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Battle of the Bankers: Why Pyshnyi Is Trying to Sink Gontareva
While Yatseniuk taunts the compatriots he abandoned with black underwear against the backdrop of Washington fountains, his friends from his foggy youth continue to pick financial crumbs out of Ukraine’s emaciated storerooms—crumbs that, during his premiership, the bulletproof Arseniy’s hands didn’t reach. And in this struggle for daily bread they heroically battle competitors from Petro Poroshenko’s camp, who rashly decided that after the “privatization” of the Cabinet, the Prosecutor General’s Office and the SBU he had everything under control.
Yanukovych’s Stash
The usually dead Ukrainian political season in summer, which at this time of year can’t even be stirred by an escalation in Donbas, has somehow been roused this year. Throughout July a number of leading media outlets published articles and TV segments dedicated to the chair of the National Bank of Ukraine, Valeriya Gontareva.
Actually, the current head of the NBU has never been able to complain about the press’s indifference to her since the day she was appointed. Every fluctuation in the hryvnia exchange rate inevitably brought intensified journalistic attention to the National Bank’s leadership, regularly spawning rumors about Gontareva’s possible resignation. Just as regularly, those rumors turned out to be duds.
But this time the head of the financial regulator is accused of things far scarier than national currency swings that devalue ordinary citizens’ hryvnia savings. Accusations of the now-trendy political corruption have been deployed — and even tied to the ominous Yanukovych and his associates (so to speak, a firing squad and the gallows in one bottle).
The essence of the accusations is as follows. The asset management company Investment Capital Ukraine (ICU), which Valeriya Gontareva managed in 2007–2014 and whose co-founder is her husband Oleg Gontarev, at the end of 2013 purchased securities for the Cypriot offshore companies of Viktor Yanukovych and people from his inner circle. We are talking about domestic government bonds (OVGZ) totaling more than 10,7 billion hryvnias (1,3 billion dollars at the then exchange rate of 8 UAH/1 USD).
According to some experts, the Ministry of Finance’s issuance of the securities was from the outset aimed at a specific buyer, which Gontareva could not simply have been unaware of. Therefore, she was a direct participant in a corruption scheme to acquire OVGZ — with all the ensuing legal consequences.
The head of the NBU herself still prefers to remain silent on the matter, while representatives of ICU, with which she is now officially unconnected, insist that the government bond transaction was an ordinary brokerage deal. Not to mention that at the time of the transaction neither Yanukovych nor members of his team were on the wanted list — on the contrary, they were legitimate representatives of Ukrainian authority.
Particular attention to this episode of ICU’s activity is explained by the fact that Ukrainian banks currently have frozen accounts of non-resident firms affiliated with representatives of the previous political regime. The ill-fated OVGZ lying on those accounts (as well as other securities) are accordingly “frozen.” Finance Minister Oleksandr Danyliuk has already set out to plug a budget hole of 7,7 billion hryvnias by selling bonds seized at Oschadbank.
Because there are no court proceedings capable of deciding the fate of these funds in favor of the state (and none are foreseen in the near future), Danyliuk’s grand plans look more like fruitless fantasies. All the more so since deputies, breezily counting on 2016 from forced sales of Yanukovych’s financial treasures in the state budget, still haven’t bothered to pass a law on special confiscation of illegal assets.
Thus, the media’s “attack” on Valeriya Gontareva—with her intriguing silence about the OVGZ purchase and obvious reluctance to be active in the noble business of “dekulakizing” her former VIP clients—at first glance looks quite objective. But only at first glance, because on closer inspection one can make out the sticking-out ears of a very specific character behind the wave of righteous anger.
Kinder-Surprises from Chernivtsi
Before explaining how Andriy Pyshnyi, head of Oschadbank, is implicated in Gontareva’s troubles, it is worth examining some aspects of the biography of this notable native of the Ternopil village of Dobrovody.
This prominent connoisseur of constitutional, administrative and financial law received his higher education at Chernivtsi State University, where his parents had moved by that time. It was at the law faculty in Chernivtsi that Andriy Pyshnyi met Arseniy Yatseniuk, and they walked step by step through life thereafter.
