Is the President's Office Taking Over Firtash’s and Kolomoisky’s Cash Flows?

Is the President's Office Taking Over Firtash’s and Kolomoisky’s Cash Flows?

Are there anti-corruption safeguards for the new beneficiaries of Firtash’s and Kolomoisky’s assets?

Just days ago a historic turning point occurred — Firtash is genuinely having the cash flows from the regional gas distribution companies taken away. Whether that will last is for time to tell. But the fact that they are being taken away is real.

So the state decided to seize from Firtash’s regional gas companies (and other small players) the pipelines that deliver gas to Ukrainian homes. And to transfer them for operation to LLC “Gas Distribution Networks of Ukraine,” which belongs to the state-owned Naftogaz of Ukraine. This was formalized by Cabinet resolution No. 1335 of 25 November 2022.

All this is because of the war and deep distrust of the pro-Russian oligarch, from whom blackmail could be expected at any moment. Because he is going to be imprisoned in the United States, it is not out of the question that, to protect himself from the U.S., he would cut off gas in Ukraine so that Volodymyr Zelensky would ask Joe Biden not to touch our scoundrel son.

So everything, it seems, is logical and justified.

But there is one but.

Regional gas distributors have always profited from a simple scheme. For years they did not pay the state Operator of the Gas Transmission System of Ukraine for gas, while collecting the money for it from consumers. This constantly accumulated debts that were sometimes simply written off as a result of agreements with the authorities. As of today, such debts have accumulated to 17 billion UAH.

The nuance is that the regional gas companies have only one way to repay these debts — collect money from consumers for gas delivery through the pipelines. And now, when the pipelines are taken from them, they automatically lose even the theoretical ability to pay the state. So this becomes hopeless indebtedness, and the state will never again receive 17 billion UAH and will not be able to spend it on repairing the gas transmission network and other energy security measures.

Such a decision seems illogical. Because if the state aims to take the pipelines away from Firtash to avoid wrongdoing, why not work to repay the debt to the state company VGTSU? What difference does it make to which pocket of the state coat the proceeds from gas distribution are put?

But the difference may be as follows.

VGTSU in recent years has been in the spotlight of international creditors, so you can’t freely siphon off money there through tenders.

And siphoning money from the new LLC will be completely nontransparent. It will not hold tenders in Prozorro at all, because our legislators have decided: if your founder is not the state but a company owned by the state, then you are not considered a customer under the law. And you can buy from whoever you want, whatever you want and however you want, and not even show your prices. And you can run Firtash-style schemes related to gas supplies that way.

So the only thing that can stop this is the political will of the country's top leaders, expressed through the attention of law enforcement agencies. Or a controlled and transparent extraction of funds from the company. Such that the head of LLC “Gas Distribution Networks of Ukraine,” Denis Myrhorodskyi, or the head of NJSC Naftogaz of Ukraine, Oleksii Chernyshov, or their patron in the President’s Office Andriy Yermak could not even look at those billions without international partners and Ukraine’s donors noticing.

The LLC’s director was appointed lawyer Denis Myrhorodskyi (law firm “Dynasty”). He is a very well-known lawyer in Dnipro, having defended many business stars in local courts, including the companies of Vadym Yermolaiev and Ihor Nikonov. It appears he joined the President’s Office team for a new challenge.

Of course, his Dnipro origin gave rise to rumors that a Kolomoisky person is taking over the regional gas companies.

But that is now unlikely. There are already many signs that the toxic oligarch is indeed losing the cash flows of Ukrnafta. After Yermak’s people entered the company’s supervisory board, it was transferred to the Ministry of Defense, and it was decided to dismiss top managers who for many years were responsible for enriching Kolomoisky — Kartashov, Kushch, Lunov.

Also, Ukrnafta’s gas stations have stopped accepting scratch cards (vouchers), Avias fuel cards, and the Energy mobile app. These are also parts of Kolomoisky’s web around the quasi-state company.

Of course, all these things can be rolled back after victory. Return Kolomoisky’s people to management, because they are not being imprisoned, only dismissed. Restore Kolomoisky’s cards, because the program at the gas stations is not eliminated but “temporarily suspended” (that is how it is stated in the press release of the updated Ukrnafta). Return the company from the Ministry of Defense to the old shareholders.

So it cannot be excluded that after the war Ukrnafta will at least partially be returned to Kolomoisky “laundered and repainted.” That is, with “resolved” criminal case problems and cleared of debt obligations. But at least today one can state one thing: Kolomoisky is losing control over Ukrnafta’s cash flows in the fuel sector right now.

Yurii Nikolov

zn.ua