Putin’s allies channelled billions to oligarch who backed pro-Russian president of Ukraine

PUBLISHED ON REUTERS.COM
By Stephen Grey, Tom Bergin, Sevgil Musaieva and Roman Anin
RED RIBBON: Then Ukrainian President Viktor Yanukovich (left) and Dmitry Firtash, one of Ukraine’s richest men, in 2012, at the opening ceremony of a new sulphuric acid plant in Crimea. The friendship between the two men benefited both, as well as Moscow. REUTERS/Mykhailo Markiv

Comrade Capitalism series, part 5: Russian bank granted huge loans to Dmitry Firtash, whose business empire boomed under Viktor Yanukovich

Русский язык (Russian translation)

MOSCOW/KIEV – In Russia, powerful friends helped him make a fortune. In the United States, officials want him extradited and put behind bars. In Austria, where he is currently free on bail of $155 million, authorities have yet to decide what to do with him.

He is Dmitry Firtash, a former fireman and soldier. In little more than a decade, the Ukrainian went from obscurity to wealth and renown, largely by buying gas from Russia and selling it in his home country. His success was built on remarkable sweetheart deals brokered by associates of Russian leader Vladimir Putin, at immense cost to Russian taxpayers, a Reuters investigation shows.

Russian government records reviewed for this article reveal for the first time the terms of recent deals between Firtash and Russia’s Gazprom, a giant gas company majority owned by the state.

According to Russian customs documents detailing the trades, Gazprom sold more than 20 billion cubic metres of gas well below market prices to Firtash over the past four years – about four times more than the Russian government has publicly acknowledged. The price Firtash paid was so low, Reuters calculates, that companies he controlled made more than $3 billion on the arrangement.

Over the same time period, other documents show, bankers close to Putin granted Firtash credit lines of up to $11 billion. That credit helped Firtash, who backed pro-Russian Viktor Yanukovich’s successful 2010 bid to become Ukraine’s president, to buy a dominant position in the country’s chemical and fertiliser industry and expand his influence.

The Firtash story is more than one man’s grab for riches. It demonstrates how Putin uses Russian state assets to create streams of cash for political allies, and how he exported this model to Ukraine in an attempt to dominate his neighbour, which he sees as vital to Russia’s strategic interests. With the help of Firtash, Yanukovich won power and went on to rule Ukraine for four years. The relationship had great geopolitical value for Putin: Yanukovich ended up steering the nation of more than 44 million away from the West’s orbit and towards Moscow’s until he was overthrown in February.

“Firtash has always been an intermediary,” said Viktor Chumak, chairman of the anti-corruption committee in the previous Ukrainian parliament. “He is a political person representing Russia’s interests in Ukraine.”

A spokesman for Putin rejected claims that Firtash acted on behalf of Russia. “Firtash is an independent businessman and he pursues his own interests, I don’t believe he represents anyone else’s interests,” said Dmitry Peskov.

The findings are the latest in a Reuters examination of how elites favoured by the Kremlin profit from the state in the Putin era. In the wild years after the fall of the Soviet Union, state assets were seized or bought cheaply by the well connected. Today, resources and cash flows from public enterprises are diverted to private individuals with links to Putin, whether in Russia or abroad.

Putin’s system of comrade capitalism has had huge costs for the ordinary people of Russia: By granting special cheap deals to Firtash, Gazprom missed out on about $2 billion in revenue it could have made by selling that gas at market prices, according to European gas price data collected by Reuters. Four industry analysts said that Gazprom could have sold the gas at substantially higher prices to other customers in Europe.

At the same time, the citizens of both Russia and Ukraine have seen unelected oligarchs wield political influence.

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One thought on “Putin’s allies channelled billions to oligarch who backed pro-Russian president of Ukraine”

  1. Tell me, do you really think that Europe and NATO needs Ukraine for snemthiog else? As soon as Ukraine will enter NATO and EU, it will be flooded with NATO military, it will have to stop selling weapons to most of its todays clients (Iran, Korea, Libya, etc..) and probably will have to stop producing certain types of weapons (that happened to the Czech Republic). So it will loose an huge amount of revenue from the weapon sector. Most of the military equipment will have to be replaced by NATO-approved (and that costs money), EU will impose a whole bunch of restrictions in agrarian sector (like in Poland), ecology (Ukraine will have to close its coal mines so lots of jobs will be lost and it will have to buy more energy abroad), and it will push on the Ukrainian market European products so lots of Ukrainian food producers will have to go out of business because their production costs are a lot higher than for example Spain or Greece (restructuring costs a lot of money).Do not look at the west as saviors and friends. They will use Ukraine in the same way as Russia, because in politics there are no friends and brothers. There are just political, military and economic interest, greed and opportunism.My advice: Grow up and turn on your brain.

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