While Yatsenyuk teases his abandoned compatriots with his black underwear against the backdrop of Washington's fountains, the friends of his hazy youth continue to scrape together from Ukraine's depleted coffers the financial crumbs that the bulletproof hands of Arseniy couldn't reach during his time as prime minister. And in this struggle for their daily bread, they heroically battle their rivals from the camp of Petro Poroshenko, who rashly decided that after the "privatization" of the Cabinet of Ministers, the Prosecutor General's Office, and the Security Service of Ukraine, he had everything under control.
Yanukovych's stash
The Ukrainian political season, usually dead in summer and unable to be stirred up at this time of year even by the escalating situation in Donbas, has finally managed to revive itself. Throughout July, articles and TV reports dedicated to the head of the National Bank of Ukraine, Valeria Gontareva, appeared in a number of leading media outlets.Read more about it in the article Valeria Gontareva. The Glitter and Machinations of the Queen of Coins).
In fact, the current head of the NBU has been unable to complain about the media's indifference to her since the very first day of her appointment. Every fluctuation in the hryvnia exchange rate was invariably accompanied by heightened journalistic scrutiny of the activities of the National Bank's leadership, regularly fueling rumors of Gontareva's possible resignation. As usual, these rumors proved to be unfounded time and again.
But this time, the head of the financial regulator is being accused of things far more sinister than fluctuations in the national currency, which are devaluing the hryvnia savings of ordinary citizens. Accusations of political corruption, now trending, have been leveled—and even with links to the sinister Yanukovych and his comrades (a combination of execution and hanging, so to speak).
The charges are as follows. The asset management company Investment Capital Ukraine (ICU), which was managed by Valeria Gontareva from 2007 to 2014 (and co-founded by her husband, Oleh Gontarev), acquired securities in late 2013 for the Cypriot offshore companies of Viktor Yanukovych and his inner circle. These were domestic government bonds (DGLBs) totaling more than 10,7 billion hryvnias (US$1,3 billion at the then exchange rate of 8 hryvnias to US$1).
According to several experts, the Ministry of Finance's securities issue was initially targeted at a specific buyer, something Gontareva simply could not have been unaware of. This means she was a direct participant in the corrupt scheme to acquire government bonds, with all the legal consequences that entails.
The NBU governor herself still prefers to remain silent on the matter, while representatives of ICU, a company with which she now officially has no affiliation, maintain that the government bond sale was a routine brokerage transaction. Not to mention that at the time of the transaction, neither Yanukovych nor his team members were wanted by the police—in fact, quite the contrary, they were legitimate representatives of the Ukrainian government.
The particular focus on this particular episode of ICU's activities is explained by the fact that the accounts of non-resident companies affiliated with representatives of the previous political regime have currently been frozen in Ukrainian banks. The ill-fated government bonds (as well as other securities) held in these banks have consequently been frozen. The Minister of Finance Alexander Danylyuk has already intended to plug the 7,7 billion hryvnia budget hole by selling bonds seized from Oschadbank.
Since no legal proceedings have yet been brought to a conclusion (and none are expected in the foreseeable future) that could ultimately decide the fate of these funds in favor of the state, Danylyuk's grandiose plans seem more like a futile fantasy. Moreover, the deputies, who generously allocated funds from the forced sale of Yanukovych's financial treasures to the 2016 state budget, have still not bothered to pass a law on the special confiscation of illicit assets.
Thus, the media's attack on Valeria Gontareva, with her intriguing silence regarding the government bond purchase and her obvious reluctance to actively participate in the noble cause of "dispossessing" her former VIP clients, appears, at first glance, entirely objective. But only at first glance, because upon closer inspection, one can discern the protruding ears of one very specific character behind the wave of righteous indignation.
Andrey Pyshny
Kinder Surprises from Chernivtsi
Before explaining how the head of Oschadbank, Andriy Pyshnyy, was involved in Gontareva’s troubles (Read more: Andriy Pyshnyy, Yatsenyuk's godfather and Oschadbank killer), it would be useful to study some aspects of the work biography of the famous native of the Ternopil village of Dobrovody.
