Making a Start
It was Sergei Stepashin who propelled Leonid Reiman on to the federal level: In July 1999, Stepashin, prime minister at the time, appointed him first deputy chairman of the RF State Commit-tee for Telecommunications (Gostelekom). A month later, in August 1999, Vladimir Putin, who had just become prime minister, appointed Reiman Gostelekom chairman. Prior to that, the future minister was an obscure fi-gure, little known outside St. Petersburg where he had been first deputy general director of OAO Peter-burgskaya Telefonnaya Set (PTS), a St. Petersburg city telephone company. True, his acquaintanceship with Stepashin and Putin at the time was far more important than that.
It will be recalled that in 1991-92, Stepashin was chief of the Federal Security Agen-cy (later renamed Federal Security Service, or FSB) of St. Petersburg and Lenin-grad Region Directorate while Reiman was deputy head of the Leningrad City Telephone Network (LGTS) for development. Communi-cations and state security have always been closely interrelated government agencies: The latter invariably needed the services of the former, while the former could never take a step without a nod from the latter.
So there is little doubt that the establishment of Delta Telekom in 1991, St. Petersburg’s first joint venture with a share of U.S. and Danish capital, had the bles-sing of state security agencies. Ditto for the creation, in 1993, of the Severo-Zapadny GSM company, a structure that subsequently formed the core of MegaFon, which will be discussed in more detail below.
It is worth noting that creation of joint ventures in the city on the Neva at the time was in the charge of the first deputy mayor and chairman of the Foreign Relations Committee – Vladimir Pu-tin. He also supervised the privatization of the Lenin-grad city telephone network, in 1993, when OAO PTS was founded. In the course of the operation, the LTGS was reorganized as a joint-stock company – so “successfully” that the city, which had for years been investing considerable funds in develo-ping the telephone network, ended up without a single share in its hands. As a result, today it has no way of influencing the telephone monopoly’s policy in general or tariffs in particular.
By virtue of his official position, Leonid Reiman played a key role in those processes. This must in fact be when he established a close relationship with Vladimir Putin: The two are now said to have raised their friendship to a family level. Besides, Rei-man’s immediate boss (director of the LGTS and then president of OAO PTS) was Valery Yashin, the future head of Svyazinvest holding, whose interests Reiman would afterward actively lobby for as a government minister.
True, those would not be the only interests he would lobby for.
The Minister and His Business
With Leonid Reiman’s appointment as head of the information technologies and communications industry the minister’s official presentations began, rather, to recall those of a joint-stock company president at a general sharehol-ders meeting. The reason for that is clear: There is not a single minister in the Russian government who would be closer linked to his own business than Reiman is.
The minister’s baby is Telekominvest, a super-hol-ding that he conceived and set up as early as 1994. At the time OAO PTS transferred to the holding the stakes in all of its subsidiaries – alternative telecom operators, both landline and mobile. Two years later, a controlling stake in Telekominvest was sold to FNH, a Luxembourg company, a subsidiary of German Commerzbank and the Swedish telecoms operators Telia, whereupon the state effectively lost its control over the PTS’s subsidiaries. That created an uproar: Rumor even had it that Vladimir Bulgak, chairman of the State Committee for Communications, vowed to sack and blacklist Valery Yashin, but that never happened.
Being closely linked to PTS, Telekominvest easily took a dominant position on the St. Petersburg market. Competitors were given the squeeze and crowded out: They were refused the lea-se of cable networks, offe-red discriminatory linkup terms, denied the required throughput capacity, and so on. Even so, the holding felt cramped on the St. Petersburg market. Its owners craved for a chunk of the national market but lacked a sufficient administrative resource. It came in the fall of 1999. In August, Reiman became Gostelekom chairman and in November, the minister: The committee’s status was upgraded to a ministry. In the meantime, in October, Valery Yashin was appointed head of Svyazinvest.
That was when it was decided to create MegaFon, a federal mobile telecoms operator, with the assets of the Severo-Zapadny GSM company. Most experts see this company as Reiman’s turf. It is difficult to say to what extent the minister controls it (that is to say, what his stake is). Be that as it may, throughout the period that Leonid Reiman headed the industry, MegaFon was given the most favored treatment.