Pyshnyi didn’t choose law randomly: his mother worked in the city police department, and his father for a time commanded a LTP (a therapeutic-labor prevention facility used in Soviet times to rehabilitate alcoholics with work therapy). By the way, it was Pyshnyi Sr. who introduced his son Andryusha and his classmate Senya to the prominent Chernivtsi businessman Ihor Pluzhnykov, who launched their dizzying careers.
Being at the origins of the creation of the legendary SDPU(o), after its leader Viktor Medvedchuk was installed as the “grey cardinal” under President Leonid Kuchma, Pluzhnykov rose to nationwide prominence, becoming chair of Oschadbank’s supervisory board and the sole owner of the TV channel Inter he created.
In the wake of this Ukrainian business shark rowed the “sweet pair” of Chernivtsi wunderkinds. After a short joint stint at the firm Yurek-Audit, Yatseniuk went first to Aval Bank and then to Crimea, where in 2001 he headed the regional Ministry of Economy. Pyshnyi moved to Kyiv, becoming first director of legal support at Oschadbank and then first deputy chair of its board.
By the beginning of 2003, Arseniy Yatseniuk had come to the capital, appointed by National Bank chair Serhiy Tihipko as his first deputy. And after Tihipko in the summer of 2004 became head of the campaign for presidential candidate Yanukovych, Yatseniuk took his chair as acting head, where he remained for the next six months.
In the troubled December of 2004 Pyshnyi acquired the same “acting” prefix. However, to head Oschadbank even temporarily he first needed to finish the Ukrainian Academy of Banking of the NBU. Since the coveted position wouldn’t wait, Pyshnyi did the simple thing: he bought from Viktor Vasylenko, rector of the University of Contemporary Knowledge, a certificate of study at that institution, which allowed him to enroll directly in the fourth year of the academy’s correspondence program.
In itself, nothing special — how many “fake” diplomas are kept in drawers by members of Ukraine’s political elite? But then an annoying mishap occurred for the enterprising Pyshnyi: in the summer of 2005 his protector Ihor Pluzhnykov suddenly died. Afterward the newly elected president Viktor Yushchenko appointed Oleksandr Morozov to head Oschadbank.
But that was not yet the worst: in March of 2007 Anatoliy Huley (an associate of the Klyuyev brothers) became chair of the board, and it was on his initiative that the fake diploma story about Pyshnyi came to light. In addition, vengeful Huley published information on how Pyshnyi had received a super-preferential loan of 3,5 million hryvnias from his native bank and failed to repay it.
After the ensuing scandal the lover of nonrepayable loans was forced to leave Oschadbank. The legal development of the case was hampered by the then-favored Arseniy Yatseniuk, who in a couple of years after the Orange Revolution became first deputy head of the Presidential Secretariat, minister of economy, foreign minister and speaker of the Verkhovna Rada. With his friend’s backing Pyshnyi was appointed deputy secretary of the National Security Council, overseeing the financial sphere — after which all his detractors lost the desire to ask uncomfortable questions.
Two years later Pyshnyi followed Yatseniuk into freer political waters, heading the party-control committee of the Front for Change, under whose banner Yatseniuk unconvincingly took part in the presidential elections of 2010 (finishing in 4 place). In 2012 Yatseniuk and Pyshnyi entered the Verkhovna Rada on Batkivshchyna’s lists after Tymoshenko’s imprisonment removed its leader, and a year later they finally put their paw on her project. After Euromaidan, a month after Arseniy Yatseniuk was appointed Ukraine’s prime minister, his faithful Sancho Panza returned to Oschadbank as its full (no “acting”) head.
Return of the Prodigal Chairman
Pyshnyi’s comeback was striking. If his predecessor Serhiy Podrezov closed 2013 with a profit of 678,8 million hryvnias (even though the last two months were marked by Maidan instability), the following year Oschadbank ended with losses of 10 billion hryvnias, and 2015 ended with 12,3 billion hryvnias of losses.
