Ukranian billionaire arrested at behest of the FBI

[David Guyatt]

In view of the situation in the Ukraine at present, it is hard not to consider this as a US political deep event.

Dmitry Firtash: Ukrainian energy magnate with close links to senior Tories arrested in Austria after FBI investigation



John Whittingdale and Lord Risby on board of organisation with strong ties to Dmitry Firtash

IAN BURRELL , JIM ARMITAGE

Thursday 13 March 2014

A pro-Russian Ukrainian energy magnate with connections to senior British parliamentarians has been arrested in Vienna at the request of the United States following an FBI investigation.

The Independent revealed last week the links between gas billionaire Dmitry Firtash and senior Conservatives John Whittingdale, the chair of the powerful Commons media select committee, and Lord Risby, a former vice-chairman of the Conservative Party and shadow minister for Financial Services.
Both Parliamentarians are on the board of the British Ukrainian Society (BUS), an organisation with strong ties to Mr Firtash, who was one of Ukraine's most powerful figures under the country's deposed President Viktor Yanukovych.
And in a development described by experts as "seismic" Mr Firtash, 48, was arrested yesterday by the organised crime unit of the Austrian police. The energy magnate is alleged to have paid bribes and formed a criminal organisation, according to the warrant which was issued after the FBI began investigating him in 2006, according to the Austrian Interior Ministry.
Firtash has a fortune estimated by Forbes at $673m, with other estimates placing his wealth at $5 billion. Timothy Ash, chief economist at Standard Bank plc, described the event as "an absolutely seismic development on so many different levels". He said: "Firtash is probably in the top two of Ukrainian oligarchs in terms of wealth/influence across borders."
The fantastically wealthy Mr Firtash is a former meat trader and second-hand car dealer who made his fortune supplying goods to energy-rich Turkmenistan in exchange for gas that was sold to Ukraine. In 2006 he emerged as one of the figures behind RosUkrEnergo, a Swiss-registered company that controls Russian company Gazprom's gas supplies through Ukraine to Europe.
The Independent has learned that Mr Firtash owns a luxurious house on a discreet side street near Harrods. Land Registry records show he bought the vast property in late 2012 and it was completely rebuilt with modifications including an underground swimming pool.
Other BUS directors include Robert Shetler-Jones, former CEO of Group DF and now a member of Group DF's Group Supervisory Council and Lord Oxford, a former British diplomat in Kiev and another member of Group DF's Supervisory Council.
Mr Shetler-Jones has donated tens of thousands of pounds to the Conservatives through a company called Scythian. BUS director Anthony Fisher is a former director of the Firtash Foundation. Another BUS director is Vladimir Granovski, a political spin doctor who worked on an election campaign for President Yanukovych and is a board member of Mr Firtash's television business.MP John Whittingdale is director of the British Ukrainian Society
In the register of members' interests, Mr Whittingdale, who is chairman of the British-Ukraine All Party Parliamentary Group, lists a succession of trips he has made to Ukraine at the BUS's expense. He went on a £2,800 trip to Kiev in 2010, "to meet members of the Government of Ukraine and Opposition". He returned to Ukraine in 2011 as a guest of the Society and in his capacity as the group's chair. That trip cost £1,700 and was to "meet members of the Government of Ukraine". A four-day visit in 2012 to attend a conference in Yalta, Ukraine cost £2,520. He visited the same conference for a £2,680 week-long trip in September last year.
Mr Firtash visited the Foreign Office in London on 24 February to meet officials and appeal for financial support for Ukraine and its businesses in the wake of the recent upheaval.
