Regime Change to Install People’s Governments? …. or Gangsters?

Western Perspective in the Past

June 2013 – Belgravia’s oligarchs square up for battle 

Jim Armitage, Wednesday June 5, 2013

A friend of Blair, Clinton and Soros prepares to take on fellow Ukrainian billionaires engulfed in a stock market row

From his five-storey white stucco mansion in Belgrave Square in London – a rare private residence amid the cluster of embassies from all corners of the earth – the oligarch Gennadiy Bogolyubov can look back on a business career that has made him a billionaire many times over.

Little-known in the UK, despite raising a family here, he is feted in Israel for his donations to Jewish charities, sprinkling dollars like confetti on the Hasidic community. In 2010, he sent 4,000 cheques for $500 to the representatives around the world of the Hasidic movement Chabad-Lubavitch – merely to celebrate the birth of his daughter, Dina. Little wonder that this Ukrainian-born tycoon has been applauded by the Israeli President Shimon Peres for his good deeds.

But we in Britain will soon be getting to know his less benevolent side far better. Later today, he – or his legal representatives – will star in a bitter fight to allegedly seize control of a London Stock Exchange-listed mining company, JKX Oil and Gas. That battle now looks set to reach its denouement in the High Court later in the summer, just as a separate $2bn (£1.3bn) court battle erupts alleging his involvement in skulduggery over privatised Ukrainian assets – charges he contests. That case has been launched by another billionaire Ukrainian, Tony Blair’s friend Victor Pinchuk.

Together with the JKX spat, it promises to bring into question the controversial business methods not just of Mr Bogolyubov, but of his business partner, the controversial Ukrainian Israeli billionaire Igor Kolomoisky. Also engulfed in the affairs are the owner of the priciest flat in the famously expensive Number One Hyde Park development and, just to keep the Belgravia set agog, the family of Roman Abramovich’s art-collecting girlfriend, Dasha Zhukova.

Let us start with JKX. One of the first businesses from the former Soviet states to list in London, JKX was formed in 1998 as a vehicle for Western investors to gain access to Ukrainian gas reserves. Based in swanky Cavendish Square, its top tier of management is distinctly Anglo-Saxon, run by chief executive Paul Davies and commercial director Peter Dixon. But that may all change if Mr Bogolyubov and Mr Kolomoisky get their way.

The Ukrainian duo, who are shareholders in JKX, are, at today’s meeting of investors in London, fighting the first stage of their bid to vote out its British chiefs and install their own people at the top. They claim this is not an attempt to seize control, but JKX insiders suspect otherwise, particularly following their similar, failed, assault on the London miner Ferrexpo a few years back.

They had been banned from voting or attending the meeting by JKX’s existing board, whose legal eagles spotted a technicality that they said allowed them to prevent the duo from voting. But this was overturned in court last night in a dramatic last-minute twist to today’s showdown.

It wasn’t just their prettily named Eclairs investment firm (and its 27 per cent stake) that was originally banned. Another major shareholder, Glengary, controlled by Ms Zhukova’s father, Alexander Zhukov, was also blocked on the grounds that he appeared to be connected with them. Sources at JKX argue that Mr Zhukov, Mr Bogolyubov and Mr Kolomoisky are acting in concert to take control of the company without going through the expense of making a formal takeover offer to all shareholders – claims they deny. Under last night’s ruling, if they succeed in voting out Mr Davies, he will be allowed to continue in post until a High Court hearing in July on whether the Eclairs/Glengary votes should stand.

An ousting of the chief executive only requires a 50 per cent vote, and given that Eclairs and Glengary together have 39 per cent of the shares, it now looks highly plausible.

JKX’s critique of the Eclairs/Glengary proposals was blistering. It alleged that one of the directors they were proposing to install was wanted by the Ukraine Ministry of Internal Affairs on charges of abuse of power or position (reports in the Ukraine press say he has fled to London). JKX also alleged that the two other proposed placemen were shareholders or employees of companies controlled by either Mr Bogolyubov, Mr Kolomoisky or Mr Zhukov.

