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Is Ihor Kolomoisky another victim of Ukrainian deoligarchization?

Ihor Kolomoisky. Photo: vesti-ukr.com

On December 20, it became known that the High Court of Justice issued an order for the world wide seizure of assets of the businessman from Dnepropetrovsk Ihor Kolomoisky and his closest business partner Gennady Bogolyubov. The plaintiff was Ukrainian PrivatBank that passed from the hands of Kolomoisky under the governmental control а year ago. The National Bank of Ukraine then stated that the government was forced to take such measures to stabilize the financial situation in the country.

According to the head of the Ukrainian Ministry of Finance, Alexander Danilyuk, the state was forced to increase the bank’s capitalization by 140 billion hryvnias (about $5 billion), because earlier money was withdrawn from the financial institution to arrive in the accounts of Kolomoisky’s fictitious companies, and loans were provided against insufficient collateral. As the press office of PrivatBank informs, thanks to the decision of the court, the financial institution plans to recover the funds, whose amount together with interest is more than $ 2.5 billion.

When PrivatBank was nationalized, an agreement was reached with Kolomoisky that the oligarch would reimburse the losses incurred by the state before July 1, 2017. But the businessman did not fulfill his obligations; moreover, he made an attempt to begin the procedure of repossessing the bank, having filed a number of lawsuits in Ukrainian and international courts. In particular, Kolomoisky justified his position by the fact that he was under political pressure, and the bank's losses, which became the reason for nationalization, are not confirmed by the findings of Ernst & Young's auditors (Kolomoisky himself argued that the bank's balance hole was not 140 billion, but 10 billion hryvnias only).

In fact, the story of PrivatBank is a grandiose scam, which brought profit to both Kolomoisky and the powers that be in Kiev. Responsibility for the situation in the financial sector that developed by December 2016 is borne primarily by the National Bank, which issued uncontrolled tens of billions of hryvnia to refinance PrivatBank and other commercial banks. Obviously, the issue of refinancing was not without "kickbacks" to the leadership of the National Bank - given the systemic political corruption in Ukraine, it is impossible to believe in the purity of the hands of the top financial regulator.

The decision of the High Court of Justice turned out to be quite unexpected and, perhaps, will become the "black swan", which will seriously change the situation in Ukrainian politics. Such a decision of the court in Ukrainian modern history has no precedents; Kolomoisky became the first oligarch whose property fell under such a global arrest.

However, Kolomoisky himself calls this arrest temporary. Indeed, the decision to seize assets is essentially just a measure of securing the case against the oligarch for the time it is considered by the High Court of London, and does not mean that the assets will indeed be seized from Kolomoisky, since this requires a court decision. In addition, it is completely unclear how the verdict of the British court will be carried out in the territory of Ukraine.

It is worth noting that after the nationalization of PrivatBank, the tactics of the Kiev authorities in relation to Kolomoisky looked something like this: to gradually seize its assets, but not burn all bridges completely, even meeting halfway the business wishes of Igor Kolomoisky. On the one hand, Kolomoisky and Bogolyubov were removed from the Ukrnafta supervisory board in May this year (the country's largest oil producer, 42% owned by Kolomoisky and Co., and the controlling stake by the state); Pechersky District Court of Kiev in early autumn seized a number of assets belonging to the oligarch in the case of withdrawing funds from PrivatBank: Ordzhonikidzevsky GOK, Marganetsky GOK, Nikopol Ferroalloy Plant, Dniprozot, plots of land, real estate, grain terminal, and Boeing aircraft. The Economic Court of Dnipropetrovsk Region ruled that the Dnepravia airline, the airport of the city of Dnipro, and the runway be returned to the state ownership. However, the structures controlled by Kolomoisky filed appeals against the arrest of all the above-mentioned assets, whose terms of consideration can be seriously delayed.

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On the other hand, in the course of the adoption of the 2018 state budget, Kolomoisky's business interests were taken into account: rental rates for oil and gas condensate production were never raised, and the oligarch’s company, International Airlines of Ukraine extended its import permit until 2023 without paying customs duties and VAT for Embraer, Bombardier, and ATR aircraft (now they are temporarily imported under operational leasing contracts).

Since Kolomoisky is considered one of the sponsors of the "Mihomaydan", Petro Poroshenko may be pushing the Dnepropetrovsk businessman to curtail the latter’s support for the protests led by the ex-president of Georgia through the adopted state budget. However, this is just a guess.

It is more likely that there are certain backroom agreements between Kolomoisky and Poroshenko - this is indirectly confirmed by the recent "accidental" meeting of the oligarch with the Attorney General of Ukraine Yuri Lutsenko, Ukrainian president’s crony, in Amsterdam (recently the corresponding photo appeared on the Internet, whose authenticity was confirmed by Lutsenko himself). Despite the last year’s events which clearly weakened Kolomoisky's business empire, the businessman prefers not to move to the hot phase of the confrontation with Poroshenko, but to negotiate in the silence of high offices.

In fact, Poroshenko and Kolomoisky are in the same boat: if the ex-governor of the Dnipropetrovsk region begins to "sink the boat" in a big way, then he may "pull to the bottom" behind him a lot of today's Kiev rulers. It seems that the main thing for Pyotr Poroshenok in this case is to ensure the loyalty of the large media belonging to Ihor Kolomoisky and get guarantees from Dnipropetrovsk that he will not provide support to the opponents of the incumbent president on the eve of the forthcoming elections, and therefore the parties will not for the time being go over the drawn "red lines". In return, Kiev can drag out the claim in the British court against Kolomoisky for as long as possible, and then drop it completely.

However, the West's position is a factor of uncertainty in this case. The detention in March 2014 of businessman Dmitry Firtash, who is still threatened with extradition from Austria (where he is under house arrest for the fourth year running) to the United States, testified to the beginning of the process of deoligarchization of Ukraine. From the West's point of view, Ukrainian oligarchs carry a large part of Ukraine's economic sovereignty, which the country, which has entered the orbit of the Euro-Atlantic influence, should be deprived of.

Apparently, Western circles are planning to make short work of Ukrainian oligarchs leaving the remnants of "tasty" assets in the management of transnational capital. At the same time, a political task is being solved - preventing the hypothetical drift of Kiev towards Moscow on the basis of still serious business ties. Therefore, under-the-table deals with Poroshenko may not protect Kolomoisky from "de-kulakization".

It is worth noting that simultaneously with the "freezing" of Kolomoisky's assets, the High Court of England and Wales decided to seize the assets of the Ukrainian businessman Konstantin Grigorishin of the Energy Standard group, an ex-citizen of the Russian Federation. Such a decision was made as an interim measure in the framework of Grigorishin's arbitration with the representative of the "Opposition Bloc" Vadim Novinsky, also an ex-citizen of the Russian Federation, in connection with the Sumy machine-building research and production association.

Well, the Ukrainian oligarchs delegated the right to the western judicial system to make decisions on their assets; it remains to wait until the assets themselves are transferred to the Western structures.

Denis Gayevsky, Kiev

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31.05.2018

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