The energy magnate has faced allegations of media censorship in Ukraine and prompted angry demonstrations in the City of London by British-based Ukrainians when he was allowed to open the London Stock Exchange in October after funding a lavish "Days of Ukraine" cultural event beside the Thames. Promotional material for the London event boasted: "The Days of Ukraine in the UK received support at the highest level, including the patronage of the President of Ukraine, Viktor Yanukovych."
Days of Ukraine was sponsored by Mr Firtash's Group DF. Lord Risby and Mr Whittingdale were among the members of the organising committee for the event, which was chaired by Mr Firtash's wife Lada. Boris Krasnyansky, CEO of Group DF, was also on the committee. Days of Ukraine was launched in the Houses of Parliament and attended by House of Commons speaker John Bercow and the Vice Prime Minister of Ukraine, Konstyantyn Gryshchenko.
Last week in Parliament, Labour MP Helen Goodman, the shadow Culture minister, challenged William Hague, the Foreign Secretary, over whether the Tories had taken money from supporters of the Yanukovych regime. Mr Hague described her suggestion as "ridiculous".
Ms Goodman told The Independent: "At a time of crisis in Ukraine it is vital that the British Foreign Secretary can negotiate in the knowledge that there are no conflicts of interest."
Mr Firtash is owner of Inter TV, Ukraine's most popular television outlet, which has been criticised over its coverage of recent events in Kiev. Activists from the Maidan Square protests called for a national boycott of Mr Firtash's channel. Journalists at the station signed a petition complaining about alleged censorship and pro-Yanukovych propaganda in the run up to the recent disturbances in the Ukrainian capital.
Mr Firtash, who has in recent days also been linked to Opposition leader Vitali Klitschko, states in his biography on the DF Group website that he "is not a member of any political party or movement".
Mr Whittingdale said his work sponsored by the BUS was intended "to promote closer relationships between Britain and Ukraine" and the Society's funding of his trips enabled him to "meet people in Kiev and Yalta of different political parties", including Mr Klitschko.
"They have never given me a line or influenced me. They pay travel costs and accommodation for me to attend the Yalta summit but on each occasion I have met with people from every party. It has been very helpful for me and given me those opportunities," he said. "I understand Mr Firtash has funded the British Ukrainian Society, as well as Cambridge University and many other good projects. In my view he is funding good work."
Lord Risby said that the BUS did a "good job" and worked closely with the Foreign Office. "I have never ever had any instruction from Firtash or had anyone ask me to take any political viewpoint," he said. "I made it clear that we would make a judgement about who we would see and that we would not be subject to any pressure."
The Firtash Foundation said it has no relationship with the BUS "beyond occasional discussions relating to culture projects in London" It confirmed that the Foundation was "the organiser" of the Days of Ukraine festival and said "the project was financially supported by Group DF".
Mr Shetler-Jones said Mr Firtash, who he has worked with for ten years, was "working hard to do whatever he can to support the interim administration in Ukraine in the current crisis" and categorically said "Mr Firtash has not provided financial support for the BUS".
Mr Shetler-Jones said Scythian was providing support to the BUS. But he said that his donations to the Tories had not been at Mr Firtash's behest or with his knowledge and also rejected the idea that Mr Firtash was indirectly influencing British politics through the BUS. "The BUS is independent and not party political," he said. "The BUS board worked very closely with John Grogan, the Labour MP, who was the former Chairman of the All-Party Parliamentary Group for Ukraine before John Whittingdale."

