By Brian Bonner. Published Sept. 17. Updated Sept. 17 at 10:30 pm
Ukrainian President Volodymyr Zelensky (C) meets with the controversial oligarch and his former business associate Ihor Kolomoisky on Sept. 10, 2019. They were joined by several top officials, including Prime Minister Oleksiy Honcharuk, Chief of Staff Andriy Bohdan and Energy Minister Oleksiy Orzhel.Photo by President’s Office of Ukraine
After a brilliant election campaign, Ukrainian President Volodymyr Zelensky’s era — only four months old — is already marred by arrogance, inexperience, incompetence and, most unfortunately, signs of corruption.
He convinced 73 percent of Ukrainian voters (and a lot of foreigners) on the idea that he would be different, that he would break up the oligarchic stranglehold over Ukraine and that there would be no more “caste of untouchables.”
It’s too early, of course, to write off Zelensky. But it’s not too early to sound the alarm about the dangers to his presidency and to call out the administration when it’s going the wrong way, as it is now in several ways.
He’s already dashing a lot of hopes placed in him.
Instead of no more “caste of untouchables,” as Zelensky promised, what is emerging is an entire cast of untouchables, led by billionaire oligarch Igor Kolomoisky.
The Zelensky untouchables also appear to include ex-President Leonid Kuchma, Kuchma son-in-law and billionaire oligarch Victor Pinchuk, billionaire oligarch Rinat Akhmetov, billionaire oligarch Dmytro Firtash, Interior Minister Arsen Avakov, Kharkiv Mayor Gennady Kernes, Odesa Mayor Gennady Trukhanov, among countless others we don’t know about yet.
All of these people named deserve tougher treatment than they are getting from the government, to put it mildly.
But while it’s still early, Zelensky shows no appetite to take them on and, in fact, appears to have cozied up to many or all of them. He appears to still be the showman president, confining his yelling and screaming to lesser officials who don’t have the power to fight back.
Assuming Zelensky still has the best interests of Ukraine in mind, and doubts are starting to emerge, his recent actions have stunned and angered many people, from ordinary Ukrainians to business leaders and the international community. He needs to regain control of the ship of state quickly if he doesn’t want his presidency to go up in flames.
Kolomoisky and the other oligarchs threaten to be his political undoing. Zelensky may find that his fall in popularity could come as swiftly and as spectacularly as his rise.
Here’s a synopsis of where Zelensky is going wrong:
Zelensky riled up people with the publication of a picture from a Sept. 10 meeting in his office of smug and smiling participants who included the president, Kolomoisky, chief of staff and former Kolomoisky lawyer Andriy Bohdan, Prime Minister Oleksiy Honcharuk, and Energy Minister Oleksiy Orzhel.
Timothy Ash, the London-based analyst who is an astute observer of Ukraine, nailed it with this response:
“The message is very clear from all around the table – we have won, and there is nothing you can do about it. Kolomoisky is now positioned as oligarch number one, and all others have to pay homage,” Ash wrote. “Sad, Zelensky was supposed to be different. The administration is just going through the motions of ticking all the reform boxes – that’s the front office. Whereas behind the scenes in the back office there is a different agenda.”
The prime minister
Honcharuk, 35 and single, showed off his youthful inexperience masked by cockiness when he had to backtrack his quoted remarks in a Financial Times interview from Sept. 14.
The background: Honcharuk let it out that a deal may be in the works to forget about the largest alleged bank fraud in Ukrainian history, in which Kolomoisky, the former owner of PrivatBank, used the nation’s largest bank as a personal piggy bank, allegedly stealing $5.5 billion from depositors through insider loans to himself and his partners.
The government had to seize control of the bankrupted bank in 2016 and recapitalize it with taxpayer money. It’s part of the $20 billion and counting that taxpayers have paid out when the sector collapsed, a clean-up engineered by ex-National Bank of Ukraine Governor Valeria Gontareva.
I write “alleged” and “allegedly” because nothing is ever proven in Ukraine since nobody is ever charged, tried or goes to prison for serious crimes. This is especially true if they are wealthy and powerful, as King Kolomoisky certainly is again.
But no less an authority than Gontareva told the Kyiv Post in 2016 about the rampant bank fraud, including at PrivatBank: “70 percent or 80 percent of cases are just simple fraud or money laundering. You do not need any high-quality forensic professionals. We’ve already documented all this fraud and money laundering.”
Kolomoisky not only denies bank fraud but he is trying to regain control of the bank he bankrupted and that taxpayers had to recapitalize. Gontareva accuses him of waging a terror campaign against her; he says that he means her no harm, although others find his denials lacking credibility.
Tweeted Swedish economist Anders Aslund of the Atlantic Council today: “Kolomoisky’s persecution of former NBU Chair Valeria Gontareva is outrageous. If President Zelensky does not stand up and condemn Kolomoisky and stop it very soon, he will finish himself as president. The US & EU need to protest forcefully.”
