Not all wealthy individuals, regardless of their nationality, should be defined as an “oligarch” (defined by Oxford Dictionary as “a very rich business leader with a great deal of political influence.”).  The word oligarch is derived from the Ancient Greek word oligarkhia, meaning the rule of a few. 

In the public domain, net worth defines an oligarch.  Behavior defines an oligarch.  Influence (particularly political influence) defines an oligarch.  How an individual uses the value of their wealth defines an oligarch.  During the last two years, politicians, particularly in the United States, have been referring pejoratively to uber-wealthy individuals subject to United States jurisdiction as oligarchs along with individuals subject to Russian Federation jurisdiction and subject to Ukraine jurisdiction among other countries.  

Mr. Rinat Akhmetov is an individual subject to Ukraine jurisdiction with a reported net worth of approximately US$7.3 billion as founder and president of Donetsk, Ukraine-based System Capital Management (SCM), the largest diversified financial and industrial group in Ukraine (with a reported 200,000 employees among 500 companies operating in 30 countries).   

Recently, Mr. Akhmetov reported he will divest of his media-related holdings and transfer their ownership to the government of Ukraine.  These assets include Ukraina TV and Ukraina 24 News. 

Why is he divesting of the media-related holdings?  “As the largest private investor in Ukraine, I have repeatedly said that I was not, and not, and will not be an oligarch.”   

Volodymyr Zelensky, President of Ukraine, as referenced in a 21 December 2021 article by London, United Kingdom-based Financial Times, believed Mr. Akhmetov met the definition of an oligarch.  See Article Text At The End of This Analysis 

Mr. Akhmetov meets the public domain definition of an oligarch and having media-related holdings does not define an oligarch, oligarch-light, or oligarch-on-the-cusp, or almost-but-not-quite-an-oligarch.   

Does anyone, including Mr. Akhmetov, believe that “the largest private investor in Ukraine” does has not, does not, and will not exert oligarchical influence at local, regional, national, and global commercial, economic, and political levels? 

He does, and he is spending US$60,000.00 per month to retain a Washington DC-based public relations company- which confirmed his “important” political connectivity in its government filings.  

Surprisingly, as a “private investor,” he enthusiastically supports taxpayers outside of Ukraine- and outside of the Russian Federation funding the entirety the reconstruction of Ukraine resulting from the 24 February 2022 invasion of the territory of Ukraine by the armed forces of the Russian Federation.   

The largest private investor in Ukraine wants the public to pay for decisions by the government of the Russian Federation.  And this is fair because?  The armed forces of the Russian Federation destroyed the SCM-owned Azovstal steel plant located in Mariupol, Ukraine. 

According to media reports, Mr. Akhmetov continued after 24 February 2022 and through 20 May 2022 to fund the construction of a 475-foot yacht at the Lurssen Shipyard in Germany.  The estimated cost of the vessel could exceed US$700 million.  According to Mr. Jock Mendoza-Wilson, Director- International Relations for SCM, “Given the current circumstances, we are considering its possible sale.” 

On 27 May 2022, Arlington, Virginia-based Politico reported: “SCM Consulting Limited, an affiliate of the company that owns a steel plant in Mariupol, Ukraine, that became the site of a standoff between Russian and Ukrainian militaries in a battle for control of the strategic port city, has hired Qorvis on a $60,000-per-month contract to provide public relations services, according to documents filed with DOJ this week.  Close to a dozen Qorvis staffers will work to highlight the “operations and humanitarian efforts” of the steel plant’s parent company, System Capital Management, which reportedly employs more than 200,000 people, and its owner, Rinat Akhmetov.  Akhmetov, who the filings say has “held an important role in political parties in Ukraine,” is the country’s richest man.  He told Ukrainian media this week that he planned to sue Russia for as much as US$20 billion in damages to his steel plants in the country.  Qorvis will work to win the company earned media coverage and “assist with securing media interviews and proactive media engagement regarding events and projects as requested by the client,” according to the filings.”

Mr. Akhmetov supports a 21st Century version of the Marshall Plan and Lend-Lease Policy.  He is wrong.  The government of the Russian Federation is solely responsible for funding the reconstruction of Ukraine.   

According to Mr. Akhmetov, there must be an “unprecedented international reconstruction program, a Marshall Plan for Ukraine,” referring to the United States-financed assistance program focused upon rebuilding Western Europe from 1948 to 1952- the US$13.2 billion appropriated then would be today equivalent to approximately US$135 billion.  The “Lend-Lease” Policy (officially Act to Promote the Defense of the United States) enacted in 1941 and ended in 1945 was valued at US$50.1 billion, today equivalent to approximately US$500 billion.  The then-U.S.S.R. was an early recipient of funds.   

It's Your Fault Theory 

Mr. Akhmetov is espousing the theory that:   

Because the United States and other countries did not take decisions in 2008 to dissuade the Russian Federation from invading and annexing the Abkhazia oblast and South Ossetia oblast in Georgia, and did not then implement subsequent sanctions which would serve as a deterrent rather than an annoyance to the Russian Federation, the United States and other countries are responsible for the damages inflicted by the Russian Federation upon Ukraine.  