Perhaps most damagingly, JKX alleged in a Stock Exchange statement that it had been struggling to raise money conventionally from banks because they did not want to be involved with a company that had Mr Kolomoisky as a shareholder – claims that Eclairs denied.

Whichever way the vote goes today, the Kolomoisky-Bogolyubov partnership faces an even tougher challenge in a High Court case in the coming months from former business partner and fellow Ukrainian billionaire Mr Pinchuk. He has hired the eminent City QC Anthony Grabiner to fight a case claiming that the duo diddled him out of $2bn by failing to hand over a company he paid them to buy for him during a Ukrainian privatisation.

Mr Pinchuk alleges he gave them $143m in 2004 to buy an iron ore mining business, KZhRK, from the state. They took his money, he claims, but didn’t deliver him the mine.

Instead, according to the claim, they sent around a bunch of men who “forcibly entered” the premises and took control of the plant.

Furthermore, he claims, they then sold half of it to Rinat Akhmetov, the billionaire owner of the Ukrainian football club Shakhtar Donetsk. Ukraine’s richest man, it was Mr Akhmetov who paid a reported £136.4m for the penthouse in One Hyde Park. No impropriety is alleged on his part in the KZhRK case.

Mr Pinchuk claims the mining assets are now worth $1bn and that he is owed a further $1bn in unpaid dividends. This week, his two enemies accepted that the court case should be heard in London, setting the stage for a very public fight.

The Independent sought comment from Mr Bogolyubov, but got no further than the high-ceilinged marble of his Belgravia home’s lobby before staff politely escorted us off the premises. However, both he and Mr Kolomoisky have appointed top City law firms and dispute the allegations. Let battle commence.

Ukrainians splash out on homes

Forget the new rich Russians, Arabs or Chinese – it is the Ukrainians who have been the record-breakers in the London property market recently.

First came Victor Pinchuk’s £80m splurge on a house in Phillimore Gardens, Kensington, in 2008. Philanthropist Mr Pinchuk is married to the only daughter of the controversial former president Leonid Kuchma. He counts Tony Blair as a friend and has hosted Bill Clinton and George Soros at numerous high-profile events in Ukraine. His art collection includes work by Antony Gormley, Damien Hirst and Jeff Koons. He once splashed out $5m hosting a public concert with Sir Paul McCartney in Kiev’s Independence Square.

In 2011, it emerged that Ukraine’s richest man, Rinat Akhmetov, had splashed out £136.4m on the penthouse at the Candy Brothers’ One Hyde Park (known among the billionaire set as just “OHP”). He said the purchase was an investment by his System Capital Management fund, although the property has reportedly just been transferred from SCM into his own name.

Dec 2013 – As Pro-European Protests Seize Ukraine, Jewish Oligarch Victor Pinchuk Is a Bridge to the West

Maria Danilova, December 13, 2013

One breezy evening last September, Viktor Pinchuk, Ukraine’s second-richest man, stepped onstage at the Livadia Palace in the Black Sea resort of Yalta to introduce the star speaker of the annual international conference he hosts to promote his country’s ties with the West: former Secretary of State Hillary Clinton. Nearby, at a table set for an exquisite five-course meal, sat her husband; they were joined in the hall by Shimon Peres and Tony Blair, as well as a number of former European heads of state, top diplomats, and business tycoons. “Mr. President, you are really a super star,” Pinchuk told Bill Clinton in a seemingly apologetic tone, “but Secretary Clinton, she is a real, real mega star.”

