Exclusive: Ukraine’s post-coup regime is facing what looks like a falling-out among thieves as oligarch-warlord Igor Kolomoisky, who was given his own province to rule, brought his armed men to Kiev to fight for control of the state-owned energy company, further complicating the State Department’s propaganda efforts, reports Robert Parry.
By Robert Parry (Updated on March 25, 2015, to include Kolomoisky’s firing)
In the never-never land of how the mainstream U.S. press covers the Ukraine crisis, the appointment last year of thuggish oligarch Igor Kolomoisky to govern one of the country’s eastern provinces was pitched as a democratic “reform” because he was supposedly too rich to bribe, without noting that his wealth had come from plundering the country’s economy.
In other words, the new U.S.-backed “democratic” regime, after overthrowing democratically elected President Viktor Yanukovych because he was “corrupt,” was rewarding one of Ukraine’s top thieves by letting him lord over his own province, Dnipropetrovsk Oblast, with the help of his personal army.
Last year, Kolomoisky’s brutal militias, which include neo-Nazi brigades, were praised for their fierce fighting against ethnic Russians from the east who were resisting the removal of their president. But now Kolomoisky, whose financial empire is crumbling as Ukraine’s economy founders, has turned his hired guns against the Ukrainian government led by another oligarch, President Petro Poroshenko.
Last Thursday night, Kolomoisky and his armed men went to Kiev after the government tried to wrest control of the state-owned energy company UkrTransNafta from one of his associates. Kolomoisky and his men raided the company offices to seize and apparently destroy records. As he left the building, he cursed out journalists who had arrived to ask what was going on. He ranted about “Russian saboteurs.”
It was a revealing display of how the corrupt Ukrainian political-economic system works and the nature of the “reformers” whom the U.S. State Department has pushed into positions of power. According to BusinessInsider, the Kiev government tried to smooth Kolomoisky’s ruffled feathers by announcing “that the new company chairman [at UkrTransNafta] would not be carrying out any investigations of its finances.”
Yet, it remained unclear whether Kolomoisky would be satisfied with what amounts to an offer to let any past thievery go unpunished. But if this promised amnesty wasn’t enough, Kolomoisky appeared ready to use his private army to discourage any accountability.
On Monday, Valentyn Nalyvaychenko, chief of the State Security Service, accused Dnipropetrovsk officials of financing armed gangs and threatening investigators, Bloomberg News reported, while noting that Ukraine has sunk to 142nd place out of 175 countries in Transparency International’s Corruptions Perception Index, the worst in Europe.
The see-no-evil approach to how the current Ukrainian authorities do business relates as well to Ukraine’s new Finance Minister Natalie Jaresko, who appears to have enriched herself at the expense of a $150 million U.S.-taxpayer-financed investment fund for Ukraine.
Jaresko, a former U.S. diplomat who received overnight Ukrainian citizenship in December to become Finance Minister, had been in charge of the Western NIS Enterprise Fund (WNISEF), which became the center of insider-dealing and conflicts of interest, although the U.S. Agency for International Development showed little desire to examine the ethical problems even after Jaresko’s ex-husband tried to blow the whistle. [See Consortiumnews.com’s “Ukraine Finance Minister’s American ‘Values.’”]
Passing Out the Billions
Jaresko will be in charge of dispensing the $17.5 billion that the International Monetary Fund is allocating to Ukraine, along with billions of dollars more expected from U.S. and European governments.
Regarding Kolomoisky’s claim about “Russian saboteurs,” the government said that was not the case, explaining that the clash resulted from the parliament’s vote last week to reduce Kolomoisky’s authority to run the company from his position as a minority owner. As part of the shakeup, Kolomoisky’s protÃ©gÃ© Oleksandr Lazorko was fired as chairman, but he refused to leave and barricaded himself in his office, setting the stage for Kolomoisky’s arrival with armed men.
On Tuesday, the New York Times reported on the dispute but also flashed back to its earlier propagandistic praise of the 52-year-old oligarch, recalling that “Mr. Kolomoisky was one of several oligarchs, considered too rich to bribe, who were appointed to leadership positions in a bid to stabilize Ukraine.”
