Graham Stack in Berlin -
Gas oligarch Dmitry Firtash is free to return to his native Ukraine after defeating a US bid to extradite him from Austria on April 30, thanks to a enormous PR campaign launched in Austria to sway the Alpine's country's tight-knit elite in his favour. This is the conclusion of a new book, “Das schmutzige Geld der Diktatoren” (The Dirty Money of the Dictators) by Austrian journalist Florian Horcicka, who examines how Austria's rolling out of the red carpet to the cash and investment of dictators and oligarchs from all over Eurasia has given rise to a strange symbiosis of Viennese rectitude and shadowy Eurasian maneouvering.
The Firtash saga started in 2006 when a Global Witness investigation first named him as the owner of EuralTransGas, a firm which had come from nowhere to become the main intermediary in the shadowy gas trade between Turkmenistan and Ukraine via Russia, worth billions of dollars per year. The investigation failed to reach Firtash, interview any people who knew the businessman well, establish his age or even to find a photo of him, dubbing him as a result “The Mysterious DV Firtash”.
But while Firtash's predecessor in the Turkmenistan-Russia-Ukraine gas trade, Ukraine's former prime minister Pavlo Lazarenko, was jailed in the US in 2006 for nine years, on April 30 an Austrian court threw out an US extradition request for Firtash, which referred to alleged bribery of Indian officials by Firtash in 2006.
What did Firtash do right in Austria? Horcicka in his book describes how, following arrest in March 2014 and a record bail of €125mn, the formerly reclusive Firtash embedded himself in a powerful network of top Viennese lawyers and PR advisers with intimate links to Austrian authorities – and for the first time in his life went public. “Firtash ... played the Austrian piano like a world master,” Horcicka writes, describing how Firtash's entourage of advisors and lawyers encompassed almost all the key channels of influence in Austria's legal system.
Thus, according to Horcicka, Firtash hired former justice minister Dieter Böhmdorfer as his lawyer, and also Böhmdorfer's former spokesmen. He also hired Daniel Kapp, former spokesperson for Austria's vice chancellor Josef Pröll, and Christoph Pöchinger, spokesman for former justice minister Karin Gastinger, as well as Patrick Minar, former spin doctor for co-governing Austrian People's Party (ÖVP).
But as the trial date neared, Firtash kept the best for last, Horcicka tells bne IntelliNews in an update to his book, which was published before the actual court decision. Firtash hired former deputy chancellor, finance minister and foreign minister Michael Spindegger to head his newly established and massively endowed pro-reform think-tank Agency for Modernisation of Ukraine, which held its inaugural conference in Vienna in March, attracting big names from across the EU member states.
Spindelegger, according to Horcicka, is a close friend of current justice minister Wolfgang Brandstetter. Spindelegger and Brandstetter are also both 'brothers' in Austria's powerful Catholic fraternity, Cartellverband, according to Horcicka.
Adding to the network, Firtash's PR adviser Pöchinger served as witness at the wedding of Christian Pilnacek, head of the justice ministry's prosecution department, and thus de facto the boss of the state prosecutors – an indication of the tight-knit society of the 8mn strong Alpine republic.
Thanks to the massive political backing he acquired in Austria, Firtash – a man rarely glimpsed in public in his native Ukraine – placed himself fully in the public eye in Austria after release on bail, taking up residence in the Ritz Carlton in the heart of Vienna. Firtash even arranged photo sessions in the famous Cafe Schwarzenberg for Austria's largest circulation paper, Kronenzeitung, to whom he gave a number of softball interviews in the course of the year.
Demonstrating the impact of Firtash's massive Austrian PR effort, Kronenzeitung's opening question to Firtash in its latest March interview arguably broke all records for sycophancy: “Your Wikipedia entry says that as well as businessman, investor and head of the Ukrainian employers association you are also a philanthropist. How great is your love of humanity?” the paper asked. Firtash answered: “Most of what I do, I do for them [the Ukrainian people]. I want to take responsibility for them.” The interview contained not a mention of allegations of corruption and organised crime links dogging Firtash for nearly ten years, which the Ukrainian oligarch refutes.
The extent of Firtash' networking in Austria's upper circles meant that the Austrian court's refusal on April 30 to extradite Firtash, while generating international headlines, was widely expected in Vienna. “He will be released,” Horcicka told bne IntelliNews hours before the verdict came in.
Firtash's newfound freedom contrasts strongly with the suicide in a Viennese jail in February of another oligarch prisoner in Vienna, Kazakhstan's Rakhat Aliyev. Aliyev, formerly the son-in-law of Kazakhstan's de facto president-for-life Nursultan Nazarbayev and once a hot contender as his successor, abruptly fell into disfavour in Astana in 2007. He fled the country for Vienna after being accused of the murder of two managers in his Kazakh bank, whose remains were later recovered encased in barrels of lime. Astana then applied to Vienna for Aliyev's extradition, but Vienna at first refused due to lack of confidence in Kazakh justice.
