Lord Mandelson to make call on Evening Standard and Alexander Lebedev

Lord Mandelson, the Business Secretary, will have to decide whether a former KGB officer is a fit and proper person to own a British newspaper after the Evening Standard was sold to Alexander Lebedev yesterday.

The Russian bought the London title yesterday for “a very nominal sum� – thought to be £1 – after several months of secret negotiations in which neither ministers, the security services or any of the newspaper’s journalists were informed.

Peter Williams, the finance director of Daily Mail and General Trust (DMGT), the company that owned the Standard, said: “We didn’t think that it was appropriate to ask the Government.�

The sellers were aware of Mr Lebedev’s KGB membership – he was an officer in the Russian Embassy in London at the end of the Cold War.

Lord Mandelson, previously in trouble over his relationship with another Russian oligarch, Oleg Deripaska, has the sole power to decide whether Mr Lebedev’s purchase should be referred to the media regulator, Ofcom, on “public interest� grounds.

Under the Enterprise Act 2002, Lord Mandelson can ask for a full investigation if he has “reason to believe the takeover could give rise to concerns about accurate presentation of news, plurality of views or the free expression of opinion�. Since the Act was introduced, no newspaper takeover has been referred to Ofcom.

The minister, who was in India last night, has not expressed any view about the future of the newspaper. So far, one Conservative backbencher, Richard Ottaway, MP for Croydon South, has asked him to conduct a public interest inquiry, but pressure is likely to grow now that the sale has been confirmed.

The buyer’s intentions for the newspaper remained unclear yesterday, with neither Mr Lebedev nor his son Evgeny, 28, appearing at its West London offices. Mr Lebedev was understood to be in Moscow but did say in a statement that he was “committed to the paper’s independence and its competitiveness�.

Mr Lebedev, helped by his friend Matthew Freud, the public relations expert, wants to set up an “independendent editorial committee� to safeguard the integrity of the title. A friend of Mikhail Gorbachev, he wants to attract people of the calibre of “Clinton, Mandela and Bono� to the board, with Tony Blair a likely target.

Viscount Rothermere, the controlling shareholder in Daily Mail and General Trust, decided that he had enough of propping up the loss-making title bought by his father in 1987. Facing losses of at least £10 million a year, he decided about a year ago to begin a secret sale process.

He chose to tell very few people, fearing that the news would leak, demoralising journalists and spooking advertisers. With the help of Nicholas Shott, from the bankers Lazard, Lord Rothermere contacted a handful of “billionaires with an interest in London� as they did not believe that a traditional newspaper publisher would want to take on the Standard’s losses.

Mr Lebedev, 49, quickly emerged as the most likely buyer. After the fall of the Soviet Union, he ended up in control of the small National Reserve Bank in 1995 and built up a portfolio of key industrial holdings, including a 30 per cent stake in Aeroflot.

He also knew Lord Rothermere socially, “but not well�, because the peer’s wife, Claudia, was a trustee of the Raisa Gorbachev foundation, a charity named in honour of the former Soviet leader’s late wife and run by Evgeny.

Journalists at the Standard expect substantial redundancies, which could amount to about 10 per cent of the 400-strong workforce. Veronica Wadley, the Editor, who was off sick yesterday, is expected widely to be among those leaving but no announcement has been made about her future.

It fell to Paul Dacre, the Editor-in-Chief of the Standard, and Editor of the Daily Mail, to address staff in the morning, although reporters at the London title believe that he did so reluctantly. His hands shaking, he apologised for the lack of information and said that there would be a month-long consultation over redundancies.

Formally, Mr Lebedev is taking a 75.1 per cent stake, with DMGT holding the rest, but the Russian is providing funding for the business in the future and will have the right to appoint the editor. The deal is expected to be completed in a month.

London life

— First published by Charles Baldwin as the Standard on May 21, 1827, it had four pages and cost 7d. The Times called it a “stupid and priggish print�

— It became a morning newspaper in 1857 and in 1859 published an evening edition

— Based just off Fleet Street, its lowest price was a penny, which remained for nearly 100 years. Sales dropped after a halfpenny increase in 1951

— It was at its peak at the end of the 19th century but sales fell when the Daily Mail seized some middle-market readers

— In 1942, the one-time Labour Party leader Michael Foot, then just 28, became Editor

— In 1988, it moved to Kensington High Street. Its sales were about 500,000

— Max Hastings became Editor in 1996 and stood down in 2002 to be replaced by Veronica Wadley, the current Editor