In September that year the international rating agency Moody’s assigned the bank’s eurobonds a long-term foreign-currency rating of Ca (debt obligations with such a rating are highly speculative and probably in default or close to default). A couple of months earlier, Fitch downgraded Oschadbank’s long-term foreign-currency issuer default ratings to pre-default “C”, saying that default on the bank’s eurobonds was currently “almost inevitable.”
In that same 2015 year Oschadbank’s equity fell from 19,2 to 7,3 billion hryvnias.
To save Oschadbank the state had to inject tens of billions into its refinancing. Although ideally it should have been the other way around: a state bank should be replenishing the state budget with dividends of 30% of profits. But where would dividends come from when under the new chair annual administrative and operating expenses alone began to exceed 4,2 billion hryvnias?
But administrative costs were not the only thing draining the bank’s coffers. The indefatigable inventor Andriy Pyshnyi, together with Pension Fund board chair Oleksiy Zarudnyi, devised a plan to provide 13 million Ukrainian pensioners with free bank cards that would serve as electronic pension IDs. They also decided to issue such cards to two million internally displaced persons.
The idea seemed benevolent: cardholders could use them to receive pensions, payments and benefits without excessive formalities and visits to many offices. Yet no coherent calculations have been presented as to how much additional servicing the near-default Oschadbank could take on. Incidentally, specialists consider the activity of Kyiv’s Kreschatyk bank as issuer of “social plastic” (the so-called “Kyiv resident card”) one of the main causes of its demise.
Already now one can roughly calculate how much producing 15 million plastic cards (pensioners + displaced persons) will cost the state at an average manufacturing cost of about 100 hryvnias per card. One and a half billion (and that’s on the modest side) will go to firms lucky enough to get the order.
Accompanying expenses can also plausibly include money spent to quash the scandal around these cards after it broke in the press. The publication “Card Mousetrap” was almost immediately removed from the websites of the state outlets Uryadovyi Kurier and Holos Ukrayiny (mind you — the main state media!). It’s quite possible the plastic manufacturers covered these costs — with such an order volume one doesn’t scrimp.
It’s also possible that the same obliging businessmen paid not only for Pyshnyi’s official needs but for his small personal pleasures. When in May of 2015 the prime minister Yatseniuk flew for the delight of Maidan romantics on a regular flight (and in economy class!!!), his football-loving classmate chartered a plane to see the Dnipro–Sevilla match—flying from Warsaw and back on a specially hired charter. Not just him, but with his wife, five deputies and two members of the bank’s supervisory board.
The Western Oil Group of the late deputy-businessman Ihor Yeremeyev paid 125 thousand hryvnias for VIP lounge use, and another 335 thousand (for the flight itself) was paid by a company registered in London that wished to remain anonymous. Details became known during a Prosecutor General’s Office inquiry. Nevertheless, Oschadbank’s press service claimed the football trip was paid for exclusively out of the top managers’ pockets.
An Oil Painting
Unfortunately, there is no harmony in our troubled world. While obscure people tried to do small favors for Andriy Pyshnyi for almost nothing, the famous Chernivtsi brotherhood cracked.
In that brotherhood, besides Pyshnyi and Yatseniuk, was Andriy Ivanchuk — their mutual friend from Chernivtsi University, who also knew Yatseniuk from school. Formally today this classmate is deputy head of the parliamentary faction People’s Front and chair of the Verkhovna Rada Committee on Economic Policy, and informally he functions as one of the “overseers” in the Rada representing Yatseniuk’s interests.
Besides lawmaking, Deputy Ivanchuk is involved in economic affairs in a very practical way: buying problematic assets “cheap,” cleaning them of debts and then reselling them at a much higher price. Given Ukraine’s current economic state, the country is full of such distressed assets. The trick is that the buyer must be able to come to terms with state banks (the main creditors). But when your friends include the prime minister and the head of Oschadbank, your chances of success are almost like a sure-win lottery.
