Russia's VKontakte CEO says he was fired, flees Russia

MOSCOW, April 22 Tue Apr 22, 2014 11:18am EDT

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MOSCOW, April 22 (Reuters) - Pavel Durov, the founder of VKontakte, Russia's largest social network, said on Tuesday he was fired and had fled the country as allies of the Kremlin gained full control of the site.

Known as Russia's answer to Facebook, VKontakte (VK) has been the focus of an ownership battle since last April, when the United Capital Partners (UCP) fund bought 48 percent of the company's shares.

UCP's dispute with Alisher Usmanov's Mail.Ru, which owns the other 52 percent, deepened this month as the rivals took legal action to assert their influence.

Durov said on April 1 he had decided to step down because his freedom in running VK had been reduced by a shareholder change. Two days later, he withdrew his resignation, saying his departure would have threatened VK's future.

"Judging by the news ... I was fired today as the general director of VKontakte. Interestingly, the shareholders did not have the courage to do it directly and I learnt about my mysterious dismissal from the press," Durov wrote on his VK.com account late on Monday.

VKontakte said it had not received Durov's formal statement withdrawing his resignation, so his job was terminated. The one-month term during which he could retract, according to the Russian law, expired on April 21.

"The only possible legitimate decision ... is to satisfy this (resignation) request, and in the context of a shareholder conflict the company must act strictly within the law," said Dmitry Sergeev, executive director of VKontakte, in a statement.

"We hope that Pavel Durov and shareholders will agree on his further participation in the network's development," he said.

But Durov told the technology blog TechCrunch on Tuesday he was "out of Russia" and had "no plans to go back."

"Unfortunately, the country is incompatible with Internet business at the moment," he was quoted as saying. Reuters could not immediately reach Durov for comment.

UCP said it was not considering Durov's dismissal an "accomplished fact", adding its lawyers were looking into the situation.

Mail.Ru declined to comment and Usmanov's company USM also declined an immediate comment.

"It is difficult to conclude whether a final decision on VK's CEO has been made," said Alexander Vengranovich, an analyst at Otkritie Capital. "In our view both shareholders need to find common ground for joint cooperation and the further development of VK, which we think is the main potential catalyst for Mail.Ru this year."

'FULL CONTROL'

VK is Europe's largest home-grown social network with 240 million registered users. It has been used widely as a platform by opposition groups against President Vladimir Putin who has been tightening grip on media since rising to power in 1999.

Durov claimed on his departure that VK was now under "full control" of Putin's close ally Igor Sechin, as well as Usmanov.

Durov's reference to Sechin, head of state-run oil company Rosneft and Putin's former chief of staff, may refer to UCP because it is run by financier Ilya Sherbovich, who used to have a sit on the Rosneft board. UCP said Sechin was neither its client nor a shareholder.

Rosneft declined to comment when asked whether Sechin had any role in VKontakte or was influencing its shareholders.

Durov has repeatedly clashed with Russian authorities in the past, including providing a forum for opposition activists to organise protests against Putin.

He also refused to comply with the authorities' request to close an anti-corruption blog of one of Putin's most prominent critics, Alexei Navalny, Durov said last week.

Navalny was convicted by a Moscow court of libel on Tuesday in a ruling his lawyer said could potentially lead to his jailing. (Reporting by Maria Kiselyova; Editing by Larry King)

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