Privat’s Kolomoisky on Dniproenergo

Privat's Igor Kolomoisky explains his thinking on Dniproenergo - From Last week Ukraine’s 3rd richest man, Igor Kolomoisky, gave a candid interview to the independent online newspaper Ukrayinska Pravda. Kolomoisky is a key owner of the powerful conglomerate Privat Group and has a worth of $4.76 billion according to Focus magazine.

He has a past of providing interesting interviews, and this latest is no exception. Most of the news on the interview centered on Kolomoisky’s surprising assertion that he is interested in purchasing the 50% stake of RosUkrEnergo of Dmitry Firtash and Ivan Fursin. However, he also talked about the conflict surrounding Dniproenergo, where he and rival magnate Rinat Akhmetov are vying for control over the major power generating company.

(Note: A Youtube video of the tussle between private security forces and the Party of Regions deputies that I described in my post has been uploaded, as well as a version remixed with a saloon brawl scene from a Russian western that highlights the “colorful” language used by the politicians.)

Since Ukrayinska Pravda’s English section hasn’t been updated in about 4 months, I decided to roughly translate some of his interview regarding the Dniproenergo situation:

– Who for you is better, [former] Prime Minister [Viktor] Yanukovich or [current] Prime Minister [Yulia] Tymoshenko?

Still Tymoshenko.

– Why?

Because under PM Tymoshenko I don’t know of a case when to a company such as Dniproenergo, they took it, diluted its shares, seized it, maybe even legally. The government had 76% of the shares, and suddenly it’s 51%.

I know that all this occurred under Yanukovich. This happened to many other things in 2004 [when Yanukovich was PM]. For example, Krivorozhstal [steel factory], and also Ukrrudprom and the Nikopolsky ferroalloy plant [NZF].

We should all be aware that Yanukovich and company are an established, well-structured, cohesive and cynical political-industrial corporation, which is convinced that its interests are above the interests of the country and the people living in this country.

For it, power is the goal and the means, and they won’t stop at anything on the way towards power and the holding of that power. Ukraine may collapse, but [Yanukovich’s] Party of Regions will remain.

Tymoshenko [as PM] — that’s a different, and not less difficult situation. She’s the classic “black widow” in politics. She is a loner and power to her represents an absolute value, but ideologically she’s an evident trotskyist. The reason for this sits within her, and she herself can’t realize this. As an unsuccessful oligarch, she hates any capital, and especially major capital. And this combination of trotskyism and a ruined business career in addition to vindictiveness gives her an explosive mixture.

A weak hope for the positive gives her internal solitude — around her there still has yet to form a stable company with shared interests.

– Today’s critique of Tymoshenko, you are dodging [лукавите], because earlier you succeeded at finding with her a common tongue. More so, in many ways it was because of you that she was dismissed in 2005 — Tymoshenko was charged with lobbying for your interests. Do you have any remorse?

I can’t say that the removal of Tymoshenko happened because of me. That means that I don’t have any pangs of conscience. Rather, Tymoshenko was dismissed because of her wishes to remove personal accounts of [Ukraine’s 2nd richest man Viktor] Pinchuk — immediately, today and irrevocably. And in that moment our interests coincided.

– But at that time in the issue of Akhmetov being selected for Dniproenergo, you openly helped Tymoshenko…

We didn’t help her, we helped our selves. The thing is, the history with NZF, with Kirovozhstal, wasn’t a cold shower for anyone. It didn’t become one! Tell me, what’s the goal to fight for NZF, if in 2005 no one learned anything?

It was shown to the whole country that when they pinched Kirvorozhstal and then it got taken away from them, that it’s just bad luck, an unfortunate circumstance. [Tymoshenko succeeded in re-privatizing Kirvorozhstal at an open auction, netting billions more than when it was sold on the cheap to Pinchuk.] But ten different objects didn’t get taken away and now its possible to boldly continue to steal further. The actions towards Dniproenergo are an advertised method — at first you can pilfer, and then bargain about how much to give in order to let it remain with you!

Why are you trying to limit [deprive] Akhmetov’s right to manage Dneproenergo due to his 44% holding if you yourself manage [Ukraine’s largest oil company] Ukrnafta based on your 42% ownership?

I’m not depriving his rights to manage, even if he had 1%. But what of the shares of the government that appeared to be his? Akhmetov didn’t have 44%. If you manage, then please, do your managing, let you pay wages, bonuses, but that doesn’t mean that they should give you the shares as a gift.

– Maybe you’re jealous of Akhmetov, that he was swifter and able to reach an agreement with the officials more effectively that you and get control over Dniproenergo?