Ex-President Petro Poroshenko’s many failings, including the failure of judicial reform, justifiably brought about his electoral downfall this year after five years of misrule. But Poroshenko at least had the good sense to make sure that Kolomoisky stayed abroad and didn’t feel comfortable in Ukraine.
Now Kolomoisky struts around like a peacock, in Zelensky’s office and the annual Victor Pinchuk Show, formally known as the Yalta European Strategy, which took place on Sept. 12-14.
For many investors and lenders, including the International Monetary Fund, any compromise that would allow Kolomoisky to regain ownership of PrivatBank, or any attempt by the government to stop recovering the $5.5 billion on behalf of taxpayers, is a “red line” that cannot be crossed.
Yet Honcharuk told the Financial Times: “I’m completely convinced that we need to concentrate on growth now and look for joint solutions instead of spending our resources on destroying each other,” Honcharuk told the Financial Times. “So I am very positive about any rhetoric directed towards searching for a compromise.”
He also said that Zelensky and Bohdan, despite being former employees of Kolomoisky, would take the lead on the PrivatBank issue for the government.
Honcharuk touched off a firestorm of criticism, from which he had to back down, issuing statements to insist that no compromise or negotiations are in the works.
He tweeted: “To avoid further manipulations, I’d like to make my point clear. The Gov is not conducting any negotiations with anyone. We are carefully studying the Privatbank case (incl. negotiations with the bank’s former owners that were held by the previous independent supervisory board).”
His press service also issued a statement, attacking the Financial Times article, a pattern of contempt for journalists started by chief of staff Bohdan. Honcharuk’s statement:
“The information published in today’s Financial Times article does not comply with the principles of objectivity that the media must adhere to, especially the media of this level. The quotation that was taken the basis for the authors’ conclusion contained in the article is totally out of context and considered the least significant in the context of all information provided by the Prime Minister of Ukraine. The Prime Minister provided no information regarding any alleged negotiations on the matter with neither Mr. Kolomoisky nor anyone else. The aforesaid material does not meet high journalism standards. In this regard, we have sent an official appeal letter to the authors of the material with a request to refute the aforementioned theses related to the above.”
Many people found his denials unconvincing.
Enter Ash, the astute London analyst: “This is just bull – so what did he say to the Financial Times then about seeking ‘compromise solutions. He says he is going to discuss PrivatBank with foreign partners – what is there to discuss? The bank was nationalized, and as is right and proper, the National Bank of Ukraine and Ministry of Finance are pursuing former owners for the losses incurred by the state, which were 5 percent of gross domestic product. How about discussing with foreign partners the attacks and intimidation of proven reformers? Honcharuk is proving to be a big disappointment – as now proven by the messaging around PrivatBank. Not sure he understands the importance of this case to the IMF and investors. The talk was that he was hired as he was young and inexperienced so that Bohdan and Zelensky would be able to run the show from the presidential palace, and that seems to be the case.”
When the directors of the National Bank of Ukraine has to issue a statement condemning “terror,” Zelensky can talk all he wants to about attracting foreign investment into Ukraine. It’s not going to happen.
The board’s statement came after the Kyiv suburban home of Gontareva, the central bank head from 2014-2016, got torched by an arsonist early on Sept. 17. That attack was preceded by an arson attack on a family car, a car accident in which a motorist struck Gontareva as she was walking on a street in London, where she is teaching economics, and police raids on her office and the Dnipro office of PrivatBank.
She blames Kolomoisky for the “terror” campaign, saying he’s threatened her verbally. He denies all of course.
The NBU statement is clear: “We publicly declare the unacceptability of these purposeful, systematic attacks on the ex-governor of the central bank, Valeria Gontareva, and, through her, all reformers who worked and work for the benefit of Ukraine. This is no longer a series of incidents, it is TERROR. Its purpose is to intimidate reformers, past and present, and to paralyze our activities, to silence us. We will not be silent. This is a direct and undisguised threat to democracy and the reforms that Ukraine’s future and the wellbeing of its people depend on. But it is not just a threat to the reforms. It is a threat to every citizen, and their constitutional rights and freedoms, which the state has committed to protecting. Furthermore, it threatens the complete destruction of the moral values of a democratic society in favor of terror. We call for action.”
And the statement cites other incidents that need to be investigated.
“Law enforcement authorities must promptly and impartially investigate this series of attacks, as well as offenses against the owners and shareholders of insolvent banks of which the NBU has previously informed these authorities,” the statement continued. “ We insist that the constitutional rights of all the citizens of Ukraine, for the protection of life and health, should be secured not by words – but by actions.”
Ash again with the final word: “Events this week around PrivatBank and the attacks on former NBU Governor Gontareva are sending a pretty strident message that former PrivatBank owners expect compensation for the nationalization of the bank. The events take Ukraine back 20 years – to bad old days of oligarch wars. Smells ugly in Ukraine – with reformers subject to intimidation. Where is the international community? … Reforms, and reformers, now really under threat in Ukraine, from the new regime.”
(c)KYIV POST 2019