One such scheme was detailed last autumn by Zerkalo Nedeli. There’s a certain oil-and-fat holding No. 1 called Kernel in Ukraine. Its owners decided to subsume oil-and-fat holding No. 2 called Kreativ. Helping them were a group of nimble investors in the person of the aforementioned Andriy Ivanchuk and his business partners Rysbek Toktomushev, Leonid Yurushev and Artur Grants.
First Kernel bought from Ukrgasbank a loan of 96 million dollars previously granted to Kreativ, and then used that loan to squeeze the debtor-company’s owner Stanislav Berezkin, taking the agroholding from him for half the loan’s value (48 million dollars). In short, a typical raider “squeeze,” carried out clearly not without the prime minister’s participation — without whose blessing a state bank would never have sold the debt.
But since Kreativ already owed more than 6,3 billion hryvnias to Oschadbank alone, Kernel had no desire to buy the holding in that sorry state. Instead it handed the prize to Ivanchuk and his partners, who performed “laundering” operations to later transfer the cleaned Kreativ to the client, taking a commission morally proportional to their labor.
The “cleaning” recipe consisted of buying Oschadbank’s eurobonds on the market at a huge discount and then submitting them back to Oschadbank as debt repayment — but already at face value. The bank’s losses from such an operation—about half a billion dollars—would be covered by the state budget. A typical Ukrainian-style business maneuver.
But then the blade met stone: Andriy Pyshnyi suddenly refused to participate in the scam. Several motives are named. First, insufficient remuneration. Second, Pyshnyi’s unwillingness to worsen Oschadbank’s already poor results amid Yatseniuk’s almost certain resignation (with the likely prospect of being targeted by the new prime minister). The third version was voiced by journalist Oleksandr Dubynsky, long specializing successfully in economic topics. According to his insider information, head of the NBU Valeriya Gontareva took an active part in the creditors’ council for Kreativ, and Pyshnyi and Gontareva chronically had a bad relationship.
The first serious conflict between Pyshnyi and Gontareva occurred back in the autumn of 2014, when after early parliamentary elections and the associated government reshuffle the dismissal of the NBU chair became possible. And it was Pyshnyi who was among those tipped to replace Gontareva. Back then Valeriya Alekseevna warmly recommended the contender return to politics — and since then she didn’t miss a chance to pin him more sharply.
In short, Gontareva’s presence in the Kreativ story was Pyshnyi’s red rag. As Dubynsky writes on Facebook, the offended Ivanchuk, having promised to throw Pyshnyi out of the bank, went with the corresponding proposal to Yatseniuk. But the old friend Arseniy, already packing his bags for a flight overseas, preferred to distance himself from the quarrel.
Skirmishes of Local Importance
Contrary to Ivanchuk’s hopes, Pyshnyi—having timely befriended the unsinkable Interior Minister Arsen Avakov—kept Oschadbank even after Yatseniuk’s departure. And now Ivanchuk and partners don’t know what to do with Kreativ, into which they invested a lot (in seizing it from the previous owner and buying bonds), and which creditors now plague like annoying flies.
Disillusioned Andriy Ivanchuk found nothing better than to try to take revenge on namesake Pyshnyi by running through “dumpster” media the story that Pyshnyi supposedly sold to the bank OVGZ belonging to ex-economy minister Yuriy Kolobov (the “black accountant” of the Yanukovych family) worth 22,4 billion hryvnias for the company 3/4. And not just anytime, but mere days before the interest payment date, which is 8,5–10% per year of the bonds’ nominal value and is paid from the state budget. Because of this Oschadbank allegedly suffered losses of 2 billion hryvnias.
The story is more than rotten, but for the Prosecutor General’s Office—looking for any pretext to get at Avakov and his circle to free up the interior minister’s chair for a Poroshenko ally—the throw via trash websites was enough to start an investigation.
Pyshnyi responded without delay. In early August the Commercial Court of the Kirovohrad region initiated proceedings on Oschadbank’s suit against Kreativ Group to recover 182,4 million dollars, 12,8 million euros and 117,2 million hryvnias. In addition, the Dnipropetrovsk Commercial Court of Appeal is currently considering Oschadbank’s appeal against the Kirovohrad Commercial Court’s refusal to satisfy its claim against Kreativ Trade LLC to recover 673,2 million hryvnias under a goods supply contract.