Because the United States and other countries did not take decisions prior to 2014 to dissuade the Russian Federation from invading and annexing the Crimean Peninsula and invading and annexing the Donbas Region (Donetsk oblast and Luhansk oblast) of Ukraine, and did not then implement subsequent sanctions which would serve as a deterrent rather than an annoyance to the Russian Federation, the United States and other countries are responsible for the damages inflicted by the Russian Federation upon Ukraine.  

Because the United States and other countries did not implement sanctions against the Russian Federation prior to the 24 February 2022 invasion of Ukraine by the Russian Federation- as the government of Ukraine requested repeatedly, the United States and other countries are therefore responsible for all that has happened in Ukraine. The ultimate clawback for responsibility.  

Use First The US$340 Billion 

The United States, the twenty-seven member countries of the European Union (EU), the thirty member countries of the North Atlantic Treaty Organization (NATO), and international financial institutions should not be focus upon raiding the earnings of taxpayers to fund the reconstruction of Ukraine.  Not at least until first the assets of the government of the Russian Federation have been exhausted.  This means using all the approximately US$340 billion in accounts of the Central Bank of the Russian Federation frozen by governments. 

The Central Bank of the Russian Federation assets are reported (with varying degrees of accuracy) as held (frozen) outside of the Russian Federation: Germany (US$55 billion), France (US$71 billion), Japan (US$57 billion), United States (US$38 billion), United Kingdom (US$26 billion), Austria (US$17 billion), and Canada (US$16 billion) among others.  Approximately 34% of the assets are reported in Euros; 22% in Gold Bullion; 17% in Chinese Yuan; 11% in United States Dollars, and 6% in British Pounds.  Surprisingly, in May 2022 the EU reported that the value of frozen Russian Federation Central Bank assets was approximately US$24.5 billion.  Mr. Dimitry Peskov, spokesperson for the government of the Russian Federation, shared that confiscation and use of assets of the government of the Russian Federation for benefit of Ukraine would be “illegal, blatant, and of course requiring an appropriate response... It would be, in fact, outright theft.”  And how would be defined the export by the government of the Russian Federation of commodities from Ukraine absent permission from the owners of the commodities? 

Insanely, officials of governments and officials of international financial organizations are speed-racing one another to play upmanship in terms of whose taxpayers will be pressed to provide the most funding to reconstruction in Ukraine. 

Here’s an analogy:  Someone who owes you money has funds in their checking and saving accounts and you have access to those funds.  Rather than access and use those funds, you choose to use your credit card and incur high interest payments.  Why would you do that? 

This is their tortured logic:  The Russian Federation has since 22 February 2022 earned approximately US$1 billion per day from the export of energy products- a considerable sum from countries having imposed sanctions upon the Russian Federation.  Thus far, approximately US$140 billion.  While the daily rate value of energy exports is expected by the EU and other countries to decline for the remainder of 2022, there is no guarantee of that result.  There is approximately US$340 billion in Russian Federation assets frozen.  The estimate for reconstructing Ukraine- meaning rebuilding on par with what existed, with reasonable upgrades ranges from US$100 billion to US$1.1 trillion (European Investment Bank estimate).  Likely, the value will be US$400+ billion.  Why is the first go-to sourcing from taxpayers outside of Belarus and the Russian Federation? 

So, the armed forces of the Russian Federation invade Ukraine.  Cause widespread damage.  The government of the Russian Federation has received approximately US$140 billion and will likely seek and have returned the US$340 billion that has been frozen.  Taxpayers in other countries fund reconstruction of Ukraine.  The Russian Federation continues to export energy products.  The armed forces of the Russian Federation are expected to retain portions of Ukraine- some newly acquired since 24 February 2022 and some acquired beginning in 2014.  And politicians believe this outcome is logical and moral? 

Mr. Akhmetov, might you want to revisit your position as to who should be first in line to pay for the reconstruction of Ukraine? 

Financial Times
London, United Kingdom
19 December 2021

Ukraine president fights oligarch on home front as Russia threat looms Volodymyr Zelensky’s war of words with Rinat Akhmetov is a dangerous distraction, say analysts  

His country faces an imminent threat of full-blown invasion, according to US intelligence, with more than 100,000 Russian troops amassed at the border. But Ukraine’s embattled president Volodymyr Zelensky has chosen the moment of danger to deepen a domestic stand-off with the country’s richest oligarch, Rinat Akhmetov.  

In a press conference late last month, Zelensky claimed, without providing evidence, that his intelligence services had uncovered plans for a Russian-backed coup that aimed to lure in support from Akhmetov. “I think [Akhmetov] may not know about it,” the president said before adding: “I invite Rinat Akhmetov to [my office] to listen to the information that can be shared.” Zelensky’s extraordinary decision to draw a powerful businessman into an alleged plot has dismayed analysts and western diplomats, given the heightened Russian threat and multiple problems including the country’s low Covid-19 vaccination rate and high death toll.  

