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Year of Kolomoisky: how the oligarch's influence changed under President Zelensky. Part 1
Some experts predicted that after the elections Kolomoisky would gain maximal influence and get back the nationalized PrivatBank. But others did not believe the oligarch's influence group within the president's team could significantly affect his decisions. Reality, as often happens, turned out to be much more complex than forecasts.
A year ago comedian Volodymyr Zelensky won the presidential election in Ukraine; his opponents called him a creature of oligarch Ihor Kolomoisky. Some experts predicted that after the elections Kolomoisky would gain maximal influence and regain the nationalized PrivatBank. But others doubted that the oligarch's influence group on the president's team could noticeably affect his decisions. Reality, as often happens, turned out to be much more complex than forecasts. Radio Liberty analyzes how Kolomoisky's influence has changed over the past year in sectors key to him.
The piece was updated with a comment from the publication Babel, which earlier operated under the name TheBabel (one of its co-investors was Ihor Kolomoisky).
"The country of dreams" for Kolomoisky: that's what the Schemes program called its investigation outlining Ihor Kolomoisky's most significant business (and not only business) interests.
This is not only about wanting loyal people in power, but also about restoring influence over PrivatBank (nationalized due to the removal of funds and a risk of bankruptcy), satisfying his needs in energy, in the oil and gas sector, in heavy industry and even in the media. During the election period the oligarch himself called himself a business partner of then-candidate Volodymyr Zelensky, and his media became a loyal and powerful information platform for Zelensky the candidate.
A year has passed. Ukraine continues to live under wartime conditions, but an economic crisis has been added, and the spread of coronavirus has made ruthless adjustments. Which of Kolomoisky's "dreams" became reality? And can we speak of the preservation or even increase of the top oligarch's influence over his "favorite" industries?
Power: what the "Kolomoisky group" can do
How has Ihor Kolomoisky's influence in power changed over the year since his business partner (as Kolomoisky himself says) Volodymyr Zelensky won the election and the pro-presidential party Servant of the People took office?
Ihor Kolomoisky: "Life is a supermarket, take whatever you want, but the checkout is ahead"
Having a group of loyal deputies in the Verkhovna Rada is an unchanging long-term must-have for Ukrainian oligarchs, specialists note. That's why talk of a "Kolomoisky group" in parliament began back when the newly elected president Volodymyr Zelensky said in his inaugural speech that he was dissolving the eighth convocation of parliament. Profile media began compiling dossiers on the influence group of the "president Zelensky's business partner."
Ukrainian media and political scientists name several deputies as coordinators of the so-called "Kolomoisky group" in the 9-th convocation of parliament (in force since August 2019). Among them they repeatedly mention Oleksandr Dubinsky, Ihor Palytsia and Oleksandr Tkachenko. All three come from Kolomoisky's businesses: media and oil-and-gas.
More interesting is how many "bayonets" the oligarch can mobilize in parliament when it comes to decisions critically important to him?
Almost all experts interviewed by Radio Liberty admit: the most illustrative was the vote on 30 March for the bill "On improving certain mechanisms for regulation of banking activity." Because of a provision that makes it impossible to return a problematic bank to its former owners (primarily PrivatBank), this document was called "anti-Kolomoisky."
The bill received 267 votes, but the Servant of the People's single majority crumbled: it mustered only 198 votes for it. The rest came from independents and two completely unexpected allies: the opposition factions European Solidarity and Holos.
The consideration of the "anti-Kolomoisky" law became precisely a roll call of the conditional Kolomoisky influence group in parliament: they all voted "against" (17 deputies), abstained (31) or simply ignored the vote.
For example, among those who abstained was Oleksandr Dubinsky; among those who did not vote were Oleksandr Tkachenko and Ihor Palytsia. In total 15 members of Servant of the People abstained or did not vote, another of them, Oleh Voronko, voted "against." They, as well as some of the 33 "servants" who were absent from the fateful session, are considered the core of the "pro-Kolomoisky" group.