Kolomoisky also is believed to have purchased influence inside the U.S. government through his behind-the-scenes manipulation of Ukraine’s largest private gas firm, Burisma Holdings. Last year, the shadowy Cyprus-based company appointed Vice President Joe Biden’s son, Hunter Biden, to its board of directors. Burisma also lined up well-connected lobbyists, some with ties to Secretary of State John Kerry, including Kerry’s former Senate chief of staff David Leiter, according to lobbying disclosures.
As Time magazine reported, “Leiter’s involvement in the firm rounds out a power-packed team of politically-connected Americans that also includes a second new board member, Devon Archer, a Democratic bundler and former adviser to John Kerry’s 2004 presidential campaign. Both Archer and Hunter Biden have worked as business partners with Kerry’s son-in-law, Christopher Heinz, the founding partner of Rosemont Capital, a private-equity company.”
According to investigative journalism in Ukraine, the ownership of Burisma has been traced to Privat Bank, which is controlled by Kolomoisky.
So, it appears that Ukraine’s oligarchs who continue to wield enormous power inside the corrupt country are now circling each other over what’s left of the economic spoils and positioning themselves for a share of the international bailouts to come.
As for “democratic reform,” only in the upside-down world of the State Department’s Orwellian “information war” against Russia over Ukraine would imposing a corrupt and brutal oligarch like Kolomoisky as the unelected governor of a defenseless population be considered a positive.
(Early Wednesday morning, President Poroshenko dismissed Kolomoisky from his post as Dnipropetrovsk regional governor.)
Investigative reporter Robert Parry broke many of the Iran-Contra stories for The Associated Press and Newsweek in the 1980s. You can buy his latest book, America’s Stolen Narrative, either in print here or as an e-book (from Amazon and barnesandnoble.com). You also can order Robert Parry’s trilogy on the Bush Family and its connections to various right-wing operatives for only $34. The trilogy includes America’s Stolen Narrative. For details on this offer, click here.
Regarding Jaresko and Biden, a fish rots from the head, and the US is the head of the Empire fish.
How long before Right Sector and their neoNazi friends pick an oligarch and take power in Kiev?
A friend is part of a group here that welcomes US visitors from State Dept visitor programs. Next week a group of five Ukrainians arrive to visit the US border and learn about “terrorism.” Don’t know who they are yet, but I’d think that they could learn more by paying attention to what the USG is doing to their country, courtesy of Nuland and McCain, et al. “The Cookie Revolution.”
Ukraine is a disgrace. Instead of bombs and bullets, it should provide food and consumer goods for its near empty shelves. How bad can government get? Just check Ukraine.
Woops! Actually Ukraine has not sunk on the corruption index. It has improved from 144th to 142nd. Well worth 50,000 lives.
Here is a classic example of monopolists “colluding and contending for hegemony”. There is no allegiance to principle, only the constant alignment/re-alignment of power and influence to gain ever more control, consolidation and profit.
Clearly Ukraine is an extreme situation. But how long before we see the same kind of outrageous behavior in the West? Right now the monopolists in the US and Western Europe are colluding and “competing” along lines deemed “appropriate” but we are bound to see this process break down. They are their own grave-diggers. The stakes are too high.
Typical behavior in the provinces of an Empire. Republics are run by citizens, through their elected representatives, generally for the common good. Empires are run by well-monied oligarchs and their retainers/henchmen, and the, now-subjugated, former citizens had better not interfere if they “know what’s good for’em”. When you see meetings at Davos, or Bilderberg meetings, just think of Al Capone, and other Mafia Dons (or their Capos sent in their stead) getting together to carve up the territories and rackets, deciding who gets what “piece of the Action”.
The latest is that President Poroshenko has forced Kolomoisky to quit as Governor of Dniepropetrovsk. The way that Kolomoisky tried to take over the headquarters of a state-owned energy company in Kiev, he seemed to think he was all-powerful and untouchable. Part of his reason for believing that might have been the IMF’s announcement this month that it was going to continue pouring billions into Ukraine’s banks, including Kolomoisky ‘s Privatbank, despite the failure of the previous round of financing.
John Helmer wrote in his ‘Dances With Bears’ blog on March 16th, 2015:
“The new loan terms announced by the IMF last week, postpone reform by the commercial banks until well into 2016. In the meantime, the IMF says it will allow about $4 billion of its loan cash to be diverted to the treasuries of the oligarch-owned banks. That is almost one dollar in four of the IMF loan to Ukraine.