As Pro-European Protests Seize Ukraine, Jewish Oligarch Victor Pinchuk Is a Bridge to the West  The steel magnate—son-in-law of the former president and once a symbol of post-Soviet nepotism—now advocates for the rule of law

Victor Pinchuk. (Courtesy of the Victor Pinchuk Foundation)

Pinchuk, a Jewish son of the Soviet system who became a steel and media magnate and, more recently, fashioned himself into a billionaire philanthropist, was in his element. At age 52, Pinchuk basks in his newfound role as a global philanthropist and a leading Westernizer of his country—and a man rich and powerful enough to crack jokes at the expense of a former American president.

It’s been a remarkable transformation. Just nine years ago, Pinchuk—the son-in-law of Ukraine’s then-President Leonid Kuchma—was denounced by many of his compatriots as a robber baron who used his personal connections to snap up some of the most valuable assets in Ukraine for a song during the post-Soviet privatization wave while millions of his countrymen struggled to make ends meet. In the fraud-ridden election that triggered Ukraine’s so-called Orange Revolution in 2004, Pinchuk backed Kuchma’s handpicked successor—Viktor Yanukovych, who eventually won the presidency in 2010 and whose recent decision to shelve a key treaty with the European Union and instead embrace Russia triggered the demonstrations that have seized Kiev in recent weeks.

As in 2004, the appearance of flag-waving pro-democracy protesters occupying the capital’s Independence Square divided Ukraine into those whose hearts lie with the West and those whose hearts lie with Moscow. A decade ago, Pinchuk found himself stung by the Orange Revolution: The new Orange government, led by Viktor Yushchenko, renationalized a steel mill Pinchuk had purchased from the state during his father-in-law’s presidency and then promptly sold it to a foreign investor at a much higher price. Pinchuk was forced to fight to hold on to the rest of his assets. <snip>

In 1997, while attending a popular Moscow play in a Kiev theater, Pinchuk met Yelena Franchuk, a delicate blonde—and the daughter of then-President Kuchma. Both were married at the time, but they nevertheless felt the spark of romance. Pinchuk asked Spivakov, who was giving a concert in Kiev that he knew Franchuk was attending the day after her birthday, to perform an encore for “one Kiev birthday girl.” Franchuk realized the surprise was for her, and Spivakov later became a witness at their wedding. (She recently changed her last name to Pinchuk.)

Bill Clinton and Victor Pinchuk at the 7th Yalta Annual Meeting, September 2010. (Courtesy of the Victor Pinchuk Foundation)

Bill Clinton and Victor Pinchuk at the 7th Yalta Annual Meeting, September 2010. (Courtesy of the Victor Pinchuk Foundation)

When they met, Pinchuk already owned two pipe factories that are now worth billions. He likes to say that the only gift he received from Kuchma was his daughter—but not everybody is convinced. Kuchma, now 75, who served as the second president of independent Ukraine, is credited with launching the crucial reforms to steer his country out of the economic ruin that followed the Soviet collapse, but he is also accused of allowing a group of hand-picked businessmen—including Pinchuk—to acquire the country’s top industrial assets at a discount in exchange for their support of his rule.

While in neighboring Russia, oligarchs like the late Boris Berezovsky spent years working their way into the inner circle of Russian President Boris Yeltsin, Pinchuk, his critics say, was spared the effort—Ukraine’s president sat across from him at the dinner table. As Kuchma was nearing the end of his final term in office in the early 2000s, he put top metallurgical and mining plants up for sale; Pinchuk, who by then was also serving as a member of a party in parliament loyal to Kuchma, took an active part in the tenders.

