This investigation was conducted in the Balkans in the last quarter of 2017, exclusively for the Observatory of Journalism. It was funded by our readers.
The dazzling career of David Petraeus, in turn - from Commander-in-chief of International Forces in Iraq and Afghanistan, to director of the CIA, to leader of the financial giant KKR and a media magnate - embodies a new form of military-security-financial-media power.
It is a career that seemed to have come to an abrupt end when a sex scandal forced Petraeus to resign from the CIA in 2012. The case of adultery was further exacerbated by the fact that the four-star general had lied during the investigation and, more importantly, that he was leaking state secrets to his mistress. He would be sentenced to two years on parole and would be charged with a $ 100,000 fine - a trifle in comparison to similar cases, including that of Edward Snowden, who claims to have disclosed much less confidential information.
Petraeus would recover. Six months after the scandal, he would be recruited by the venture capital fund Kohlberg, Kravis, Roberts & Co. L. P. (KKR) to run its newly founded Global Institute.
The Barbarians of Wall Street
In the 1970s and 1980s, KKR was the pioneer of LBO, or the "leveraged buyout" – leverage here signifying massive debt. The architect of this concept, Jerome Kohlberg, soon worried by the “overpowering greed that pervades our business life,” would leave the fund he had created, leaving only his K at the head of the acronym. Following his departure, it was the second K, Henry Kravis, who would lead these LBOs to skyrocket, thus earning KKR the unflattering nickname of the “Barbarians of Wall Street” (the best-seller and film “Barbarians at the Gate” are dedicated to their historical LBO on RJR Nabisco). They would remain the champions of this method, despite the practice often resulting in the dismemberment or even bankruptcy of the companies bought, as was the case with their other historical LBO: Energy Future Holdings. The same method is now practiced by Patrick Drahi, who built his media empire on colossal debt.
At the end of 2016, Donald Trump was considering Petraeus for head of US diplomacy, but he would remain with KKR, henceforth as a partner. Kravis and Petraeus are also members of the Council on Foreign Relations and regular participants in Bilderberg meetings. Kravis was ranked 38th on the list of the richest Jews by the Jerusalem Post.
The invasion begins
Upon his migration into the business world, the former government official immediately proved his worth by expanding KKR's already impressive portfolio. In 2013, the fund made its first direct investment in the region of Central and Eastern Europe by taking over United Group (SBB/Telemach) for an amount never disclosed but estimated to be over 1 billion euros. United Group represented a consolidation of the leading cable, satellite, and internet providers in the former Yugoslavia, with almost two million subscribers:
SBB (Serbia Broadband) - the largest cable operator and internet provider in Serbia with 700,000 subscribers;
Telemach - the leading cable operator and internet provider in Slovenia and Bosnia and Herzegovina;
Total TV - the first satellite TV network in Serbia, present in all six countries of the former Yugoslavia;
NetTV Plus - the leading OTT platform for PayTV and fixed telephony;
United Media - channels Sport Klub, Cinemania, Ultra, Mini Ultra, Lov i Ribolov;
CAS Media - the largest agency for the sale of advertising space on cable and satellite channels.
In the following year, 2014, KKR strengthened its grip. Via United Group, it bought the “turbo-folk” entertainment giant Grand Production and acquired a controlling stake in the Montenegrin cable operator BBM. The company also became co-owner of the number one information website in Serbia, Blic.rs, by buying a 49% stake in Ringier Digital SA, a digital subsidiary of the Swiss press group.
Finally, KKR launched its own regional television channel, N1 TV, an exclusive partner of CNN, with studios in Belgrade, Zagreb, and Sarajevo. Through this controversial move, United Group unified content distribution with production.
In 2015, the group set another precedent with the first acquisition of a mobile network - Slovenian Tušmobil - by a cable operator. In 2017, it acquired the activities of Central European Media Enterprises (CME) in Croatia and Slovenia, which included TV Nova, the most watched Croatian channel, whose evening news attracts the widest audience in the country amongst news programs; as well as POP TV, whose 24ur is Slovenia's main news program. Meanwhile, United Group has continued to expand its activities in fixed and mobile telephony and to absorb its competitors, including BHB Cable TV (Bosnia-Herzegovina), M-kabl (Montenegro), and Ikom (Serbia).
Who's hiding whom?
The “financial barbarians” spearheaded by Petraeus have erected a true media empire, but they have done so very discreetly, shying away from public scrutiny. Rare, reluctant, and belated investigations have, however, eventually revealed some details.
In 2015, a “Report on Ownership Structure and Control over Media in Serbia” by the Serbian Anti-Corruption Council identified the lack of transparency of media ownership as its priority issue. The following year, the ownership structure of United Group was investigated by the Slovenian newspaper Delo in cooperation with the Organized Crime and Corruption Reporting Project (OCCRP). Their article “On the Dark Side of Telemach” finally allowed the people of the region a behind-the-scenes look at their prime source of information. What they found in their probe was a labyrinth of ghost offshore companies, mushrooming in tax havens in order to hide the original owners and their financial networks.
A half revelation: the figue leaf is Serbian
The primary target of this investigation was Serbian Dragan Solak. In 2000, he founded KDS, a local cable operator in Kragujevac (Serbia), and while his start-up soared, becoming SBB in 2002, SBB / Telemach in 2012, and United Group in 2013, he was always able to maintain his hold on the managerial reins. There was nothing secret about it. The true discovery of the investigation was that he also kept 20% of the shares, hidden behind the company Gerrard Enterprises, which had he founded in 2001 on the Isle of Man.
This “king of the cable”, regularly “not available to the media,” now stands as a new business magnate in a devastated economic landscape and a flamboyant nouveau riche outlier among his impoverished compatriots, with his private jets, villa at Geneva lake, and a golf course that once belonged to the king of Yugoslavia (Petraeus's lifestyle has also long been the subject of gossip and reports, even in Huffington Post and Washington Post). A Serbian in a region where national rivalries are alive and well, an illusionist opening three offshore companies per day and pulling off “now you see it now you don't” tricks with millions of euros – and all of this without paying taxes – are just some of the reasons that the journalists of Delo and those who have followed in their footsteps (Nacional, Jutarnji list, Ekspres...) chose to turn the spotlight on Solak. Moreover, the risk was smaller than if they had followed the tracks of bigger game.
The role of American ambassadors ......
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EDIT- Re KKR
KKR, Pay to Play, Black Weapons, Petraeus, Blood Diamonds, Clinton Global Initiative, and the Green, Green Hills of Africa