The biggest beneficiary of last yearâ€™s IMF financing is likely to repeat its good fortune, according to sources close to the National Bank of Ukraine (NBU). This is PrivatBank, controlled by Igor Kolomoisky (lead image), governor of Dniepropetrovsk region and financier of several units fighting on Kievâ€™s side in the civil war…
… The new loan dossier reveals that IMF supervision of the Ukrainian banks, introduced last April and pursued through ten months, failed to staunch capital outflow from the Ukrainian banks; failed to recover value from the assets of insolvent institutions; and failed to require control shareholders to recapitalize their bank balance-sheets. These include Kolomoiskyâ€™s PrivatBank; Rinat Akhmetovâ€™s First Ukrainian International Bank (FUIB, Cyrillic acronym PUMB); and Credit Dnepr Bank of Victor Pinchuk. The remedy, newly proposed by the IMF last week, lets the oligarchs off the hook, promising to feed their banks with public funds. Thatâ€™s to say, IMF funds…
… Fund officials now reveal they were novices at Ukrainian accounting, admitting â€œthe balance sheets of intervened banks turned out worse than the books indicated; little value has, so far, been recovered from the assets of failed banks.â€ ”
Kolomoisky’s real crime was probably not his looting, lawlessness and thuggery but the fact that he interfered too much with the supply of oil and gas, which is really the role of western governments and corporations. That was Saddam Hussein’s real crime when he invaded Kuwait and he had to pay the ultimate price. After that armed adventure by Saddam, the Western powers suddenly discovered that he was a monster who had gassed innocent Kurdish villagers, even though they had no problem with that beforehand.
If Kolomoisky can’t convince the West that he will do whatever they order him to do, they might also suddenly discover that he has been guilty of large scale looting and war crimes.
Not so much that he has interfered, but that he will interfere in the future. The parties jockeying for Naftogaz spinoffs need to get rid of him now, before he can cause any more trouble.
As for exposing his looting and war crimes, I certainly hope so. Maybe it will be self-serving for the West, but it will vindicate the rebels.
It is important to add that the robber-baron, kosher-nostra capitalism in a country divided into feudal regions is an experimental model which will be applied to Russia, if the US neocons win the coming Big War. Add this to the list of extracurricular benefits, such as the mentioned establishment of private mercenary armies to play through the EU. The US neocons intend to spread the Uki “revolution” both to the East and to the West. Therefore, the Eastern rebels are not only fighting against the US imposed coup government in Kiev, they are also fighting against the neofeudal social control model aimed at European part of Russia and Siberia. But why stop at Russia and EU when the whole World is your oyster: http://cluborlov.blogspot.com.au/2015/03/financial-feudalism.html.
How long will it be before the Ukrainian Nazis like the Right Sektor and Svoboda become disenchanted and stage a coup against the current Kiev regime? The Nazis must be frustrated being used as cannon fodder while the oligarchs spend their time behind the lines looting what is left of the Ukrainian economy. When the Ukraine has its “”Night of the Long Knives” it should be almost impossible for the mainstream media to ignore the true nature of the Ukrainian government.
Correction: UkrTransNafta is owned 100 percent state-owned. The Radio Liberty story I cited has it wrong, as do many other news outlets. The confusion is likely due to similarity between UkrTransNafta and UkrNafta, in which Kolomoisky has around 42 percent control. Further confusion arises in the reference by many sources to Kolomoisky’s “control” of UkrTransNafta, which is (or was) de facto by virtue of his association with Lazorko and not due to ownership of shares. In addition, there is a complicated relationship between the pipeline company and refineries owned by Kolomoisky, giving him some real financial influence. Lazorko, according to a report in the Kyiv Post, used to head one of them.
As best as I can tell, using rough Google translations of Ukrainian and Russian sources, the issue of ordering the transfer to state banks of accounts of companies managed by the energy ministry refers to UkrTransNafta accounts in Kolomoisky’s PrivatBank — according to one source, about $86 million.
