With his popularity sinking at home and in Western capitals, President Viktor Yanukovych appears to be digging in to keep his hold on power. While he doesn’t stand for re-election until 2015, his ruling Party of Regions faces a key test in the Oct. 28 parliamentary election. The president has installed key allies to head virtually all of the nation’s most powerful financial and law enforcement agencies. The president denies doing so, but many have the impression that loyalty rather than qualifications is the determining factor in these appointments -- and this is worrisome to many people.
When President Viktor Yanukovych took office in 2010, critics dubbed him a creature of the powerful oligarchs who had backed his election campaign.
But in the two years since, he has increasingly relied on a close circle of trusted friends and family. This development comes as his popularity sinks. According to a survey by the Razumkov Centre think tank, only 13 percent of Ukrainians would have voted for Yanukovych if presidential elections had been held in January.
Some in the tight group of relatives and confidantes around him — besides taking the nation’s top government post — also appear to be acquiring wealth and control over major businesses at an astounding pace.
“The Family” – or “Simya” as it is known in Ukrainian – is the shorthand way that people refer to this group.
Oleksandr Yanukovych
It includes many key figures, political analysts say, but perhaps none more important to the president’s modus operandi than the elder of his two sons, Oleksandr. His younger son Viktor is a pro-presidential lawmaker who rarely shows up for work.
The 38-year-old Oleksandr, in contrast, appears to have been entrusted to concentrate much of the family business in his hands through Management Assets Company, better known by is MAKO acronym.
A spokeswoman for Oleksandr Yanukovych, Natalia Boyko, declined to comment for this story. The president’s press service did not respond by the time this edition went to press.
The business took off in 2006, after his father became prime minister under President Viktor Yushchenko. By then, the sting and stain of the 2004 Orange Revolution – in which the senior Yanukovych was denied the presidency by protests against a rigged election – was starting to fade.
Serhiy Harmash, editor of Donetsk-based Ostrov website, has investigated Yanukovych and his family for years and traces the trajectory of the president’s dealings from his time as governor of Donetsk Oblast, when billionaire Rinat Akhmetov was the most prominent of his backers, to now.
“After the Orange Revolution in 2004, when many allies turned from Yanukovych and some business partners tried to squeeze him out of his business, he seemed to have come to a conclusion that he can only rely on his family and close trusted circle,” Harmash said. “That’s when Yanukovych’s son registered his corporation and when his business started to blossom.”
Oleksandr Yanukovych’s net worth is estimated to be least $130 million, with his MAKO firm uniting several construction companies that built business centers and shopping malls in Donetsk, as well as a VIP hotel in Balaklava, Crimea. The son also owns 100 percent of VBR bank, a small but fast-growing institution.
The president’s daughter-in-law, Elena, owns a VIP fitness club and a beauty salon in Donetsk, while his younger son, Viktor Yanukovych Jr., rarely shows up for work in parliament. The first lady of Ukraine, Lyudmila, remains a seldom-seen figure in public.
Head of Penta think tank Volodymyr Fesenko defines the family as a “group of people, who are relatives, friends and partners in business.” He says the term is borrowed from Russia, where “the family” of the late former President Boris Yeltsin was in power in the 1990s.
“There is a similar circle of close friends around [Russian Prime Minister Vladimir] Putin. The same sort of circle has formed around Yanukovych’s older son,” Fesenko said. He says individual members may come and go as new people come into favor and others have a falling out with Yanukovych.
In any case, people close to Yanukovych’s son have landed some of the nation’s most important positions, despite the fact that their proximity to the president appears to be their most outstanding qualification.
Serhiy Arbuzov
One of them is Serhiy Arbuzov, the 35-year-old ex-head of relatively small bank Ukrbiznebank. The bank is owned by Oleksandr Yanukovych.
After the president took office in early 2010, Arbuzov’s career skyrocketed. He became head of the supervisory board of state owned Ukreximbank. Months later he was promoted to the highly influential position of first deputy head of the National Bank of Ukraine. By December 2010, he became head of the central bank.
Banking and ties to the Yanukovych family run in Arbuzov’s family. His mother, Valentyna Arbuzova heads VBR bank, which is owned by Oleksandr Yanukovych. She is also co-founder of Donsnabtara, another company owned by the older son. She combines her banking post with her duties as head of the Association of Ukrainian Taxpayers.
Oleksandr Klymenko
Another fantastic career rise was made by 31-year-old Oleksandr Klymenko, who became head of the State Tax Service in 2011. His official biography until 2005 is vague, noting that “from 1997 to 2005 he was an entrepreneur, founder and manager of several firms.”
Klymenko’s rise from obscurity – a clerk in the Donetsk tax service since 2005 – took off after Yanukovych was elected president. A swift round of promotions followed: first deputy head of the tax service in Donetsk Oblast in 2010, deputy head of the State Tax Service in 2011 before, in November of last year, being put in charge of the Tax Service of Ukraine.
