Page 71 - bne_April 2021_20210401

bne April 2021
Opinion 71
In Ukraine one oligarch in particular has caused the most problems: Ihor Kolomoisky, who is credited with putting Zelenskiy into office in April 2019 by using his media empire to back him. However, the relationship between the oligarch and the comedian-turned-politician remains unclear. The two men knew each other well before the presidential elections and have done business together. Zelenskiy continues to earn royalties from the broadcasting of his comedy shows on Kolomoisky TV channels and also from rights sold to Russian TV stations.
Zelenskiy has also held controversial meetings with Kolomoisky where they discussed the development of Ukraine’s business, although few details were released. However, most controversially of all, Kolomoisky is accused
of looting $5.5bn from his bank PrivatBank, which was nationalised in 2016 when former President Petro Poroshenko was in charge. Kolomoisky remained in exile in Israel for
all of Poroshenko’s term in office, but returned as soon
as Zelenskiy was elected. No charges have been brought against Kolomoisky, nor has any investigation been launched despite very strong evidence showing that the managers
of PrivatBank emptied the deposits accounts of cash, as
bne IntelliNews reported in a cover story in November 2016 “Privat investigations” that triggered the NBU’s investigation into PrivatBank’s books.
That seems to have changed now.
Zelenskiy’s flip-flops
“Ukrainian officials announced in late February that three former top managers at the country’s biggest bank, Privatbank, are now suspects in a $5.5bn fraud case at the heart of Ukraine’s oligarch politics. One of these suspects was detained while attempting to leave the country. The news generated considerable international attention and was widely seen as an indication that the high-profile investigation may finally be gaining momentum,” Mendel said. “The Privatbank case has long served as a symbol of oligarch impunity. Progress towards justice would be seen as a major breakthrough for Ukraine.”
She is not wrong about that. The PrivatBank case being brought against its former managers is a litmus test, but it raises the question: why now?
Kolomoisky has been operating with impunity inside Ukraine and clearly increasingly interfering in domestic politics, specifically trying to counter International Monetary Fund (IMF) efforts to prevent him from recapturing his bank
and to set up effective anti-corruption mechanisms that Kolomoisky, and the other oligarchs, use to run their rent- seeking business empires.
The political novice Zelenskiy appears to swinging in the wind depending on who is offering to back him. He has put through many contradictory policy decisions that have both supported the oligarch and have acted against him.
Last summer Zelenskiy personally sacked the well-respected central bank governor, Yakiv Smolii, on June 2, who complained of “systemic political pressure” as the reason for his departure. Kolomoisky had been attacking the central bank as part of his efforts to regain control over PrivatBank and National Bank of Ukraine (NBU) staff were threatened and their houses and cars burnt in arson attacks. The NBU branded attacks on its staff and former NBU governor Valeriya Gontareva as a “terror” campaign, naming Kolomoisky as responsible.
More recently, the Rada adopted a draft law that allows the government to sack the head of the National Anti-Corruption Bureau of Ukraine (NABU) that is part of a triumvirate set up at the insistence of the IMF to fight corruption and is entirely outside the government’s control. The draft bill was submitted to the Rada by the president’s office, according to local reports.
However, Zelenskiy has also worked against Kolomoisky. When the so-called anti-Kolomoisky banking law was presented to the Rada last May that was a prerequisite to get the next desperately needed $2.1bn IMF tranche, Zelenskiy personally went down to the parliament buildings to lobby deputies to vote for the law, which was narrowly passed.
The pressure on Kolomoisky is growing. The now state-owned PrivatBank has brought a number of cases against Kolomoisky in London and Cyprus, which are making good progress. The courts in London have already frozen $2bn of Kolomoisky's
“The pressure on Kolomoisky is growing. The now state-owned PrivatBank has brought a number of cases against Kolomoisky in London and Cyprus, which are making good progress”
assets. And the US government has also launched a Grand Jury money-laundering investigation into Kolomoisky, who used companies based in Cleveland and other US locations to launder hundreds of millions of dollars.
Then the new Biden administration dropped a bombshell, by sanctioning Kolomoisky, including asset freezes and travel bans for him and his family.
It has taken a long time. bne IntelliNews called for international sanctions to be imposed on Kolomoisky during his very blatant efforts to scupper the anti-Kolomoisky banking bill, which
was not even on the agenda a year ago. Clearly something
has changed.
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