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Ukraine's president sacks oligarch from post as regional governor | Ukraine's president sacks oligarch from post as regional governor |
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Ukraine’s president has sacked powerful oligarch Ihor Kolomoisky from his post as a regional governor, after an altercation that saw the businessman send armed men to the offices of a state company and launch a barrage of swearwords at a journalist questioning him about his actions. | Ukraine’s president has sacked powerful oligarch Ihor Kolomoisky from his post as a regional governor, after an altercation that saw the businessman send armed men to the offices of a state company and launch a barrage of swearwords at a journalist questioning him about his actions. |
Petro Poroshenko’s surprise move to remove Kolomoisky late on Tuesday night closes a chapter in the stand-off between the oligarch and the state that many fear could have dangerous repercussions. Successive Ukrainian governments have failed to deal with the influence of the oligarchs, instead merely shuffling them around and changing which individuals gain preferential treatment. | Petro Poroshenko’s surprise move to remove Kolomoisky late on Tuesday night closes a chapter in the stand-off between the oligarch and the state that many fear could have dangerous repercussions. Successive Ukrainian governments have failed to deal with the influence of the oligarchs, instead merely shuffling them around and changing which individuals gain preferential treatment. |
Kolomoisky was appointed governor of Dnipropetrovsk region a year ago, shortly after the Maidan revolution and just before a Russia-backed insurgency started in eastern Ukraine. He is personally credited with having stopped separatism in his region even as rebels were taking over in neighbouring Donetsk. He spent millions in subsequent months on forming and equipping several volunteer battalions that helped to strengthen Ukraine’s half-disintegrated army. | Kolomoisky was appointed governor of Dnipropetrovsk region a year ago, shortly after the Maidan revolution and just before a Russia-backed insurgency started in eastern Ukraine. He is personally credited with having stopped separatism in his region even as rebels were taking over in neighbouring Donetsk. He spent millions in subsequent months on forming and equipping several volunteer battalions that helped to strengthen Ukraine’s half-disintegrated army. |
Related: Corrupt, cash-strapped and lacking skill: the Ukraine army Britons come to train | Related: Corrupt, cash-strapped and lacking skill: the Ukraine army Britons come to train |
Kolomoisky benefited from Ukraine’s privatisation of the 1990s and 2000s, when former Soviet industrial giants were sold. During an appearance in parliament on 5 March, Kolomoisky declared that he had been a beneficiary of that privatisation process. | Kolomoisky benefited from Ukraine’s privatisation of the 1990s and 2000s, when former Soviet industrial giants were sold. During an appearance in parliament on 5 March, Kolomoisky declared that he had been a beneficiary of that privatisation process. |
“We know that a person who gave bribes but came forward to confess it will not face any consequences,” he said, to laughter. | “We know that a person who gave bribes but came forward to confess it will not face any consequences,” he said, to laughter. |
But what made him different from other oligarchs was his tendency to control state assets though buying minority shares in companies and appointing his own managers, as opposed to buying them out. This allowed him to control business activities and the payment of dividends. | But what made him different from other oligarchs was his tendency to control state assets though buying minority shares in companies and appointing his own managers, as opposed to buying them out. This allowed him to control business activities and the payment of dividends. |
One such company, the national oil producer Ukrnafta, owes millions of dollars in dividends to the government, which owns 50% plus one share of the firm. But instead of paying the dividends, Kolomoisky sent armed guards to take over the company’s headquarters last weekend, and built an iron fence around its perimeter. Kolomoisky showed up personally at the site, saying he was trying to protect the company from an illegal takeover. | One such company, the national oil producer Ukrnafta, owes millions of dollars in dividends to the government, which owns 50% plus one share of the firm. But instead of paying the dividends, Kolomoisky sent armed guards to take over the company’s headquarters last weekend, and built an iron fence around its perimeter. Kolomoisky showed up personally at the site, saying he was trying to protect the company from an illegal takeover. |
