Ukraine's Secret Weapon: Feisty Oligarch Ihor Kolomoisky

DNIPROPETROVSK, Ukraine -- Leaning over a map of eastern Ukraine on his desk, Gennady Korban gripped a ballpoint pen and drew a squiggling blue line down its center.

Ihor Kolomoisky, a billionaire banking tycoon recently appointed governor of Dnipropetrovsk region in eastern Ukraine.

The border, he said, marked the battlefront in his country's war with pro-Russia separatists.

One side was stable, rid of "troublemakers," he said.

On the other are "maniacs," he said.

"Men without families, who don't want families, they just like war."

If they cross over the line, he said, "we'll just have to kill them."

He called the border "Kolomoisky's line"—after his billionaire boss, who is emerging as one of the more unlikely protagonists to emerge from Ukraine's fight for survival. 

When its high-profile conflict with Russia began, the fledgling government in Kiev was caught flat-footed, with an army with little fighting experience or funding.

Enter Ihor Kolomoisky, a 51-year-old outspoken banking tycoon.

Now recently appointed by the country's president as governor of Dnipropetrovsk region in eastern Ukraine, he has decided to dip into his fortune to bolster that army and defend the homeland.

So far, that has included buying tires, car batteries and fuel for army units, as well outfitting local militias.

He also announced a program to buy up contraband weapons and offer a $10,000 bounty for any pro-Russia militant captured with a gun.

Without disclosing numbers, Mr. Kolomoisky's deputies call the program a success, though they say a few drunks have tried to turn in some compatriots for reward. 

Notable for having a massive shark aquarium in his office, Mr. Kolomoisky has arrived on the scene as the conflict with Russia drags into its fourth month.

On Friday, Ukrainian President Petro Poroshenko extended a week-long cease-fire with pro-Russia fighters until Monday night.

Certainly the country, with a dire shortage of battle-ready troops, could use a billionaire's backing—and this particular one has no shortage of ideas.

Earlier this month, he announced a plan to build a 1,200-mile electrified fence spanning the border of Russia and Ukraine.

But critics question Mr. Kolomoisky's motives, pointing out that he and other oligarchs in Ukraine may have more financial than altruistic reasons for maintaining the status quo.

For years now, critics say, the oligarchs' powerful influence over many industries have blocked economic reforms in a country that has one of Europe's lowest average per capita incomes.

"These are precisely the opposite of the sorts of people would you want to appoint" as governors, said Mark Kramer, professor of Cold War studies at Harvard University.

"It's hard for me to see why those who fought for change in Ukraine would want such people in charge."

To oversee military operations, Mr. Kolomoisky appointed Mr. Korban, who describes himself as a conflict manager in hostile corporate takeovers.

In widely reported incidents, Mr. Korban narrowly escaped two assassination attempts during his career—when his car was machine-gunned and when someone planted a bomb under a table.

"I know one thing, we can only win this war with a real army," said Mr. Korban.

But, he said, until the army is ready for an offensive, he and Mr. Kolomoisky are taking temporary measures.

In a rare interview, Mr. Kolomoisky declined to say how much he is spending personally to build up what his aides call the "Kolomoisky army," but experts estimate it is about $10 million a month just to fund the salaries of militia and police units, some of whom technically report to Ukraine's army and interior ministry.

His province now has close to 2,000 battle-ready troops in the field, his aides say.

By comparison, Ukraine's army had only 6,000 through the entire country when Russia took control of the Crimean peninsula earlier this year.

For their part, Ukraine government officials say they are happy to have his help.

Mr. Kolomoisky didn't address any specific criticism about him, but did say his job as governor has mainly hurt, not helped, his business interests.

Still, Privat Bank, the bank he controls, could stand to gain from aid being pumped into Ukraine that will partly be used to recapitalize the country's banks regardless of the Russian threat.

This spring, for example, the International Monetary Fund approved $17 billion in aid to Ukraine, and the World Bank and Group of Seven leading nations plan to pump in another $15 billion soon.

A rotund man who is fond of home-cooked meals, Mr. Kolomoisky said he had been directing his businesses from a home in Switzerland, but returned to Ukraine in March to take the governor's job.

He said he is ready to quit it as soon as the threat of pro-Russia separatism subsides in Ukraine.

He took the governor's post, he said, on principle to oppose Russia's policy of bullying Ukraine away from closer ties to Europe.

He said he believes along with most Ukrainians that the country must follow the development of European countries that had been under Moscow's heel as members of the Warsaw Pact.

"It would have been possible to have warmer relations with Russia, but I'm not going to sacrifice my principles for it," he said.

"I'm a die-hard European."

He described the rise of oligarchs like himself in Ukraine as a natural stage in the transition of some countries to democracy, similar to the rubber barons of the U.S. at the beginning of the 1900s.

Today, a handful of tycoons control most of the heavy industries and media of Ukraine.

But Mr. Kolomoisky said he hopes such oligarchs will ultimately disappear as a class.

Not one to mince words, the tycoon quickly drew attention when he took office, saying in his first local television appearance that Russian President Vladimir Putin was a "schizophrenic of short stature" and was "completely incapable, totally insane."

Mr. Putin, who stands 5 feet 7 inches, shot back, calling Mr. Kolomoisky a "unique impostor" and expressing amazement that "such a scoundrel could be appointed governor."

Russian authorities then put the Moscow subsidiary of Mr. Kolomoisky's Privat Bank under temporary administration, saying it was having liquidity problems.

The unit was sold to a Russian company, protecting customers.

Mr. Kolomoisky's acquaintances say he never showed much interest in politics, but he did like to make money.