In May 2002, MegaFon, where a 31 percent stake is held by Telekominvest and 26 percent belongs to the Finnish company Sonera, was officially registered and is today among Russia’s three leading mobile telecoms operators, along with BeeLine and MTS. It is noteworthy that being only in third position by the number of subscribers, MegaFon is the only provider holding a GSM standard operations license throughout Russia. Its competitors have not as yet been able to obtain such a license. Meanwhile, in St. Petersburg, “outsider” mobile telecoms operators were effectively barred from the local market and it was not until recently that first MTS and then BeeLine got hold of licenses to operate in the northern capital.
Neither was it by accident that MegaFon won a tender organized by the Federal Government Communica-tions and Information Agen-cy (FAPSI) to operate a “closed” cellular communications network used by go-vernment security and law enforcement structures. Insi-der sources say that by actively promoting MegaFon, Leo-nid Reiman looks after not only number one but also the RF president. The company is said to be controlled, through their own banking structures, by the well-known Kovalchuk brothers, who are closely associated with the president. Interestingly, in the late 1990s, when Vladimir Putin was not president yet, his wife, Lyudmila, was working at Telekominvest, under Reiman.
Observers attribute Leonid Reiman’s meteoric career not only to his friendship with Putin. After all, even before that he had achieved plenty. Graduating from rather unspectacular Leningrad Institute of Communications Technology, Reiman by age 40 had advanced to deputy head of the LGTS, which, given his parentage (his father was an ethnic Tajik) and his obviously non-Slav family name, would hardly have been possible if he was not really a clever and flexible man.
A case in point were the numerous and persistent attempts to force the introduction of a time-based telephone billing system (a story that was widely covered by Moskovskiye No-vosti). Yet, no sooner had Vladimir Putin, in early 2003, backed the principle whereby citizens had a right to choose to pay for local telephone service either by a flat fee or on a per-minute basis than Reiman wholeheartedly embraced the idea – that, given that over the preceding three years Reiman had been adamantly opposed to the principle. The ostensible reason: That would cut into telecom operators’ profits – a judgment logical for the head of a private phone company, but definitely not for a go-vernment minister.
Leonid Reiman’s private life is very much in the shadows. He is one of the most reclusive figures in the present Cabinet. He grants interviews very rarely – always on “business” occasions, and he never talks about himself or his family. It is only known that he is married, with two children, and likes classical music, computers, and tennis.
Well, all the indications are that in the next four years, Leonid Reiman will have no cause for concern. Putin’s patronage is guaranteed, his business is successfully developing, and there are no competitors eyeing his position. The story of his abrupt dismissal, followed by a triumphant return to the Cabinet of Ministers, is the most eloquent evidence to this effect. Moreover, Western partners respect and value him, while do-mestic businessmen understand only too well who the sheriff in the town is. From time to time he is tipped for promotion, which is even seen as a foregone conclusion. Thus, in 2001, he was favored for deputy prime minister and in 2003, following Valentina Matvien-ko’s election as St. Peters-burg governor, for presidential envoy in the North-West Federal District. Neither appointment materialized, but chances are that Leonid Reiman’s career will not be limited to a government minister’s position.
Leonid Dododzhonovich Reiman was born in the city of Leningrad, on July 12, 1957.*
In 1979, he graduated from the M.A. Bonch-Bruevich Leningrad Institute of Communications Technology.*
1979-1983, engineer and then section chief at the Leningrad city international telephone station.*
1983-85, did a tour of compulsory military service.*
1985-99, chief engineer at the Leningrad City Telephone Network (LGTS); deputy chief of the LGTS for development; first deputy general director of OAO PTS.*
From July 1999, state secretary, first deputy chairman of the RF State Committee for Telecommunications (Gostelekom).*
From August 1999, Gostelekom chairman.*
November 1999, appointed RF information technologies and communications minister.*
March through May 2004, first deputy minister of transport and communications.*
Since May 2004, RF information technologies and communications minister.*