The case should have been about alleged bribes in India and whether influential Ukrainian oligarch Dmytro Firtash should be extradited to the United States to face trial on criminal racketeering charges.
Instead, Firtash turned a Vienna courtroom into a political drama about Ukraine’s cutthroat politics. He claimed credit for propelling Petro Poroshenko to the presidency via secret talks last year in Austria along with Vitali Klitschko, the Kyiv mayor.
The self-proclaimed kingmaker and ally of disgraced ex-President Viktor Yanukovych convinced the judge on April 30 to reject the American extradition request on the grounds that the criminal indictment was politically motivated. He was set free the same day after spending a year restricted to Austria.
High-profile testimonies from Ukraine’s political elite weaved the Firtash side’s narrative that the U.S. criminal indictment was motivated by America’s desire to promote its own energy interests and counter Firtash’s Kremlin ties.
Firtash denied the allegations that he had conspired to bribe an Indian government official in an attempt to win licenses to mine titanium. A U.S. grand jury in 2013 indicted Firtash, along with a member of India’s parliament and four others.
Klitschko, ex-President Leonid Kravchuk, Firtash business partner and Yanukovych’s chief of staff Serhiy Lyovochkin and former Energy Minister Yuriy Boiko were among those called to testify.
Firtash said that Lyovochkin, Klitschko and Poroshenko visited him in Vienna in March 2014, two months before the presidential election, a revelation that fueled anger among Ukrainians who waged the EuroMaidan Revolution to stop the backroom dealmaking among Kyiv’s ruling elite.
At the meeting, Firtash said that Klitschko dropped his candidacy for presidency, paving the way for Poroshenko’s first-round election on May 25, 2014. “We got what we wanted – Poroshenko as president and Klitschko as mayor,” Firtash bragged in court.
Poroshenko confirmed that the meeting took place but never disclosed the substance of talks. Klitschko’s spokeswoman dismissed Firtash’s bravado.
Oksana Zinovieva, a spokewoman for Klitschko said: “Firtash’s testimony was an attempt to discredit Ukraine and its political leaders and thereby destabilizing the country. There was no signed agreement between Klitschko and Firtash.”
Some analysts think Firtash went beyond the framework of his legal defense when he mentioned a secret deal he had allegedly brokered with Poroshenko and Klitschko.
“It was a clear attempt at discrediting and blackmailing the presidency of Poroshenko,” Oleksiy Haran, political science professor at Kyiv-Mohyla Academy, told the Kyiv Post.
The same day as Firtash made his claims in the Vienna hearing, Poroshenko signed a landmark natural gas bill that will directly affect how Firtash’s regional gas distribution companies in Ukraine do business. Firtash, according to members of parliament, controls a large share of regional gas supply monopolies. The legislation will force them to pay a fee to use the nation’s pipeline system.
His vast chemicals empire under the Ostchem holding company – Firtash owns four of the six nitrogen fertilizer producers in Ukraine – now faces a criminal investigation on suspicion of embezzling Hr 5.7 billion, or $247 million.
Parent company Group DF has in a statement denied the allegations, describing the investigation as part of a “deliberate and prolonged campaign of political persecution against Group DF and its owner,” but didn’t respond to a Kyiv Post written request for commentary.
A day before the extradition trial, a Kyiv court authorized the seizure of 500 million cubic meters of gas that Ostchem has stockpiled.
Poroshenko also that day said there “would be no more oligarchs in Ukraine,” insisting that they will have to operate in a competitive and deregulated environment.
The president’s comments came as Kyiv’s pro-Western government and parliamentary majority have stepped up initiatives to boost competition and break up Ukraine’s oligarchy.
The “deoligarchization” campaign has not been selectively 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 Yanukovych. Last month, prosecutors announced plans to cancel his DTEK energy holding’s controversial acquisition of a top electricity generator under Yanukovych’s rule because the process was uncompetitive.
Dmytro Firtash, one of Ukraine’s most influential oligarchs, at his extradition hearing on April 30 in Vienna, Austria.