In Ukraine's loosely regulated market, he thrived as a pioneer with aggressive takeover tactics such as getting obscure provincial courts to change a company's share registrar, or hiring armed guards to seize company offices, said Tom Warner, a former Ukraine analyst for Sito Capital, an emerging markets fund manager.

Mr. Korban, the billionaire's takeover manager, says all of these tactics were legal.

"In the rest of the world it's called mergers and acquisitions," he said.

About 10 years after founding with some friends Privat Bank, and expanding his empire into numerous businesses, Mr. Kolomoisky began in 2000 to think about raising his political profile.

Dmitry Vydrin, a political consultant from Kiev, said Mr. Kolomoisky invited him for a chat in his office in Dnipropetrovsk, where the banking magnate listened, but also periodically pressed a button on a remote-control box on his desk that dropped crayfish meat to the sharks in his aquarium.

"It was unnerving," said Mr. Vydrin.

Mr. Kolomoisky steered clear of open party politics, but did acquire a nationally broadcast television station and a news service.

That "has more influence than having a party in parliament," Mr. Korban explained to a Ukrainian newspaper in 2007.

In the interview, Mr. Kolomoisky said he and his partners never offered any financial support to protesters before the president, Viktor Yanukovych, was ousted, but he did support them through his television channel.

He said discussions about becoming governor started in January—the month before the president fled—but declined to say whom they were with.

By the time he arrived in the governor's office, pro-Russia groups were seizing control of government buildings in nearby provinces, and moving to do the same in Dnipropetrovsk.

He moved quickly on several fronts, said a deputy governor, Boris Filatov.

Mr. Filatov said he was assigned to defuse tensions by holding meetings with various political groups and listening to their complaints.

He and Mr. Kolomoisky met with veterans groups and promised more patriotic education in the schools, and with Communists, to whom he promised to pay respects to some historic monuments.

Local fascists "wanted to do more sports," Mr. Filatov said.

"So we gave them gyms."

As Mr. Filatov tells it, pro-Russia demonstrations in the city at first drew about 1,500 people, but soon their numbers dwindled to 500, then 300, "and soon there weren't any meetings at all."

Critics of Mr. Kolomoisky said there was a more brutal campaign behind the scenes.

Viktor Marchenko led meetings of his local chapter of Union of Soviet Officers, clamoring for a return to Soviet borders, until some unidentified men punched him in the head at one event, he said.

He blamed Mr. Kolomoisky, who is Jewish, and said "there will be consequences" for the Jewish community one day.

The tycoon didn't discuss the incident in the interview. 

Oleg Tsarev, a local pro-Russia parliament member, also led some meetings, but left Ukraine after he was beaten by a mob in Kiev.

After decamping to Moscow he received a phone call from Mr. Kolomoisky, a recording of which was posted on the Internet.

In a conversation laced with invective, Mr. Kolomoisky told him that a Jewish soldier from the Dnipro Battalion had been killed in fighting and that members of the Jewish community had put a reward of a million dollars on Tsarev's head.

"They will be looking for you everywhere," Mr. Kolomoisky said.

"Don't go anywhere."

Mr. Kolomoisky confirmed the tape was real.

Mr. Korban said there was nothing wrong with the phone call.

"He was just giving him his opinion, he wasn't threatening him," Mr. Korban said. 

Mr. Korban said business contacts from Privat Group, an informal nebula of companies controlled by Mr. Kolomoisky and his partners, have been useful in supplying the army and militia units, allowing him to contact heads of major local chains to cut deals for military supplies.

The tycoon's team also funneled volunteers into a local militia, called the Dnipro Battalion, that were outfitted with gray SUVs and new uniforms.

More lightly armed militias were cobbled together as well, to man checkpoints around the province.

Today the Dnipro Battalion has not only the 2,000 battle-ready troops, equipped with heavy weapons, but more than 20,000 in reserve.

If any Russian soldier wants to die for Russia, said Yury Beryoza, the commander of the battalion, "they should come to Dnipropetrovsk, because here we will kill them." 

The Dnipro Batallion saw its first major action when separatists took control of a police station in the port city of Mariupol, in an adjacent province.

The station was burned to the ground with its occupants.

In all, 54 volunteers from Dnipropetrovsk have been killed since the beginning of the fighting.

Mr. Korban said Dnipropetrovsk is expanding the borders of its influence, with regional militias taking over four regions inside the adjacent province of Donetsk and installing regional administration heads who are friendly to Mr. Kolomoisky.

Mr. Korban called it a "buffer zone" and said they were prepared to take four more regions.

He said Mr. Kolomoisky has brought in Romanian and Georgian military advisers to help with the training of troops, who in the Dnipro Battallion until recently only had a week of boot camp.

He also invited Georgia's former president, Mikheil Saakashvili, to visit and bring some of his former advisers to help them streamline the bureaucracy of the Dnipropetrovsk government.

Mr. Saakashvili, whose country was invaded in 2008 after years of cross-border altercations with Russia, said he spent two days in Dnipropetrovsk last month, and said the situation looked a lot like Georgia's before the war.

He said that Mr. Putin was able to seize Crimea and destabilize eastern provinces by acting quickly, but that Mr. Kolomoisky appears to have halted his progress by moving faster than anyone expected.

As an oligarch who has insulted Mr. Putin's height "he is really everything that Putin hates," said Mr. Saakashvili, who believes now that Mr. Kolomoisky's appearance is a bad development for the Russian leader.

"I used to think that I was Putin's No. 1 enemy," he said, "but now I think an oligarch just pushed me aside."

Source: Wall Street Journal


Igor Skakovsky said…
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