Navigate to News section

Ukrainian Jewish Oligarch Steps Aside, For Now

Igor Kolomoisky resigns governorship following weeklong confrontation

Vladislav Davidzon
March 26, 2015
Petrovskoho Square in Dnipropetrovsk, Ukraine, pictured on October 10, 2014. (Brendan Hoffman/Getty Images)
Petrovskoho Square in Dnipropetrovsk, Ukraine, pictured on October 10, 2014. (Brendan Hoffman/Getty Images)

Ukrainian President Petro Poroshenko accepted the resignation of Igor Kolomoisky from the governorship of Dnipropetrovsk Oblast late Tuesday night. The resignation concluded a weeklong confrontation between the state and Ukraine’s most flamboyant oligarch. It was likewise a reassertion of the state’s monopoly on armed force after Kolomoisky had occupied government buildings in Kiev with his private militia. A week of bluster ended and proffered a symbolic victory for the Central government over the caste of powerful oligarchs whose outsized power the Maidan revolution had pledged to curtail. Poroshenko signed the decree over a gilded table in the presidential administration, dismissing the chastened-looking oligarch in front of live cameras.

Kolomoisky was credited with ruthlessly stamping out separatist tendencies in his home region, the Russophone Dnipropetrovsk, the industrial heartland of the country bounded by Donetsk province. (He offered $10,000 bonuses for captured Russian separatists.) A maximalist vulgarian, the maxim ‘obscenity-laced’ doesn’t do justice to his profane and hilarious screeds, though I would not want to be on the receiving end of one. When asked by a reporter last year about rumors of his possessing foreign passports, he admitted that he held three: Ukrainian, Cyprus, and Israeli. When the journalist pointed out that dual nationality is prohibited by Ukrainian law, Kolomoisky riposted, “Yes, but it does not say anything about triple nationality!”

Kolomoisky had lavishly funded the right-wing Right Sector battalion and at one point flirted with the ultra-nationalist Svoboda party, and was even rumored to be involved with the neo-Nazi Azov battalion—making an Israeli citizen perhaps the primary purveyor of the ultra right wing in Ukraine. He sparked a national debate about the ‘feudalization’ rather than federalization of the country with his aligning of volunteer military battalions, widely considered to be out of control. Many of these have since been or are in the process of being folded under the authority of the interior ministry. This week the critics who long warned that Kolomoisky’s private army and allied militias would be invoked in a classic warlord power play in the middle of Kiev were proven correct.

Until last week, the law on public companies required a quorum of 60 percent for annual shareholders’ meetings. This meant that a minority shareholder like Kolomoisky, who owned 42 percent of Ukrnafta, the largest gas and oil extracting company in Ukraine, could block shareholders’ meetings from taking place simply by not showing up. The lack of board meetings was the reason there had been no dividend payouts to the government for several years, and state-run Ukrnafta owner Naftogaz was concurrently bleeding capital and required deep restructuring and refinancing.

An earlier attempt to amend the corporate law on public companies faltered with the Parliament’s error of lowering the quorum to 50 percent plus one share only for companies in which the state controlled more than 50 percent. While Naftogaz is a state-owned owned company, it isn’t a state entity. This provision was adopted for all public companies last week. Oleksandr Lazorko, the CEO of Ukrtransnafta and a Kolomoisky ally, was soon ousted. In response to his de facto control being challenged, Kolomoisky brought in masked, heavily armed men to occupy the state oil company offices in the center of Kiev. The company’s new government-appointed CEO was barred from entering the building by Kolomoisky’s private security contractors.

Kolomoisky loyalists insisted the newly appointed CEO represents a rival Oligarchic grouping, but the point is moot. Kolomoisky appeared at the offices personally claiming, in front of cameras, that he was there to protect the ‘private companies from raiders and Russian saboteurs.’ He then proceeded to construct an iron fence around the Ukrnafta building. It was the first major non-peaceful event to transpire in the capital since the conclusion of the Maidan more than a year ago. The indefatigable Kolomoisky was questioned by journalists late at night at the gates and delivered a profane, on- camera diatribe. For this he was publicly rebuked by Poroshenko.

On Monday, Ukrainian Secret Service head Valentyn Nalyvaichenko implicated two of Kolomoisky’s deputy governors for involvement with organized crime. The accusations were denied by the men as well as by Kolomoisky’s proxy parliamentarians like Borys Filatov. Initially there seemed to have been a deal struck between Kolomoisky and the authorities, but later that day the government ordered the arrest of any remaining armed men at the Ukrnafta offices. The government set a deadline for vacating the offices and Kolomoisky backed down. The charge was a victory for the young reformist journalists turned parliamentarians Mustafa Nayem and Sergei Leshchenko, both members of Poroshenko’s Block.

The conflict and swift resignation has, however, opened up a public rift between those who think Kolomoisky’s role in quelling Eastern rebellion was indispensable and those who think that he has wildly over-leveraged his assistance to the state. Ukraine expert Adrian Karatnycky is squarely in the camp skeptical of the claims of Kolomoisky’s usefulness.

“He did a great deal to help Ukraine at a critical time in the spring of 2014, but in recent days, his recklessness, use of force against government institutions, his threats to government leaders and his general intemperate, bullying behavior made him more of a threat to Ukraine’s stability than its guarantor. One can only hope that his dismissal will lead him to reconsider his recent disregard for the rule of law. As President Poroshenko is widely regarded as a person willing to compromise, there is a good chance this will quiet down and a balanced solution will be found.”

Not everyone agrees with this formulation. Many Ukrainians predict a severe deterioration in security in Dnipropitrvorsk and the already terrorized Odessa. A prominent Kiev businessman who knows Kolomoisky well and who requested anonymity told me, “If they want to level the playing field, they should. But he is the only one they have gone after. And unlike the rest of them he knows how to make money running a business as well as knowing how to steal. Though he also steals with relish because he can. Also unlike the rest of them—Rinat Akhmetov, Dmytro Firtash, Viktor Pinchuk—he has done a lot for this country. But he always played his hand hard, and I always told people he would end badly.”

His characterological bravado proving to be a lethal liability, Kolomoisky misread the political landscape badly and fomented a direct challenge to the institutional sovereignty of the state when it could least afford the humiliation. What all this augurs for the coherence of the Ukrainian response to the Russian invasion and continued separatism in the East remains to be seen. Whether Kolomoisky, who has on occasion been surreptitiously taped negotiating with rebels, will continue to be a staunch defender of the state is an open question. Ukrainian Pravda reports that Right Sector fighters have been been demobilized by Kiev and are leaving the Eastern front, with only volunteer units of the Ukrainian Armed Forces and Interior Ministry registered battalions being allowed to remain the operational areas. Right Sector units seem to be complying with the instruction and leaving the front.

Yet if the shuffling and ever recurrent returns of major players in Kiev’s post-Soviet oligarchic elite has taught us anything, it’s that there is always a chance for a second act in Ukraine.

Vladislav Davidzon is Tablet’s European culture correspondent and a Ukrainian American writer, translator, and critic. He is the Chief Editor of The Odessa Review and a Non-Resident Fellow at the Atlantic Council. He was born in Tashkent, Uzbekistan, and lives in Paris.