Klymenko won’t talk about reports that he is friends with Oleksandr Yanukovych and Serhiy Arbuzov. But in a Feb. 10 interview with Dzerkalo Tyzhnya weekly newspaper, he called both of them “wise people” who “think from the state’s point of view first of all.”
Vitaliy Zakharchenko
Adding to these personal allies who are in charge of the nation’s central bank and tax service, Yanukovych also moved in November to appoint another Donetsk Oblast native, 48-year-old Vitaliy Zakharchenko, to run the Interior Ministry – a position that puts him in charge of the nation’s 300,000-member police force. His personal relations with the first family are unclear. He was the former head of the nation’s tax service.
Ihor Kalinin
Yet another power agency – the Security Service of Ukraine – came under the leadership of a presidential ally in December when Yanukovych named Ihor Kalinin to the job. He was formerly in charge of Yanukovych’s security entourage.
Viktor Pshonka
One of the only other really powerful government posts – that of general prosecutor – has been in the hands of a close ally since 2010. In taking the appointment, Prosecutor General Viktor Pshonka – who also hails from Donetsk – famously defined his job as carrying out presidential orders before backtracking in the face of public criticism.
Yuriy Kolobov
The newest addition to the circle of those close to the family is Yuriy Kolobov from Arbuzov’s team. On Feb. 28 he was appointed Minister of Finance. Little is known about Kolobov’s biography until 2008 when he started working in banks. In 2010 Kolobov was a subordinate to Arbuzov in Ukreximbank, and later the same year was appointed Arbuzov’s deputy in central bank.
But controlling the nation’s central bank, tax service, finances, police and prosecutors is only one aspect of the interests of the “Yanukovych Family.”
Yuriy Ivaniushchenko
One of the more mysterious yet infamous persons considered to be part of the president’s entourage is Yuriy Ivaniushchenko, nicknamed “Yuriy Yenakyivsky.” The camera-shy lawmaker hails from Yanukovych’s hometown of Yenakieve in Donetsk Oblast. He is considered the second most influential person in Ukraine after Yanukovych by Korrespondent magazine.
Once accused of being a mobster – which he denies – by the now imprisoned former Interior Minister Yuriy Lutsenko, little was publicly known about Ivaniushchenko until recent years. Among his businesses is Mariupol-based Azovmash, one of the nation’s top machine-building factories.
Ivaniushchenko has said publicly that he and Yanukovych are long-time friends but has remained tight-lipped on his involvement with the family and state matters.
Ivaniushchenko’s name often comes up in discussions about recent raider attacks in which nominally legal or law enforcement-sanctioned force is used to take over a company.
Ivaniushchenko, in scarce interviews, has always denied any involvement in such dubious power grabs.
A recent high-profile case involves Odesa’s Stalkanat Silur, a steel rope and wire producer, whose co-owner Volodymyr Nemirovsky left the country after a special Sokol police unit raided the company and seized all documents.
In an interview with Ukrainska Pravda on Feb. 28, Nemirovsky openly accused Ivaniushchenko and his long-term business partner Ivan Avramov of trying to muscle the business away from him. There has been no reaction from either yet.
Aim is to ‘get rich’
The intersection of state and private interests within the family has led Harmash to conclude that the president “gets rich” by using his state power resources.
“It seems like all the major decisions in this country are made by two Yanukovychs – Viktor and Oleksandr. They appoint their trusted people, reshuffle them, balance with other oligarchs and groups to not stir conflict,” Harmash said.
Despite seemingly getting stronger, experts say “The Family” must co-exist among different power groups.
Apart from the family, Fesenko identified the “gas lobby” as a separate yet formidable power group aligned with Yanukovych. The gas lobby is understood to include Presidential Administration Chief Serhiy Lyovochkin, First Deputy Prime Minister Valeriy Khoroshkovsky, billionaire industrialist Dmytro Firtash and Energy Minister Yuriy Boyko.
Another formidable power center, also aligned with Yanukovych, is led by billionaire Rinat Akhmetov – by far the richest person in Ukraine and the 39th richest person in the world according to Forbes magazine, which recently estimated his net worth at $16 billion.
Akhmetov is joined with Deputy Prime Minister Borys Kolesnikov. Yet another center is a group led by National Security Council head Andriy Klyuyev.
Politician analyst Taras Voznyak predicted that governing a nation of 46 million people through loyalists will not be a winning strategy for the president for long.
“Yanukovych will be doomed if instead of dialogue and compromise he persists in strengthening the all-controlling close but closed circle,” Voznyak said.
Kyiv Post staff writer Svitlana Tuchynska can be reached at [email protected].
