests on a tacit agreement between the businessmen and politicians not to talk about their mutual corruption. In Russia’s desperation to roll back history’s biggest arbitration award, this bargain is breaking down.

In July 2014, arbitrators ordered Russia to pay 
$50 billion to the oligarchs from whom it seized Yukos Oil Co. At a Feb. 8 hearing to set aside this award, Russian counsel Albert Jan van den Berg told the Hague District Court: “If we want to talk about the reality of this case, we have to go back to … the disintegration of the Soviet Union.… A handful of oligarchs were robbing state-owned companies blind.” On April 20, a Dutch court will decide whether “you stole it first” is a valid defense.

In the “loans for shares” program of 1995-1996, Russia allowed a larger group of oligarchs to transfer control of a dozen major companies to themselves in exchange for loans to help Boris Yeltsin balance his budget and thwart the Communists’ return to power. Russia chose Mikhail Khodorkovsky’s Bank Menatep to hold the initial Yukos auction and share tender. Two Menatep affiliates submitted the only bids. The winner bought 33 percent of Yukos in exchange for $159.5 million, committed to invest $200 million in the company and won the right to lend the state $159 million secured by another 45 percent of Yukos.

When Russia defaulted on that loan, Menatep organized a new auction, with two Menatep affiliates again emerging as the only bidders. One bought the secured shares for $160.1 million. Menatep’s total commitment was $518.6 million. By the next year, Yukos was publicly valued at $6 billion. Other crown jewels of the Russian economy that were privatized in this creative manner include Lukoil, Mechel, Norilsk Nickel and Sibneft.

Putin tolerated Khodorkovsky until he publicly questioned the integrity of another state oil deal in 2003, as we described in our ongoing coverage.Then prosecutors tested a long list of pretexts for hounding Yukos into liquidation. They never even considered going after Yukos for rigging a state auction, because that remained business as usual. Indeed, the state would recover Yukos’ main asset in 2004 by means of—you guessed it—a rigged auction.

As the 10th anniversary of Yeltsin’s “loans for shares” approached in 2005, the Duma passed a law at Putin’s urging that cut the statute of limitations for challenging a privatization. At that moment, a legal accounting seemed unlikely either for the oligarchs stealing Yukos, or for the government stealing it back.

But before Russia dismantled Yukos, the Menatep oligarchs had passed their shares to corporate shells based in jurisdictions that signed an investment treaty with Russia known as the Energy Charter Treaty. “It looks like someone mapping the Ebola virus,” a Russian counsel says of their tangled legal structure. In 2005, three offshore affiliates of Group Menatep (now GML Ltd.) filed claims for expropriation.

With Cleary Gottlieb Steen & Hamilton defending the arbitration, Russia argued only in passing that “loans for shares” sullied the oligarchs’ hands. The arbitrators, in their 1,888-point ruling of 2014, dismissed the argument in one formalistic point. Russia had failed to adequately connect Bank Menatep’s allegedly illegal “loans for shares” scheme with the claimants’ “investment” in Russia, they concluded, because the claimant entities were separate from Bank Menatep and its oligarchs. The reasoning of paragraph 1370 struck us as the award’s weak link immediately. The arbitrators didn’t back up their assertion of corporate separateness. And they never tested the alleged illegality.

Now, Russia’s only recourse is in the Netherlands. (The day before the 2014 award, a Russian missile killed 193 Dutch citizens over the Ukraine.) At first, in January 2015, Russia told the Dutch court that “legal infirmities surrounding Yukos’ founding” were not a basis for a set-aside. Then White & Case took over Russia’s case from Cleary. With White & Case’s guidance, Russia is making “loans for shares” central to its enforcement defense in Washington, D.C., France, England, Germany, Belgium and the Netherlands.

Russia only raised “loans for shares” in Dutch court early this year. Even though it had confiscated Yukos’ share registry in 2003, Russia presented the evidence as newly discovered because “the code was not cracked until October 2015.”

Yukos’ counsel, Shearman & Sterling’s Emmanuel Gaillard, teases Russian intelligence: “It took the FSB 12 years to crack a code? This is very disappointing.”

Russia argues in its Dutch challenge that the arbitrators lacked jurisdiction because the Energy Charter Treaty does not extend a nation’s consent to arbitrate toward investors who make an illegal investment. (Russia also renews its arguments that it never ratified the treaty and that the claimants are Russian nationals, among other things.) For all the same reasons, Russia contends that the usual exception to sovereign immunity for confirming an arbitral award doesn’t apply.

As a legal matter, the Yukos camp counters that Energy Charter jurisdiction is predicated on claimants’ status as “investors,” rather than their investment’s legality. Anyhow, they say, Russia clearly waived its “loans for shares” objection.