[Magda Hassan]

Yes indeed...
I've been meaning to post this too. Heere is some more on him:

Poor Dmytro (Firtash)?

Firtash may be caught by the throat, but most other oligarchs are feeding merrily still

Can one feel sorry for a multi-millionaire ($673M according to some, $2.3B according to alternative accounts, and $3.8B to others) suspected of bribery, who reportedly admitted consorting with wanted gangsters and once boasted of his close ties to Yanukovych? If so, then spare a thought for Ukrainian gas and titanium tycoon Dmytro Firtash, arrested in Vienna on a US warrant on bribery and organised crime charges. Why on earth might one feel any sympathy for him? Not for the philanthropy, not even for the massive donations to my alma mater at Cambridge to endow Ukrainian studies. Rather than Firtash would seem to be a businessman of the regular Ukrainian oligarchic variety. What does that mean? It means certainly not clean by Western standards, but nor, in any meaningful sense, an organised crime figure himself. So what might he have been?
When he first started building his energy empire, bringing Russian gas into Ukraine, the infamous financial crime lord Semen Mogilevich was a shadowy but indispensable fixer and broker. His involvement was pretty much essential to make any Russo-Ukrainian gas deals work. So, of course, I was entirely unsurprised when the accounts (subsequently denied) of an admitted connection arose. If nothing else, there had been widespread rumours beforehand. Furthermore, Mogilevichwho has an interestingly unique role as, in effect, the boutique personal banker of choice to post-Soviet crooks of every stripewould conceivably also have been a useful contact and service provider for subsequent sub rosa activities such as moving money abroad discreetly, evading taxes or doing any of the other patriotic parlour games at which post-Soviet plutocrats excel.
That said, Firtash's attempts to present himself really as a victim of Mogilevich, forced to placate a dangerous gangster who could neither be avoided nor denied, have also been challenged. Back in 2008, the US embassy in Kiev wrote in another cable that, "As co-owner of gas intermediary RosUkrEnergo (RUE), Firtash is widely believed to be serving as a front man for far broader interests." The suggestion in the cable was that Firtash was a frontman or at least in business with Mogilevich, while other suggestions have presented Firtash as a Russian "agent" in both Ukraine and the wider world.
He could be; I do not know. He certainly has the opportunistic ability to identify useful allies, not least his magic epiphany as the Yanukovych regime crumbled and he suddenly realised what a bad egg his former patron was and instead reportedly transferred his allegiances to opposition leader Klitschko and his UDAR party. In fairness, though, I've seen no real evidence of a particular devotion to the Kremlin's line over and above that required by anyone whose business depends still on Russian goodwill to a considerable degree. Likewise, part of the reason for his bitter feud with former Ukrainian President Timoshenka was his claim that she was cooperating with Moscow against RUE. More to the point, I do not see Firtash as anywhere near the worst of the Ukrainian oligarchs, let alone if we also add the Russians into the mix.
Firtash, who was already persona non grata in the USA, made several mistakes. Being linked with Mogilevich, a man who has acquired almost mythic status in many US government perspectives on Russian/Eurasian organised crime, was a major strike against him. He is high enough profile to be a tempting political target, even though he wasn't on the EU's list of oligarchs and major figures linked with Yanukovych's kleptocracy. He didn't move quickly enough to distance himself from Yanukovych and his distinctively inefficiently bloody regime (unlike, say, Viktor Pinchuk, son-in-law of previously dirty Ukrainian president Leonid Kuchma, the beneficiary of sweetheart deals aplenty, now rebranded as Westernising businessman).
But Rinat Akhmetov, Ukraine's richest man, who was once named by the Ukrainian authorities as connected with organised crime and whose possessions include a handsome crop of bought-and-paid-for parliamentarians, so far is doing fine. (But then, the US embassy generously if scarcely-recognisably described him as "a moderate within [Yanukovych's] Party of Regions who, with his interest in market-oriented reforms and promotion of a good investment climate, balances more hard-line elements within the party".) And other, dirtier figures are also still free to travel, live life well and ingratiate themselves with the new regime in Kyiv, and with foreign governments and financial institutions for that matter. The point is not that Firtash ought not to be arrested: the warrant is legitimate and the charges ought to be proved or disproved in court. It is rather than Firtash is nothing special, as vastly rich oligarchs go. It seems to be that so long as you don't directly commit a crime in a Western jurisdiction and hobnob with "real" gangsters, then you can be rich, dirty and safe.
And let's also note one other thing. This has nothing to do with sanctions against Yanukovych's people, nor relating to Crimea. It's not going to cleanse Eurasian business, it's not going to put a dent into organised crime (although if Firtash really was in bed with Mogilevich, the latter might well take a financial hit but he himself is safe in no-extradition Russia and has fingers in so many pies he's unlikely to notice the loss). It's a good thing, yes. But it's just one small step in the right direction. And no, I don't feel sorry for him.

http://inmoscowsshadows.wordpress.com/20...o-firtash/

And more here. But caveat lector because it is from the Jamestown Foundation the notorious front described elsewhere on this forum:

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[TD]WikiLeaks Confirms Role Played by Firtash in Ukrainian Politics [/TD]
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[TD="colspan: 2"] December 09, 2010 [/TD]
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[TD="colspan: 2"] Pavel Korduban

