Ukraine’s Oligarchs Turn on Each Other

March 26th, 2015 - by admin

Robert Parry / Consortium News & Tomas Hirst / BusinessInsider – 2015-03-26 13:01:21

Ukraine’s Oligarchs Turn on Each Other

Ukraine’s Oligarchs Turn on Each Other
Robert Parry / Consortium News

(March 25, 2015) — In the never-never land of how the mainstream US press covers the Ukraine crisis, the appointment last year of thuggish oligarch Igor Kolomoisky to govern one of the country’s eastern provinces was pitched as a democratic “reform” because he was supposedly too rich to bribe, without noting that his wealth had come from plundering the country’s economy.

In other words, the new US-backed “democratic” regime, after overthrowing democratically elected President Viktor Yanukovych because he was “corrupt,” was rewarding one of Ukraine’s top thieves by letting him lord over his own province, Dnipropetrovsk Oblast, with the help of his personal army.

Last year, Kolomoisky’s brutal militias, which include neo-Nazi brigades, were praised for their fierce fighting against ethnic Russians from the east who were resisting the removal of their president. But now Kolomoisky, whose financial empire is crumbling as Ukraine’s economy founders, has turned his hired guns against the Ukrainian government led by another oligarch, President Petro Poroshenko.

Last Thursday night, Kolomoisky and his armed men went to Kiev after the government tried to wrest control of the state-owned energy company UkrTransNafta from one of his associates.

Kolomoisky and his men raided the company offices to seize and apparently destroy records. As he left the building, he cursed out journalists who had arrived to ask what was going on. He ranted about “Russian saboteurs.”

It was a revealing display of how the corrupt Ukrainian political-economic system works and the nature of the “reformers” whom the US State Department has pushed into positions of power.

According to BusinessInsider, the Kiev government tried to smooth Kolomoisky’s ruffled feathers by announcing “that the new company chairman [at UkrTransNafta] would not be carrying out any investigations of its finances.”

Yet, it remained unclear whether Kolomoisky would be satisfied with what amounts to an offer to let any past thievery go unpunished. But if this promised amnesty wasn’t enough, Kolomoisky appeared ready to use his private army to discourage any accountability.

On Monday, Valentyn Nalyvaychenko, chief of the State Security Service, accused Dnipropetrovsk officials of financing armed gangs and threatening investigators, Bloomberg News reported, while noting that Ukraine has sunk to 142nd place out of 175 countries in Transparency International’s Corruptions Perception Index, the worst in Europe.

The see-no-evil approach to how the current Ukrainian authorities do business relates as well to Ukraine’s new Finance Minister Natalie Jaresko, who appears to have enriched herself at the expense of a $150 million US-taxpayer-financed investment fund for Ukraine.

Jaresko, a former US diplomat who received overnight Ukrainian citizenship in December to become Finance Minister, had been in charge of the Western NIS Enterprise Fund (WNISEF), which became the center of insider-dealing and conflicts of interest, although the US Agency for International Development showed little desire to examine the ethical problems – even after Jaresko’s ex-husband tried to blow the whistle. [See’s “Ukraine Finance Minister’s American ‘Values.'”]

Passing Out the Billions
Jaresko will be in charge of dispensing the $17.5 billion that the International Monetary Fund is allocating to Ukraine, along with billions of dollars more expected from US and European governments.

Regarding Kolomoisky’s claim about “Russian saboteurs,” the government said that was not the case, explaining that the clash resulted from the parliament’s vote last week to reduce Kolomoisky’s authority to run the company from his position as a minority owner.

As part of the shakeup, Kolomoisky’s protégé Oleksandr Lazorko was fired as chairman, but he refused to leave and barricaded himself in his office, setting the stage for Kolomoisky’s arrival with armed men.

On Tuesday, the New York Times reported on the dispute but also flashed back to its earlier propagandistic praise of the 52-year-old oligarch, recalling that “Mr. Kolomoisky was one of several oligarchs, considered too rich to bribe, who were appointed to leadership positions in a bid to stabilize Ukraine.”

Kolomoisky also is believed to have purchased influence inside the US government through his behind-the-scenes manipulation of Ukraine’s largest private gas firm, Burisma Holdings. Last year, the shadowy Cyprus-based company appointed Vice President Joe Biden’s son, Hunter Biden, to its board of directors.

Burisma also lined up well-connected lobbyists, some with ties to Secretary of State John Kerry, including Kerry’s former Senate chief of staff David Leiter, according to lobbying disclosures.

As Time magazine reported, “Leiter’s involvement in the firm rounds out a power-packed team of politically-connected Americans that also includes a second new board member, Devon Archer, a Democratic bundler and former adviser to John Kerry’s 2004 presidential campaign. Both Archer and Hunter Biden have worked as business partners with Kerry’s son-in-law, Christopher Heinz, the founding partner of Rosemont Capital, a private-equity company.”

According to investigative journalism in Ukraine, the ownership of Burisma has been traced to Privat Bank, which is controlled by Kolomoisky.