Among those who pressed "against" from other factions were 10 representatives of Batkivshchyna. It did not give a single "for" vote, nor did the For the Future group. This gives grounds to almost wholly include that faction and that non-factional association in the current Kolomoisky influence group in parliament, according to Vitaliy Kulik, Oleksandr Kharebin, Hlib Vyshlinsky and several other experts who spoke with Radio Liberty.
At the same time, on the eve of the second reading the "anti-Kolomoisky" law received a record number of amendments: 16 000.
Of them 6000 were filed by a deputy expelled from Servant of the People, Anton Polyakov, and another one and a half thousand by faction member Olha Vasilevska-Smaglyuk. Before being elected this deputy was an investigative journalist at the channel "1+1."
However Ihor Kolomoisky has already assured in his interview with NV that he did not ask any deputies to submit amendments to this bill, that he is not acquainted with Anton Polyakov, and that, in the oligarch's words, those deputies are not sympathetic to him. "As far as I know, they are sympathetic to Ukraine. I didn't ask anyone for anything," Kolomoisky said.
Nevertheless, the "anti-Kolomoisky" law, necessary for obtaining IMF assistance and for protecting state finances and PrivatBank's depositors, passed first reading despite unprecedented resistance from "the most influential oligarch in Ukraine."
Last year Andriy Bohdan resigned as head of the President's Office; he was connected to Ihor Kolomoisky as his adviser in 2014 (when Kolomoisky headed the Dnipropetrovsk regional state administration) and as his lawyer in 2015-2019. The resignation of prime minister Oleksiy Honcharuk's government also changed the balance of power.
Former head of the President's Office Andriy Bohdan: "I don't know Kolomoisky's interests, I know the state's interests"
But overall over the past year Ihor Kolomoisky's influence has increased, though not as much as expected after the elections, admitted Gleb Vyshlinsky, executive director of the Center for Economic Strategy, in a comment to Radio Liberty.
"Kolomoisky's influence on political decisions that may affect his economic interests has grown. This concerns both a greater number of deputies under his control and an increase in the number of people in the executive branch who have ties with him. But I don't see a critical mass that would turn all of Ukraine's policy in Kolomoisky's favor. Comparing different economic sectors in which he has interest, the situation is not unambiguous," the economist asserts.
The government change amid the "turbulence" caused by the coronavirus pandemic is also indicative. Among experts many believe the new Cabinet has fewer officials linked to Kolomoisky, partly because there are more people close to oligarch Rinat Akhmetov. Radio Liberty conducted an analysis of the connections and biographies of the new ministers.
Investment banker Serhiy Fursa, meanwhile, claims the rotation from the Honcharuk government to the Shmyhal government was dictated precisely by Ihor Kolomoisky's interests. He supports this with how the revenues of the state-owned Centrenergo changed after management close to Kolomoisky came in, and that the attempt to replace that management preceded the government's resignation.
"Zelensky could have sided with the government, but instead sided with Kolomoisky—and the government was dismissed," the investment banker said on air after the change of the Ukrainian government.
For his part, public policy expert in the fuel-energy complex Hennadiy Ryabtsev notes that assessments of current officials' ties with Kolomoisky, Akhmetov or other oligarchs remain largely subjective.
"Our evaluation of people's personalities in power is dominated by subjectivity. If a person worked in a corporation, somehow it's assumed they will carry out the owner's wishes. That's a mistaken approach. Being noticed and appointed doesn't mean a person will necessarily follow a business owner's whims," the expert clarifies.
At the same time experts say some managerial decisions (for example in the portfolio of the Ministry of Energy and Environmental Protection) still provide a "green light" effect for Kolomoisky's assets.
Thus political scientist Vitaliy Kulik asserts that a so-called "pro-Kolomoisky" parliamentary influence group has clearly formed and that loyalty to Ihor Kolomoisky persists in a number of state institutions.