Life became truly interesting for Pyshnyi’s former friend after the “attack” on his main remaining hope and support—the chair of the NBU Valeriya Gontareva—began on all fronts.
First appeared an article claiming that investment company ICU (formally no longer belonging to Gontareva) and Avangard Bank were earning billions from corrupt OVGZ schemes. Namely—buying bonds from state banks on the exchange with deferred payment for several months (i.e., spending not a cent at purchase), during which they obtained loans from the NBU secured by those papers or short-term REPO deals. Then, when the payment date comes, they refuse to pay under the contract and, by mutual agreement, the exchange annuls the deal. As economic commentator Oleksiy Komakha, who conducted the investigation, especially noted: “Oschadbank’s chair Andriy Pyshnyi does not deny his institution’s involvement in these dubious operations.”
Then journalists started to spin the story of Platinum Bank, whose purchase in 2013 for Odesa businessmen Oleksandr Hranovskyi and Borys Kaufman, who represented the interests of Oleksandr Yanukovych, was handled by ICU. It was reported that when the bank ran into trouble in 2015, the NBU under Gontareva pumped stabilization loans into it totaling 640 million hryvnias. Rumor had it that this year the NBU already provided 785 million hryvnias, which the owners of Platinum immediately used to buy the loan portfolio of Mykhaylovskyi Bank, finally burying the competitor.
However, the problem is that all these soul-stretching banking intrigues worry only a small portion of the population—apart from, perhaps, depositors of Mykhaylovskyi Bank, whom the NBU and the Deposit Guarantee Fund refused to pay. Therefore the main trump card in the kompromat war became the aforementioned sure-win theme of Yanukovych’s “frozen” assets and co., which the thoroughly corrupt NBU chair is accused of not allowing to be spent.
After this theme was regularly chewed over in the press, it was the turn of elected representatives. To “warm up,” Svoboda deputies Oleh Osukhovskyi and Mykhailo Holovko, who after Tyahnybok’s deep political sidelining provide services in a freelance mode, simultaneously declared the urgent need to suspend Gontareva during the investigation, accusing the Prosecutor General’s Office of suspicious indifference. Following them, Leonid Polyakov (People’s Front), a representative of the inter-factional association “Parliamentary Control,” demanded that detectives from NABU trace the published documents.
Then came the “heavy artillery” in the person of Arsen Avakov’s right-hand man in the Rada—his fellow countryman Oleksandr Kirsh. All Ukraine first got to know this outstanding Kharkiv accountant three years ago, when a young man named Maksym told journalists about how Avakov, having once initiated him into the mysteries of unconventional relations, after fleeing to Italy left the boy in the care of his great friend Kirsh. To back up his words, the offended youth Maksym produced a video recording capturing a fragment of one of their meetings.
Now this youth mentor, having moved from Kharkiv to Kyiv at Avakov’s behest, performs other, no less delicate tasks for him. As, for example, in the scandal around the so-called “Yanukovych papers.” “The question is to the president: why does he keep her in such a position? And as soon as Gontareva leaves it, all our numerous prosecutor’s offices will immediately take up her person. The current Prosecutor General’s Office, of course, depends on Bankova. Perhaps less than the previous one, but not to the extent that it would investigate Gontareva’s activities,” declared the People’s Front deputy.
Meanwhile, the presidential side’s prolonged silence scarcely indicates a lack of arguments or weakness. This autumn the Pechersk hills expect battles far larger than the routine underhand skirmish of two bankers. The outcome of that fight will show who remains in Kyiv and who will be sending beach photos from faraway abroad. Unless, of course, some peak arrangement doesn’t reconcile yesterday’s enemies by seating them on the same bench in a courtroom…
Vasyl Mokrousov
korr.com.ua
Document: PDF proof of the original version of the news item "Битва банкиров: зачем Пышный топит Гонтареву". It records the publication content at the moment of the first scan, the preservation date and the source: ANTIKOR.