Despite the error, the gist of my comment remains the same. Kolomoisky stands to lose big if Deloitte’s audit uncovers his illegal dealings. As long as the threat of exposure was coming from other corrupt oligarchs, he could protect his secrets with blackmail. But he won’t be able to do that with Deloitte.
Deloitte (CeloIttA) has a way of not finding things, from time to time. Incompetence? No, not really. More likely a little bird(s) whistling in their ears from afar looking to profit off a change of scenery perhaps, an artistic interpretation possibly, or just an old fashioned chameleon maneuver. In the end, nothing is ever as it seems, even carefully documented and on solidly, official looking and sounding paper. Kolomoisky will learn American style sheep-dipping, pretty quickly I suspect. And either sink, or swim.
I’ve been advised from several quarters that Yandex is better than Google for translating Russian. I remain dubious, however, until someone explains to me how Yandex can translate “head DNR” as “the President of Armenia.”
I’ve maintained all along that the impending breakup of state-owned oil and gas monopoly Naftogaz is behind a lot of the political maneuvering going on in Kiev. The split is necessary to meet EU rules and has been on the table for several years. It’s more urgent now, because it’s a condition of the IMF loans. The plan is to separate the transmission side â€“ the pipelines â€“ from the production and storage side. As I understand it, Naftogaz will continue as the trader (buying and selling). The European Bank for Reconstruction and Development has been working with the coup government on the restructuring plan, as well as a project to modernize the pipeline system (big construction contracts!).
According to the bank’s year-end report, final preparations are under way to sell off 25 percent of Naftogaz through IPO. In other words, they’re getting close. So maybe this isn’t just a fight between oligarchs, but a sign that the battle is heating up between major Western corporations and their respective government vassals. The fight between Kolomoisky and Poroshenko might even be a proxy war. If true, it would be a deliciously cruel irony.
Kolomoisky, through PrivatGroup, owns minority interest in two Naftogaz subsidiaries. Their names are similar, so it’s easy to confuse them. UkrTransNafta is the oil pipeline subsidiary of Naftogaz. Ukrnafta is the oil and gas production, refinery, and storage division. There’s also a natural gas pipeline division, which is 100-percent state-owned. It looks like the gas pipeline system is going to be the first be auctioned off, but Kolomoisky has got to be freaking out.
Until recently, Kolomoisky exercised control over Ukrnafta. Even though the state has controlling interest, Kolomoisky was able to use his 42 percent stake to block votes, typically by not showing up for shareholder meetings. On January 13, the Verkhovna Rada voted to reduce the quorum necessary for a vote, effectively taking away his control. Now if he doesn’t show up, they can proceed without him.
By some accounts, Lazorko was complicit in diverting oil from the UkrTransNafta pipeline system to a refinery owned by Kolomoisky that had unused capacity. His replacement, Yuri Miroshnikov, is former SBU. Poroshenko allegedly has been working with the SBU in an attempt to dig up dirt on Kolomoisky and thus neutralize him. Itâ€™s also likely that they wanted Lazorko out before he could destroy evidence ahead a major audit. Naftogaz announced in late January that it contracted with Deloitte to review the company and its subsidiaries in preparation for selling off parts of its business to foreign investors. Miroshnikov’s appointment is only temporary, but he would have enough time to fish around, despite the agreement between Kolomoisky and Poroshenko that he would hold off and let Deloitte do its job.
Kolomoisky ignored a slap on the wrist by the U.S. embassy in Kiev and an official reprimand by Poroshenko and on Sunday sent his thugs to the Kiev headquarters of Ukrnafta. The reason isn’t clear. Radio Liberty reported that he said it was a precautionary measure against “corporate raiders” â€“ similar to charges he made about UkrTransNafta. If destroying evidence was the motive behind Friday’s assault, then it could have been the same for the repeat offense.
Kolomoisky also reportedly froze Poroshenko’s accounts at PrivatBank. Poroshenko responded with an order by the energy ministry on Monday that all accounts and deposits of companies managed by the ministry be transferred to state-owned banks. I suppose that would constitute a corporate raid from Kolomoisky’s point of view, and it’s quite possible that someone really is trying to get him out of the picture. Poroshenko also has ordered that all of the oligarchs’ private armies be dissolved immediately.
