Ukrainian oligarchs stepping up fight for spoils

By bne IntelliNews July 15, 2014

bne -


As the battle in eastern Ukraine rages on, a call for a review of privatizations carried out under the ousted government of Viktor Yanukovych threatens to spark a war amongst the country's oligarchs.

Governor of Dnipropetrovsk Ihor Kolomoisky, who controls the powerful Privat Group, called on July 14 for firms that were "privatised illegally" to be renationalised. Kolomoisky wants a review of all state asset sales carried out between 2011 and 2014, when Yanukovych reigned.

"The assets that have been privatized illegally need to be nationalized," Kolomoisky - who has been credited with suppressing the rise of separatist militia since being appointed by Kyiv to head the Dnipropetrovsk Region in March - told local TV, according to Interfax.

Amongst the companies he specifically names are Zakhidenergo, Dniproenergo and Dniprooblenergo, which belong to DTEK, the holding company of Ukraine's richest man Rinat Akhmetov. He also pointed at the country's energy distribution companies and the 49% stake in ZTMK held by Dmytro Firtash's Group DF. The same holding is at the centre of a controversy that saw the delay in June of privatisation of minor stakes in chemicals company Sumykhimprom.

The terms for the privatization of each of those companies and assets were made "to match the desires of a single buyer," Kolomoisky said. The oligarch also mentioned Ukrtelecom, having named the fixed-line operator the previous week as he called for assets to be confiscated from "supporters and sponsors of terrorism".

"They not only grabbed dozens of plants, energy companies and Ukrtelecom on a sole source basis, practically free of charge, but also Yanukovych and his minions are actually sponsoring killings of our citizens at the expense of these plants," Kolomoisky stated, according to Deputy Governor Borys Filatov's Facebook page.

The governor continued his theme on July 14. "Some of the enterprises belong to DTEK, some to Ostchem or Group DF, but who is behind those and what stakes they hold we don't know," he told Channel Five. "I, for example, know it for a fact that the Yanukovych family own minimum stakes of 25% in Cherkasy Azot, in Severodonetsk Azot, and in Stirol in Horlivka. But we realize, don't we, that, if not Yanukovych himself, then his closer entourage and his family are involved in separatism and terrorism."

The call appears to support claims that militia's loyal to oligarchs and criminal groups scouting for opportunistic asset grabs have helped fuel the violence in eastern Ukraine. It's also a can of worms that the Ukrainian government may not want to open. Although the companies may well have been effectively stolen from the state, Kolomoisky's campaign is seen by some as part of an internecine war between the country's oligarchs.

Next door in Russia, President Vladimir Putin made a pragmatic decision to allow the oligarchs to retain the assets they bought on the cheap during the 1990s. However, they were told to stop stealing, and have since been put into harness to support the government's economic policy. 

The stability this strategy offered proved to be a base for Russia's economic boom ahead of the crisis. Renationalising assets held by Ukraine's oligarchs would spark an economic, legal and political war, which would do little to help the cash-strapped country get back on its feet. 


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