Page 59 - BNE_magazine_05_2020

bne May 2020
Opinion 59
that is the essence of the problem. I have to stick to the rules and Kolomoisky only has to stick to those parts that suit him.
Westerners dealing with eastern Europe have to pretend the rule of law is in effect. Indeed, in Ukraine, which is wooing the West for aid and eventual membership of the EU, Zelenskiy’s administration has also got to maintain the fiction that rule of law is in effect. You can’t just call “foul” on the amendments and nix them, as ironically that is against the law. The proper place to throw these amendments out is the Rada’s committee on banking, but that is reportedly headed and stacked with more Kolomoisky supporters. Kolomoisky has prepared his ground carefully. But that is why he is a top dog in a country as corrupt and chaotic as Ukraine. He is very good at this game. Because of this duplicity I have to write the following paragraph.
There is no evidence whatsoever that Kolomoisky paid any bribes, money or in any other way materially influenced
the deputies in their decision to submit those amendments. There is no evidence of any sort that Kolomoisky has not stuck entirely to the letter of the law or that he abused the political or legal system in any way. I leave it to the reader to draw their own conclusions as to the motivations of the deputies
to submit 16,335 amendments to the draft law on banks, bill number 3260, at a time of national crisis that is likely to derail an imminent deal with the International Monetary Fund (IMF) and as such could cause a catastrophic economic crisis.
Nevertheless, Kolomoisky’s name should be added to every sanction list we have. The NBU has branded a string of attacks on its staff and former NBU governor Valeriya Gontareva last year as a “terror” campaign and named Kolomoisky as being behind those attacks. And there were several other incidents laid at his feet. Gontareva told bne IntelliNews last summer in London that Kolomoisky had threatened her and she afraid for her safety. Since then she has been knocked down by a car in
a hit-and-run incident police say was “suspicious,” her house in Kyiv was burnt down in an arson attack and the car of her daughter-in-law was torched after someone doused it with petrol in the middle of the night.
The West has been extremely fast to impose sanctions on Russian oligarchs where the evidence against them is far more flimsy than this. Indeed, one of the principal objections to the personal sanctions regime is that it undermines the “innocent until proven guilty” principle that is the bedrock
of the West’s legal system. Sanctions are the punishment for individuals who have not stood trial nor been convicted of
any wrongdoing. They are sanctioned on the basis of political decisions made by governments that want to “punish” political regimes they disagree with.
The obvious example is the inclusion of Russian oligarch
Oleg Deripaska and his Rusal metallurgical company in the April 6 round of sanctions last year. While Deripaska clearly belongs to the top tier of Russian business, there is no evidence his relationship with the Kremlin is any different to that of
any leading CEO to the government in any country. Indeed, when the US Treasury Department (USTD) finally responded to requests for the evidence used to justify the sanctions on Deripaska it sent a risible list of articles that was little more than hearsay. The letter even included a claim that he cancelled the IPO of his car company GAZ “to hide money laundering activities” that was flat out wrong: the company already held its IPO in 2007, years before Deripaska took it over.
Putin used to actively engage with most of Russia’s business elite in regular meetings as bne IntelliNews reported in a cover piece “ZAO Kremlin” in 2007 but more recently he restricts himself to a small circle of businessmen he has known since he was a young man as bne IntelliNews reported in a cover story: “Meet the stoligarchs” in 2016.
“Oligarchs can ignore the rule of law and use bribes and at times violence and murder to grab the assets they are after. But they also use the legal system to their advantage when
it suits them”
And yet the USTD deemed Deripaska a suitable target for extremely harsh sanctions that caused chaos on the metals market when they were imposed. Deripaska seems to have been largely singled out in the April sanctions simply because he is high profile and vulnerable thanks to the international nature of his business.
The case against Kolomoisky is infinitely stronger. bne IntelliNews first raised the alarm in a November 2016 cover story “Privat investigations” that showed the loan book was stuffed with shell companies belonging to Kolomoisky. The NBU followed the scandal up with an audit of Privatbank books and found that 99% of the loans were to related parties. This was followed by a forensic audit of the books by corporate sleuths Kroll, which came to the same conclusion – with hard evidence – and even tracked down some of the money.
All this evidence is now being presented to courts in London and Cyprus where Privatbank is suing Kolomoisky for about $8bn in total in damages. The UK court has already ordered $2bn of Kolomoisky assets frozen for the duration of the trial.
But no charges have been brought in Ukraine. There is no active investigation into him or his affairs. He is free to move around the country and conduct business with impunity. Zelenskiy seems powerless or unwilling – it's not clear which – to stop the de facto effort to derail the banking law. Zelenskiy’s role in all this is unclear too. On the one hand the president lobbied
www.bne.eu