His move came in response to a new law approved by Ukraine’s parliament on 19 March, which would allow the state to restore control over this company by appointing new management. This law is a part of Ukraine’s commitment to the International Monetary Fund and other foreign lenders to clean up the management of state-owned companies. | His move came in response to a new law approved by Ukraine’s parliament on 19 March, which would allow the state to restore control over this company by appointing new management. This law is a part of Ukraine’s commitment to the International Monetary Fund and other foreign lenders to clean up the management of state-owned companies. |
In its memorandum with the IMF, which was a precondition to receiving a $17.5bn (£11.7bn) Extended Fund Facility earlier this month, the government said that “we will introduce best international standards and practices in … corporate governance” of national energy companies, including Ukrnafta. | In its memorandum with the IMF, which was a precondition to receiving a $17.5bn (£11.7bn) Extended Fund Facility earlier this month, the government said that “we will introduce best international standards and practices in … corporate governance” of national energy companies, including Ukrnafta. |
The president signed the bill at the same time as accepting Kolomoisky’s resignation in the early hours of Wednesday morning – possibly an indication that some kind of deal has been reached between the president and the oligarch, who is currently worth $1.36bn, according to Forbes. | The president signed the bill at the same time as accepting Kolomoisky’s resignation in the early hours of Wednesday morning – possibly an indication that some kind of deal has been reached between the president and the oligarch, who is currently worth $1.36bn, according to Forbes. |
The conversation between the two lasted for hours and was also witnessed by Ukraine’s prime minister, Arseniy Yatsenyuk, and the interior minister, Arsen Avakov, according to a source familiar with the late-night negotiations. | The conversation between the two lasted for hours and was also witnessed by Ukraine’s prime minister, Arseniy Yatsenyuk, and the interior minister, Arsen Avakov, according to a source familiar with the late-night negotiations. |
Reigning in the oligarchs has long been seen as the biggest challenge for Poroshenko, who is a billionaire himself. Under the presidency of Viktor Yanukovych, the leader’s family and close circle became fabulously wealthy, while his long-term associate Rinat Akhmetov grew his fortune further. | Reigning in the oligarchs has long been seen as the biggest challenge for Poroshenko, who is a billionaire himself. Under the presidency of Viktor Yanukovych, the leader’s family and close circle became fabulously wealthy, while his long-term associate Rinat Akhmetov grew his fortune further. |
Since the Maidan revolution toppled Yanukovych a year ago, Akhmetov has lost much business and influence, while fellow oligarch Dmytro Firtash was arrested in Austria and faces extradition to the US for bribery. He denies the charges, but is not allowed to leave Austria, diminishing his influence inside Ukraine. Kolomoisky has emerged as the most powerful oligarch in the new system, partly for his willingness to fund the military effort against Russia-backed separatists. | |
“I think there’s a widespread understanding that Ukraine needs to move away from an oligarchic system, but less of an understanding of how that can actually be done,” said a western diplomat in Kiev recently. | “I think there’s a widespread understanding that Ukraine needs to move away from an oligarchic system, but less of an understanding of how that can actually be done,” said a western diplomat in Kiev recently. |
Former investigative journalist Sergei Leshchenko, who is now a Ukrainian MP, said he expected Kolomoisky to “muddy the waters” rather than go quietly, but said it was difficult to say what exactly he might do. | Former investigative journalist Sergei Leshchenko, who is now a Ukrainian MP, said he expected Kolomoisky to “muddy the waters” rather than go quietly, but said it was difficult to say what exactly he might do. |
Many see Kolomoisky’s departure as a tactical move by a wily strategic thinker. | Many see Kolomoisky’s departure as a tactical move by a wily strategic thinker. |
Separately on Wednesday, two top officials were arrested on corruption charges during a televised cabinet meeting. Investigators read out charges to the head of the emergencies ministry and his deputy before leading them off in handcuffs, as assembled photographers took photographs. | Separately on Wednesday, two top officials were arrested on corruption charges during a televised cabinet meeting. Investigators read out charges to the head of the emergencies ministry and his deputy before leading them off in handcuffs, as assembled photographers took photographs. |
“When the country is at war and when we are counting every penny – they steal from people and the state. This will happen to everyone who breaks the law and sneers at the Ukrainian state,” said Yatsenyuk. | “When the country is at war and when we are counting every penny – they steal from people and the state. This will happen to everyone who breaks the law and sneers at the Ukrainian state,” said Yatsenyuk. |