Valery Khoroshkovsky talks about his mandate, conflict of interest, personal wealth and more in an interview with the Kyiv Post.
Valery Khoroshkovsky talks about his mandate, conflict of interest, personal wealth and more in an interview with the Kyiv Post.Valery Khoroshkovsky’s rise as deputy head of the State Security Service, best known by the SBU acronym, has ignited controversy. Many say that the Jan. 28 appointment by President Victor Yushchenko only confirmed fears that law enforcement agencies in Ukraine are used as tools to settle personal vendettas.
Anatoliy Hrytsenko, chairman of the Verkhovna Rada’s defense and security committee, demanded Khoroshkovsky’s resignation on March 17. “My personal proposal to the head of the SBU is to urgently submit a request for dismissal of Khoroshkovsky during the next three days,” Hrytsenko explained. “This would be a serious signal that business is starting to separate from politics. The conflict of interest is clear, in my opinion.”
Khoroshkovsky owns Inter, the nation’s most prominent TV channel, and is former head of the State Customs Service. He said he is qualified to be a top manager of the nation’s elite law enforcement agency, which is in charge of fighting organized crime, corruption, terrorism and other threats.
He has business relations with Dmitry Firtash, 45 percent owner of RosUkrEnergo, the Swiss-based intermediary whose role in the Ukraine-Russia gas trade is seen by Prime Minister Yulia Tymoshenko and others as a source of corruption. Such accusations are vigorously denied by the shadowy gas trader.
Khoroshkovsky says Firtash has an option to buy his Inter television group, but insists this poses no conflict of interest with his role at the SBU. At the SBU, Khoroshkovsky is seen as championing an investigation to return natural gas worth more than $2 billion to Firtash’s RosUkrEnergo. The dispute between state-owned Naftogaz Ukraine and RosUkrEnergo over ownership of the 11 billion cubic meters of gas led to a March 4 raid by SBU agents of Naftogaz headquarters. The Kyiv Post interviewed Khoroshkovsky on March 16 in his SBU office.
K.P.: There is a conflict of interest in your appointment as deputy head of the SBU because your business partner Dmytro Firtash and his company are being investigated not only here, but in Russia and the United States. And you take over the investigation…
V.K.: No, first of all, I did not take over it. There has been a myth created, and you continue to live it. Valentyn Oleksandrovych [Nalyvaichenko, SBU head] was away on business trip that day [Feb. 4] when those peculiar events took place of Naftogaz [Alfa, the SBU special division, confiscated documents]. I was the most senior official who could answer questions. I took on the public function to account for the situation at the SBU – this is fact. Then everyone started talking that I am conducting the investigation.
The whole conflict of interests is that I do not accept pressure on private property. Whatever happens, I think this property is sacred until there is a sale and purchase agreement, a court decision, an agreement of exchange, or other basis for transfer of the right of ownership.
I am not even discussing whose gas this is and who needs it. [11 billion cubic meters of gas under dispute]. But when there is effectively a raider attack going on at the state level? May I ask you do you want to live in this sort of a state? I don’t.
There is a conflict of interest whenever there is joint money. I don’t have joint money in gas.
KP: You have joint money and interests in other areas, though.
V.K.: So, what am I to do? Does it contradict my office? I am not conducting the investigation. And the fact that the president appointed me is not contrary to, but rather thanks to my knowledge on contraband and the knowledge of the regions. I do not take bribes, it’s impossible to buy me. Is it good or bad?
KP: You said that the SBU raid in Naftogaz had a legal basis. What sort of papers did the members of task force show to Naftogaz officials before entering their office?
V.K.: The decision to employ Alfa is taken on the basis of the investigator’s application. If the investigator considers it impossible to conduct investigation without the special forces, he makes an application. There is a procedure whether to allow him to use this subdivision or not.
Alfa is used several tens of times per day. There are no other precedents when there are problems. The problem appeared because in this case the work of the department met with resistance of people’s deputies.
If only I could imagine for a second the inadequacy of the people’s deputies behavior, I would do maximum to prevent SBU from going in there that day to seize these documents. What for? To bring so much negative [publicity] to out forces and the country? After all, we would wait for another month for these documents, nothing bad would happen.
K.P.: Apart from the investigator’s application, what other basis is used in such cases?
V.K.: There are two legal reasons for the use of Alfa. They are anti-terrorist activity and – this is clearly stated in law – to protect investigators of criminal investigations.
K.P.: It looks like all of the basis comes from the SBU: there is no court decision, no sanctions from outside?
V.K.: It’s our internal decision.
K.P.: Following up the Naftogaz raid, there was a curious incident in Boryspil [when Khoroshkovskiy returned from Switzerland and Italy on March 11]:
V.K.: I know for a fact that there was an order not just against me, but my family, too. I think this is really dirty. It’s so dirty it’s disgusting to talk about it. If my wife wasn’t there – no problem. You have the right to do what you want, as long as you don’t plant anything on me. As far as I understand this was one of the orders, if you judge from the statements about drugs and diamonds.
K.P.: What was the aim of your trip?
V.K.: This was a private journey. I don’t understand what can be interesting about it.