Relatives of the allegedly murdered men then filed charges against Aliyev in Austria itself. Austrian authorities finally arrested Aliyev in June 2014 on murder charges. Aliyev then committed suicide in his jail cell in February before the case could be brought to trial.
Aliyev had an initial network of support in Austria, including links to justice minister Brandstetter, dating from spells as Kazakh ambassador to Austria. But he had left a trail of alleged money laundering behind in Austria itself – some of the evidence of which was made available to Austrian authorities by Kazakhstan – and he increasingly became politically too hot to touch.
Crucially, however, Kazakhstan pursued Aliyev with far more vehemence than the US, let alone Ukraine, did Firtash. It was Aliyev's Kazakh foes that won the battle for PR and influence in Austria itself. According to Horcicka, the families of Aliyev's alleged murder victims spent as much as €14mn pursuing charges in Austria against Aliyev – money that could only have come from the Kazakh authorities themselves. The money went to hire top lawyers with abundant political connections, and other Kazakh-connected politicians also helped: ex-Bundeskanzler Alfred Gusenbauer, an adviser to Kazakh president Nazarbayev, backed the extradition of Aliyev to Kazakhstan domestically.
This points to an often overlooked aspect of Firtash's courtroom triumph: while Kazakhstan went the distance against Aliyev, it appears the US ultimately backed down over Firtash for some reason. The US had already withdrawn an initial international arrest warrant once in November 2013, before refiling it in February 2014. In the course of the subsequent year, however, the US authorities failed to deliver to the Austrian court transcripts of questioning that were crucial to proving the bribery case against Firtash. Both factors were referred to in the Austrian verdict as grounds for the decision. Moreover, in stark contrast to Kazakhstan's embittered pursuit of Aliyev, Ukraine's prosecutor general declared on a number of occasions that Firtash is not under suspicion of any crime in Ukraine.
Firtash even used his courtroom battle not only to escape extradition to the US, but also to rehabillitate his reputation in Ukraine, and thus prepare the ground for a return: Firtash told the courtroom under oath he had backed the opposition against ousted former president Viktor Yanukovych, and was thus an ally of the current pro-Western government.
Capital of shadows
While giving an exhaustive overview of Vienna's love affair with dictators and oligarchs, one thing Horcicka's book lacks from an Anglo-Saxon viewpoint is any reference to Graham Greene's noir thriller “The Third Man” set in post-war Vienna, so here it is: “A city of undignified ruins… in the classic period of the black market… We'd run anything if people wanted it enough – had the money to pay… The centre of the city that's international is policed by an International Patrol. One member of each of the four [occupying] powers. What a hope they had! All strangers to the place and none of them could speak the same language… Good fellows on the whole, did their best you know.”
Implicit in Horcicka's arguments is that today's Vienna is an exact negative image of Vienna in the days of Greene's anti-hero smuggler Harry Lime – except that the dirty money remains dirty. Instead of the ruins, there is one of Europe's most elegant and affluent cities, and as Florian elaborates, the roles are reversed: the police are now locals – but they remain equally helpless in the face of the shadow world of the black market operators, who now flock to Vienna from all the corners of Eurasia.
At the same time, another legacy of the immediate post-war years, the strict policy of east-west neutrality means Austria's judiciary are reluctant to extradite if there is a whiff of political intrigue.
And while in Harry Lime's day, it was the breakdown in law-and-order in post-war Austria that spawned the black market, today it is the very strength of Austria's law-and-order that makes the place attractive to oligarchs and dictators. Efficient law enforcement creates the everyday security that oligarchs crave, while the rigour and slowness of Austrian courts thwarts attempts by investigators to penetrate the veil of offshore shell companies protecting dodgy operations. And according to Horcicka's account, Austrian bank executives traditionally have absolutely no interest in unravelling the politics of the neighbouring countries, and identifying who might constitute a “political exposed person”.
Among the pantheon of dictators and oligarchs surveyed by Horcicka who have placed their money in Austria, acquired pricey real estate and assets, and even taken up residency, ranging from the former Soviet countries to the Middle East, it took one of Eurasia's leading peddlers of influence, Russian First Deputy Prime Minister Igor Shuvalov, to summarise the specific charm of Austria.
During an encounter with Shuvalov in a secluded low-key rural restaurant with friends and only a couple of bodyguards near the idyllic Attersee, while negotiating the interior fittings of his lakeside villa with a local antique dealer, Shuvalov divulged to Horcicka the attraction of Austria for his sort: “This you can only find in Austria... This unhurried ease of living, complete security, good food and no hassle with other oligarchs. Here it does not matter how big your yacht is or what sport cars you have in the garage”, Horcicka summarizes the conversation.
Only months later, Shuvalov was exposed in a leak of company data from the British Virgin islands, which confirmed his wife Olga to be owner of shell company Severin Enterprises. Severin Enterprises in turn owned via another shell company Sevenkey Limited, which journalist investigations alleged received $119mn in payments from leading Russian oligarch Alisher Usmanov in 2007. Shuvalov has claimed there was nothing untoward about the payments.
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