Serhiy Taruta made and lost his once billion-dollar fortune in Donetsk Oblast. Along the way, he managed to anger two presidents, Ukraine’s Petro Poroshenko and Russia’s Vladimir Putin.
“I risked my business to save my country. I had everything taken away,” Taruta, 59, said in an interview at his downtown Kyiv mansion on May 13. Then with bitterness: “For others it has been business as usual.”
In April 2014, one month into the job as governor of the combusting Donetsk Oblast, the steel mogul called himself a “crisis manager” as he and other regional tycoons, including Ukraine’s richest billionaire Rinat Akhmetov, gathered at a local chamber of commerce to meet with visiting Prime Minister Arseniy Yatsenyuk.
By then, Taruta was reduced to governing from the five-star hotel he had built in Donetsk because Kremlin-backed separatists had taken over the regional government headquarters five days earlier on April 6.
While negotiating with Kremlin figureheads to free the vital administrative building, Taruta urged Yatsenyuk to give him and other governors more authority and resources to “quell the desire of people wanting to join Russia.”
But the next morning, armed men – led by former Russian security officer Igor Girkin – took over the city of Sloviansk, marking the start of a bloody war that has killed 1,800 Ukrainian soldiers among an estimated 7,000 people killed altogether.
Given the industrialist’s native Donetsk pedigree and proven record as an effective manager of steel assets, many thought that Taruta was exactly what the post-EuroMaidan government needed to keep the oblast under control. He was part of the new government’s drive to install oligarchs, including billionaire Ihor Kolomoisky in neighboring Dnipropetrovsk Oblast, to govern regions thought to be at risk of separatist attacks.
While Kolomoisky quickly asserted control, Donetsk disintegrated with Russian forces and their proxies taking over seven cities by April 12, 2014. The dismemberment was accelerating and negotiations were futile.
Bribes didn’t work either. Taruta told Lyvyi Bereh newspaper in January that Akhmetov even offered money to the armed squatters to free the regional government headquarters in Donetsk.
“But as soon as we had agreed, here immediately came the ‘little green men’ (Russian soldiers) from Sloviansk and quickly removed the negotiators or changed their attitude,” Taruta told the Ukrainian news publication.
At one point he asked Yatsenyuk to supply police, many of whom had been bused in from other regions, and equip them with water cannons and tear gas. His request was denied on the grounds that such measures hadn’t been effective during the EuroMaidan Revolution and “wouldn’t do any in good in Donetsk too,” Taruta told the Kyiv Post.
Taruta rejected suggestions that the police were disloyal because they were allegedly controlled by Akhmetov, the nation’s largest steel producer and a major backer of disgraced ex-President Viktor Yanukovych.
Taruta admits that he was too late in recognizing that that the Russian agents didn’t want a peaceful solution. “We should have acted with greater resolve. Special operations forces would have solved the problem maybe even without firing a shot,” he said.
By mid-June, Taruta was forced to move his headquarters to the Ukrainian-controlled Azov Sea port city of Mariupol. He would be elected to parliament from a constituency there four months later.
During this time, Taruta started losing court cases initiated by a Russian bank in Moscow, Cyprus and the British Virgin Islands, a popular tax haven. Allegations included an unpaid debt with a Russian shareholder of Industrial Union of Donbas in which Taruta has minority share. Courts ruled to freeze at least eight big assets in which he has a stake, including two Ukrainian steel enterprises, Kyiv’s Hyatt hotel, and his Donetsk Metallury soccer club.
He blamed the Kremlin for taking revenge on his pro-Kyiv and European Union integration stance as governor.
Poroshenko fired him in October.
Then Donetsk Governor Serhiy Taruta whispers into Prime Minister Arseniy Yatsenyuk’s ear at a government meeting at the Donetsk Chamber of Commerce on April 11, 2014 attended by cabinet members and local government leaders and businesspeople.
Taruta had sent Putin a sarcastic birthday greeting on Oct. 7 accusing the Kremlin leader of staging a bloody “fratricidal war” and wishing him the “bravery” to end it. Taruta said that his business partners in Moscow, who hold a majority stake, “received an order from above to punish me for working as governor, they squeezed me out, aided by the unfair justice system of Russia,” he said.
A month before his firing, Taruta publicly criticized a peace plan for Donbas that Poroshenko proposed in September. Taruta said he wasn’t consulted and predicted the president’s plan would hand Donbas to Kremlin-backed militias for years to come: “We feel raped.”
Taruta said the insurgency “wasn’t a genuine protest movement” and that “we saw the same faces over and over. It was staged from the outside. This truth will eventually come out, and help in reconciliation.”
Today he claims to have lost his prize asset, the Alchevsk Steel Mill in Moscow courts. The plant is in Russian-controlled territory, along with about half of the other steel businesses in the Donbas, according to Empire State Capital, a Kyiv-based investment boutique.
But all is not lost for Taruta.
Forbes magazine this year estimated his net worth at $144 million, a big fall from 2006, when his estimated wealth hit $1.2 billion.
Russia’s war left the Alchevsk plant Hr 20.2 billion in the red and his minority-held Dniprovsky steel mill, in Ukrainian controlled territory, with a net loss of Hr 8.6 billion, according to Forbes.
Taruta co-founded the Industrial Union of Donbass in 1995, a vertically integrated steel producing company, eventually employing 40,000 and producing more than 10 million tons steel annually.
Taruta doesn’t regret his involvement in politics. “If it hadn’t been for our resistance we would have lost much more of Ukraine,” he said.
Taruta said pro-Russian sentiment prevails in Donbas, where Ukrainian TV has been blocked. All the same, he considers the oblast’s residents as hostages. “They are brainwashed into thinking that only Moscow will do them good, it’s an old Soviet belief…They are bitter at Ukraine, heavy influenced by Russian disinformation. Misguided Ukrainian policies and wrongdoing by some of the volunteer battalions contribute to hatred towards Ukraine,” Taruta said.
His solution is to win over each Donbas resident one person at a time: “Hostages are treated as victims and helped even if they are trapped in a Stockholm syndrome, right?”
He said that Russia doesn’t care about the industrial region, which would be too costly for the Kremlin to subsidize.
“There is only one way out for Donbas: to reintegrate with Ukraine,” Taruta concluded, explaining his opposition to the Ukrainian government’s cutoff of pensions and payments to the region. “If we could get the economy going in Donbas, sentiment would change.”
He is skeptical about the government’s campaign to reduce the influence of oligarchs. He said there would be no oligarchs if Ukraine had independent regulatory bodies, prosecutors and courts.
“It’s an illusion to make the appearance of reform. You don’t break monopolies by changing the beneficiary,” Taruta said. “We are still mainly fighting oligarchs like (Dmytro) Firtash or Akhmetov instead of fighting for principles – it’s a dead end.”