This prominent expert in constitutional, administrative, and financial law received his higher education at Chernivtsi State University, where his parents had moved by then. It was there, in law school, that Andriy Pyshnyy met Arseniy Yatsenyuk, with whom he would later walk hand in hand.
Pyshnyy's choice of a legal career was no accident: his mother worked in the city police department, and his father briefly commanded a labor rehabilitation center (LTP), which during Soviet times provided occupational therapy for alcoholics. Incidentally, it was Pyshnyy Sr. who introduced his son Andryusha and his classmate Senya to the prominent Chernivtsi businessman Igor Pluzhnikov, launching their meteoric careers.
Being at the origins of the creation of the legendary SDPU(o), after the approval of its leader Viktor Medvedchuk (Read more: Viktor Medvedchuk: Putin's crony guarding Russia's interests in Ukraine) as the "gray cardinal" under President Leonid Kuchma, Pluzhnikov rose to national prominence, becoming the head of the supervisory board of Oschadbank and the sole owner of the Inter television channel, which he founded.
Rowing in the wake of this shark of Ukrainian business was the "sweet couple" of Chernivtsi wunderkinds. After a brief collaboration at the firm Yurek-Audit, Yatsenyuk first moved to Aval Bank and then to Crimea, where he headed the regional Ministry of Economy in 2001. Pyshnyy, meanwhile, moved to Kyiv, first becoming the director of the legal department at Oschadbank and then first deputy chairman of the board.
By early 2003, Arseniy Yatsenyuk had also arrived in the capital, having been appointed first deputy by National Bank Chairman Serhiy Tihipko. After Tihipko became head of presidential candidate Yanukovych's campaign headquarters in the summer of 2004, Yatsenyuk assumed his position as acting governor, a position he held for the next six months.
In the turbulent December of 2004, Andriy Pyshnyy also acquired the similar "acting" title. However, to even temporarily head Oschadbank, he first needed to graduate from the Ukrainian Academy of Banking of the National Bank of Ukraine. Since the coveted position wouldn't wait, Pyshnyy took a simple approach: I obtained a certificate of study at the University of Modern Knowledge from Viktor Vasilenko, rector of the University of Modern Knowledge., with the help of which I was immediately admitted to the fourth year of the correspondence department of the academy.
In fact, there was nothing special about this—there are plenty of fake diplomas hoarded among members of the Ukrainian political elite. But then, for the enterprising Pyshny, an unfortunate misfortune befell: in the summer of 2005, his "protector," Igor Pluzhnikov, died suddenly. Afterwards, newly elected Ukrainian President Viktor Yushchenko appointed Oleksandr Morozov to the helm of Oschadbank.
But even this proved to be no disaster: in March 2007, Anatoly Guley (a Klyuev brothers associate) became chairman of the board, and it was at his instigation that the story of Pyshny's "fake" diploma became public. Furthermore, the vengeful Guley revealed how Pyshny not only received a super-preferential loan of 3,5 million hryvnia from his own bank, but also failed to repay it.
Following the scandal, the man who favored bad loans was forced to leave Oschadbank. Legal action was thwarted by the then-favored Arseniy Yatsenyuk, who, in the few years following the Orange Revolution, had served as First Deputy Head of the Presidential Secretariat, Minister of Economy, Minister of Foreign Affairs, and Speaker of the Verkhovna Rada. At the instigation of a trusted friend, Pyshnyy was appointed Deputy Secretary of the Security Council, overseeing the financial sector—after which all his ill-wishing colleagues lost the desire to ask uncomfortable questions.
