Currently owns assets worth an estimated USD 16-17.8bn
Mr. Akhmetov is the richest man in Ukraine and Peoples’ Deputy in the Verkhovna Rada, from the Party of Region. More than 90 companies, directly or indirectly controlled by System Capital Management (SCM), the largest company in Ukraine, generate his revenues. SCM employs more than 160,000 people.
Mr. Akhmetov was born on 21 September 1966 in Donetsk to a mining family.
According to some sources, Mr. Akhmetov used to be a professional poker player during the Soviet era, while the mass media has also listed other illegal activities. However, Mr. Akhmetov appealed to the London court, which recognized this material to be libelous.
In 1995, Mr. Akhmetov was among the founders of the Dongorbank that merged the assets of some “Donetsk-born young people” who were not connected with the so-called red directors, the traditional Donbas elite at that time.
In 1996, Rinat Akhmetov became the President of Shakhtar (The Miner) football club after the death of Akhat Bragin, a criminal known as Alic Grek, on 15 October 1995. According to some sources, Mr. Akhmetov “inherited” both the football club, and the business structure of the deceased. Yevhen Shcherban, another visible figure in the region, was killed shortly thereafter. By the end of the 1990s, Mr. Akhmetov had in fact become the most powerful man in the Donbas region, having outrun other local groups, such as the Industrial Union of Donbas, Energo concern and so on. He squeezed entities controlled by Pavlo Lazarenko out of the region. Eventually, there was a change in power in the Donetsk Oblast. On 14 May 1997, Serhiy Poliakov, Chairman of the local Oblast State Administration and Mr. Lazarenko’s henchman, resigned. He was replaced by Viktor Yanukovych, supported by Mr. Akhmetov.
Mr. Akhmetov only entrusted the most responsible positions to his closest family members. His wife Lilia is the Head of SCM CJSC Audit Committee, while his mother Nyakia chairs the company’s Supervisory Board.
According to some publications, Mr. Akhmetov’s popular practice in the 1990s was to force people to sell their businesses. Later, the tycoon intensely exploited power leverage to promote his own interests. These included the privatization of state-owned companies thanks to connections in the government, budget privileges for his companies, particularly for his ore enrichment plants, and access to state-owned resources. Currently, Mr. Akhmetov currently presents himself as an entrepreneur that wishes to conduct “honest business”.
IHOR KOLOMOISKY AND THE PRIVAT GROUP
Owns assets worth an estimated USD 2.5bn
His key allies include Hennadiy Boholiubov, Oleksandr Dubilet and Serhiy Tihipko
For many people, the words “Kolomoisky” and “Privat” are synonymous. In fact, there is no group with this official name. However, there are several dozen various businesses that belong to the owners of PrivatBank Commercial Bank CJSC. Currently, the only remaining major shareholders and the bank’s biggest partners are Mr. Kolomoisky with 45.01% and Mr. Boholiubov with 44.99%.
Each individual industry or business is under the supervision of one of the shareholders.
Ihor Kolomoisky, who was born on 13 February 1964, plays a leading role among the partners. This status, in addition to the completely private lifestyle of his partners, makes him the only known representative of the Privat conglomerate.
In the mid 1980s, Mr. Kolomoisky and his friends began to import computers. Together with Hennadiy Boholiubov, he co-founded a company that imported office equipment from South-East Asia and another company called Sentoza. Oil trading was the business that boosted the development of Privat Group.
In 1992, four companies: Vist Ltd., Sentoza Ltd., Som Ltd. and Privat Intertrading CJSC founded a commercial bank, Privat Bank CJSC. Supposedly, the initiator behind the idea was Serhiy Tihipko. He was the bank’s first CEO and worked there until 1997 when he was appointed Vice Premier. Mr. Tihipko sold his share, taking along part of the group’s assets.
As concerns the majority of projects, the strategy of the co-owners of PrivatBank co-owners focused on portfolio investment and the highest possible revenues over the shortest possible term. To this day, the managers and staff of the iron and steel plants and ore mining companies once owned by Privat Group and subsequently sold to Evraz still recall their one-time owners, who completely ignored environmental and social issues at the plant, as a nightmare. Only the banking and food businesses that are part of the group, boast a long-term development strategy. The mass media has often accused Privat Group owners of raider attacks: they used to pick high-profit companies that were legally easy to seize due to gaps in the ownership structure.
The biggest scandals in the Group’s history were between Privat Intertrading and two steel giants, the Dzerzhynsky Dniprovsky Steelworks and Petrovsky Dniprovsky Steelworks, stirred. The plants’ payables to the Group brought them under its unofficial control. Although initially privatized by the ISD, Petrovsky Steelworks was acquired by Privat Group shortly thereafter due to a complex situation regarding the supply of raw materials and the company’s debts.
In the mid 1990s, Privat Group entered the ferroalloy business together with Kostiantyn Hryhoryshyn. They acquired more than 50% of the Ordzhonikidze and Marhanets Ore Enrichment Plants. By the end of the 1990s, Mr. Hryhoryshyn sold his shares in Bagleykoks and Dniprodzerzhynsk coke plants to Privat Group for a mere USD 30mn, who stated that he was threatened that he would be dealing with bandits if he didn’t do so.