Unlike in the case of several regional neighbors, including Russia, the recent WikiLeaks transcripts hardly carry the potential of spoiling relations between Washington and the current administration in Kyiv. However, WikiLeaks has shed new light on the role of energy businessman, Dmytro Firtash, as a powerbroker in Ukrainian politics and on his links to the alleged Russian crime boss, Semion Mogilevich.
Although Firtash has denied much of what the documents made public by WikiLeaks revealed about him, it is difficult to deny the role that he played in destroying post-Orange Revolution alliances, thereby helping Viktor Yanukovych win the Ukrainian presidency earlier this year.
According to a cable allegedly written by William Taylor, who served as US Ambassador to Ukraine from 2006-2009, Firtash spoke in detail about his role in domestic politics and the gas trade with Russia, as well as his relationship with Mogilevich at a meeting with Taylor in December 2008. The meeting took place several weeks before the energy intermediary RosUkrEnergo (RUE), which Firtash co-owns with Gazprom, and which would have been banished from the Ukrainian market according to agreements between Tymoshenko and Russian Prime Minister, Vladimir Putin.
Firtash expressed support for Yushchenko but spoke contemptuously of Tymoshenko, according to the text of the cable. Firtash allegedly told Taylor that he worked to build a coalition comprised of Yushchenko and Yanukovych who was the opposition leader at the time. Furthermore, Firtash allegedly boasted that he jointly with the Donetsk-based oligarch, Rinat Akhmetov, thwarted a Tymoshenko-Yanukovych coalition which, he claimed, had been supported by Russia. Firtash also claimed that Tymoshenko's deals with Russia would leave Ukraine vulnerable to Russian oligarchs in the future. Moreover, Firtash, according to the cable, boasted of his friendship with Yushchenko, claiming that he had advised him ever since his election as president in 2004 (Kyiv Post, December 3). Yushchenko vehemently denied any association with Firtash when he was president.
Firtash was correct in that Tymoshenko's agreements with Putin eventually increased Ukraine's dependence on Moscow. While RUE was indeed removed from Ukraine's energy market, as Tymoshenko had promised, that was a Pyrrhic victory. Moscow increased its gas price for Ukraine, and lured Tymoshenko into a dubious deal with Gazprom whereby Kyiv seized RUE's gas kept in Ukrainian storage. Consequently, in 2010 Kyiv in exchange for a gas price discount was pressured into extending the presence of the Russian navy in Sevastopol by 25 years. In 2011 it will have to return the gas seized from RUE in 2009 plus damages in accordance with a Stockholm arbitration verdict (Zerkalo Nedeli, December 3).
According to WikiLeaks, Firtash told Taylor about his ties to Mogilevich, saying that he had needed Mogilevich's approval to secure his entry into business (Kyiv Post, December 3). It had long been rumored that Mogilevich, and not Firtash, was the real founder of RUE and of its predecessor, Eural Trans Gas, so WikiLeaks did not add anything new to the picture. Firtash's press service denied any partnership between Firtash and Mogilevich, as well as the allegation that he needed permission from Mogilevich to do business. However, the press service confirmed that Firtash met with Taylor at the end of 2008 and that he had been acquainted with Mogilevich (Ukrainski Novyny, December 3). Asked by the Kommersant-Ukraine daily to comment on his alleged role in domestic politics, Firtash's press service only said that he did not want to reveal confidential information about the topics discussed during his meeting with Taylor (Kommersant-Ukraine, December 3).
Taylor, according to WikiLeaks, also reported to Washington that Firtash owned 61 percent of Inter, Ukraine's arguably most popular TV channel, which is staunchly pro-government. Inter is known to be controlled by Valery Khoroshkovsky, the security service chief. Khoroshkovsky has on several occasions denied the reports that he is a business partner of Firtash. The Russian TV anchor, Yevgeny Kiselev, who hosts the flagship political talk show Big Politics on Inter said he knew for certain that Firtash did not control Inter. Kiselev confirmed Khoroshkovsky's earlier statement that Firtash had an option to buy 50 percent of Inter shares, but had not used it (Inter, December 3).
Official reaction to WikiLeaks' publications related to Ukraine has so far been subdued, probably because nothing damaging has thus far emerged personally about Yanukovych and his political team. Prime Minister, Mykola Azarov, was the only Ukrainian official who reacted to WikiLeaks' publications last week. Speaking on Kiselev's talk show, Azarov predicted that as Ukrainians have become accustomed to political scandals nothing in WikiLeaks would astonish them. Azarov also said he was not afraid of any future publications of his own conversations by WikiLeaks. However, Azarov added that, in his opinion, the publication of secret analytical papers was inadmissible (Inter, December 3).
Source: http://www.jamestown.org/programs/edm/

