Ukrnafta rejects state inspection attempt

The management of Ukrnafta (UNAF UK), Ukraine’s largest oil producer, denied the State Inspection Committee the ability to conduct a review of the company’s finances and management that had been planned for May 26, the pravda.com.ua news site reported the same day. Commission Head Vadym Svirin had notified Ukrnafta’s management five days in advance of the planned review, which was supposed to last until mid-June. Urknafta would have been required to submit any documents requested by the commission. None of its inspectors were allowed into the headquarters of Ukrnafta, which is 50 percent plus one share owned by the state and 42 percent owned by Igor Kolomoisky, who controls the company’s operations.

Zenon Zawada: Kolomoisky hasn’t resolved his conflict with the government and is still refusing to allow Ukrainian President Petro Poroshenko to retake control of Ukrnafta on behalf of the state. The conflict reached its apex in late March when Kolomoisky dispatched armed brigades to defend the premises, before backing down and resigning as Dnipropetrovsk oblast administration head. Further evidence that it’s still simmering is Kolomoisky using his media outlets recently to poke fun at the president.

We view the ongoing conflict between Kolomoisky and Poroshenko as among the biggest domestic threats to Ukrainian stability, especially considering Kolomoisky’s enormous influence. Besides controlling influential media outlets and the nation’s biggest commercial bank, Kolomoisky led the effort in defending southeastern Ukraine against a further Russian incursion. In our view, he’s the second-most influential person in Ukraine behind Poroshenko.

As we stated earlier, we don’t see how this conflict can be resolved to Ukraine’s benefit. The March standoff reportedly needed U.S. Vice President Joe Biden to personally urge Kolomoisky to back down. He did so only temporarily. The overwhelming consensus, both domestically and abroad, is that Ukraine’s oligarchy needs to be reined in and overhauled, but the recipe for doing so – within the bounds of democratic ideals – is elusive.