During the establishment stage, Privat Group enjoyed the political protection of Pavlo Lazarenko, the Head of Dnipropetrovsk Oblast State Administration, and President Kuchma. Later, Serhiy Tihipko became a public promoter of their interests in the governments headed by Mssrs. Lazarenko, Pustovoitenko and Yushchenko.
Unlike many financial and industrial groups (FIGs), Privat Group has no political force of its own. Just as in business, it gives preference to situational unions, considering them to be a more efficient and cheaper instrument to protect its interests.
The Group focuses on portfolio investment, getting the highest possible revenues over the shortest possible term, grabbing all it can lay its hands on, and placing its people at state-owned enterprises and government authorities to promote its own business interests.
Privat Group uses the courts and the state registrar to gain control of profitable businesses, particularly those that have gaps in their ownership structure; conducts legal wars; gains control of companies by means of appointing “its own” administration while blocking meetings of shareholders; exploits the minority shareholder status of its business partners to force them sell their shares through court appeals, meetings of shareholders and so on; and places loyal people in government authority bodies to promote its own business interests.
Owns assets worth an estimated USD 3.3bn
Mr. Pinchuk founded EastOne investment consultancy firm that provides support for new investment projects and the current portfolio covering more than 20 businesses and wide-scale projects including Interpipe, pipe and wheel producer; media resources, including STB, Novyi, ICTV, M1 and M2 TV channels; Fakty i Kommentarii (Facts and Comments), a Russian-language newspaper; and The Economy publishing house producing Delo (Business) and Investgazeta (Investment Newspaper), Russian-language newspaper and magazine; and the insurance business including a firm called Russia and others. His business empire covers Novomoskovsk Pipe Plant, Nikopol Seamless Pipe Plant, Nyzhniodniprovsky Tube Mill, Nikopol Ferroalloy Plant, and Credit Dnipro Bank, founded in 1993. Mr. Pinchuk also controls the Dniprovsky Railroad Car Repair and Construction Plant, Kherson Combine Plant, Aerosvit airline and other companies.
Mr. Pinchuk was born on 14 December 1960 in Kyiv.
His career began at large plants in Dnipropetrovsk rising all the way from a lab assistant at the Dnipropetrovsk Steelworks Institute and cold pipe cutter at Nyzhniodniprovsky Tube-Rolling Mill, to senior research assistant at the Research and Development Institute for Tube and Pipe Industry during 1981-1985.
Mr. Pinchuk started his business in Dnipropetrovsk in 1990 with Interpipe, a research and investment group co-founded with Volodymyr Arshava, his first father-in-law and a friend of Pavlo Lazarenko, his own mother and wife. Before getting involved in intense steel trading, Interpipe had been a dealer for a gas company called Itera. For this purpose, Mr. Pinchuk set up Spivdruzhnist (The Commonwealth) corporation between Interpipe and Ms. Tymoshenko’s KUB, an importer of Turkmen and Russian gas. After his commercial entities left the Commonwealth in 1995, Mr. Pinchuk switched to metallurgy, especially pipe production and selling, banks and the mass media. As a politician, Mr. Pinchuk first joined the People’s Democratic Party (NDP) that was in power and supported the Labor Party later. His funding of individual projects, including the Team of the Winter Generation in 2002 and Viche (Assembly) in 2006 led by Valeriy Khoroshkovsky and Inna Bohoslovska, respectively, failed to meet expectations as none of the blocs crossed the 4% and 3% threshold in the parliamentary elections.
Mr. Pinchuk used favoritism, family connections at the top state level and power leverage to privatize highly liquid companies at knock-down prices and get official preferences during the implementation of his business projects.
Current assets: unknown
It is assumed that some of Mr. Lazarenko’s assets are still in hands of the people loyal to him, linked to Gorky Agriculture Company OJSC, UkrAnt Consulting Ltd, Oranta Dnipro insurance company, Land Capital commercial bank and a group of mass media.
Mr. Lazarenko was born in the Dnipropetrovsk Oblast on 23 January 1953 to a family of kolkhoz workers.
In 1984–1992, he was involved in party and administration work, mostly in the agricultural sector of the Oblast, then as Deputy Head of the Oblast Executive Committee.
In 1992–1995, Mr. Lazarenko was the Representative of the President in the Dnipropetrovsk Oblast and was appointed First Vice Premier in September 1995 staying in office until May 1996. From May 1996 till July 1997, Mr. Lazarenko was the Prime Minister of Ukraine.
People knew Mr. Lazarenko as a good manager during his years in the Dnipropetrovsk Oblast. After his short-term premiership, he was also known as one of the richest and most influential politicians in Ukraine who had an eye on the entire country, and a realistic rival to President Leonid Kuchma.
Most of Mr. Lazarenko’s income supposedly came from supplying Russian gas to Ukrainian companies through Yulia Tymoshenko’s United Energy Systems. He invested the funds into acquisitions or gaining control of companies and industries both in the Dnipropetrovsk Oblast, and all over Ukraine. Most notably, he conducted a “business-war” for control of regional enterprises with Donestk groups. Mr. Lazarenko himself used to say that he opened the door to big business for other Dnipropetrovsk-born tycoons including Viktor Pinchuk, Serhiy Tihipko and Ihor Kolomoisky.
