More woes are coming to gas mogul Dmytro Firtash, who is already facing U.S. criminal charges of racketeering and attempted bribery.
Ukraine’s government is threatening to expropriate two of the nation’s six major chemical plants that belong to Dmytro Firtash, a gas mogul with ties to the Kremlin. Prime Minister Arseniy Yatsenyuk accused him of halting production of nitrogen fertilizer at the Rivne Azot and Cherkasy Azot, part of his Ostchem holding.
The group owes state-owned oil and gas monopoly Naftogaz Ukraine Hr 6 billion in overdue gas bills, Yatsenyuk told parliament on June 5. “If the bill isn’t paid, these companies will be transferred to the state,” he said.
On April 30, the same day that Firtash successfully fought U.S. extradition during a hearing in Vienna, a Kyiv court authorized the seizure of 500 million cubic meters of gas that Firtash’s Ostchem holding has stockpiled, worth Hr 3.8 billion.
In a June 5 statement, Ostchem said that the “unlawful confiscation” had caused the halt in production, depriving the factories of gas, a raw material in the manufacture of mineral fertilizers.
Russia’s war against Ukraine prompted Group DF in May 2014 to suspend production at two more plants over safety worries: Concern Stirol in Russian-occupied Horlivka and Severodonetsk Azot Association in Luhansk Oblast. Production at Serverodonetsk resumed in late December, according to a company news release.
Meanwhile, Interior Minister Arsen Avakov on June 7 said that the state lodged 110 criminal complaints to “arrest” 110 units of real estate belonging to Ostchem, of which 46 have so far been authorized as of June 5, in a further effort to collect on the debt.
He also intimated that authorities are investigating former Naftogaz officials for a possible conspiracy with Firtash. This is in connection with a Stockholm arbitration court case in which Ukraine lost 12.1 billion cubic meters of gas that was worth billions of dollars to him.
In response, Ostchem cited “systematic and unprecedented pressure on its business from lawmakers and state officials affiliated with the National Front party,” headed by Yatsenyuk. The holding accused Yatsenyuk of a “provocation.”
In a written response to the Kyiv Post, the holding declined to name the state agencies it accused of wrongdoing.
Firtash, in an interview with his Inter TV channel, cited by his non-profit Federation of Employers, said Ukrainian business is being forced to fight the government.
“When they saw that they can’t win the war and realized that something still needs to be done, they started this so-called fight with the oligarchs,” Firtash said. “This isn’t just one…five people, it’s thousands of people…who are creating jobs, who fill the state coffers, and who develop entire regions.”
The government’s “deoligarchization” campaign has not been solely focused on Firtash. Earlier this year, Poroshenko removed billionaire Ihor Kolomoisky as a regional governor as lawmakers moved to take control of lucrative state energy companies away from him.
More recently, authorities zoomed in on Rinat Akhmetov, Ukraine’s richest man and a longtime backer of ex-President Viktor Yanukovych. Last month, prosecutors announced plans to cancel his DTEK energy holding’s controversial acquisition of a top electricity generator because the process was uncompetitive.
A factory worker at the Cherkasy-based Azot plant told the Kyiv Post that production had unexpectedly stopped on June 1. “We were told that the factory was to undergo a major overhaul because of some debt issue,” Serhiy Butenko said.
“It’s a war of nerves,” energy expert Mykhailo Honchar, president of the Centre for Global Studies ‘Strategy XXI’ said, adding that Russian President Vladimir Putin is part of the blame game. “Firtash is acting as an agent for Moscow. He is trying to stir up social unrest by sending workers home and destabilizing the government.”
Honchar defended the government’s actions, saying that “debts have to be returned, and Firtash knew that.”
Firtash’s wealth skyrocketed from 2004 through 2009, when, in partnership with Kremlin-controlled Gazprom, he supplied Russian and Central Asian gas to Ukraine. In prior years, Firtash reportedly borrowed heavily from Russian banks to purchase gas at privileged prices and acquire Ukrainian chemical plants, according to a Nov. 26 Reuters investigative report.
Firtash, whose net worth is estimated by Forbes to be $270 million, received another Russian loan to pay his record bail of €125 million in Austria, where he successfully convinced a judge that U.S. racketeering charges against him are politically motivated. The money came from Vasily Anisimov, the billionaire who heads the Russian Judo Federation, the governing body of Putin’s beloved sport.
Firtash has defended his intermediary relationship as essential for putting an end to haggling over gas prices between Ukraine and Russia. Ukraine’s government has now cut out the intermediaries and reduced gas purchases from Russia in light of the ongoing war.
In turn, Ostchem said the state-owned Odesa Portside Plant owes more than Hr 4 billion for gas to the group. Honchar said that the holding might have hoped for a debt swap because it was caught in its own net.
During Yanukovych’s disgraced presidency in 2010-2014, Firtash aimed to privatize the Odesa plant, Honchar said.
The EuroMaidan Revolution put an end to Firtash’ plans. Then in March 2014, Austrian police detained Firtash at the request of U.S. authorities. Still under travel restrictions in Austria he staged a comeback in March 2015 by launching a $300 billion investment plan for Ukraine, setting up an agency with the support of notables like French philosopher Bernard-Henri Lévy, Lord Mandelson and Günter Verheugen. It was a direct challenge to the government’s efforts to turn the crisis-stricken nation around. The price of the plan, Honchar said, would be a Ukraine under Russia’s influence.
Geopolitics aside, Honchar said he expects a compromise on the debt issue. “Firtash gets to keep his plants, but the past paradise for him is over and he will have to go after the Odesa debt through the courts,” he said.
