Saturday, August 23, 2014


Ukraine

In Donetsk, A 'Self-Made' Oligarch Learns To Play Nicely With Others

Rinat Akhmetov waves during celebrations to mark the 75th anniversary of his football club, FC Shakhtar, in Donetsk. (file photo)
Rinat Akhmetov waves during celebrations to mark the 75th anniversary of his football club, FC Shakhtar, in Donetsk. (file photo)
By Daisy Sindelar
Privacy is essential when you're an oligarch. But so is well-timed publicity. So when Rinat Akhmetov, Ukraine's richest man and a born-and-bred Donetsk loyalist, waded into a confrontation with pro-Russian separatists occupying the region's government headquarters, he made sure tape was running.

"Put away your emotions!" a voice resembling Akhmetov's can be heard saying in an April 7 recording later aired by Ukrainian media. "I understand that your souls ache. All of you whose souls ache for Donbas are my brothers. Why? Because I live here. I walk here. I breathe the air here, the same as you." 

Sometimes bullying, sometimes cajoling -- and almost always with very rough language -- the voice continued to appeal to the separatists to soften their stance and hold talks with authorities in Kyiv. "In order to change the situation," it said, "we need to talk."

Four days later, separatists continue to occupy the government headquarters with no evident de-escalation of tensions. But Akhmetov, 47, had made his point. No matter how the standoff ended, the king of one of Ukraine's most pro-Russian regions was on record as putting himself on the side of peace and national unity. That gesture paid off on April 11 when Akhmetov appeared alongside Arseniy Yatsenyuk as the pro-Western prime minister visited Donetsk in an attempt to defuse the crisis.

"For me, Donbas is Ukraine," the oligarch told Yatsenyuk. "Donbas, Ukraine are in my heart forever." 

'Enemy Of The People'

The past weeks have seen a distinct turnabout for Akhmetov, a '90s multibillionaire and Party of Regions stalwart who owed his fortune to Viktor Yanukovych and remained faithful nearly to the last. Akhmetov, who had profited wildly during Yanukovych's presidency, had no particular investment in Ukraine's democratic development and was precisely the kind of oligarch Euromaidan protesters had sought to uproot.

So as the center of gravity shifted from Kyiv to Crimea to the current militarized rumblings in the east, Akhmetov's sudden rebirth as a moderate voice of reason has left many people skeptical. Some suggested Akhmetov had actually orchestrated the separatist takeover after media reports claimed he had met with Russian President Vladimir Putin just days before the seizure. (Akhmetov denied meeting Putin.) Others, like the presidential administration in Kyiv, have suggested it may be Ukraine's ousted leader who's helping the Kremlin to stir the unrest from across the border.
 
  • A once-perfect partnership: Akhmetov is considered one of the main beneficiaries of Viktor Yanukovych's political career, trading political support for unfettered access to top government tenders and privatization deals. Here, the two Donetsk natives celebrate a 2006 win by the home side, Akhmetov's Shakhtar Donetsk. 
  • Yanukovych's son, Oleksandr, was also a government beneficiary, quietly receivng contracts on behalf of "the Family." Once friendly with Akhmetov, the relationship has cooled since Akhmetov renounced ties with his father following his February escape to Russia. The younger Yanukovych now appears to be acting as the family's agent of revenge, and is currently suing Akhmetov for $75 million. 
  • Another Akhmetov associate, titanium king Dmytro Firtash, fled Ukraine at the height of the Euromaidan protests and was subsequently arrested in Vienna on surprise U.S. charges. Observers say Akhmetov, fearing a similar fate, may be sticking close to his Donbas base.  
  • Despite their political differences, Akhmetov gained key concessions from Viktor Yushchenko during his time as Ukrainian president -- most notably, securing immunity from prosecution despite efforts by Yushchenko's prime minister, Yulia Tymoshenko, to put him in jail.
  • Tymoshenko earned Akhmetov's enmity in 2004 after canceling an $800 million deal by Akhmetov and Viktor Pinchuk, the son-in-law of former President Leonid Kuchma, to acquire Kryvorizhstal, the country's largest steel mill. Now, as a presidential candidate, Tymoshenko appears to have softened her stance, and was rumored to have met with Akhmetov during a trip to Donetsk this week. 
  • Akhmetov, despite serving as a parliament deputy, rarely embraces political roles, and most recently turned down the job of governing the Donetsk region. In his place, he recommended a political nemesis, Serhiy Taruta, a Tymoshenko ally and a longstanding voice for Ukrainian unity. Taruta (right) meets with German Foreign Minister Frank-Walter Steinmeier in Donetsk on March 22. 
  • Akhmetov has been criticized for failing to prevent pro-Russian separatists from occupying the Donetsk government administration despite enjoying near-absolute authority over his native region. A fellow oligarch, Ihor Kolomoyskyy (left), has been credited with preventing similar unrest in Dnipropetrovsk region, where he is currently serving as governor. 
  • The Party of Regions has found itself in political dissaray following Yanukovych's ouster. With presidential elections approaching on May 25, Akhmetov and the party have failed to front a viable candidate, settling instead for former Kharkiv Governor Mykhailo Dobkin, who currently faces criminal charges for leading a separatist movement. 
  • Vadym Novinsky, a fellow billionaire and Party of Regions member, is considered one of Akhmetov's closest political advisers and holds a stake in his Metinvest company. A native Russian, Novinsky received Ukrainian citizenship in 2012 and remains one of the country's most openly pro-Russian politicians. 
PHOTOS: The Friends And Foes In Akhmetov's Orbit

