February 21, 2014 / 6:10 PM / 6 years ago

Ukrainian leader moved after oligarchs spoke out

KIEV (Reuters) - Marooned among empty seats in the Ukrainian parliament, Vadim Novinsky broke with the ruling Party of Regions and voted in favor of a bill condemning the violence that has left dozens dead in Kiev during a week of bloodshed.

It was unusual behavior by Ukraine’s fourth richest man, a close ally of President Viktor Yanukovich.

It was also a sign that a leader who had seemed unshakeable since protests against him broke out in November may be under pressure from his most powerful supporters, Ukraine’s money men.

On Friday, Yanukovich made a number of concessions to the opposition, signing a deal brokered by the European Union which ushered in an early presidential election, a national unity government and other constitutional reforms.

Oligarchs in Ukraine wield proportionately more influence than their better-known counterparts in Russia, given the relative sizes of their wealth and their countries’ economies.

“It was the first and necessary step to stop the escalation of violence,” Novinsky said about his vote on Thursday.

“Today we must understand that parliamentary deputies are responsible for the future of Ukraine, and only inside the walls of the Verkhovna Rada (parliament) should the solution be found to the political crisis. We will do everything to halt the bloodshed.”

His calls echoed those made by three of Ukraine’s richest men earlier this week, when they were stirred to speak by the deaths of protesters and police amid signs that Yanukovich had resolved to crack down on the protests once and for all.

In condemning the bloodshed, the oligarchs were also distancing themselves from it, after the European Union said it would impose targeted sanctions on those responsible for the violence. And even if the EU measures did not apply directly to them, business sources in Kiev said the oligarchs were anxious to avoid possible asset freezes and visa bans.


Desperate for Russian money to avoid bankruptcy, Yanukovich had seemed set to secure more funds by reassuring Moscow he was in control, only to see it slip from his grasp when the rising number of deaths prompted the oligarchs to speak out.

Even after they had issued statements urging an end to violence, the killing continued on Thursday, pushing up the death toll to 77 in two days this week.

Owing much of their business success to the tacit support of Yanukovich, Ukraine’s richest had kept largely silent since protests broke out over his decision to scrap a trade deal with the European Union in favor of closer ties to Russia.

Late on Tuesday that silence was broken.

Rinat Akhmetov, Ukraine’s richest man who hails from Yanukovich’s native Donetsk in Russian-speaking eastern Ukraine, said the bloodshed was unacceptable.

Two other oligarchs also condemned the violence, but the strong statement from Akhmetov would have rattled Yanukovich who had relied on his donations to win election in 2010.

“People’s deaths and injuries on the side of protesters and the security forces in street battles are an unacceptable price for political mistakes,” he said, for the first time suggesting that the leadership may have committed mistakes.

Privy to many of Yanukovich’s meetings with visiting EU officials, Akhmetov has been reluctant to ditch him.

And even amid reports Akhmetov had taken his private jet and fled to his residence in London, his spokesman said he was staying in Ukraine.

“Rinat Leonidovich flew nowhere, not to the football in the Czech Republic, not to London as some are writing. Today he is in Donetsk,” he said. “He plans to stay in Ukraine. He lives in Ukraine.”

But the fact that the question was raised underlined the dilemma some big businessmen face.

“This is a very delicate situation for the oligarchs: their physical assets are in Ukraine so their fate and their fortunes are tied very closely to the country and its leaders,” said a source in contact with at least one of Ukraine’s top oligarchs.

“They will be looking at this on a grand chessboard, trying to work out who will come out on top and what that means for each of them and their assets, if say one of the pawns becomes a queen or if the queen is taken,” this source said.


The United States and European Union have imposed sanctions on those responsible for the violence, but could target financial assets and impose visa bans on the elite.

One business insider in Kiev said it was clear that Akhmetov was not linked to the violence and so should not be individually targeted. “But their (the oligarchs) worry always here is collateral damage. You can get caught up in a push to sanctions,” this insider said.

And the businessmen, who rose as the Soviet Union collapsed in 1991, have a lot to lose.

Akhmetov runs the System Capital Management Group, which has assets in more than 100 businesses in almost all economic sectors. Revenues in 2012 reached $23 billion. Its largest company is the mining and steel business Metinvest, in which Novinsky took a stake in 2007.

Like many other oligarchs, Akhmetov has substantial property abroad, most notably his apartment in London at One Hyde Park, which he bought for 136 million pounds ($227 million).

The apartment is now the focus of some rowdy protests to force the businessman to “tell Yanukovich to stop”.

“The president will listen to Akhmetov,” said Andriy Hunder, director of the Ukrainian Institute in London.


Most Ukrainian oligarchs, like their Russian equivalents, have stashed a lot of cash in the British capital, and some Ukrainians would like the government to take action.

“Go into Harrods and look at the oligarchs’ wives spending fortunes, and across the road Ukrainian communists have flats there,” Hunder said, gesturing towards London’s pricy Knightsbridge neighbourhood and demanding that banks do more due diligence when accepting Ukrainian money.

But some experts think they have little to fear.

“I don’t think that rich Ukrainians fear a backlash from the EU,” said attorney Thomas Koblenzer, a Duesseldorf-based lawyer who advises the very rich on wealth planning.

“Also, I cannot imagine that possible sanctions would lead to the freezing of assets - possibly with the exception of President Viktor Yanukovich. Britain is known to be very careful about freezing assets.”

But while their money might be safe, many oligarchs do care about prestige.

Since the 1990s, several have moved into philanthropy. Viktor Pinchuk, a media and metals tycoon who is also son-in-law to Ukraine’s second post-independence president, is a case in point. Through his foundation he rubs shoulders with artists Jeff Koons and Damien Hirst and ex-Beatle Sir Paul McCartney.

For Ukraine’s second richest man, to be the focus of sanctions would be a blow. ($1 = 0.6003 British pounds)

Additional reporting by Elizabeth Piper in Moscow, Oliver Hirt in Zurich, Guy Faulconbridge in London, Justyna Pawlak by Brussels; Writing by Elizabeth Piper; Editing by Giles Elgood nL6N0LQ2HE

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