"Yes, there are fewer Kolomoisky people in the new government in key positions; he has problems appointing people from his orbit. But decisions in the power vertical are still sometimes made in his favor. Except for a few important cases, like the 'anti-Kolomoisky' law," says Vitaliy Kulik.
On the whole Kolomoisky's influence over Ukrainian power has barely changed in the past year, Kulik states. However he highlights several divergent trends.
"He does not have the level of influence over the president that he had at the start of the term. However his influence on economic processes is growing: on energy, banking, heavy industry. The 'green light' regime introduced in sectors where he has interests remains, and some decisions in his favor are still made. Despite the alleged conflict between him and President Zelensky. Though it's hard to call it a conflict—rather different approaches to solving state problems between him and the president and his circle. Ihor Kolomoisky offers simple solutions for complex issues: not spreading the problem among all stakeholders, but placing it on citizens: a sort of 'privatization of profits and nationalization of losses,'" Kulik explains the growing disagreements between the Privat group and the Bankova (the Presidential Administration) amid economic crisis, war and the COVID-19 pandemic.
A steady trend of decreasing Kolomoisky influence is seen by Ivan Verstiuk, economic editor at NV.
"Ihor Kolomoisky's influence has decreased over the past year, and the best examples are the Verkhovna Rada's votes for the 'anti-Kolomoisky' banking law and the land market. The oligarch still has resources to finance his political projects. But President Zelensky finally understood he was dealing with tough stakes—either Ukraine or Kolomoisky," Ivan Verstiuk believes. "The entire world watches and sees who is who. And finally Kolomoisky is being worn down by court cases in Britain and the US, which prevent him from planning normal business development of his assets... On the line is the political card: Kolomoisky directly or indirectly influences about 30 deputies of the Verkhovna Rada (from Servant of the People). Some have ties to him as a former employer, some have ideological ties, thinking Kolomoisky advises the right things. But all his advice is marginal politics, influenced by what is called the 'Transnistrian republic' and authoritarian Belarus."
Political adviser and media expert Oleksandr Kharebin admits Kolomoisky's economic weight and political influence have not always correlated in recent years. But Kolomoisky's political weight can be quite precisely measured by the number of his interviews and public communications, the expert thinks.
"If at the start of last year, after returning to Ukraine, the rather silent and closed-for-journalists oligarch exploded with a huge number of quality and candid conversations with selected journalists in which he tried to fix and secure nearly exclusive access and priority in communicating with the new president and forming his own vision of Ukraine's future, now journalists and the public must be content with exclusives, rumors and conjecture... Kolomoisky not only hoped but was sure of his unquestionable right to reap significant political dividends from Zelensky's victory. But in fact he got a rather limited quota of deputies in the Servant of the People faction. They now deal with purely pressing issues: targeted lobbying of his interests and blocking initiatives harmful to him, acting as sort of opinion leaders and trying by legal hooks and media activity to influence the majority's decisions," the media expert explains.
Kharebin recalls long-standing business ties between Kolomoisky's television channel and the Kvartal-95 team. In this context the "television investment" Kolomoisky made in Zelensky's victory, the expert says, was more a repayment of debts for broadcasting Kvartal's licensed product.
"Perhaps that's why it was never converted into Kolomoisky's monopolistic access to the president's ear and so far has not affected state bodies' positions in lawsuits over nationalized PrivatBank by its former shareholders. Therefore Kolomoisky's attempts to attract allies in the Rada that he understands—from Batkivshchyna, situational ones from OPZZh and influential ones from Arsen Avakov's group—look understandable as attempts to restore 'justice.'"
But it's a shock for those who remember and compare Kolomoisky's governor-era position in 2014 with his current one. The change in his rhetoric about Russia's participation in the war in Donbas may have purely economic explanations. But precisely for that reason one of Kolomoisky's most famous aphorisms ("Life is a supermarket, take whatever you want, but the checkout is ahead") is more relevant than ever regarding the future of this undoubtedly prominent businessman. Theodore Dreiser could have written his incomparable 'Trilogy of Desire' about his life," Oleksandr Kharebin concludes.