As a factual matter, the oligarchs say that Russia knew full well that Menatep lay behind the bid for Yukos—just as the arbitrators knew full well that Menatep lay behind the arbitration. Given the dire state of Yukos and Russia in 1995, and a ban on foreign bids, they say a half-billion-dollar commitment was nothing to sneeze at.At the end of the day, the oligarchs argue that “loans for shares” were legal because they were organized, overseen, monitored and later ratified by Russia.

The Global Lawyer accepts that the Russian “sale of the century” was an open secret, and a disgrace. We’ll let the Dutch courts assess its legality. Meanwhile the cat and mouse game begins. On Dec. 17, a Paris court declined to suspend enforcement of the Yukos award pending appeal.

Gaillard complains that “Russia is busy slapping diplomatic plaques after the fact on every piece of property it owns in Western Europe.” Russia persuaded Belgium to enact a “Yukos Law,” requiring that a judge preauthorize asset attachment. It pressured Belgian diplomats and French police to block local functionaries from taking inventory at buildings the oligarchs seized. Most ominously, Russia warned in a July 15 diplomatic note that it will consider any American enforcement as grounds for retaliation against U.S. citizens and businesses.

Even so, the oligarchs have provisionally seized close to $1 billion in assets in France—including $400 million owed by Eutelsat to the Russian Satellite Communications Co. for satellite capacity and $300 million owed by Arianespace to Roscosmos for rocket launchers. One billion down, says Shearman. Forty-nine billion to go, says White & Case.

Using state of the art satellite technology, Eutelsat and Facebook will each deploy Internet services designed to relieve pent-up demand for connectivity from the many users in Africa beyond range of fixed and mobile terrestrial networks. Satellite networks are well suited to economically connecting people in low to medium density population areas and the high throughput satellite architecture of AMOS-6 is expected to contribute to additional gains in cost efficiency.

That quote is not from a press release issued in 1999. It’s from Eutelsat’s announcement of a partnership with Facebook on 5 October 2015, leasing Ka-band capacity on Spacecom’s forthcoming spacecraft. In 1999, satellite was seen as the “leapfrog” technology, intended to bypass old wireline or tower-based schemes to get the Internet out to the people of Africa. Although “good for data” Ka-band payloads were not widely available back then, the same disadvantages are still lingering:

1. the high cost of space segment
2. customer premises equipment is not cheap
3. latency will always be an issue

Unless Facebook dollars subsidize the first two costs, we’ll only need to deal with physics.

The RF signal to and from the geosynchronous spacecraft will always require a 1/4-second to complete, then add a little bit of time to get the content, then another 1/4-second to serve it up. We’re not getting into video or any rich media — just the basics. Fine. People without any connection will be happy with whatever they get. High-throughput or not, you get what’s allocated to you.

Let’s consider reliability. First, there’s the issue of a reliable electric supply. Do we have enough of that in Sub-Saharan Africa? Next, there’s the signal itself. Even with a good link budget, and backing-off on the data rate a bit, you’re dealing with a considerable amount of rainy conditions for wider areas, so you can expect the signal to fade or experience complete outages during the rainy season.

Considering satcom’s promise hasn’t been kept for so many years, true “leapfrogging” is happening everywhere. In Rwanda, for example, 4G LTE is being built out and it kills any comparison to satcom alternatives using geo satellites. Using LEOs from O3b Networks works well, but somebody stills has to make the economics work.

So good luck to to Facebook and their internet.org effort.

The remnants of totalitarian communism in Russia refuses to go away. Putin’s mafia-style government first tried to take down the satellite TV signal of Dozhd, one of the few remaining independent channels. The channel is available via Yamal 300K, Eutelsat 36B, Astra 4A, and Dish Network in the U.S. (via Anik F3).

Now the government wants to ban advertising on any channel beside FTA television, most of which is state-owned or controlled. Removing one of the main sources of revenue is their way of putting them out of business.

Dozens of small and independent Russian television stations could face closure after lawmakers approved a controversial bill banning advertising on cable and satellite channels.

The proposal would also consolidate state-controlled channels’ dominance of the advertisement market.

The surprise bill raced through Russia’s State Duma, the lower house of parliament, last week, sailing through its three compulsory readings in just two sessions.

Excluded from the ban are “national, compulsory, universally accessible” channels and those conveyed by terrestrial broadcasting — meaning all the state-controlled channels that currently dominate Russian television.

Advocates say the new law aims to end unfair competition on the television market, where pay channels supposedly benefit from mixed funding schemes — subscription fees and advertising — while free broadcast channels are limited to commercials.

But the heads of 15 pay channels, including Natalya Sindeyeva of opposition-leaning Dozhd TV, have written a letter to the government warning that the ban will sound the death knell for more than half of Russia’s cable and satellite channels.