In 2003, Pinchuk won an auction for the majority stake in the Nikopol Ferroalloy Plant, one of the world’s largest producers of ferroalloy, in a tender his rivals called skewed in Pinchuk’s favor, prompting a protracted and messy ownership dispute. The following year, Pinchuk partnered with another oligarch, Rinat Akhmetov—today Ukraine’s richest man—to snap up the country’s biggest steel plant, Krivorozhstal. A year later, the deal was annulled and the plant was sold to British-Indian steel magnate Lakshmi Mittal for $4.8 billion—six times the price paid by Pinchuk and his partner. The sale of Krivorozhstal became a metaphor for corruption under Kuchma, and the affair dealt a harsh blow to Pinchuk’s reputation, not just at home, but in the United States: In a diplomatic cable to Washington released by WikiLeaks, former U.S. Ambassador to Ukraine William Taylor wrote that the two auctions were “rigged” in favor of Pinchuk and sold “for a cut-rate price.”  [Read entire article]

April 2014 – Ukrainian oligarch offers bounty for capture of Russian ‘saboteurs’

Alec Luhn in Donetsk, Thursday April 17, 2014”

Igor Kolomoisky, a Ukrainian politician and energy tycoon, offers $10,000 of own money for each agent caught and separate rewards for their weaponry

A pro-Kiev oligarch offered a $10,000 (£6,000) bounty on Thursday for the capture of any Russian “saboteur” and promised another half-million hryvnia (£27,000) to the national guardsmen who successfully repelled an attack by pro-Russian militia last night, killing three.

Igor Kolomoisky, an energy tycoon who was appointed governor of the Dnipropetrovsk region in eastern Ukraine last month, also offered rewards for handing in weapons belonging to insurgents: $1,000 for each machine gun turned in to the authorities, $1,500 for every heavy machine gun and $2,000 for a grenade launcher.

Several hundred protesters stormed a Ukrainian national guard base in the eastern port city of Mariupol on Wednesday night, but Ukrainian soldiers turned them back with gunfire, killing three. Ukraine’s interior minister, Arsen Avakov, said the attackers had fired at the troops, but protesters said they had been armed only with clubs.

The attack was the first significant defeat for anti-Kiev forces, which have seized government buildings in at least 10 cities in eastern Ukraine over the past two weeks. Soldiers deployed to the Donetsk region as part of an anti-terrorist operation that was announced by Kiev last weekend, have been turned around by angry locals, and militia men captured six infantry fighting vehicles in the city of Kramatorsk on Wednesday. Officials in Kiev and Washington blame the unrest on Russian agents.

The rewards for weapons and saboteurs, which were announced by Kolomoisky’s deputy, Boris Filatov, were offered around eastern Ukraine on Thursday afternoon. A local man outside the anti-terrorist operation’s staging point at the Kramatorsk airfield, which has been partially blocked off by angry residents, told the Guardian on Thursday that the airfield director had offered $10,000 for a captured Russian agent. He declined to provide his name.

This is not the first time Kolomoisky has put his own money toward the country’s defence. Last month, the oligarch spent “several million dollars” buying car batteries for military vehicles. Ukraine’s army has suffered years of neglect, with a reported 6,000 battle-ready troops at the moment.

Kolomoisky has a personal feud with the Russian president, Vladimir Putin, who derided him as a “unique impostor” last month. In return the oligarch called Putin “a schizophrenic, short in stature”.

Meanwhile, tensions continued to rise in the east between residents supporting and opposing the new Kiev government. Protesters gathered outside police headquarters in Stakhanov to demand the local police chief’s resignation. They attempted to storm the building but were reportedly repelled by residents who formed a human shield in front of the station.

Hundreds gathered in Donetsk to demonstrate for Ukrainian territorial integrity. The rally ended peacefully, unlike similar demonstrations in previous weeks where pro-Russian protesters beat up participants.

Dima Balakai, a student, said he was there to oppose the Russian-backed “bandits” occupying the regional administration building.

“There are no violations against the Russian language here,” he said, referring to pro-Russian protesters’ tendency to blame Kiev for oppressing Russian speakers. “If I speak Ukrainian at institute, they could soon kick me out.” He said he was beaten by a crowd of young men at a similar rally on 4 March.

Also on Thursday evening, activists from the “people’s republic” occupying the administration building went to the Donetsk airport to demand negotiations with airport and border control officials. They told the Guardian that they wanted to prevent any military flights from landing, as well as ensure that Russian citizens could arrive freely.