K.P.: The central office of RosUkrEnergo is based in the country where you went.
V.K.: I can tell you this country has many good thermal springs, many wonderful skiing resorts, good banks – anything, including good chocolate. You remember it was March 8. So, sometimes you have to let your family see you as well.
K.P.: As deputy chief of the SBU, do you know whether Firtash is listed in any wanted or other lists in Russia?
V.K.: I don’t know this either as a representative of the SBU, nor as a citizen. But I do want to say that within the framework of the investigation we are conducting now, we will investigate RusUkrEnergo too. And I think it would be fair.
K.P.: Who is going to be in charge of this investigation?
V.K.: The same people. I am not in charge as a deputy, this belongs to a different department. But we do hold meetings, and I have attended, and I understand what is going on. I think it’s absolutely fair and right, if we’re dealing with this situation, to investigate this aspect also.
K.P.: You have said that the transfer of 11 billion cubic meters of gas took place with participation of Cabinet members. Is there an investigation in this context?
V.K.: There is a formal assignment that confirms that certain people within the Cabinet stimulated this sort of a deal. To be able to take the decision about their involvement and corruption, one needs to go up the whole chain, from the bottom.
K.P.: Getting back to your appointment, what gives you the confidence to claim that you’re qualified for the job?
V.K.: There are several things. My whole previous experience showed that I am patriotic. I am a qualified manager. I understand economic schemes, economic crimes, ways to launder money, the banks that convert currencies illegally, currency conversion centers. My knowledge is significantly greater than that of many people working here.
K.P.: How did you gain it?
V.K.: This is just because I have been dealing with the economic sector for the last 15 years. I know what a market is, I know how it works. I know that if the market finds no legal way to solve its problems, it will resort to illegal ways.
K.P.: What mandate did you get from the president when he appointed you to the job?
V.K.: There are two major tasks. One is fighting corruption. The president insisted that it has to be improved in terms of quality. Unfortunately, corruption fight ends at a very low level of officials, and creates an illusion of fight with corruption and negative moods in the society.
Number two is smuggling. To not be concerned with individual containers and trucks, but uncover serious schemes, and permanent systems of contraband flow to protect the internal market during the economic crisis.
K.P.: Have you achieved anything yet?
V.K.: As far as corruption goes, I would like to say that I was not worried about gas itself as much as about corruption in the highest power organs. As far as contraband is concerned, we’re to present a plan for the president for fighting its inflow by Wednesday [March 18].
The priority of my work is corruption in customs organs, because no contraband deal takes place without this element. That’s why I don’t want to chase individual pants – consumer goods are often the subject of smuggling through various customs points – but I know that behind every case there is a person who received a bribe.
K.P.: You are often referred to as a “professional front man” because of your work in Russian Evraz holding, Ukrsotsbank and Inter TV channel. What do you think about it?
V.K.: To anyone who gives comments like these I can prove who is a front man, and who is a real professional. What was done in Ukrsotsbank? When I first came there, there were grannies in rollers behind counters. And after a while the bank was sold for big billions. [$ 2.2 billion in 2006]. This proves that something was done in this bank. Ask those who work there, not those pseudo-experts who do not use any other information except the Internet.
K.P.: What’s your evaluation of your personal wealth?
V.K.: It’s invariably good.
K.P.: Can we have some numbers? You’re often called a billionaire. What is the number in your last year’s tax declaration?
V.K.: I have filed the declaration, but I can’t remember. My lawyers take case of that. I understand that my declaration this year will get a lot of attention.
I don’t want any numbers. Giving estimates is an ungrateful task.
K.P.: As a result of the recent gas raid, you ended up in the middle of conflict of alliances of Yushchenko-Khoroshkovskiy on one side, and Putin-Tymoshenko on the other. What do you think of being a part of it?
V.K.: This is a very low level of discussion. First of all, Yushchenko has not made deals with me by definition. The instructions he gives me, I execute. And then it’s all very simple. When there is a primitive attempt to talk one’s way out of the criminal case, they employ big politics, personal insults and inspection of your family. What I am asking is very simple: can you answer two questions, but with documentary proof, and I will drop all claims. I understand that in our country by removing an official you can also remove the questions. But, by and large, I did not get them off the top of my head. These are the questions that that are waiting in line, and they will be asked, sooner or later.
K.P.: From the point of view of philosophy of mass media, is it right that Inter TV channel, the most influential in Ukraine, has become a propaganda machine for Firtash?
V.K.: This is your own evaluation. How can I affect the editorial policy? There is only one way. We have agreed on it. If something does not conform to my understanding, I would have to take a decision about the management at a share holders’ meeting.
I also understood a paradox when I tried to create a TV station equally removed from all political forces. I became everyone’s enemy. And that is very dangerous.
I definitely bought [Inter] as a business, and if it wasn’t for the crisis I am convinced that the group would be traded at the stock exchange, and managed by an independent board of directors.
K.P.: When you were preparing for IPO last year, what was your evaluation of the company?
V.K.: It wasn’t our evaluation, it was independent. At that point it ranged between $ 1.8 to 2.3 billion.