“Excluding the advertising model could place about 150 thematic pay channels on the brink of survival,” the letter says. “Raising payments for television services may lead to understandable customer dissatisfaction.”

The signatories also warn that the new law will hurt small and medium-sized businesses currently advertising on pay channels since “only big-business representatives can afford advertising on federal channels.”

Read the letter in Russian here. Behold the quick translation into English…

From an article in the newspaper “Kommersant” from 26/06/14, we were surprised to learn that in the State Duma in an expedited manner planned to adopt a package of amendments to the “Law on Advertising.” Our keen interest aroused amendment prohibiting advertising on pay channels. We believe that consideration of this amendment, the State Duma of the Russian Federation should take into account the following circumstances:

1. Absolutely no obvious reason why television channels necessary in law to impose a particular model in the market. We believe that any TV channel can select or advertising model, or paid, or mixed. The choice of a model should be determined solely by market mechanisms rather than the provisions of the legislation. According to our information the absence of such legislative restrictions characteristic of the vast majority of countries around the world.

2. Most pay-TV channels now uses both models of monetization of their business – and advertising and paid. Exception advertising model will deliver about 150 paid thematic channels on the brink of survival. It is possible, the financial burden will be shifted to the subscribers. Services of the largest Russian operators used by tens of millions of Russian citizens. Increased pay for TV service can lead to understandable frustration consumers.

3. Please note that the central channels of essential federal campaigns can afford only representatives of big business. For medium and small business advertising on such channels is not available due to its high cost. But representatives of small and medium businesses can promote on the Russian market their products and services by means of pay-TV channels. They can appeal to the audience of thematic channels, which are most likely to consume their product or service at feasible prices for their business. Ban such advertising can lead to a significant delay in the development of small and medium-sized businesses in our country. We believe that this provision of the legislation is contrary to public policy to support small and medium-sized businesses.

Appeal with the proposal to postpone consideration of this amendment in the spring session of the State Duma. Propose to discuss the amendment with the business community, and nominate it for discussion by the State Duma in view of his opinions.

This is ridiculous, yet typical of Putin’s stupidity. Gutting the Russian economy is obviously not a consideration.

People will find want they want from other sources: the truth.

The board of directors of Tricolor TV, a satellite TV bouquet in Russia, has decided to drop the channel Dozhd from their offerings, citing the most recent activity they had that pissed off Putin and his bully government: a poll regarding the siege of Leningrad during World War II, know as “the great patriotic war” during Soviet times.

If they really want the world to take them seriously, allowing for a free expression of ideas and opinions can only help their further their objectives. But this is Russia, so fuck the people. We are the boss of you.

Eutelsat, the carrier of the Tricolor package at 36 deg. east, should reach out to Dozhd and make space available elsewhere.

Back in 2007, SES and GE worked out a deal that included GE getting back into the satellite operator business. Well, not really an operator — just an owner of an orbiting spacecraft. They called it “GE Satellite” and continued to employ a bunch of people who were selling it. To make that deal work, GE had to have title of the asset (the GE-23 spacecraft) for five years.

Did you do the math? It’s been five years all right. Earlier today, news came out that Eutelsat was buying the asset from GE Capital, which never bothered to list it as part of their many businesses since they knew it was only a matter of time before it went away.

Good day at the office for GE Capital (again) in getting a bunch of cash and good for Eutelsat for getting an asset and an orbital slot over the Pacific Ocean Region (POR). One of the key customers is the U.S. government and Connexion by Boeing, which is still around to provide satcom services to airliners such as Air Force One. Other than that, there’s not much on that bird.

The 20 channels available in the Ku-band is divided among five beams, which was good for the Boeing service, but not really all that workable for standard satellite customers. It was not an easy sell — except for GE Capital.

Nice to see Sea-Launch’s return to service after all that bankruptcy business in 2009.

Sea Launch AG has successfully launched the ATLANTIC BIRD(TM) 7 broadcast satellite from the Equator on the ocean-based Odyssey Launch Platform, marking its first mission for Eutelsat Communications (Euronext Paris: ETL) and its awaited return to launch operations following re-organization in late 2010.

The Zenit-3SL rocket carrying the ATLANTIC BIRD(TM) 7 spacecraft lifted off at 13:18 Pacific Daylight Time (20:18 GMT/UTC) on September 24 from the launch platform, positioned at 154 degrees West Longitude in international waters of the Pacific Ocean. One hour and seven minutes later, the Block DM-SL upper stage inserted the satellite, weighing approximately 4,600 kilograms (10,141 lbs.) and built by Astrium, an EADS company, into geosynchronous transfer orbit, on its way to a final orbital position at 7 degrees West Longitude. Operators at the Hartebeesthoek ground station near Pretoria, South Africa acquired the spacecraft’s first signals from orbit shortly after spacecraft separation. All systems performed nominally throughout the launch mission.

