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Fixers and Fiends
The Swamp of Ukrainian Politics

Meet Dmytro Firtash: Ukrainian gas tycoon, middleman, and political fixer. Two recent profiles give you a sense of the man, as well as an insight into just what business and politics have been like in Ukraine since 2004. First up, from the Globe and Mail piece, here is how Mr. Firtash got his start:

Hooked on trading, he moved to Moscow, which was operating as an enormous souk at the time as representatives of the former Soviet republics came to town to barter and beg for life’s essential products. His big break came when he based himself in the Rossiya hotel, Europe’s biggest hotel until it was demolished in 2006. Located near Red Square, it was the city’s deal-making hub. There, he met a trade official from Turkmenistan. The country desperately needed food and Mr. Firtash raised money from acquaintances (some of whom are now famous oligarchs, he said) and delivered enough flour, oils and other products to fill entire warehouses. But the bill went unpaid for three months and his backers were getting surly. So he flew to Ashgabat and learned the government had no money. “The only product I could take in return was gas,” Mr. Firtash said. “It was effectively a barter trade. … Eventually, we contracted for almost the entire volume of central Asian gas.”

Rather suddenly, Mr. Firtash found himself in the unlikely role of gas tycoon. From the late-1990s, he was supplying Ukraine with almost all its imported gas, some of which was in turn sold into European spot markets, where he earned fortunes. In 2004, Mr. Firtash formed a joint venture in Switzerland with Russia’s Gazprom called RosUkrEnergo (RUE). The deal: Gazprom would get access to central Asian gas and the Ukrainian market and Mr. Firtash would gain access to Gazprom’s pipeline network, which extended into Europe. “Gazprom made no investment in the [joint venture] but got in return an awful lot,” he said.

And with all that money came a lot of clout. He feuded with Prime Minister Yulia Tymoshenko, who also had made her fortune in the gas business, and was a big supporter of recently-ousted President Viktor Yanukovych, who threw Tymoshenko in jail upon coming to power in 2010. But according to a leaked Wikileaks cable from 2010, Firtash told the American Ambassador to Ukraine that he also considered himself a close friend of Viktor Yushchenko, the man who became president of Ukraine after the Orange Revolution.

On March 12 of this year, a few days before the Crimean referendum on joining the Russian Federation took place, Firtash was detained in Vienna at the request of the FBI. He posted bail at an eye-watering $190 million (an Austrian record), but is still unable to leave the country. The New York Times has the details on the charges:

In a civil court case in the United States District Court for the Southern District of New York, lawyers have argued that Mr. Firtash funneled profits from the Gazprom deal into supporting pro-Russian politicians in Ukraine.

The lawsuit against Mr. Firtash and RosUkrEnergo, a gas-trading company he co-owned with Gazprom, was filed in 2011 under United States racketeering laws and the Alien Torts Statute by Yulia Tymoshenko, a former Ukrainian prime minister and presidential candidate. It claims that Mr. Firtash first laundered a portion of the Gazprom funds through Manhattan real estate deals that also benefited an American political adviser of the former president, Viktor F. Yanukovych. Lawyers recently asked for additional time in the case to collect as evidence documents discovered in the Ukrainian presidential residence after the revolution.

In the criminal court case, federal prosecutors in Chicago recently unsealed an indictment accusing Mr. Firtash of bribing government officials in India after transferring money through American banks.

Why does all this matter? Though Firtash’s days at liberty may be numbered if he is extradited to the United States, he is still a force to be reckoned with in Ukrainian politics. He insists he broke with Yanukovych before the latter’s ouster, and now supports Petro Poroshenko, the oligarch currently ahead in the polls, in the May elections. Poroshenko, who has made fighting corruption one of his rallying cries, has taken pains to distance himself from Firtash.

Corruption is a systemic disease and locking up one cat, no matter how fat, won’t change things decisively. But it’s important to keep an eye on power players like Firtash, and to notice when and how their names come up in relation to Ukraine’s next administration, whatever that may be. Like it or not, we can’t afford to ignore that part of the world any longer.

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  • Arkeygeezer

    “Like it or not, we can’t afford to ignore that part of the world any longer.”

    Why not? The United States has no vested interest in Ukraine. We do not need to have our people kill or be killed in an effort to change the culture of a nation on the other side of the world.

    If you want to work on corruption in politics, there is a lot in the United States that will keep you busy.

    • rheddles

      Were you thinking of Chicago?

  • free_agent

    Is there any way to salvage the Ukranian economy? Ukraine is close to being a failed state. The GDP per capita (at PPP) of Ukraine is less than half of that of Russia’s. Russia is also hopelessly corrupt, but Putin redistributes enough of the money to keep the populace quiet. It would hardly be surprising if the Ukranians aren’t worrying too much about staying in Ukraine.

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