A spokesman for Aeroflot, the Russian airline, said on Thursday that the Ukrainian border service had placed an entry ban on Russian men aged 16 to 60. The Russian foreign ministry said it had requested more information from its Ukrainian counterpart, but journalists at Kiev’s Borispol airport reported seeing Russian male passengers turned back.

Donetsk activists said such an entry ban has already effectively been put in place in eastern Ukraine. Dima Prokopshuk said two friends from Russia whom he had invited to his recent wedding were turned back at the Ukrainian border three times even though they tried to enter from Crimea, Belgorod and Rostov-on-Don.

“Some Russians may come here for separatist activities, but others are just coming to visit,” Prokopshuk said.

Eastern Views and Revelations

March 2015 – ​‘24 hours to disarm’: Kiev on verge of violence as oil dispute between govt, oligarch escalates

Published time: March 23, 2015 16:47

The Ukrainian government has given the private army of billionaire Dnepropetrovsk governor Igor Kolomoysky a day to lay down their weapons, after they occupied and erected a fence around the headquarters of the national oil company.

“We won’t have armed personal security forces of businessmen and politicians on the streets of our cities. This applies to every single one of them,” Interior Minister Arsen Avakov said on his Facebook page.

“All security forces have 24 hours to comply with the letter of the law.”

President Petro Poroshenko has also dispatched two battalions of the elite National Guard to Dnepropetrovsk, to diffuse “rising tension in the region.”

“There will be no more pocket armies for each governor. Any regional armed forces must fall in with the national military hierarchy,” the president warned.

Arriving in unmarked armored trucks, dozens of camouflaged men barricaded themselves in the head office of majority state-owned oil producer Ukrnafta in central Kiev on Sunday afternoon. Kolomoysky, whose net worth is estimated at $1.3 billion by Forbes but may be much greater, according to local sources, was inside, issuing orders to build an impromptu barrier around the office. The government says no permit has been issued to allow this.

Kolomoysky’s companies own about 43 percent of Ukrnafta, and the government controls just over half the shares. According to previous legislation, the state needed 60 percent ownership to exercise active control over a part-private company, which meant that Kolomoysky could treat Ukrnafta as his own property, including withholding dividends from the state, and sabotaging quorums at board meetings. The conflict erupted after the Rada passed a law on Thursday, stipulating that the state could manage any company in which it had a majority share.

Kolomoysky has taken the news badly. After the government fired his protégé from Ukrtransnafta – another energy company in which he has a stake, but a transporter, not a producer – Kolomoysky also occupied its office on Friday. Accusing the government of being “Russian saboteurs” and “corporate raiders” in an expletive-filled rant to the media, he reportedly threatened to “bring 2,000 volunteer fighters to Kiev,” before being persuaded to stand down.

Embedded image permalink

Можно бесконечно долго смотреть на три вещи – огонь, воду и на то, как Порошенко и Коломойский мочат друг друга.   –> You can endlessly looking for three things-fire, water, and as Poroshenko and Kolomoisky bump off each other.

He also allegedly temporarily froze bank accounts owned by companies affiliated with Petro Poroshenko, himself an oligarch.

From key ally to potential suspect

Until the recent fallout, the oligarch, who additionally holds Israeli and Cypriot citizenships, was considered one of Kiev’s most effective allies. As well as espousing strongly nationalist rhetoric, Kolomoysky has funded several large units fighting against the rebel forces in the east of the country.

But taking on the entire state apparatus may cost the oligarch more than just financial influence.

On Monday, Valentin Nalivaichenko, the head of Ukraine’s security service, the SBU, directly accused the Dnepropetrovsk authorities of “financing criminal gangs.”

These have been operating near the eastern conflict zones.

“A single criminal gang has been carrying out kidnappings, murders and violence against officials in Donetsk and Dnepropetrovsk. That gang has been in contact, and even received financing from Dnepropetrovsk officials,” he said during a press conference in Kiev.