Poroshenko’s campaign was again voiced on May 6 during a National Security and Defense Council meeting in which he announced plans to break Akhmetov’s monopoly over the country’s electricity sector.
Putting an end to “wild capitalism” in the “strategic corrupt gas sector” the state would no more be a “milking cow” for people “skimming the cream” in order to enrich themselves, Poroshenko said. “I want this to be understood across the board, in Kyiv and in Vienna as well.”
Firtash’s wealth skyrocketed from 2004 through 2009 when, in partnership with Kremlin-controlled Gazprom, he controlled the supply of Russian and Central Asian gas to Ukraine.
The Firtash-Gazprom-owned company, RosUkrEnergo, won through litigation under Yanukovych’s first year as president ownership over 12.1 billion cubic meters of gas worth billions of dollars from state-owned Naftogaz Ukraine. In prior years, Firtash reportedly borrowed heavily from Russian banks to purchase gas at privileged prices and gas-guzzling chemical companies, according to a Nov. 26 Reuters investigative report.
Firtash received another Russian loan to pay his record bail of €125 million in Austria. It came from 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 to 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.
Speaking ahead of the court ruling, Ukrainian Prime Minister Arseniy Yatsenyuk accused Firtash and his business partner, Lyovochkin, of “feeding like vampires upon Naftogaz for decades, embezzling billions.”
In the Vienna courtroom, Lyovochkin testified that Firtash was one of the few people Yanukovych listened to and took advice from, according to tweeted messages posted from the trial by Insider project manager Serhiy Scherbyna.
After Firtash realized in 2012 that Yanukovych wasn’t going to embark on meaningful reforms, he decided to back Klitschko’s presidential bid, according to Scherbyna’s account of the hearing.
Then the EuroMaidan Revolution changed everything as Yanukovych fled power on Feb. 22, 2014.
As the May 2014 presidential election neared, with both Poroshenko and Klitschko in the race, the meeting took place in Vienna because Firtash was under a travel ban while awaiting trial.
Suspicions that Poroshenko entered into a secret deal with Firtash have fueled criticism by those who note Ukraine’s continuing corruption and susceptibility to oligarch influence. Firtash’s claim of exerting influence over Poroshenko and Klitschko could damage their popularity.
In the days after the revelations in Vienna, Poroshenko came under pressure to respond. Defending the president, lawmaker Yuriy Lutsenko, the former interior minister who leads Poroshenko’s bloc, dismissed Firtash’s testimony.
“He tells the court of his role in Ukrainian politics,” Lutsenko wrote on Facebook. “This is a form of defense. He doesn’t want to tell the truth about the Indian deal and is trivially trying to place the blame on somebody else…(such) statements should be judged solely as the defense of a cornered predator.”
Radical Party lawmaker Oleh Lyashko said Poroshenko’s silence was a sign of his dependence on Firtash.
Political expert Taras Beresovets wrote that the trial raised fears that insider, self-interested politics still prevails over the public interest in Ukraine.
Firtash’s combination of media resources like the Inter TV channel, major industries, big money and success in doing business with Russia could alter the balance of power in Ukraine.
“Firtash’s attack on Poroshenko should be seen in the light of what is going on now, not their tactical election alliance last year” to defeat ex-Prime Minister Yulia Tymoshenko’s presidential candidacy, Haran said.
“Klitschko had no chance against Poroshenko or Tymoshenko anyway,” Haran said.
Volodymyr Fesenko, director of the Penta Centre for Political Studies, said Firtash is overestimating his influence. In fact, Fesenko said, Firtash made more enemies by alienating Poroshenko and Klitschko.
But Fesenko said the lesson to politicians is clear: No more backdoor deals with oligarchs. In a televised address, Poroshenko, himself an oligarch, rejected concerns that his deoligarchization campaign was a witch hunt.
“If the rules will apply across the board, then he is right,” Fesenko said.
Kyiv Post staff writer Johannes Wamberg Andersen can be reached at [email protected].