Some geopolitical analysts say access to foreign oil and gas was never as important as the power to control the flow. Of all the divisions of Naftogaz, the pipelines have got to be the biggest prize. The head of Naftogaz recently was quoted as saying the bidders were lining up. No doubt, and they likely are in the country with their suitcases full of unmarked bills, laying the groundwork for the IPO. It’s also likely they are using the oligarchs (and vice versa) to gain an edge over the competition. For all we know, Kolomoisky and Poroshenko have competing “sponsors.” We’ll soon find out.
There’s a lot of opportunities
If there aren’t, you can make them
Pet Shop Boys – Opportunities (Let’s Make Lots of Money)
LOL. Thanks for that.
But where are the brains?
Kolomoyskyi is the most visible paymaster. However, even if the private armies are officially “dissolved”, in the chaos that is today’s Ukraine they will remain a dagger to the throat of the economies of Western Europe. Washington has an enduring fetish for stay-behind mercenary forces.
Ukraine now plays a vital role in both the storage and transit of gas in Europe and in improving EU energy security. Ukraine has the largest storage capacity in Europe, which enables the country and its European partners to accumulate over 30 bcm of gas during summer periods when prices are lowest. Ukraine is also strategically placed to play the role of a transit hub. Its interconnectors have the ability to transfer gas from central Europe to South-Eastern Europe, which is the most exposed region to Russia’s gas monopoly. Naftogaz asserts that ensuring gas flows freely will significantly improve the liquidity and the stability of the EU market, making it more resilient to political pressure.
Ihor Kolomoyskyi, Ukraine’s largest employer of Nazi thugs, is a prominent supporter of Ukraine’s Jewish community and the president of the United Jewish Community of Ukraine.
In 2010 he was appointed as the president of the European Council of Jewish Communities after promising the outgoing president he would donate $14 million, with his appointment being described as a “putsch” and a “Soviet-style takeover” by other EJCJ board members. Several ECJC board members resigned in protest.
But after members of the ECJC resigned in protest over his unilateral appointment, Kolomoisky withdrew his bid. Fellow Ukrainian oligarch Vadim Rabinovitch, already an ECJC vice president, quit his post to follow Kolomoisky.
In the Spring of 2011, Kolomoisky and Rabinovitch created a new group with a grand-sounding name, the European Jewish Union.
Based in Brussels, the EJU’s stated aim is to be “a uniting structure for all Jewish communities and organizations throughout Western, Eastern and Central Europe.” It sought to establish a European Jewish Parliament, comprising 120 members modeled on the Israeli Knesset.
The EJU was criticized for its choice of candidates to the Parliament, including comedian Sacha Baron Cohen, international football star David Beckham, Pee Wee Herman, Andrew Grove, fashion designer Diane von FÃ¼rstenberg, film director Roman Polanski and others, many of whom never sought nomination nor even knew they had been nominated. Several candidates, including Viviane Teitelbaum, a member of Brussels’ regional parliament and former head of the Belgian Jewish community, upon learning of their nominations, immediately asked to have their names removed from nomination. French controversial entertainer DieudonnÃ© M’bala M’bala and other names have been dropped from the list. The European Jewish Congress distanced themselves from the EJU, circulating a memo that they were â€œnot connected in any way to this initiative and do not support it.â€
The elections process itself was also criticized. Elections were being conducted over the internet, on the EJU’s own website. Although the election rules limited elections to residents of European countries, with voters restricted to voting for representatives from their own country, the website provided no resources to verify the voter’s nationality other than a bulk eraser provided free by NATO. In at least one case, a North African based journalist was able to register on the site as a Canadian citizen and cast a vote.
The European Jewish Parliament hailed its inauguration on February, 16th 2012 as a “great day for Jews in Europe”.
The EJP logo is modeled on the flag of European Union flag of 12 golden stars on a blue background. Instead the EJP logo uses 11 golden stars with a 12th star being a white Star of David, stylized as on the flag of Israel, on a blue background.
Rabinowitz and Joel Rubinfeld, former Secretary General of the Belgian-Israeli Friendship, were elected co-presidents of the EJP.
In January 2014, Rubinfeld co-founded the Belgian League against Anti-Semitism (LBCA). He assumed the office of President of the LBCA. Rubinfeld wrote a chapter on Belgium forthe collective work “The new clothes of anti-Semitism in Europe”.