“Those officials are now intimidating our investigators by threatening to use illegal armed units against them in the region,” said Nalivaichenko, specifically naming the threat posed by ‘Sich’, the very same “security firm” that has occupied the Ukrnafta head office in Kiev.

Four of Kolomoysky’s allies in the Rada said on Monday that they were quitting Poroshenko’s bloc, and called for a demonstration in Dnepropetrovsk, to show support for the embattled oil baron.

March 2015 – Private army in Kiev: Why oil stand-off in Ukraine shows oligarchs won Maidan revolution

Dmitry Babich, Sputnik International March 23, 2015

Whatever the outcome of the stand-off between President Petro Poroshenko and his subordinate Igor Kolomoysky may be, their conflict over Ukrainian oil giant Ukrnafta reveals realities about post-Maidan Ukraine which mainstream media manages to circumvent.

READ MORE: ‘24 hours to disarm’: Kiev on verge of violence as oil dispute between govt, oligarch escalates

Firstly, the country is still ruled by oligarchs, not by the people, even though Igor Kolomoysky is formally governor of Dnepropetrovsk region. Kolomoysky’s private army simply took control first of Ukrtransnafta (Ukraine’s oil transportation monopoly) and later of Ukrnafta. What does this tell us about the Ukrainian state?

Secondly, Ukraine’s oligarchs are not at peace with each other; the country is bracing for a major ‘war for assets’ between the country’s richest men (Kolomoysky is worth $2.4 billion on the Forbes list and ‘The Chocolate King’ Poroshenko is worth $1.3 billion).

Thirdly, the Maidan revolution not only left the country without any meaningful legal opposition in the parliament or in the media – as Kost Bondarenko, director of the Kiev-based Foundation for Ukrainian Politics, put it in his article for the Moscow-based Nezavisimaya Gazeta – but the revolution also left Ukraine in a situation of complete lawlessness, when neither laws nor even the words of the president mean much before brutal force and big money (the main weapons of oligarchs).

The story of the weekend conflict between Ukraine’s president and the governor of Ukraine’s most important industrial region is a perfect illustration of all these sad truths.

READ MORE: Ukrainian oligarch helps ‘fortify’ state oil & gas company HQ in Kiev ‘against raiders’

Kolomoysky’s men with submachine guns not only took control of Ukrtransgaz on Friday, but the governor of Dnepropetrovsk was apparently untroubled by President Poroshenko’s reprimand for his “unethical behavior” issued the next day.

Kolomoysky’s response to this “scolding” from Poroshenko was widely reported, along with an officially unconfirmed freeze on the accounts of Poroshenko’s companies in Kolomoysky’s bank (Privat-bank).

Adding armed insult to the financial injury, Kolomoysky’s men on Sunday took control of Ukrnafta, the country’s biggest oil company, presenting themselves as members of the “voluntary battalion Dnieper” (a Kolomoysky-sponsored paramilitary group known for its atrocities against civilians in the rebellious Donetsk Region). Despite Poroshenko’s order to disarm the gunmen and the president’s promise that “there will be no pocket armies in Ukraine,” Kolomoysky’s men did not leave the building on Monday; instead, they started to put up metal fences around it.

How could such things happen? The answer is simple: the traditional post-Soviet alliance of big money and political power (the fertile ground for oligarchs) failed to be destroyed, and has been strengthened by the Maidan revolution.

“Let’s face it: Yanukovich was removed by oligarchs. Some of them financed and supported Maidan. Others, more importantly, betrayed Yanukovich, removing the police guard from the building of his administration in February 2014 and switching the political allegiances of oligarch-controlled TV stations in favor of Maidan,” explained Mark Stolyar, former head of the Kiev-based radio station Stolichnye Novosti and a longtime analyst of the Ukrainian media scene. “After Maidan, these oligarchs demanded their part of the spoils, unleashing another redistribution of property.”

