Medvedchuk, Kolomoisky share ownership in numerous firms, reports say

Viktor Medvedchuk, a Ukrainian magnate with close ties
to Russian President Putin, shares indirect ownership in numerous large Ukrainian
enterprises with Ihor Kolomoisky, a billionaire who has proposed in the last
year that Ukraine abandon its Euro-Atlantic integration. Their business ties
were reported by the Skhemy investigative news program on June 10 and 11, which
drew its information from Medvedchuk’s annual assets and income declaration,
which revealed that his stakes in numerous companies are formally registered
with his wife, Oksana Marchenko.

 

Most notably, Marchenko is the owner of a company that
is part of the ownership structure of the 1+1 media group, controlled by
Kolomoisky, and controls 8.22% of the shares of the 1+1 television network and
8.17% of the TET network, according to Ihor Kyrylenko, a lawyer for Medvedchuk
who confirmed the original report by Skhemy, which is produced by Radio Free
Europe/Radio Liberty with Ukrainian state television. Medvedchuk reportedly
controls three television news networks that broadcast pro-Russian narratives:
112, NewsOne and ZIK.

 

Medvedchuk/Marchenko and Kolomoisky also reportedly
share stakes –through Cyprus-based intermediaries and Virgin Islands
incorporated firms – in electricity distributors Lvivoblenergo,
Prykarpattiaoblenergo, and Zaporizhiaoblenergo; the Dniprospetsstal
Electrometallurgical Plant in Zaporizhia; the Zaporizhia Ferroalloys Plant; and
a logistics complex in Odesa that specializes in the transshipment of oil and
liquefied gas.

 

Medvedchuk is among the founders of the pro-Putin
Opposition Platform For Life party, currently serving as the head of its
political council and member of parliament. Putin is the godfather to
Medvedchuk’s 16-year-old daughter, Daryna. His wealth was estimated at USD 55
bln in 2018 by the annual survey performed by the focus.ua news site. The same
survey didn’t estimate Medvedchuk’s wealth in 2019, but the nv.ua news site –
which also performs an annual survey on the wealthiest Ukrainian citizens –
estimated his wealth at USD 133 bln in 2019.

 

Zenon Zawada: Most of
Ukraine’s wealthiest citizens have business ties with each other, and many of
them have business ties with Russia. Those with ties to Russia include former
President Poroshenko, the founder of the European Solidarity party whose Roshen
confectionary empire still controls the Lipetsk factory. Poroshenko is also
reported to have been involved in business schemes with Medvedchuk.
So this information about Medvedchuk and Kolomoisky comes as no surprise.

 

What’s relevant to Western investors is whether these
ties to Russia, and ties to brazen Russian agents like Medvedchuk, pose a
threat to Ukraine’s Euro-Atlantic integration. On this front, the evidence
indicates that even the magnates who claim to be pro-Western (including
Poroshenko and even Kolomoisky, back in 2014) have done the minimum to promote
Ukraine’s Western integration, which is highly dependent on establishing rule
of law structure that actively defend private property rights.

 

Instead, much of the credit for Ukraine’s move towards
Euro-Atlantic structures (albeit disappointingly slow) lies with the Ukrainian
public, which has voted for pro-Western parties; the Renaissance Fund, which
has actively promoted Western institutions with funding by George Soros; and
the IMF, which has required rule of law institutions in exchange for loans.

Western investors should also be concerned with news
reports in recent months that billionaire Victor Pinchuk is gradually divesting
of his assets in Ukraine. The pravda.com.ua news site reported in early
February that Pinchuk is selling his vast oil and gas assets, while political
pundit Yuriy Romanenko reported on May 31 that Pinchuk is selling his mass
media assets to Russians because they are also offering to buy his
metallurgical assets in tandem. Pinchuk was among the more Western-oriented
magnates, though his investments in this sphere weren’t particularly
impressive.

 

So ultimately, we expect Ukraine to continue its
sluggish pace of Euro-Atlantic integration, but in spite of its elites, who either
outwardly oppose Western integration (Kolomoisky, Medvedchuk, Novinsky), don’t
back their verbal commitment with serious actions (Poroshenko), or are utterly
passive (Akhmetov, Zhevago). We see a growing rift in Ukraine between its
increasingly pro-Russian business elites and increasingly pro-Western
electorate.