The Ukrainian government has launched an embezzlement probe against the business interests of gas oligarch Dmitry Firtash, as the billionaire appeared before a court in Vienna to fight a US extradition request on bribery charges.

Firtash's gas and chemicals concern Ostchem is at the centre of the investigations, Prime Minister Arseny Yatsenyuk told a government meeting on April 29.

"The interior ministry has opened criminal proceedings on charges of embezzlement of state property by officials of [state energy company] Naftogaz in collusion with the Ostchem company, resulting in the loss of UAH5.7bn ($270mn) by the state," Yatsenyuk said.

Also on April 29, a Kyiv court ordered the seizure of around 500mn cubic metres of natural gas belonging to Ostchem. Besides trading gas, the company owns four major chemicals plants in Ukraine that earn hundreds of millions of dollars in export revenues, as well as plants in Tadzhikistan and Estonia.

Murky party politics

Interior Minister Arsen Avakov was personally overseeing the investigation, Yatsenyuk said. "Deoligarchisation, Messrs Firtash and [Serhiy] Lyovochkin!" Avakov wrote on Facebook on April 30, referring to member of parliament and Firtash's business partner Serhiy Lyovochkin.The minister added that his team were delving deeper in the "schemes" of the pair, "which caused billions in losses to the country".

While Ukraine's prosecutor general had issued a statement on April 29 refuting that Firtash was officially a suspect in any case, newswires quoted Avakov as saying the investigation was being conducted independently by his ministry.

The discrepancy between the interior ministry and the prosecutor general's office may point to party politics behind the anti-Firtash moves, since these were initiated under Yatsenyuk and Avakov, who along with security council head Oleksandr Turchinov co-founded the People's Front party.

People's Front, founded only weeks before parliamentary elections last October, unexpectedly took the largest share of the national vote, pushing President Petro Poroshenko's eponymous party into second place. This success allowed Yatsenyuk, Avakov and Turchinov to keep their jobs, despite tensions with Poroshenko.

Prosecutor General Viktor Schokin is an ally of Poroshenko, who has also enlisted political support from the influential Firtash-owned TV channel Inter. Analysts point to the contrasting relations with the businessman as a possible reason for the confusing state of the claimed case around him.

Poroshenko was reported in Austrian media to have personally met with Firtash in Vienna in March 2014 to secure his support for his campaign in the presidential elections held in May 2014, which Poroshenko won.

Yatsenyuk is seen as having closer ties to Poroshenko's rival Ihor Kolomoisky, the billionaire owner of Ukraine's largest bank Privat, and until recently governor of Dnipropetrovsk. Poroshenko fired Kolomoisky from the governor's post on March 25 and initiated moves to weaken Kolomoisky's hold on state energy assets.

Firtash's partner Lyovochkin, the former head of the administration of ousted former president Viktor Yanukovych, is an MP for the opposition party Opposition Bloc.

Vienna courtroom drama

Ukraine's oligarch wars continued in parallel in Vienna on April 30. Firtash went to court to fight an extradition request from the US on charges of having allegedly paid a €19mn bribe to an Indian official to obtain licences for titanium production in 2005.

Firtash was detained in Vienna in March 2014, and has been under house arrest after €124mn bail was paid, Austria's largest ever bail.

In apparent synchronisation with events in Kyiv, Firtash's defence opened by saying that the charges brought against him were the work of Yatsenyuk and former prime minister Yulia Tymoshenko, a longstanding opponent of Firtash. "It's very politically motivated," newswires quoted Firtash as saying.

According to his defence, the US wanted Tymoshenko and Yatsenyuk to come to power in Ukraine, while Firtash had backed the former president Yanukvoych, who was toppled by opposition protests in February 2014.  "He did not want this alliance," Firtash's lawyers told the judge.

Firtash faces up to 10 years in jail if he is extradited to the US and found guilty as charged.