Having resigned from the post of preme minister, Lazarenko headed The Yednist (Unity) parliamentary faction. In September 1997, he chaired the nationwide association Hromada (Community), established in 1994 by Oleksandr Turchynov, an ally of Ms. Tymoshenko; the latter became deputy head of Mr. Lazarenko’s party. In 1998-2002, he was MP of the 3rd convocation and leader of the Community party that managed to cross the 4% threshold in the parliamentary election.
In February 1999, the Verkhovna Rada stripped Lazarenko of the immunity enjoyed by all members of parliament thus allowing the Prosecutor General to bring him to criminal liability. Later that same month, the one-time Prime Minister was arrested in New York airport carrying a fake Panamanian passport, attempting to enter USA illegally.
He asked the US government for a political asylum but instead of a warm welcome from the Americans, he faced a bouquet of charges, including the laundering of USD 280mn. The San Francisco court found him guilty of financial fraud in the amount of almost USD 5mn. In August 2006, Mr. Lazarenko was sentenced to nine years in jail and a fine of USD 10mn. He is currently trying to prove his innocence.
Mr. Lazarenko used power leverage to get privileges for his companies.
Current assets: unknown
The Kyiv Seven includes Viktor Medvedchuk, Valentyn Zhursky, Grygoriy and Ihor Surkis, Bohdan Hubsky, Yuriy Karpenko and Yuriy Liakh who died in 2004
This Kyiv-based FIG was supposedly set up back in 1989 by Valentyn Zhursky, a fairly powerful functionary in Soviet Ukraine and the Chairman of the Communist Party’s Kyiv Executive Committee. Mr. Zhursky still chairs the Supervisory Boards at Dynamo Football Club CJSC, Slavutych financial and industrial concern and Ukrainian Credit Bank CJSC.
K7’s business background began in 1992 through offshore companies, such as Berly Management, New Port Management and Ometa 21st Century National Investment Fund, a multi-profile joint stock company. Its branches included Ometa Trust, Ometa Invest, Ometa Inster and Ometa Private. These entities turned out to have other partners, such as Bohdan Hubsky who used to be the Deputy Chairman of the Supervisory Board at Ometa Inster insurance firm with Grygoriy Surkis as Chairman of the Supervisory Board.
Ometa founders included BIM, an international law firm set up by Ben Israel & Co law firm based in Haifa, Israel, as well as Viktor Medvedchuk, Grygoriy Surkis, Ihor Surkis, Valentyn Zhursky, Yuriy Karpenko, Bohdan Hubsky and Yuriy Liakh - all K7 members.
In 1992, the group’s entities imported oil to Ukraine to sell it internally.
In early 1993, Ometa 21st Century issued securities worth 400,000 karbovantsi with dividends reaching 1,000%. By the mid 1990s, nearly 12,000 people wanted to buy Ometa’s shares. However, in 1995, the concern stopped paying out dividends.
In 1994, K7’s commercial entities set up Slavutych Industrial and Financial Concern, a closed joint stock company. The multi-profile company operated on the fuel, oil refining, grain, sugar, steel and other markets with Mr. Hubsky as Chairman of the Board and Grygoriy Surkis as CEO. According to some sources, more than 2,000 major clients were buying oil products supplied by Slavutych in 1998. In 1997–1998, the company enjoyed VAT-free oil imports thus leaving a UAH 3bn shortfall in tax revenues in the state budget. The company was also granted a virtual monopoly to conduct settlement for Turkmen gas sold to Ukraine. As a result, Ukraine’s gas debt increased by USD 243.6mn in 1994.
K7’s business grew and diversified. Slavutych Nafta, Slavutych Agro and Ukrainian Gas Complex CJSC began to develop individual profitable business lines, later joined by Dynamo Kyiv Football Club, headed by Grygoriy Surkis.
Dynamo-Atlantic, a Ukrainian-American joint venture was also part of K7 with Ihor Surkis as a “supervisor” who managed the import and sales of huge shipments of alcohol and tobacco in Ukraine went through the company’s books, duty-free.
Although after the 1994 election, the newly-elected President Kuchma removed K7 from influence and power, it succeeded in returning closer to the country’s administration in 1996, luring in the new president with its services. In 1998, K7 took the United Social Democratic Party of Ukraine under its control, thus guaranteeing its political protection.
K7 used power leverage due to its members’ close links to those in power to privatize highly liquid state-owned companies at knock-down prices; gain interest in profitable companies, especially oblast power supply enterprises; get tax benefits through joint ventures set up in the 1990s, and employ bill schemes in settlements with state-owned companies. K7’s opponents and former business partners have informed the mass media about their businesses being grabbed out of their hands by group members.
The Official currency in Ukraine during 1992-1996 preceding the hryvnia.
Ukrainian activists are pursuing the lustration of state organs of professional frauds. Yet another place where lustration of corrupt individuals has to occur is among the Diaspora of the United States