“It has recently turned outÂ that Ukrainian oligarch Viktor Pinchuk, a vocal proponent ofÂ Ukraineâ€™s European integration, made huge contributions toÂ the Clinton Foundation, while Hillary Clinton was the US Secretary ofÂ Stateâ€¦Experts note that afterÂ the coup, the Ukrainian leadership has actually become Washingtonâ€™s puppet government. Several foreign citizens, including American civilian Natalie Jaresko, Lithuanian investment banker Aivaras Abromavicius and Georgia-born Alexander Kvitashvili have assumed high posts inÂ the Ukrainian government. It should be noted that Natalie Jaresko, Ukraineâ€™s Financial Minister, have previously worked inÂ the US State Department and has also been linked toÂ oligarch Viktor Pinchuk.” Source: Sputnik
“Franklin Templeton Investments, one of the US largest investment funds, acquired the bonds of Ukrainian government worth $ 5billion, accounting for 20 percent of the Ukrainian foreign debt” Source: Strategic Culture Foundation
Now that these bonds promise to default, investors aren’t worried. Apparently, Franklin’s risk is underwritten by the Federal Reserve, so American taxpayers will pick up the tab. It seems the “Troubled Assets Relief Program” has gone global under the U.S. State Department. Kolomoisky has filed a lawsuit to recover millions he claims due to him from the bankrupt Ukrainian government. So, the money will go directly from the Federal Reserve into Kolomoisky’s pocket.
There is a uniquely Ukrainian explanation for these irregularities. Tradition!
For the sake of fairness maybe the US and EU Corporatocracy should put economic sanctions on the Ukrainian oligarchs.
So the local billionaires are turning on each other so as to be in the best position to steal what’s left of the wealth in the Ukraine.
I found an interesting story on the Saker site about this.
Is Uncle Sam â€œtossingâ€ Kolomoiskii?
The last paragraph had a speculative tidbit:
So it all adds up: Kolomoiskii is a universally loathed figure, there is a very good chance that MH17 can be fully dumped on him (thereby providing the Empire with a face saving â€œoutâ€), he is probably very hard to control and he is threatening the junta. If I was sitting in Langley my recommendation would be clear: send him to Muzychko.
Somebody has to take the fall for downing that airliner, and why not the evil Kolomoisky?
Russian news also reported yesterday that Poroshenko is sending National Guard units to Dnepropetrovsk to “help stabilize” Kolomoisky operation. In an interesting twist of fate, Kolomoisky is essentially exposing new Ukraine government for what it is thus largely validating what the pro-Russian outlets have been saying.
If this Ukrainian fiasco were only a novel it wouldnâ€™t sell because the storyline was unbelievable.
The oligarch Kolomoisky, a Jewish Israeli citizen, funds radical anti-Semitic neo-Nazi brigades and is gifted a province, Dnipropetrovsk Oblast, to plunder and rule over. He turns against another Jewish oligarch, President of Ukriane, Poroshenko, who also has a dark criminal past and supports the fascist anti-Semitic factions in the Ukrainian government. Both oligarchs are spreading propaganda against a country, Russia, that is also dominated by Jewish oligarchs.
This real life â€œKosher Nostraâ€ of organized crime is more entertaining than James Bondâ€™s SPECTRE.
A feel-good piece in the Jerusalem Post about the rescue of the Ukrainian Jews touched on the connection.
Kolomoiskyâ€™s decision to use militiamen from a battalion he financed to protect his business interests last week became a major scandal in Ukraine, pitting him against fellow oligarch and President Petro Poroshenko. It is possible that this could reflect badly on the Jewish community with whom he is so intimately identified.
IMO they’re not wrong with this concern – innocent Jews around the world are going to be in increasing danger from the deductions made by local rednecks. Not that Israel cares … by encouraging this sort of thing they can recruit even more people to move to Israel.
Reporter makes Journey with Ukranian Jews set to make aliya, flee civil war.
Yes, the government will do anything to increase immigration, even hype racial fears like Netanyahoo did in France. It brings to mind a quote by an Israeli peace activist and former member of the Kenssett and Irgun.
â€œIsraelis like immigration but donâ€™t like immigrantsâ€. Uri Avnery