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U.S. Slaps Sanctions On Ukrainian Oligarch Kolomoyskiy Over Corruption Accusations

Ihor Kolomoyskiy
Ihor Kolomoyskiy

The United States says it has banned powerful Ukrainian tycoon Ihor Kolomoyskiy from entering the country in another sign that President Joe Biden's new administration is taking a tougher stance on endemic corruption in Ukraine.

In a March 5 statement announcing the travel ban, Secretary of State Antony Blinken expressed "concern about [Kolomoyskiy's] current and ongoing efforts to undermine Ukraine's democratic processes and institutions, which pose a serious threat to its future."

Kolomoyskiy's critics in Ukraine accuse the tycoon of undermining efforts to implement political and economic changes -- including judicial, banking, and graft reform backed by Washington and Brussels -- with the help of dozens of loyalists in the parliament.

Lawmakers close to the tycoon are seeking to remove Artyom Sytnyk as the head of Ukraine's National Anti-Corruption Bureau (NABU), which has been investigating cases tied to Kolomoyskiy. The magnate's media empire has also been critical of the work of NABU.

The State Department ban "is clearly a message to all these parliamentarians trying to protect Kolomoyskiy," Daria Kaleniuk, the executive director of the Kyiv-based Anti-Corruption Action Center, told RFE/RL.

The United States has already gone after at least one member of parliament close to Kolomoyskiy. In January, the Treasury Department sanctioned Oleksandr Dubinskiy for meddling in the 2020 U.S. elections. The move blocks any U.S. assets he possesses, including dollar-denominated accounts. Dubinskiy was subsequently kicked out of President Volodymyr Zelenskiy's Servant of the People party.

In a tweet, former Ukrainian Prime Minister Oleksiy Honcharuk called the travel ban an "intermediate result," adding that Kolomoyskiy's "partners and minions will not escape responsibility" either.

The actions from the State Department make official what had been a years-long rumor that Kolomoyskiy was banned from traveling to the United States.

The magnate in 2017 even hired the Washington-based lobby firm Arent Fox for $50,000 to help him get an E-2 investor visa, a sign he was facing difficulties.

In addition to Kolomoyskiy, Blinken designated his wife, Iryna Kolomoyska; his daughter, Angelika Kolomoyska; and his son, Israel Zvi Kolomoyskiy, making them also ineligible for entry into the United States.

The State Department actions do not impose any financial sanctions on Kolomoyskiy, which is the jurisdiction of the Treasury Department. However, large U.S. banks are likely to avoid working with him, Sarah Felix, an anti-money-laundering expert and founder of Palerma Consulting, told RFE/RL.

Energy, Metals, Media

Kolomoyskiy is one of the most influential tycoons in Ukraine, owning assets ranging from media and airlines to energy and metals. He also briefly served as governor of Dnipropetrovsk, where many of his businesses are based, from 2014 to 2015.

Kolomoyskiy's media assets are credited with helping Zelenskiy, a former comic with no political experience, win the April 2019 presidential election in a landslide.

The tycoon is rumored to have influence in the administration while activists say he controls at least 30 parliament deputies in the president's party.

In his statement, Blinken accused Kolomoyskiy of being "involved in corrupt acts that undermined rule of law and the Ukrainian public’s faith in their government’s democratic institutions and public processes" while serving as governor. Kolomoyskiy used "his political influence and official power for his personal benefit," Blinken’s statement said.

Separately, the FBI is investigating Kolomoyskiy and business partner Hennadiy Boholyubov in connection with the $5.5 billion bailout of PrivatBank, once Ukraine's largest lender.

The tycoons are accused of embezzling billions of dollars from the bank through fraudulent loans and using some of the proceeds to buy assets in the United States, including real estate and metals plants.

The United States is seeking the seizure of three commercial real estate properties owned by the tycoons and allegedly purchased with the embezzled funds. Kolomoyskiy and Boholyubov deny the accusations and last month filed a lawsuit against the U.S. government.

Ukraine's Reform Struggles

The United States and Europe have been supporting Kyiv with aid and political backing ever since Russia illegally annexed the Crimean Peninsula in 2014 and backed separatists in two provinces in eastern Ukraine.

However, Washington and Brussels attached strings to the aid, including demanding Ukraine carry out tough economic and political reforms that would weaken the enormous influence of a small group of tycoons like Kolomoyskiy who have impeded the nation’s development.

One of the bills demanded by the West was the so-called "Anti-Kolomoyskiy" bill designed to clean up the banking sector and prevent owners of nationalized lenders from regaining control.

While Ukraine has made much progress on economic and political reforms since 2014, the country has failed to live up to Washington's expectations, with some achievements like anti-corruption reform being partially rolled back.

The Biden administration has said it will make battling corruption and strengthening democratic institutions a key component of its foreign policy agenda.

In a move many viewed as a message by the new Biden administration to Kyiv about the centrality of reform to the bilateral relationship, Blinken last month named Zelenskiy's ousted prosecutor-general, Ruslan Ryaboshapka, an "anti-corruption champion."

Ryaboshapka, who briefly served from 2019 to 2020, reportedly angered tycoons with his investigations.

Blinken in January told the Senate during his confirmation hearing that even if the United States helped Ukraine contain Russian aggression, the country would fail to build a durable democracy if it did not tackle corruption.

With reporting by Liubomyra Remazhevsika in Kyiv
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    Todd Prince

    Todd Prince is a senior correspondent for RFE/RL based in Washington, D.C. He lived in Russia from 1999 to 2016, working as a reporter for Bloomberg News and an investment adviser for Merrill Lynch. He has traveled extensively around Russia, Ukraine, and Central Asia.

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