Kolomoisky dispatches armed men to guard Ukrnafta headquarters

Privat Group Head Igor Kolomoisky dispatched on March 22 armed men to guard the corporate headquarters of state enterprise Ukrnafta (UNAF UK), the leading Ukrainian oil producer and distributor in which he has the largest minority stake. He said the guards are protecting the enterprise against a corporate raid of an organized crime gang led by rival oligarch, yet denied they were armed, despite video evidence. The same day, a metal fence was built around the building, which Deputy Board Chairman Viktor Zakharov said was needed to defend the property against provocations. One of the armed men said on video that he represents the Dnipro-1 volunteer battalion financed by Kolomoisky, as reported by MP Serhiy Leshchenko. Yet the battalion’s commander denied the report the same day, stating that no one from Dnipro-1 is among the armed guards at the building.

Ukraine’s parliament voted on March 19 to reduce to 50%+1 the quorum needed to call a shareholder meeting from 60%+1 previously. The measure is expected to enable the state to retake control of Ukrnafta after its minority shareholders repeatedly ignored requests to meet by representatives of the state, which has the 50%+1 stake. Several MPs tried to enter the headquarters on March 22 and were denied by the armed guards. One of the MPs, Mustafa Nayyem, was physically assaulted when trying to enter the headquarters.

Zenon Zawada: The March 22 events make up the latest episode in the attempts by the state, led by President Petro Poroshenko, to take control of Ukraine’s oil production and distribution industry from Kolomoisky, the second-most powerful oligarch in Ukraine (after Poroshenko). Although the interior minister stated on March 20 that the conflict over Ukrtransnafta, a state company that operates oil pipelines, would be resolved in the legal sphere, it’s now evident that an agreement wasn’t reached over Ukrnafta.

We see these events as Kolomoisky raising the stakes to give himself a stronger position in forthcoming negotiations, which should result in a peaceful resolution eventually, in our view. The example of Ukrtransnafta demonstrates that Kolomoisky is not interested in a conflict that threatens to destabilize the government. Kolomoisky said as much to U.S. Ambassador to Ukraine Geoffrey Pyatt, who was interviewed by a Kyiv radio station on March 21.

Yet the possible presence of Dnipro-1 battalion fighters indicates deterioration in the rule of law in Ukraine. Oligarchs are alleged to have financed the Donbas separatists, and the same practice being employed in Ukraine’s capital is a troubling precedent that threatens to undermine the legitimacy of the elected central government. We don’t support the notion that Kolomoisky should be dismissed as governor of the Dnipropetrovsk region because that would deprive the Poroshenko administration a means to communicate effectively with him and keep him under its orbit of influence. At the same time, Kolomoisky needs to agree to avoid using his battalion forces in business conflicts, if that was the case.