Snag or Monkey Wrench?

Snag or Monkey Wrench?


By: NBASCOUT / Special to netsinteractive.com


A breaking news report in the New York Post suggests that there could be an eleventh-hour, major obstacle holding up approval and possibly threatening completion of the deal for the Nets to move to a new arena in Brooklyn. It seems that the Prokhorov-controlled $25 billion Onexim investment fund that is buying the Nets took on a less than fifty percent stake — not controlling interest — in Rennaissance Capital a few years back. It is not clear whether that was a passive investment or not.*

Rennaissance Capital is a Russian investment bank with an office in New York that has investment in Zimbabwe and apparently some sort of ties to the country or its leadership, if reports are accurate. Bush-era sanctions in 2003 and 2008 barred certain dealings with that country.

If a violation is found, the resolution to the problem may be as simple as Onexim\’s selling it\’s stake in Renaissance or it could be more complicated. Maybe the deal falls apart. Who knows? President Obama may need to weigh in before it\’s all over.

Whatever the case, this emerging issue may delay formal approval by the NBA League of Governors and hold up the sale of the Nets pending the outcome of a request by a New Jersey Congressman for a Treasury Department inquiry into the matter that could determine whether any law has been violated. Rep. Bill Pascrell Jr. (D-NJ), who represents parts of Bergen and Passaic counties, is behind the request and has long opposed the move (of the Nets to New York).

It all means that Forest City Enterprises, Bruce Ratner and/or Onexim and Mikhail Prokhorov may need to find a way around this or failing that a fall back plan. What timing? It only gets more interesting. Stay tuned.

UPDATE: Renaissance Capital, the investment banking firm that Prokhorov has a minority interest in through his investment fund Onexim, issued a strongly worded denial in a statement reported in a blog by William Mauldin appearing in the Wall Street Journal Online April 12, 2010, to wit:

\”Renaissance Capital is fully aware of the sanctions imposed by the United States on certain Zimbabwean persons and companies and takes its compliance obligations extremely seriously. Contrary to erroneous reports in the press, we have at all times strictly complied with all laws and have no relationship with sanctioned individuals or companies.\”

NBASCOUT is an independent freelance sportswriter that covers the NBA and the New Jersey Nets. He is not affiliated with the National Basketball Association. Copyright 2010 by NBASCOUT, all rights reserved. This material may not be published, broadcast, rewritten, or redistributed without the express written consent of the author. The opinions expressed herein are those of the author and not necessarily this website. You may e-mail NBASCOUT in care-of his wife, who writes for children, at kathyforkids@cs.com

Leave a Reply

Your email address will not be published. Required fields are marked *