I am very respectful towards Akhmetov, especially when it comes to his swiftness [проворство – agility, nimbleness]. He is a very swift guy. (laughs)
– What are you fighting for in the Dniproenergo conflict?

We’ll start with the fact that Dniproenergo hasn’t accounted for its debts to Privat. We have a small shareholding, but it’s significant enough to not prevent us from saying that we’re a major shareholder. [The Privat-affiliated Business Invest company owns approximately 0.0065% in Dniproenergo.]

We never had pretensions to manage the company. But I don’t like how it was done — to use administrative resources, in that Yanukovich was PM and all privatization issues could be decided within three or four rooms, just to transfer one to another the loan slips, sign everything, and transfer shares from the state’s pocket to private interests. That’s what I don’t like.

– So you’re fighting for justice [справедливость]? [Just like Superman, yeah?]

On the one hand, for justice, and on the other — for my interests.

– And what’s more important?

I can say that at first, justice, and then my interests, but they won’t believe me and will say that first off my interests, and then justice. But actually here my personal interests and the fight for justice coincided.

My interests included the following: I don’t want them to deprive me, Privat Group, or any other company in Ukraine — except [Akhmetov’s] SCM –the possibility to participate in what we consider for us necessary

I am for everyone having equal opportunities to come and participate in a competition [privatization tender]. But not by one purchaser, as it was with Kivorozhstal or for NZF.

– How much money have you already spent on the Dniproenergo conflict?

Believe me, the budget is unlimited. (grins)

– If they had offered you, would you have bought the shares in Dniproenergo?

I don’t know. The company is very rich, looking at it in perspective. But let’s look at it from the economic point of view. The debts of Dniproenergo were about one billion gryvna, that is $200 million. And how much does Dniproenergo cost? Not less than $3 billion.

Dneproenergo went into bankruptcy because it didn’t account for the $200 million dollars. But that isn’t a critical sum, not one that needs to elicit new shares, the cause of [Akhmetov’s] 44%. Who conducted an estimation of the company? How much were the shares valued at? How did it happen, that for the settling of $200 million, 44% was given away? As I figure it, 44% of $3 billion is $1.2 billion. So where did that billion dollars disappear to on the way, and who ended up obtaining it?

– Who do you think?

Whoever today owns those shares.

– If tomorrow they redo the sale of Dneproenergo, would you participate in the auction?

I’d have to look at who else is going to participate. If it might fall into someone else’s hands, besides those of Rinat Akhmetov, and so forth. For us that’s important, because we need transparent terms for the formation of the price.

In general, we don’t consider Dniproenergo as an object of intense interest for us. But we’re going to think about it.

5 responses to “Privat’s Kolomoisky on Dniproenergo

  1. Would be interested in more info. about the following esp. as to date this is the first footage ever (to my knowledge) where there is an attempted corporate raid inc. the presence of press and national deputies and it was unsuccessful. (Statistically this one is off the chart.) I am a tad bit skeptical esp. with the involvement of a particular deputy who has exhibited behavior in contradiction to the principles which he showed at the corp. headquarters. Could it have been planned and contrived? Remain sitting on the fence.

    The following news story purporting that leaked documents from Gazprom employee is what led to the ‘vitory’ of Ukraine’s last set of negotiations with Gazprom (Ukraine is in the midst of current set of negotiations) (the timing of the publ. of this story is interesting) is a buzz. Don’t know if the truth will ever really be revealed – did it happen the way the internet site story states it did? And what are the implications for the current set of negotiations?

    Hans, what do you think?

  2. I think the Akhmetov crowd was hoping that bringing press on board and involving deputies would prevent the raid from happening — which it seems to have done, but managed to catch the deputies in some unsightly behavior. Both sides are undergoing big PR pushes, and it seems like they view the press as another weapon to wield in the conflict. But of course it’s hard to know what’s going on under the surface when things are manipulated so much.

    The espionage story is very interesting. I had heard about the two brothers being arrested for spying charges, but didn’t realize it was associated with the Ukraine gas negotiations at all. I’ll try to post on it soon — it’s worth digging into a bit.

  3. “it’s worth digging into a bit”

    Well the story serves the useful purpose of explaining why/how PM Tymo ‘won’ in the gas negotiations and connects the dots between Ukraine, brothers detained on spying charges and Britain. (What next? story about how Tymo is being ‘funded’ by Berezovsky? 🙂 Perhaps will never really know but I do think that TNK-BP will soon be ‘under new management’.

  4. Pingback: Kremlin, Inc » Firtash and Privat resist Naftogaz’s encroachment on Ukrgazenergo as Gazprom prepares to enter market

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