Notorious Ukrainian oligarch Kolomoisky on his back foot as pressure on him mounts

Notorious Ukrainian oligarch Kolomoisky on his back foot as pressure on him mounts
/ Анна Безулик
By bne IntelliNews July 10, 2023

Kolomoisky, the Ukrainian oligarch, has been facing a series of challenges that have affected his business empire and political influence, reported in a long profile of the businessman’s woes.  

Following the Russian invasion of Ukraine, his oil companies Ukrnafta and Ukrtatnafta were placed under the control of the Ministry of Defence, and his attempts to challenge this temporary nationalisation were thwarted. He received a warning from the Office of the President, stating that he should remain silent or he would be deported to the United States to face justice there, where he is under sanctions and suspected of being involved “in large-scale corruption”. As a result, Kolomoisky complied with the warning.

While Kolomoisky still retains a significant business portfolio, including metallurgy, gas stations, media outlets and an airline, his dreams of reclaiming Privatbank, Ukraine's largest consumer bank, remain elusive. Furthermore, his oil business is gradually slipping away, and he is unable to travel abroad due to an ongoing FBI investigation. His once-dominant position has been undermined, with the need to visit the National Anti-Corruption Bureau of Ukraine for questioning and endure searches of his home by security services. His fortune has fallen from an estimated $10bn pre-war to around $1bn now, after most of his known assets were frozen by a London court.

Kolomoisky has always been known for finding a way out of difficult situations, but the current challenges he faces are proving to be more formidable. He returned to Ukraine in 2019 after two years of exile during Poroshenko’s presidency, hoping to regain what he had lost under the previous administration. He focused on suing Privatbank and diminishing the influence of rival oligarch Rinat Akhmetov in the energy sector. He also aimed to increase his political power by supporting loyal MPs in the ruling party.

Initially, it seemed that Kolomoisky had significant influence and could achieve his goals. However, the adoption of the Anti-Kolomoisky law in May 2020 that made it impossible for the former owner of bank that has been nationalised to retake control of it and the government's victory on appeal prevented the return of Privatbank to its former owners. The relationship between Kolomoisky and the President's Office soured, and he became toxic in the eyes of the United States, leading to travel restrictions and accusations of large-scale corruption.

The war with Russia further complicated Kolomoisky's situation. Initially he believed the Russian occupation of Ukraine was inevitable and sought refuge in the Menorah Jewish cultural centre in Dnipro. However, he eventually evacuated to the West, and his psychological state fluctuated between periods of depression with drinking and dreams of regaining political influence. By the summer of 2022, he portrayed himself as a retired oligarch, hoping for a return to politics after the war.

During this time, his oil businesses faced significant setbacks. Ukrnafta and Ukrtatnafta were placed under state control, and there were allegations that fuel was being withheld from the Ukrainian Armed Forces. Kolomoisky's attempts to initiate lawsuits were halted after the warning from the Office of the President. Furthermore, the seizure of shares in Ukrnaftoburinnya added to the blows against his oil business.

Kolomoisky's political activities now revolve around fine-tuning the news broadcasting of the 1+1 channel and attempting to revive the influence of Oleksandr Dubinsky as an opposition political blogger and MP. However, his political group is no longer as cohesive as before, and its actions have become predictable to the administration. Dubinsky's influence has been curtailed since he was sanctioned by the United States, but he still maintains some recognition through social media platforms.

In terms of business, Kolomoisky's main sources of income have been severely restricted. He retains control over JKX Oil & Gas, gas stations, an oil terminal and idle refineries. However, his ferrous alloy business, located near the front line, faces uncertainties due to recent sanctions. The Bukovel resort, once officially owned by Kolomoisky and Boholyubov, now operates under different ownership, with the Palytsia family controlling the rights and profits.

The ongoing legal battle in London over Privatbank's fraud claim against Kolomoisky and Boholyubov further threatens their wealth. The court has seized all their known assets, and a loss in the case could require them to compensate the bank's losses to the tune of $4bn. The outcome of the trial, due this year or next, remains uncertain, but even in defeat, Kolomoisky and Boholyubov would still be wealthy individuals seeking an understanding with the authorities.

Despite the challenges, Kolomoisky still maintains contacts with the Office of the President through his close associate Timur Mindich. The authorities view him as a domesticated oligarch, someone who can be controlled to some extent to ensure progress and European integration. The changing dynamics of power in Ukraine, with increased influence held by the Office of the President and military administrations, mean that oligarchs like Kolomoisky and Boholyubov have limited space in the new Ukraine, but the intension seems to be to press them into service once the fighting ends.

The future relationship between the government, business, and civil society in Ukraine will determine the role and influence of oligarchs. While Kolomoisky continues to navigate through challenges and seek opportunities, the landscape has shifted, and his once-dominant position is no longer guaranteed.