(This refers to Theodore Dreiser's described story of the rise and fall of an American tycoon at the turn of the 19-20 centuries — ed.).
"The media emperor" changes the rules of the game
Influence over the mass media is one of an oligarch's basic status attributes, experts say. Ihor Kolomoisky also has the necessary 'gentleman's set' of information resources. What has changed in Kolomoisky's media 'kitchen' over the past year?
Traditionally, this businessman's media holding is considered to include the TV channel "1+1" and related TV projects (part of the "1+1 Media" group), as well as the UNIAN news agency. Kolomoisky owns both of these pillars of the Ukrainian media space jointly with his friend and business partner Hennadiy Boholiubov through companies they both co-own. Experts also count smaller projects in the oligarch's media empire, such as Hlavred and Telekritika. Kolomoisky was also recently (indirectly) a co-investor in the publication TheBabel.
Notably, the head of the "1+1 Media" holding (before the elections), Oleksandr Tkachenko, and TV host and creative producer Oleksandr Dubinsky, who entered parliament from Servant of the People, are attributed by political scientists to Kolomoisky's informal influence group in parliament.
You can't assess the situation linearly—like Kolomoisky gained or lost influence over the media over the year, blogger and co-founder of the Democratic Axe party Anton Shvets tells Radio Liberty. He explains this using the example of the information policy of the group of channels owned by the oligarch.
"A strange situation has formed: Kolomoisky almost doesn't use the '1+1' channel to pressure elected politicians, in particular the president. If he starts 'taking down' Zelensky from the 'plus' channel—it's over: that's a war. And I don't rule out that Volodymyr Zelensky, an impulsive man, might make efforts to shut the channel down entirely, for example by a decision of the National Council on Television and Radio Broadcasting. Note this narrative: after a series of wiretapping scandals, namely the tapping of Prime Minister Oleksiy Honcharuk, they came with searches simply to '1+1.' Since then the channel has conspicuously ignored any scandals related to the president. Yet Kolomoisky shows he can cause Zelensky trouble even without his own channel. If there is kompromat, Telegram, Facebook and other social networks will quickly spread it and everyone will start discussing it," Anton Shvets points out.
In his view Kolomoisky thus shows that taking media assets from him is useless, because the information sphere is changing rapidly, he quickly learns new tactics, and he uses other channels to pressure opponents (or even partners).
Telegram channels through which pro-Kolomoisky leaks occur are linked by experts to several "pro-Kolomoisky" deputies from Servant of the People.
At the same time several Radio Liberty sources explain the wiretapping scandal of Andriy Yermak's brother (head of the President's Office) as related to Ihor Kolomoisky's influence on power after the vote on the "anti-Kolomoisky" law.
These recordings were released by deputy Geo Leros, a director and lawyer, former adviser to Kyiv mayor Vitali Klitschko and later to Zelensky.
"Kolomoisky successfully used his TV channel to bring Volodymyr Zelensky to power and to 'destroy' his rival Petro Poroshenko. But the scandal over the 'Honcharuk wiretap' put an emphatic full stop on that. It became clear that in the new paradigm any media asset is vulnerable. So Ihor Kolomoisky has adopted a new tactic," Anton Shvets concludes.
Over the past year Kolomoisky bought or sold almost nothing in the media sphere. With one exception: The Babel, recently revived after closure, changed owners. Previously half of the shares of that online publication were owned by Yaroslav Pakholchuk; he was executive director of Kolomoisky's main media asset: the "1+1 Media" holding.
State registries show that now a quarter of that asset is owned by Kateryna Kobernyk and Hlib Husiev, and half is owned by the Slovak LLC IG, whose founder is the Ukrainian Serhiy Mostenets.