"It may look like it's Akhmetov who arranged for all this to happen. But judging by the kinds of things people were shouting at him after he spoke in favor of a united Ukraine, the person who really ordered it was Yanukovych," says Oleksiy Matsuka, editor of the independent online news site "Novosti Donbassa," who watched as pro-separatists protesters derided Akhmetov as an "enemy of the people" and burned orange-and-black flags from his football club, Shakhtar Donetsk.

What's unfolding, says Matsuka, is a battle for control between two former allies. "When Akhmetov first came out for a united Ukraine about a month ago, it irritated Yanukovych," he says. So now the question is, who's going to rule the region -- Yanukovych from abroad, or Akhmetov from right here? What Akhmetov's trying to do is use his diplomacy to persuade the separatists to switch to his camp." 

Dwindling Fortunes

Coal-miners' children don't usually become billionaires. But Akhmetov, raised in a working-class Tatar family, looked at his gritty region and saw the potential for huge profits. His Donetsk-based company, System Capital Management, includes over 100 businesses in metals, mining, banking, telecommunications, media, and real estate. 

He has his own television station, Ukraina, and built Eastern Europe's first UEFA-standard football stadium, the $400 million Donbas Arena. He owns London's most expensive property, a luxury apartment at One Hyde Park. He openly speaks of SCM's 300,000-strong workforce as a political bloc he can put behind any idea or candidate he chooses.

But one need look no further than Russian oligarchs like Mikhail Khodorkovsky or Boris Berezovsky to know these kinds post-Soviet of fortunes can turn on a dime. From the 1990s on, Akhmetov used his proximity to Yanukovych to scoop up a healthy portion of state tenders and privatization sell-offs. (Even in January, at Euromaidan gained force, Akhmetov reportedly received 31 percent of the month's tenders.)

Now, with Yanukovych's ouster and an at least nominal commitment in Kyiv to weed out corruption at the roots, Akhmetov is undoubtedly anxious to hold on to what remains of his fortune and, on the surface, a respectable business reputation. (SCM and two of its major subsidiaries, Metinvest and DTEK, were included in a list of Ukraine's most transparent companies in 2011.) 

A slump in metals and Euromaidan fallout have already seen his assets dwindle from $15.4 billion to $11.4 billion. Yanukovych has begun to exact revenge as well: Ukrainian media reported this week that the former president's son, Oleksandr, is suing Akhmetov for nearly 1 billion hryvnyas ($75.5 million) in a case involving Metinvest.

With the Party of Regions in disarray and its presidential candidate, former Kharkiv Governor Mykhailo Dobkin, facing criminal charges, Akhmetov may now be pursuing new political alliances with the two likely front-runners, Petro Poroshenko and Yulia Tymoshenko, in the May 25 race. Observers say Akhmetov is looking to trade in eastern votes in exchange for retaining his money, his influence, and -- most importantly -- his regional autonomy.

"Probably right now this game is not only about the elections. It's also about certain moves toward decentralizing the government that would preserve all of Akhmetov's footholds in the east, particularly in Donetsk Oblast," says Oleksandr Klyuzev, a Donetsk-based political analyst who says it's oligarchs, and not separatists, who may be driving calls for a federalized Ukraine.

"When we talk about so-called 'federalization,' it's really a way of safeguarding the status of Ukraine's eastern and southern oligarchies," he says. "Including, of course, Rinat Akhmetov." 

Playing Both Sides? 

For all his professed love of Donbas, Akhmetov is fond of the wider world. He happily fled to Monaco in 2005 when he faced potential prosecution for financial crimes at the behest of then Prime Minister, Yulia Tymoshenko. For now, however, his world is smaller -- his associate, Dmytro Firtash, was arrested in Austria last month on unexpected charges brought suddenly by the United States.

Under Yanukovych's protection, Akhmetov successfully avoided attempts to prosecute him on a range of criminal and financial charges. Now, without a mentor, he may be feeling decidedly less secure.

"Akhmetov doesn't know if the Americans or somebody else also have some secret criminal charges waiting for him if he turns up in a European Union country," says Taras Kuzio, a research associate at the Canadian Institute of Ukrainian Studies. "He simply doesn't know what could happen to him. And that uncertainty forces him to be cautious, and it forces him to hide in Donetsk and to play both sides. I'm sure he's negotiating with Putin and with Kyiv at this very moment."

As long as Kyiv can guarantee his security, Akhmetov may be happy to play the peacemaker. But Kuzio says Ukraine's number-one oligarch may still be more than happy to turn over Donetsk to Russia if he gets a better offer.

"I think it's always been a mistake to believe that people like Akhmetov are somehow patriots of Ukraine," he says. "They're patriots of themselves."

Daisy Sindelar

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