June 28, 2019

What the return of Kolomoisky might mean for Ukraine


Billionaire Ukrainian oligarch Ihor Kolomoisky returned to Ukraine on May 16 – his first time back in the country since June 2017, when he had to leave due to an unfolding conflict with then-President Petro Poroshenko over Privatbank (Gordonua.com, May 16). The businessman has well-known ties to Ukraine’s newly elected head of state, the former comic and actor Volodymyr Zelenskyy, and is strongly suspected of having supported or possibly even financed the latter’s presidential campaign (see Eurasia Daily Monitor, February 11, 13, April 23). 

Along with Mr. Kolomoisky, two of his close associates, Timur Mindych (co-owner of the media firm 95 Kvartal and a former business partner of Mr. Zelenskyy) and Andrii Shypko (a parliamentary deputy from the Vidrodzhennya party), also arrived in Ukraine (Hromadske.radio, May 16).

On May 28, Mr. Kolomoisky stated that Mr. Shypko is likely to be appointed Ukraine’s next minister of health (Novynarnia.com, May 28). A number of individuals tightly linked to the oligarch already serve in the top echelons of power in Kyiv. They include Andriy Bohdan, a former Kolomoisky lawyer and today the head of the Presidential Administration (who, rumors suggest, is currently trying to become more independent) (Liga.net, June 5). On May 29, Maksym Donets – reportedly, a former security guard of Mr. Kolomoisky (Apostrophe.ua, May 29) – was appointed head of the State Security Service of the President of Ukraine (i.e., the president’s dedicated bodyguard service) within the Department of the State Guard (of which he simultaneously becomes deputy head) (President.gov.ua, May 29). The new deputy head of the Presidential Administration, Kyrylo Tymoshenko, is also connected to the oligarch (Pravda.com.ua, May 22). Additionally, Oleksandr Tkachenko, a producer and a long-term CEO of 1+1 Media group (owned by Mr. Kolomoisky), will take part in the July Ukrainian parliamentary election as a member of Mr. Zelenskyy’s Servant of the People party (Thebabel.com.ua, June 9). Apart from this, Mr. Kolomoisky is maintaining friendly relations with Arsen Avakov, the current minister of internal affairs, with whom he met on May 20 – the day of Mr. Zelenskyy’s inauguration (Hromadske.radio, May 23).

Reportedly, upon his return to Ukraine, Mr. Kolomoisky spoke with Yulia Tymo-shenko, the head of the Batkivshchyna party, three times in the month of May alone (Korrespondent.net, May 24). Mr. Kolomoisky himself has said he will support Ms. Tymoshenko in the upcoming parliamentary elections (Pravda.com.ua, May 27). Moreover, it has been revealed that the oligarch is currently “advising” a new political project, the so-called “party of mayors” (notably including Hennadiy Kernes and Gennadiy Trukhanov, respectively, the municipal executives of Kharkiv and Odesa – the two main economic “arteries” of Ukraine) (Pravda.com.ua, May 23). 

Thus, it would appear that Mr. Kolomoisky’s “political agenda” in the run-up to the July 21 snap parliamentary elections is premised on his determination to make a bet on as many players as possible as a means to increase the chances of securing friendly forces in the next Verkhovna Rada.

Apart from politics, Mr. Kolomoisky also still must see to his vast business interests in Ukraine. Since the presidential election, Mr. Kolomoisky has enjoyed a string of favorable judicial decisions pertaining to his many current or former holdings, especially in the cases involving Privatbank, Zaporozhsky Ferroalloy Plant (ZFP), Ukrnafta and Ukraine International Airlines (Radiosvoboda.org, May 31). 

On April 18 – three days before the second round of presidential elections – the District Administrative Court of Kyiv satisfied a lawsuit filed by Mr. Kolomoisky against the National Bank of Ukraine (NBU), ruling that the nationalization of Privatbank in December 18, 2016, was illegal (Epravda.com.ua, April 19). Mr. Kolomoisky wants either the total return of ownership or compensation in the amount of $2 billion (Epravda.com.ua, May 23). The NBU and the Finance Ministry, in turn, have declared they would fight the ruling. However, on the basis of previous experience (since June 2018, the NBU has filed 147 lawsuits against Mr. Kolomoisky that largely came to naught despite multiple instances of overwhelming evidence), the oligarch is again quite likely to emerge victorious.

Importantly, Mr. Kolomoisky and his business partners had become targets of multiple lawsuits abroad as well – primarily in the United Kingdom, Switzerland, where he holds residency, and the United States, where cases were opened at the request of the Ukrainian government (Deutsche Welle – Ukrainian service, June 7). On May 21, the nationalized Privatbank filed a lawsuit against its former owner, Mr. Kolomoisky. The case, which is being reviewed by the Delaware Court of Justice, states that the oligarch was using the Cypriot branch of Privatbank for money laundering, with the total cash flow during fiscal years 2006-2016 allegedly amounting to $470 billion (approximately twice Cyprus’s GDP in the same period). If confirmed, the case would be the largest money laundering affair in history (Censor.net.ua, June 5). 

Importantly, the U.S. Federal Bureau of Investigation (FBI) has also launched an investigation against Mr. Kolomoisky concerning possible financial crimes, including money laundering. Due to the wide range of investigations and charges against him, Mr. Kolomoisky had to move to Israel, which (like Ukraine) does not allow extradition of its citizens (Pravda.com.ua, April 8).

Meanwhile, the scandal involving his Zaporozhsky Ferroalloy Plant  (ZFP) has raised strong suspicions that Mr. Kolomoisky gained influence over the Constitutional Court of Ukraine (CCU). The ZFP is one of the largest Ukrainian enterprises. In October 2018, the National Anti-Corruption Bureau of Ukraine (NABU) accused the plant of embroilment in a massive corruption scheme (Censor.net.ua, June 7). On June 5, however, the CCU de facto blocked the NABU from conducting further anti-corruption investigations into the metal producer controlled by Mr. Kolomoisky (Ukrinform.ua, June 6; Interfax, June 7). Following the Constitutional Court’s decision, the Ukrainian state is at risk of losing up to $190 million – the cumulative sum of 93 illegal business deals over four years, as identified by the NABU and later recognized as such by the Supreme Court of Ukraine (Espreso.tv, May 30).

Given Ukraine’s still-shifting political landscape following the inauguration of President Zelenskyy, it is rather difficult to accurately forecast Mr. Kolomoisky’s strategy or his next moves in either the political or economic spheres. However, it is evident that the oligarch is taking concrete steps to increase his control by cultivating political support in the next Verkhovna Rada as well as influencing appointments to key positions in the Presidential Administration.

The article above is reprinted from Eurasia Daily Monitor with permission from its publisher, the Jamestown Foundation, www.jamestown.org.