Political adviser and media expert Oleksandr Kharebin calls Kolomoisky's "media empire" his main asset, which plays the role of a "weapon of mass destruction": designed to protect friends and destroy enemies.
"The importance of this factor for Ihor Kolomoisky, despite his difficult financial situation, is suggested by the lack of significant losses among his media assets. Except for the defunded online publication The Babel, whose journalists—consciously or not—along with 1+1 worked the pre-election campaign well as 'mild lapdogs' for friends and 'destructive torpedoes' for enemies of the then media management of 1+1 media. These resources impressively demonstrated to both their shareholder and the future president good skills in information killing and financial blackmail of partners," Kharebin believes.
For her part, Babel's editor-in-chief Kateryna Kobernyk said the expert has a conflict of interest. "Kharebin has an obvious conflict of interest on this topic: after The Babel journalist Mariia Zhartovska asked about the expert's past at Kurchenko's UMH company, Zelensky removed Kharebin from the team," she wrote on Facebook after the piece was published.
Understanding the importance of this asset, Ihor Kolomoisky personally headed the Supervisory Board of "1+1 Media," Kharebin explains. He claims the holding's owner gave a carte blanche to a new, tougher manager who must maximize the revenues and influence of the "1+1 Media" channel group and bring it to break-even by 2022.
"This, and the dominant dependence of Kolomoisky's 'media empire' and the ratings of the '1+1' channel on showing entertainment content (which since 2012 has been produced for hundreds of hours by the company whose shareholder and driving force is the Kvartal 95 team) makes Ihor Kolomoisky very cautious and balanced in public assessment of President Zelensky's actions. This factor of mutual dependence balanced their relations last year. But even now it remains a safety valve, which is important to say separately, dismantling the imposed public notion of some 'fatal dependence of Zelensky on Kolomoisky,'" the media expert admits.
Meanwhile the information space is developing, gradually sidelining Kolomoisky's traditional media empire, economic editor Ivan Verstiuk of NV shares his observations.
"The '1+1' TV channel is popular and quite creative, but in the era of video bloggers and social networks the channel's audience base can fall or worsen in quality. Many watch the channel only for the spice it provides, not for objective information," Ivan Verstiuk admits.
At the same time Anton Shvets notes that around Kolomoisky a 'pool' of bloggers and half-anonymous Telegram channels has formed, promoting narratives favorable to him and specializing in information drops and coordinated attacks against opponents.
Finance: "Tell me whose PrivatBank is..."
In the year since the presidential elections Ihor Kolomoisky has not been able to regain control of PrivatBank. Despite ties to the president, despite his people in government, despite a 'Kolomoisky group' in parliament and the loyalty of some courts ready to issue rulings in the oligarch's favor.
Many experts use this point to assess the former co-owner's real influence over processes in Ukraine. This influence, even if increased, turned out insufficient to completely subordinate Ukrainian power and the public agenda to him.
Kolomoisky is in a hurry: if the banking law that makes returning problematic banks impossible is adopted, it will be almost impossible for him to achieve his goals—those indicated by experts and partially by Kolomoisky himself:
- to derail cases against him in Western courts;
- to refute accusations of stripping funds from the bank (which, according to the Finance Ministry and the NBU after nationalization, made nationalization the only option);
- to obtain compensation equal to the bank's authorized capital and related-party contributions as they were before nationalization;
- to legitimize the removal of debtors' assets from collateral (more than 97% of the bank's commercial borrowers were related parties—according to the NBU and international audits).
Ukrainian courts often issue rulings in favor of Ihor Kolomoisky and Hennadiy Boholiubov, former co-owners of the country's largest bank, as well as for the Surkis brothers—the NBU recognized them as related parties, so their multibillion deposits in the bank were added to the capital when it was rescued from bankruptcy. But the last word in the courts has not been spoken: the most important cases continue in major foreign jurisdictions, where Kolomoisky and partners are now facing tactical setbacks.