Here’s the video, with dual English and Ukrainian countdown in the beginning, followed by the camera operator trying to keep the rocket in the frame while out at sea…

Ahrar TV launches today on Atlantic Bird 4A (7° West) at 16:30 GMT. Downlink details: 10930 H (tp 121). It’ll be part of the Jordan Media City MUX.

The report, via RIA Novosti…

The Libyan opposition is launching a satellite television channel, Ahrar TV, on Wednesday with the help of the Qatari government in counterbalance to state-controlled media.

Libyans have only been receiving information from media controlled by Muammar Gaddafi’s government and from foreign satellite television channels, which Tripoli has been jamming in the past few weeks.

The new TV channel will go on the air at 7:30 p.m. local time (17:30 GMT) using the French Atlantic Bird satellite.

The U.S.-based Foreign Policy journal said the Qatari government had provided technical equipment of their culture channel Al-Rayyan to a group of Libyan journalists led by Mahmud Shammam, who arrived in Doha, the capital of Qatar.

The Libyan opposition has already launched Radio Free Libya and Radio Free Tobruk on mid-range bandwidths.

A new regional news operation is opening up in the Balkans, with an interesting business plan. The story, via AFP:

The Al-Jazeera pan-Arab satellite channel says it will begin airing a Balkans programme in September, hoping to to establish itself as a regional news hub in the ethnically divided region.
With powerful public television divided along ethnic lines across the region and dozens of private channels mostly focusing on entertainment, Al-Jazeera Balkans hopes to fill the void for a regional news broadcast.

“In the region there are currently more than 100 stations that broadcast news,” said Goran Milic, 65, a prominent Croatian journalist who will be responsible for Al-Jazeera’s Balkans operation.
“We cannot compete with them on the level of local news and won’t be able to for a long time,” he added, Instead, he said, Al-Jazeera could offer the regional approach abandoned in the 1990s due to war and the emotions that it sparked.

In the 1990s, the former Yugoslavia broke up into six separate states (Bosnia, Croatia, Macedonia, Montenegro, Serbia and Slovenia) and the disputed territory of Kosovo.

But Milic argued that many people across the region “are still interested in what is going on on the other side of the border.

“No local television dares to make a regional programme treating topics relating to bordering countries, for fear of being accused of “Yugo-nostalgia,” he noted.

“Our advantage will be also to compare information on an event in one country with a similar situation in an another,” he explained.

Media analysts however question whether Al-Jazeera can succeed since several previous attempts over the past 16 years to set up Balkans broadcasters with support of the international community failed because of lack of interest.

“They were political concepts aimed at breaking down the walls that arose during the conflicts and to push reconciliation,” Bosnian media analyst Zoran Udovicic told AFP.

After 20 years of various state media repeating the official line, it is hard to get people interested in what is happening in neighbouring countries, he added.

“(Al-Jazeera) can focus on the languages that are similar or the same and even on the feelings that people still have about the (Yugoslav) period before the wars … but they will also need to work to spark people’s interests in their neighbours,” Udovicic said.

Al-Jazeera’s best bet, he noted, would be to steer clear of the war-torn past and focus its programming on the present and the future of the region.

Serbian journalism lecturer Zoran Cirjakovic also saw problems ahead for the Balkans branch of the Qatar-based company.

“The audience in various parts of the Western Balkans has a different understanding not only of the past but also of the present,” he warns.

“The audience in all countries (in the region) have radically different interests in political topics,” he told AFP.

“They are more easily united in topics like art, culture and entertainment,” he added, citing examples of successful regional entertainment such as music and reality shows.

“My students, born in the late 1980s or early 1990s do not remember Yugoslavia… for them it is another planet, another world,” he explained.

So Al-Jazeera Balkans will be put to the test when it starts broadcasting in what was once called Serbo-Croat, which is universally understood in Croatia, Serbia, Bosnia and Montenegro.

Together with Al-Jazeera Turkey, it will be one of the first regional offices to broadcast in languages other than Arab or English.

The Pan-Arab channel has invested more than 20 million dollars (14 million euros) in the Balkans project.

Initially launched in 1996 as an Arabic news and current affairs satellite TV channel, Al-Jazeera has since expanded into a network with several outlets, including the Internet.

Al-Jazeera Balkans will employ some 100 people, including around 60 journalists and cameramen.
It will have correspondents in all the countries that once made up the former Yugoslavia and in several world capitals.

And it will tap a regional audience of over 20 million people as well as an important diaspora from each of the six former Yugoslav republics, particularly in Western Europe.

I don’t think they’ve figured out what satellite they’ll be on. Al-Jazeera is carried by quite a few satellites around the world, but they’ll likely select one that’s popular in the Balkan region. However, the either Astra or Eutelsat would be be a good choice as well.