Oleksandr Danylyuk, briefly national security chief under Zelensky, said his weakness “is an unwillingness and maybe inability to consolidate society and elites amid the Russian aggression threat”. “At a time when Russia is threatening to attack, it is really critical that the pro-Western forces in Ukraine be working together,” said a western diplomat who has worked closely with Ukraine. “The current domestic fighting in Ukraine is damaging.”  

Zelensky won the presidency in 2019, promising to end the war in eastern Ukraine and to root out corruption. He has made little progress on the first and has a mixed reform record. A hoped-for robust economic recovery from the pandemic has faltered.  

Akhmetov, a steel and energy tycoon, has rejected alleged involvement in a coup plot as “lies”. Experts say his television channels have been increasingly critical of Zelensky, upping the ante in a disagreement between two of Ukraine’s most powerful people. Meanwhile, the looming fear from Washington to Kyiv is that Russia’s military build-up spells plans by President Vladimir Putin to destabilise Ukraine and possibly initiate a full-blown military incursion. Ukrainian troops are battling Russian-backed separatists in far eastern regions, in a proxy war fomented in 2014 soon after Putin occupied Ukraine’s Crimean Peninsula. 

“I don’t recall any other president who was ready to challenge Akhmetov” but “the Russians will exploit this moment when Ukraine is weaker internally”, said Daria Kaleniuk, director of anti-corruption watchdog Antac.  

“Maybe Zelensky thinks going after the oligarchs will rally the population and ultimately help the national cause in resistance against Russia,” said Timothy Ash, analyst at BlueBay Asset Management.  

Since winning the presidency in 2019 after many voters cast ballots in a protest at his predecessor, Zelensky’s poll ratings have plunged. A recent poll has shown that he could lose a re-election bid, with erstwhile ally Dmytro Razumkov, who was ousted this autumn as speaker of parliament, positioned to beat him in a run-off. Experts say Razumkov has received favourable coverage on Akhmetov’s television channels. In turn, Zelensky’s MPs have boycotted what they view as hostile media.  

“Because Akhmetov started eating into Zelensky’s popularity by using his media,” the president responded with his “fairytale” claim that the oligarch could be part of a coup plot, said Maria Zolkina, an expert at Kyiv’s Democratic Initiatives Foundation.  

Their dispute is also grounded in legislation adopted this autumn taking aim at the influence of rich business figures.  

The so-called de-oligarchisation law would formally register oligarchs — defining them by reference to their wealth and media and political influence.  

It would ban them from funding politics, prohibit participation in privatisation and require all contact with public servants to be reported. “Akhmetov is really unhappy about this anti-oligarch law, and to some extent it is really a tipping point,” said Yuriy Vitrenko, chief executive of the state gas company Naftogaz and a trusted presidential confidant.  

“It is very difficult for the president to implement [the rest of] his reform agenda unless he changes the situation with the oligarchs.”  

In written comments to the Financial Times, Akhmetov questioned the fairness of the law, saying: “I am not an oligarch, I am an investor. And I am ready to defend it in Ukrainian and international courts.” “We all need a fair competition and a level playing field,” he added. Political analysts see scope for compromise between Zelensky and Akhmetov.  

“Zelensky wants an end to the massive criticism . . . which has been airing on Akhmetov’s channels,” said political analyst Volodymyr Fesenko. “Akhmetov wants the president to withdraw or soften the oligarch law.”  

The oligarch law was “not the best solution,” a western diplomat in Kyiv said. “The way to defang the oligarchs is by improving antitrust law, speeding up judicial reform and building anti-corruption institutions . . . These things will have a bigger impact in the medium and long term.”  

Some experts and diplomats fear the oligarch law could be used by Zelensky for a selective crackdown on non-loyal business figures. “The question is whether the same approach is taken to all oligarchs,” said Kaleniuk. She pointed to positive coverage for Zelensky on channels owned by Igor Kolomoisky, an oligarch who backed the president’s election campaign.  

Since before Zelensky’s election Kolomoisky has been part of legal battles over PrivatBank, a commercial lender nationalised in 2016 after authorities uncovered a $5.5bn hole in its balance sheet. Ukrainian authorities and PrivatBank allege in court cases spanning multiple jurisdictions that Kolomoisky and partners siphoned money out of the bank under their ownership. Ukrainian prosecutors have not brought any charges against Kolomoisky, who denies claims of corruption. Addressing parliament this month, Zelensky took another swipe at Akhmetov and other oligarchs without mentioning them by name. He unveiled plans to use taxes from natural resources for a fund for the country’s next generation to finance higher education and home purchases. “Then our oligarchs will become real investors in our children,” Zelensky said. “For the first time in 30 years, we have started a systematic struggle against the oligarchs. And I am sure that Ukraine will win this fight.”

LINK TO COMPLETE ANALYSIS IN PDF FORMAT