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[Magda Hassan]

---

NY Times, April 21 2014
Ukrainian Gas Broker Faces Scrutiny
By ANDREW E. KRAMER

MOSCOW Gas pricing wars between Russia and Ukraine, like the one
breaking out now, have generally ended badly for the two countries and
Gazprom, the Russian energy monopoly.

But not for Dmytro Firtash, a Ukrainian businessman who made a career
and a fortune as a middleman in this troubled energy trade. For more
than five years, Gazprom sold Mr. Firtash fuel at reduced prices. He
resold it to the Ukrainian state energy company, Naftogaz, and other
clients in Ukraine at a markup, making billions of dollars along the way.

Throughout the former Soviet Union and Eastern Europe, such gas
middlemen, who arrange big-ticket deals between suppliers and buyers,
have been essential to the region's energy dealings, as well as its
politics. An open question after the change of leadership in Ukraine
this year is whether a new gas middleman will play a role in the current
pricing dispute.

In the past, players like Mr. Firtash have helped broker solutions.
Worried about higher energy prices, European governments were willing to
accept murky arrangements with the middlemen to assure a steady flow of
natural gas.

This was the case in 2006, when Gazprom and the post-Orange Revolution
government in Ukraine failed to agree on a price, but did finally hash
out a deal to trade through a mystery intermediary. The identity of the
trader was such a secret that Gazprom did not release his name for
months after signing the contract, eventually doing so through an
anonymous leak in a newspaper the energy company owns, Izvestia. It was
Mr. Firtash and a minority partner, Ivan Fursin.

An energy crisis in Ukraine now seems imminent, analysts say. In an
analytical note published recently, the policy research group IHS wrote
of the two sides' intransigence: "A new gas war between Russia and
Ukraine could spark an actual war."

But this time around, the middlemen may not have the same political
capital to work out a deal. In the months after the Ukrainian
revolution, such players have come under increased scrutiny for their
business and political activities.

One 27-year-old gasoline trader in Ukraine was wholly unknown to his
countrymen before the Ukrainian edition of the magazine Forbes wrote
about him. Stung by the criticism, the young billionaire, Serhiy
Kurchenko, bought the publication last summer, then hired a new editor.
Mr. Kurchenko is now wanted in Ukraine for evading customs duties, his
whereabouts unknown.

In addition to buying Ukrainian media to try to control criticism, the
middlemen have also spread their businesses abroad. One former gas
middleman and the prime minister of Ukraine in the mid-1990s, Pavlo
Lazarenko, bought the actor Eddie Murphy's Southern California home for
$6 million. He later served several years in an American prison for
money laundering.

Two court cases in the United States, one criminal and one civil, shed
new light on Mr. Firtash's operations and the role of the gas
middleman, not only in Eastern Europe but around the world.

In a civil court case in the United States District Court for the
Southern District of New York, lawyers have argued that Mr. Firtash
funneled profits from the Gazprom deal into supporting pro-Russian
politicians in Ukraine.

The lawsuit against Mr. Firtash and RosUkrEnergo, a gas-trading company
he co-owned with Gazprom, was filed in 2011 under United States
racketeering laws and the Alien Torts Statute by Yulia Tymoshenko, a
former Ukrainian prime minister and presidential candidate. It claims
that Mr. Firtash first laundered a portion of the Gazprom funds through
Manhattan real estate deals that also benefited an American political
adviser of the former president, Viktor F. Yanukovych. Lawyers recently
asked for additional time in the case to collect as evidence documents
discovered in the Ukrainian presidential residence after the revolution.