So, it appears that Ukraine’s oligarchs who continue to wield enormous power inside the corrupt country are now circling each other over what’s left of the economic spoils and positioning themselves for a share of the international bailouts to come.

As for “democratic reform,” only in the upside-down world of the State Department’s Orwellian “information war” against Russia over Ukraine would imposing a corrupt and brutal oligarch like Kolomoisky as the unelected governor of a defenseless population be considered a positive.

(Early Wednesday morning, President Poroshenko dismissed Kolomoisky from his post as Dnipropetrovsk regional governor.)

Investigative reporter Robert Parry broke many of the Iran-Contra stories for The Associated Press and Newsweek in the 1980s. You can buy his latest book, America’s Stolen Narrative.

A Billionaire with His Own Private Army
Has Just Been Sacked by the Government in Ukraine

Tomas Hirst / BusinessInsider

(March 25, 2015) — Igor Kolomoisky was once called Ukraine’s “secret weapon” as the 52-year-old billionaire raised his own private army to fight off separatist forces attempting to capture the country’s third-largest city. Now the government in Kiev faces a dangerous standoff with one of its most important allies.

The banking magnate was fired by Ukrainian President Petro Poroshenko on Wednesday. Kiev must now face up to the loss of an ally with thousands of heavily armed troops at his disposal.

In March last year Kolomoisky, who founded Ukraine’s largest commercial bank Privat Bank, had been appointed governor of Dnipropetrovsk Oblast, a predominantly Russian-speaking region in the east of the country.

The collapse of President Viktor Yanukovych’s government led the neighboring eastern regions of Donetsk and Luhansk to declare their independence from Kiev, and Dnipropetrovsk Oblast became a flash point.

The government became desperate to halt the rebel advance there, and the separatists became equally intent on reestablishing it as part of what Russian President Vladimir Putin termed Novorossiya, or New Russia.

With the situation descending into war the region found itself exposed, and the new government in Kiev was ill-equipped to offer it the financial or military resources required to hold off the Moscow-backed separatists. So the job fell to Kolomoisky. Or rather Kolomoisky took it, with Kiev’s grateful acceptance.

At a cost of about $10 million a month, according to The Wall Street Journal, Kolomoisky began to build up his army. By June the Dnipro Batalion consisted of over 2,000 heavily armed troops, with a further 20,000 in reserve under the command of Kolomoisky’s close ally and self-described “conflict manager” Gennady Korban.

Although a businessman, Korban was no stranger to life-and-death situations, having survived an assassination attempt in March 2006 when his car was shot at by machine-gun-wielding attackers. Both men are known for their aggressive business methods, though they said that in other countries their actions would simply be dubbed as “mergers and acquisitions.”

Having managed to keep Dnipropetrovsk in government hands despite fierce fighting, the appointment appeared to have been a success. That, however, was thrown into doubt last week when armed men in masks stormed the headquarters of the state-owned oil company UkrTransNafta in the Ukrainian capital Kiev following the sacking of its director Oleksander Lazorko, a key ally of Kolomoisky’s.

Two deputies in the Ukrainian parliament accused Kolomoisky of sending in the armed men, and the billionaire himself later emerged from the building and began arguing with members of the press who had camped outside.

Though the building was back under government control by the weekend, the fact that this was allowed to happen in Kiev is a source of major embarrassment for Ukrainian President Petro Poroshenko’s administration. It also comes at an extremely sensitive time as the government starts to undertake widespread economic reforms in exchange for a bailout package estimated to total £26.9 billion ($40 billion).

Poroshenko was urged by members of parliament to “put [Kolomoisky] in his place,” and indeed he has subsequently told soldiers in the capital that “we will not have any governor with their own pocket army.” Yet there are concerns the government is heading for an ill-advised standoff with one of its wealthiest and most strategically important allies.

The question nobody seems quite able to answer is what happens next.

Despite owning only 42% of UkrTransNafta, Kolomoisky became accustomed to the de facto running of its business operations. However, as the Financial Times reported, a new law passed in parliament effectively gave back control of the company to the state, which owns 50% plus one share.

The new law lowers the numbers of shareholders required to be present for a vote at a meeting, a move that is widely seen as damaging to the interests of Kolomoisky’s Privat Group.

In interviews on Ukrainian TV, supporters of Kolomoisky’s accused the president of launching a politically motivated attack on him. Meanwhile, the governor called for past privatization of state assets to be reviewed in a move that is likely to anger his fellow oligarchs and one that could be interpreted as a challenge to the state.

The idea of a standoff between powerful factions within the Ukrainian state — especially those with their own private armies — will hardly reassure international backers who are being asked to stump up additional funds for the beleaguered country. Yet imposing state control over its portfolio of assets is also likely to be key if it is to implement the economic reforms demanded by the International Monetary Fund.

There are already signs Kiev is willing to compromise, with Kolomoisky announcing that the new company chairman would not be carrying out any investigations of its finances. That, however, may simply be a temporary lull in a spat that threatens to pit powerful business interests against the reform agenda of the government.

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