The Ukrainian president has not just transferred his assets, as promised during the election campaign, but he appointed some of his longtime associates at the head of several public structures, mixing public and private interests.
(Continued from Part One)
The Bank of Poroshenko, the International Investment Bank, doesn’t belong only to Poroshenko. The shares not held by the Ukrainian president belong to Ihor Kononenko, deputy head of the parliamentary group of Bloc Petro Poroshenko, has 14.9%, Oleg Gladkovsky, first deputy head of the Security Council, 9.9%, Konstantin Vorushilin, head of the state Deposit Guarantee Fund, owns 5.5%, and Oleh Zimin, owner of carmaker Bogdan Corporation, 9.9%.
The conflict of interests between politics and private business, therefore, is not just about Poroshenko but also his associates, now incorporated in the state structures. The case of Kononenko got the most attention in the news in February when the then Minister of Economy, Aivaras Abromavicius, resigned, denouncing a system of corruption at the highest levels. “I will not become a puppet for those who, very much like the ‘old’ government, are trying to exercise control over the flow of public funds. These people have names. Particularly, I would like to name one today: the name is Igor Kononenko”, Abromavicius wrote in a statement, sparing no details. “Kononenko attempted to influence key appointments in the state-owned Derzhzovnishinform, in metal powder factories, and the National Accreditation Agency. This entire rampage culminated in Mr. Kononenko’s desire to have his personal deputy minister of economy – one responsible for Naftogaz and other state-owned companies”.
Longtime associates
Poroshenko, Kononenko and Gladkovsky have other ties. Both Prime Assets Capital, the holding company of the President, and the capital funds of the other two partners, Kononenko’s VIK and Gladkovsky’s SOVA, are managed by an asset management company, Fusion Capital Partners, whose owners are not disclosed. All four companies, however, are located in the same office of Vulitsa Elektrykiv in Kiev, as revealed by an investigation of IntelliNews.
All companies related to Poroshenko and his associates are good clients of the International Investment Bank. Among these is Zimin’s Bogdan carmaker, which once produced 150,000 cars a year but because of the crisis was on the verge of bankruptcy. Since last year, however, the Bogdan group companies have won more than 300 public supply contracts for military equipment and spare parts, for over 60 million dollars, without having specific experience in the military sector: as in the case of the Cherkassy plant that makes trucks on a licence from Belarus. “The orders are made to a plant which produces primitive screwdrivers used to assemble the Belarusian MAZ”, said Kostyantin Zhevago in an interview with Bne. He is the owner of a competitor Kremenchuk Automobile Plant, now left high and dry.
A very similar story concerns Poroshenko’s shipyard companies. The shipyard Leninska Kuznya – owned by Prime Assets Capital for 82.5% and Kononenko’s VIK for 11.5%, and also a client of the International Investment Bank – was going really badly with losses of $ 200,000 in 2015, until it quickly converted to military production and got orders for six armed coastal-patrol boats worth $ 2 million.
Public and private interests
Among the top bank’s clients there is Biznespostavka. The company was founded in October 2014 by a resident of Donetsk. It does not have an office or a website, and doesn’t answer its telephone number. But in the last year it won 232 tenders in the gas pipelines sector worth $ 9 million.
Clients of the International Investment Bank are quite lucky with public tenders. Artek-Soyuz has provided rations to the army for $ 36 million, Farmplaneta has won more than 300 tenders for $ 8 million in medicines for the army and the Ministry of Health, Akku-Energo sold batteries and generators to the state company Ukrtransgaz for $ 5 million, and so on.
Doubts about the overlap of business and politics do not begin or end with public supplies. The Podillya and Zorya Podillya plants produce sugar and belong to Poroshenko. Quotas for the production are allocated by the Minister of Agriculture, Taras Kutovy, a member of the Bloc Poroshenko party. The president’s two plants had the largest quotas of all the producers for 2016-17, for a total of 13% all national production.
Unfortunately Ukraine has a long history of mingling public and private interests, even before the kleptocracy set up by Yanukovych. The management of the fortunes accumulated by the richest men in the country has always involved a reckless use of public resources. The experience of the Maidan is remembered as the Revolution of dignity, but it seems that much of the shock wave from the Independence square has now petered out in the streets around the Bankova.
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The Ukrainian president has not just transferred his assets, as promised during the election campaign, but he appointed some of his longtime associates at the head of several public structures, mixing public and private interests.