In the criminal court case, federal prosecutors in Chicago recently
unsealed an indictment accusing Mr. Firtash of bribing government
officials in India after transferring money through American banks. Mr.
Firtash was detained in Austria on those charges and is awaiting an
extradition ruling.

Mr. Firtash has denied wrongdoing in both cases.

A lawyer involved in Mr. Firtash's defense said that the businessman
"categorically denies the allegations in the indictment and questions
why the U.S. government went through so many years and so much tax money
pursuing a case involving an Indian mine, Indian officials and a
Ukrainian businessman."

Of the case filed by Ms. Tymoshenko, the lawyer said, "Anybody who
regards this case as serious needs to look at the history of frivolous
RICO claims filed in New York and what has happened to them."

Energy analysts and minority investors in Gazprom have long criticized
the company for allowing middlemen to siphon off profits. Mr. Firtash,
for example, had been buying about eight billion cubic meters of
Gazprom's gas a year at a price $95 to $105 lower per 1,000 cubic
meters than what Gazprom charged the state energy company, Naftogaz,
costing Gazprom about $800 million annually. Gazprom has said its
pricing policies are purely commercial.

"Gazprom needs a middleman like a hole in the head," said Ken McCallion,
a lawyer with McCallion & Associates, a law firm representing Ms.
Tymoshenko and other Ukrainian political opposition figures in the
lawsuit. Ms. Tymoshenko, whose nickname is "the Gas Princess," would
know: Before entering politics, she was chief executive of a gas trading
company, United Energy Systems of Ukraine.

"The middleman was there for one purpose, to grab some money and grease
the operation of this political-industrial machine," Mr. McCallion said.

Jonathan Stern, an authority on the European natural gas market at the
Oxford Institute for Energy Studies, said Ukraine's gas middlemen,
whatever their role in politics, also helped Gazprom provide flexible
pricing to Ukraine's industrial gas customers, some of which would have
been compelled to close factories if charged the full rate. In a letter
to European leaders released this month, President Vladimir V. Putin of
Russia noted that such discounts to Ukraine's chemical industry most
likely kept factories open and workers employed.

The New York lawsuit makes clear they also allowed a profit for Mr.
Firtash. It traces his funneling money from Ukrainian gas deals to a New
York real estate fund established with the help of Paul J. Manafort, a
Republican political operative who advised Mr. Yanukovych on his 2010
campaign in Ukraine.

In 2008, Mr. Firtash's investment fund struck a deal to buy the former
Drake Hotel on Park Avenue for $885 million, according to documents
filed in the lawsuit. The fund planned to reopen it as a mixed-use
retail and residential building to be called Bulgari Tower, named for
the luxury goods brand.

Mr. Firtash and Mr. Manafort, who was a principal at the lobbying firm
Davis Manafort Partners, solicited investors for the building deal. But
the deal fell apart before it closed. Another senior partner at the
firm, Rick Davis, was on leave while serving as campaign manager for
Senator John McCain's 2008 presidential race.

Despite numerous efforts, neither Mr. Manafort nor Mr. Davis could be
reached for comment.

The criminal indictment in Chicago became public after Mr. Firtash was
detained in Vienna on March 12 at the request of the Federal Bureau of
Investigation.

The indictment accuses Mr. Firtash and associates of bribing officials
in the Indian state of Andhra Pradesh to secure rights to mine titanium
they planned to sell to Boeing. Boeing quickly broke off the deal and is
not accused of any wrongdoing. Mr. Firtash wired about $18.5 million in
bribes to Indian officials, some of it through American banks, court
documents contend.

Mr. Firtash said, through a spokesman, that the case relates to an
eight-year-old deal in India and reflects political spite, as it came so
soon after the change of government in Kiev. Mr. Firtash's lawyer,
Dieter Böhmdorfer, the former Austrian justice minister, couldn't be
reached for comment.