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Will Kolomoiskyi arrest bring an end to oligarch influence in Ukraine? [1]

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Date: 2023-09

At first glance, the 60-year-old heavy-set man with a grey beard and unruly ash-coloured curls, wearing glasses and a blue tracksuit and carrying a leather briefcase, looks like a caricature of an Eastern European businessman from the 1990s.

But this is how one of Ukraine’s richest and most influential men, Ihor Kolomoiskyi, appeared in court last week.

It comes as Ukrainian authorities are pushing a new, wartime anti-corruption drive – something signalled most recently by president Volodymyr Zelenskyi earlier this month. Describing a Ukraine of the future in his daily public address, Zelenskyi said the situation would change for “those who ransacked Ukraine and put themselves above the law” in the past.

Ukraine’s Bureau of Economic Security suspects the businessman of fraud and money laundering. The Ukrainian Security Service delivered Kolomoiskyi to court. He was offered bail, set at $14m (about £11.2m), but he refused and remains in custody.

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Then, on 7 September, another law enforcement agency – the National Anti-Corruption Bureau of Ukraine (NABU) – brought a new charge against Kolomoiskyi, accusing him and five other employees of stealing 9.2bn hryvnia (£200m) from Privatbank, a bank he owned, in 2015. Those funds were later returned to the bank in the form of additional shareholder capital. But it did not save Privatbank from collapse.

In 2016, Ukraine’s finance ministry had to nationalise the institution, pouring $5.5bn (£4.3bn) into the bank to prevent the collapse of Ukraine’s entire banking system. Privatbank had been the largest private bank in the country, with the equivalent of one in every two adult Ukrainians having an account there. After this, in 2017, Kolomoiskyi fled Ukraine: first to Geneva, and then to Israel. “Our property was stolen from us,” he said in 2019 on the nationalisation.

The businessman returned triumphantly after Zelenskyi was elected in 2019. He had openly supported the comic-turned-politician in the elections from abroad, and rightly felt like he was on the winning side. But now he sits in a prison cell awaiting a court decision.

Kolomoiskyi’s lawyers argue the fraud charges “have no basis”, and have not commented on the new money laundering charges. They are now awaiting appeal.

Roots of a fortune

Kolomoiskyi was born in Dnipro, Ukraine and made his fortune in the 1990s, first by importing goods into Ukraine, and then by currency speculation and the privatisation of Soviet state-owned enterprises. The heart of his empire was Privatbank.

As one of Kolomoiskyi’s original business partners in the Privat group, Oleksiy Martynov, recalled in a 2010 interview: “We started the business by trading in industrial consumer goods and computer equipment. It was a common speculation.” Another Dnipro businessman, Serhiy Tihipko, later “suggested that we create our own bank”, Martynov said.

That bank, Privat, helped Kolomoiskyi buy assets and finance numerous businesses (as I reported together with journalist Graham Stack in our book, A Private Story).

By the 2000s, Kolomoiskyi and his partners controlled Ukraine’s largest airlines, and ferroalloy and oil businesses, ranging from mining and refining to retail gas station networks. And this is not counting influential TV channels, upscale resorts, luxury real estate and his hometown football club, Dnipro. In the chaotic aftermath of Ukraine’s 2014 Euromaidan revolution, he served as regional governor of Dnipro for a year.

Forbes magazine estimates Kolomoiskyi’s worth at $1bn in its billionaires list, describing him as a citizen of Israel. The businessman also has a Cypriot passport. Whether he has a Ukrainian passport is not known for certain. Last year, Zelenskyi allegedly stripped him of Ukrainian citizenship, but the decree was never officially passed.

Even if this decree exists, Kolomoiskyi could challenge it in court – he loves to litigate and knows how it’s done.

Business partners

Discussing Zelenskyi, Kolomoiskyi told popular website Ukrainska Pravda on the eve of the Russian invasion: “I sympathise with him; everything suits me in principle.”

Indeed, Zelenskyi and Kolomoiskyi used to be business partners. Zelenskyi’s production studio has filmed shows and series for Kolomoiskyi’s TV channels for many years. Zelenskyi acted in many of these shows himself – that’s how he became known across the country.

Prior to the 2019 elections, his familiarity from TV sent his ratings as a candidate soaring. Kolomoiskyi’s popular 1+1 TV channel openly promoted Zelenskyi to viewers. On the eve of the elections, 1+1 broadcast films and shows featuring Zelenskyi almost around the clock, including talk shows in his support.

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[1] Url: https://www.opendemocracy.net/en/odr/ukraine-oligarch-ihor-kolomoiskyi-arrest-trial-anti-corruption/

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