Ukraine files criminal charges against Firtash for conspiracy

Ukraine’s Interior Ministry has filed criminal charges against Dmytro Firtash, Ukraine’s former leading private natural gas trader, for conspiring with the former executives of state natural gas production and transit firm Naftogaz, Interior Minister Arsen Avakov announced on June 8. The conspiracy involved the Naftogaz executives changing their position in late 2010 on 11 bcm of gas that was being contested by RosUkrEnergo, a natural gas intermediary in which Firtash was a key player, along with Gazprom. This change in position essentially led to the surrender of 11 bcm (and a 1.1 bcm penalty) to RosUkrEnergo, which conspired with then-Energy Minister Yuriy Boyko and then-Naftogaz Chairman Yevhen Bakulin. Both Boyko and Bakulin were elected to parliament in October as members of the Opposition Bloc led by Boyko.

In response, Firtash said he will fight in court the criminal charges filed by the Ukrainian government, which views business as its enemy. The government’s actions have led to the loss of 600,000 jobs, higher utility rates and failure to resolve the military conflict, he said in a June 8 interview for the Inter television network that he controls. The government wanted to write off all its losses on the war, and when that failed, it shifted to the so-called war on the oligarchs, he said.

Zenon Zawada: The gloves are off, as they say. It’s clear that the criminal charges were the last straw for the billionaire Firtash, who was hoping to find some compromise with the government. Now he’s joined billionaires Rinat Akhmetov and Igor Kolomoisky on the hit list.

For the pro-Western forces, picking fight with the top oligarchs has numerous goals. Among them is giving voters a reason to support them in the October national elections. They will base their campaigns on not allowing oligarchs such as Firtash and Akhmetov, with their pro-Russian position, to retake power and undermine the progress made towards integrating with the West and away from Putin’s crypto-fascism.

The People’s Front party led by Yatsenyuk is targeting Firtash in particular after he admitted last month in an Austrian court that he had political agreements with the president. So it’s aiming to capitalize on the public anti-oligarch sentiment to sway support from the president’s party.

Of course, all this is for show until the oligarchs are forced to surrender their ill-gotten assets or face punishment for alleged criminal behavior. On June 5, Yatsenyuk threatened to nationalize Cherkasy Azot and Rivne Azot, two fertilizer producers owned by Firtash.

Not only is it unclear whether this will go anywhere, but such a move opens the Pandora’s box of which assets were ill-gotten, and which were lawfully acquired. A true nationalization campaign could be disastrous if not handled carefully, so we continue to view this threat as political show, for the time being.

At the same time, the government has employed what we would characterize as a strategy of bombarding the oligarchs with various criminal cases and charges, as well as threats to nationalize, with the aim of extracting at least some concessions from them. We expect these conflicts to simmer after the elections.