In that sense, Maidan’s sponsor, Poroshenko, was just one of the oligarchs who won the seemingly best prize: the formal position of head of state, adding power to money.

But Poroshenko never took his hands off his business assets after being elected president of war-torn Ukraine in spring 2014 – and this mere fact made him vulnerable. Poroshenko promised to strip himself of all assets, except his TV station – Channel 5 – but he never fulfilled his promise. Today, simply by having his assets and money in many regions, including Russian ones, Poroshenko becomes vulnerable to pressure from richer oligarchs, such as Kolomoysky. The reported freeze on Poroshenko’s capitals in Privat-bank is a good illustration of what this pressure could look like. This puts Poroshenko in an awkward situation.

“If Poroshenko does not react to Kolomoysky’s challenge now, he will become a toy figure not only to Kolomoysky, but also to other regional strongmen. In this situation, the state will be badly weakened,” said Valentin Zemlyansky, a Ukrainian political analyst, formerly the chief spokesman for Ukraine’s oligarch-controlled company Ukrenergo.

Vladimir Sinelnikov, a Kiev-based correspondent for Russian radio Vesti-FM, is skeptical about Poroshenko’s resolve to cut Kolomoysky to size.

“It is still a big question, who is more powerful, Poroshenko or Kolomoysky. The whole controversy around Ukrnafta started after the Ukrainian parliament put in question Kolomoysky’s control over that company. Kolomoysky controls 42 percent of the stock of this formally state-owned asset. This allowed him to block the meetings of shareholders, which required a vote by 60 percent of the stock for a meeting’s convention. The parliament lowered this minimum to 50 percent, thus limiting Kolomoysky’s powers, but he quickly showed who the true master of the country was,” Sinelnikov said.

So much for Poroshenko’s promise to cut the oligarchs to size.

This story also tells us where all the Western loans to Ukraine went, and where they will most likely go.

The “democratically elected” billionaires ruling Ukraine after the “democratic” coup of February 2014 have not been able to conceal their rivalries for even two weeks since receiving the first $5 billion batch of the $40 billion loan package pledged to Ukraine by the IMF and other Western financial institutions.

Kolomoysky did not shy away from using his “Russia-stopping” battalions for shielding his assets from the state.

There is little doubt that Poroshenko and other Ukrainian officials will find a way to explain to their Western counterparts that their $40 billion was swallowed by the need to contain “Russia’s intervention” from the east. Some of these billions, however, may help Poroshenko and his allies move up the Forbes ratings of Ukraine’s richest men. And again, the State Department won’t see any link there.

Dmitry Babich, Sputnik International

 The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.

March 2015 – Fall of oligarch who bankrolled Ukraine’s war

Tom Parfitt, Moscow, March 29, 2015

The sacking of tycoon Ihor Kolomoisky by President Poroshenko could have grave consequences

Igor Kolomoisky, the governor of Dnipropetrovsk region, at the Presidential Office in Kiev, Ukraine

Igor Kolomoisky, the governor of Dnipropetrovsk region, at the Presidential Office in Kiev, Ukraine Photo: MYKHAYLO MARKIV/EPA

He is the billionaire Ukrainian oligarch who offered a bounty of $10,000 for the capture of any Russian “saboteur” and bolstered his country against the advance of Moscow-backed separatists.

Ihor Kolomoisky was appointed governor of Dnipropetrovsk region in south-east Ukraine last year and poured millions of dollars into volunteer battalions that headed out to fight rebel militia to the east.

A portly man with unruly grey hair and a beard, Mr Kolomoisky, 52, quickly became seen as the country’s second-most powerful person after Petro Poroshenko, the president – and a patriot ready to reach into his wallet to stave off Russian aggression.

But this week Mr Poroshenko sacked his ally after a business dispute escalated and Mr Kolomoisky sent armed men to occupy the offices of two state energy companies in the capital, Kiev.