Independent member of PrivatBank's board Roman Sulzhyk told Radio Liberty about the current situation:
Independent member of PrivatBank's supervisory board Roman Sulzhyk: "We are attacking powerfully: in London and in the US, and new jurisdictions have also opened. I'm optimistic about what's happening."
"We are attacking powerfully: the cases continue in London and the US, and new jurisdictions have opened. I'm optimistic about what's happening. And it's very good that the IMF now insists on adopting the 'banking law' (the so-called 'anti-Kolomoisky' law), and that deputies have already voted for it in first reading," he said.
Sulzhyk admits that during the legal confrontation PrivatBank operates under pressure. But this is not pressure from the current authorities, the banker notes.
"I see people who work at PrivatBank. They are top-class professionals, and they are doing everything right both for the bank and for Ukraine. We counter the crisis and fight for the return of these funds. This is the biggest challenge we are working on. Is there pressure on us? Yes. We know how Ukrainian courts work. There are hundreds of cases open against bank employees and members of its supervisory board. But these are Ukrainian conditions in which we operate. At the same time we saw President Volodymyr Zelensky personally insist that the 'anti-Kolomoisky' law be passed. Therefore I hope that after PrivatBank's wins in Western jurisdictions everything in Ukraine will be fine. And we will do everything in our power to make that happen," he expresses optimism.
The independence of the financial regulator (the NBU) and state banks (including PrivatBank) from specific representatives of power is preserved, financial experts interviewed by Radio Liberty say. Therefore, despite the change of power, the state of Ukraine does not retreat in the legal confrontation over PrivatBank, and calls from its ex-owner for compensation, breaking with the IMF and tolerating default practically do not influence state financial policy.
That Kolomoisky did not achieve his main goals over the year is also noted by Financial Club portal editor-in-chief Ruslan Chernyi. Therefore, in his opinion, the oligarch's influence—especially in the financial sector—is greatly exaggerated:
"Has Kolomoisky's influence on the financial sector changed over the year? I think it hasn't. He was absent last year and is still absent now. Although Kolomoisky is a very talented manipulator and creates an impression that he influences something, forcing others to believe it. But in fact he influences very little."
Chernyi, along with other experts, notes the vote on the banking law as illustrative despite certain shortcomings it has. The vote was preceded by certain 'anti-Kolomoisky negotiations' and consultations among deputies, resulting in a situational 'anti-Kolomoisky' majority in the chamber, he notes.
Restoring control over PrivatBank and closing cases opened by the bank against its former shareholder in various countries—this, the executive director of the Center for Economic Strategy Gleb Vyshlinsky explains, is the oligarch's current tactic:
"Perhaps that's why Kolomoisky was significantly less active in other sectors. Of course he has interesting assets in other industries. But they are incomparable, for example, with the assets of Rinat Akhmetov."
This can be explained by the specifics of the Privat group's methods of generating profit, which distinguish it from other financial-industrial groups, Vyshlinsky notes.
"Kolomoisky follows more of a 'parasite' approach: he has (relatively) fewer assets that he physically controls, but he tries to latch onto schemes. By comparison, other oligarchs—like Akhmetov—try to buy assets cheaply, including state ones, then produce goods and services on them, earn profit and subsequently control those assets," Vyshlinsky compares.
So what are the 'material assets' of one of Ukraine's most influential businessmen? And what changed for them over the past year?
Read the second part of the article to learn how Ihor Kolomoisky's influence has changed in energy and heavy industry, in oil and gas, and in aviation.
Photo: A poster with a caricature of Ihor Kolomoisky during the 'For the land market' rally under the Office of the President of Ukraine. Its participants demanded 'a normal pro-liberal land reform not for specific persons, but for Ukrainians.'
Yevhen Solonyna, published in Radio Liberty
Translation: Argument
Document: PDF proof of the original version of the news item "Год Коломойского: как изменилось влияние олигарха при президенте Зеленском. Часть 1". It records the publication content at the moment of the first scan, the preservation date and the source: ANTIKOR.
