Raid Raises Stakes in Post-Revolution Ukraine

KIEV, Ukraine -- Rinat Akhmetov, Ukraine's richest industrialist, insists he is on holiday in Monaco and not avoiding his home country. But after a police raid at his home this week in Donetsk, eastern Ukraine, Mr Akhmetov's holiday could well turn into a prolonged exile.

On Tuesday, an armoured vehicle parked in front of his mansion while dozens of masked police with machine guns subdued his guards and searched the premises.

Yuri Lutsenko, interior minister, initially said the raid was to retrieve financial records in a tax-evasion investigation. But on Thursday evening, Mr Lutsenko said police were also searching for "the leader of a group of hitmen". His press office confirmed the quote but declined to elaborate.

By connecting Mr Akhmetov - even in such an indirect way - to an organised crime investigation, Mr Lutsenko greatly raised the stakes in one of the most important conflicts in post-Orange Revolution Ukraine.

Viktor Yushchenko, the president, and his government have pledged to reverse at least partly what they see as the unfair enrichment of the former regime's business cronies. In June, the government won a court ruling reversing last year's privatisation of Kryvorizhstal, the country's largest steel mill, to a consortium 50 per cent controlled by Mr Akhmetov.

He has not been to Ukraine in over a month, since the interior ministry announced it wanted to question him about an attempted murder in 1988. He said yesterday in comments relayed by a spokesman: "I would very much not like to believe that what is going on is a planned attack on me and my business, even though the latest events are reason to worry."

The guarded response was characteristic of Mr Akhmetov, who has been reluctant to accuse the government of revenge-taking even though he is widely believed to have been one of the main sponsors of Viktor Yanukovich, Mr Yushchenko's chief political opponent, in last winter's presidential elections.

"I'm convinced that some interior ministry officials are following personal motives, but that isn't connected to the Ukrainian government as a whole," he said.

By contrast, Mr Akhmetov's business partner, Boris Kolesnikov, who was released this month after four months in pre-trial detention, has repeatedly accused the government of engaging in political repression and trumping up charges against him. Mr Kolesnikov is facing trial on charges that he directed a campaign of threats and violence to force the owners of a Donetsk department store to sell their shares to him and other associates of Mr Akhmetov, including Mr Akhmetov's brother.

Despite the multiple investigations, Mr Akhmetov has not lost his optimism. In an interview with the FT in Milan just before the raid, he said he was preparing an initial public offering of his main holding company, System Capital Management, in about two years.

This would allow Mr Akhmetov to capitalise on the improved sentiments among foreign investors towards Ukraine since Mr Yushchenko came to power.

Asked his target valuation for the offering, Mr Akhmetov said "like Sergey Bubka!", the Olympic champion pole-vaulter, also from Donetsk.

Mr Akhmetov said he had not decided how much he would include of SCM, a vertically integrated coke, iron ore and steelmaker that also owns power plants, breweries, stakes in mobile phone companies and the Donetsk Shakhtar football team. Analysts estimate his net worth at more than $2bn.

Mr Akhmetov condemned the criminal investigations as "fabricated" but insisted they were not causing him any trouble. He said he did not like being compared with Russia's former richest man, Mikhail Khodorkovsky. "Those who propose it don't believe in Ukraine."

Source: Financial Times