The tycoon’s sudden fall from grace represents one of the country’s biggest political upsets since the Ukraine crisis began in 2013.

His departure is prompting concern that without the billionaire’s clout, Ukraine’s defences could crumble in the event of a new offensive this spring by the rebels, who are backed by men and arms sent by Moscow.

Mr Kolomoisky’s ousting was swift but Ukraine’s president had already issued a warning, sensing public discontent at an oligarch sending out armed bully-boys in the capital.

“None of the governors will have their private armed forces,” Mr Poroshenko told army chiefs two day before he dismissed Mr Kolomoisky on Wednesday.

The fracas raises another, more enduring question that taunts post-Soviet Ukraine: can it shake off the rule of self-serving tycoons?

Mr Kolomoisky was born in the city of Dnipropetrovsk and started out in business buying and selling computers. Later he co-founded the PrivatBank banking chain and by 2012 had amassed a fortune of $3 billion (£2 billion), with assets in airlines, oil and metals.

Mr Poroshenko, himself a rich chocolate manufacturer, made him governor as the country began to implode. Russia was on the verge of seizing the Crimea peninsula; separatists in the eastern Donetsk and Luhansk regions would soon begin seizing government offices and carving out de facto independent “people’s republics”.

It was part of a wider policy to draw rich businessman into power in order to bankroll the fight for Ukraine’s survival.

Thousands of Ukrainians attended a rally in central Ukraine’s city of Dnipropetrovsk organised by powerful oligarch and former regional governour Igor Kolomoisky and his allies aimed at showing unity among regional and central authorities amid fighting with pro-Russian separatists in the east and economic crisis

In Dnipropetrovsk, the plan seemed to work. Mr Kolomoisky bought tyres, car batteries and fuel for the army and began financing battalions of volunteer fighters such as Dnipro, which has an estimated 2,000 battle-ready troops and thousands more in reserve.

The businessman’s former colleagues say he raised at least £8.6 million last year – some of it his money, some from donors – to fit out the battalions and to build roadblocks outside Dnipropetrovsk region on the roads towards Donetsk, the rebels’ capital.

A jovial man who shows flashes of temper, Mr Kolomoisky also caught the public mood of anger with Russia, calling Vladimir Putin, its president, a “schizophrenic of short stature” who was “completely incapable, totally insane”.

Mr Putin responded that the businessman was a “unique villain” and expressed amazement that “such a scoundrel could be appointed governor”.

The oligarch was popular in Dnipropetrovsk, but he unsettled Kiev earlier this month in an ugly business dispute.

In an attempt to clip the wings of businessmen encroaching on central government, Mr Poroshenko sponsored a bill allowing state-controlled companies to ignore the opinion of minority shareholders.

As a result, UkrTransNafta, the state-owned pipeline operator, sought to impose greater control by kicking out its management team, seen to be loyal to Mr Kolomoisky. His influence was also reduced in Ukrnafta, the oil and gas producer.

In response, the businessman sent armed men in fatigues and masks to occupy the offices of both companies, claiming he was protecting them against “Russian saboteurs” and a “raider attack”. His sacking followed.

Mr Kolomoisky told the Washington Post he had been the victim of a “public information bacchanalia” after trying to disrupt corruption at the two energy companies to which he sent his men.

“I have no future plan in politics,” he said, adding that he did not blame Mr Poroshenko for his downfall and would lend his support to Valentin Reznichenko, the new acting governor of Dnipropetrovsk.

Kiev claims a campaign has begun to purge plutocrats from power, but Ukrainians will be suspicious after years of such claims. Mr Poroshenko himself has reneged on a promise to sell his chocolate business, Roshen.

Sergei Leshchenko, an MP and opponent of Mr Kolomoisky, said the tycoon had gone too far. The armed seizure of Ukrnafta “looked like the first act in a military coup”, he wrote on his blog.

“That was the point of no return.”

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