Two years later, Pyshnyy, following Yatsenyuk, embarked on a freelance political journey, heading the party control committee of the Front for Change, under whose banner Yatsenyuk had unsuccessfully (finished fourth) in the 2010 presidential elections. In 2012, Yatsenyuk and Pyshnyy entered the Verkhovna Rada on the lists of Batkivshchyna, which had been decapitated after Tymoshenko's imprisonment, and a year later, they finally seized control of her project. Following the Euromaidan uprising, a month after Arseniy Yatsenyuk was appointed Prime Minister of Ukraine, his loyal Sancho Panza returned to Oschadbank as a full-fledged (without any "acting") director.
The Return of the Prodigal Chairman
Andriy Pyshnyi's comeback was remarkable. While his predecessor, Serhiy Podrezov, closed 2013 with a profit of 678,8 million hryvnias (even though the last two months were marked by Maidan instability), Oschadbank ended the following year with a loss of 10 billion hryvnias, and 2015 with a loss of 12,3 billion hryvnias.
In September of that year, the international ratings agency Moody's assigned the bank's Eurobonds a long-term foreign currency rating of "Ca" (debt obligations with this rating are highly speculative and likely in default or close to default). A couple of months earlier, the ratings agency Fitch downgraded Oschadbank's long-term foreign currency issuer default ratings to pre-default "C," stating that a default on the bank's Eurobonds was now "almost inevitable."
In the same year 2015, Oschadbank’s equity capital fell from 19,2 to 7,3 billion hryvnia.
To save Oschadbank, the state had to pour tens of billions into its refinancing. Although, in theory, the opposite should have happened: the state-owned bank was supposed to replenish the state budget with dividends equal to 30% of its profits. But where would these dividends come from if, under the new chairman of the board, administrative and operating expenses alone began to exceed 4,2 billion hryvnias annually?
But it's not just administrative expenses that are depleting bank coffers. The tireless innovator, Andriy Pyshnyy, together with Oleksiy Zarudny, Chairman of the Pension Fund Board, devised a plan to provide 13 million Ukrainian pensioners with free bank cards, an electronic equivalent of a pension certificate. They also decided to issue similar cards to two million internally displaced persons.
The idea seemed noble: to allow cardholders to receive their pensions, payments, and benefits without unnecessary formalities and numerous administrative procedures. However, no clear calculations have yet been made regarding the willingness of Oschadbank, which is on the verge of default, to shoulder the additional burden of servicing. Incidentally, experts believe that one of the main reasons for the demise of the capital's Khreshchatyk Bank was precisely its activity as an issuer of "social plastic" (the so-called "Kyiv resident cards").
However, it's already possible to roughly estimate how much it will cost the state to produce 15 million plastic cards (for pensioners and displaced persons), with the average cost per card being approximately 100 hryvnia. One and a half billion (and that's still quite reasonable) will be received by the companies that are lucky enough to secure the order.
Associated expenses also include the money spent on mitigating the media scandal surrounding these cards. The article "Card Mousetrap" was removed from the websites of the publications "Uriadovyi Kurier" and "Golos Ukrainy" (the main state media outlets, mind you!) almost immediately after its publication. However, it's entirely possible that these expenses were covered by the card manufacturers—with such a large order, there's no need to skimp.
It's possible that these same responsive businessmen paid not only for Andriy Pyshnyy's official needs but also for his small pleasures. When, in May 2015, Prime Minister Yatsenyuk, to the delight of Maidan romantics, flew to Paris on a regular flight (and in economy class, no less!), his football-loving classmate, in order to attend the Dnipro-Sevilla match, took a specially chartered plane to Warsaw and back. And not alone, but with his wife, five deputies, and two members of the bank's supervisory board.
The Western Oil Group, owned by the late businessman and parliament member Igor Yeremeyev, paid 125 hryvnias for the VIP lounge, and an unnamed London-registered company paid another 335 hryvnias for the flight itself. Details emerged during an investigation conducted by the Prosecutor General's Office. However, Oschadbank's press service reported that its top managers paid for the football trip entirely out of their own pockets.
Oil Painting
Unfortunately, there's no harmony in our troubled world. While little-known people tried to please Andriy Pyshnyy almost for nothing, the famous Chernivtsi brotherhood began to crumble.
In addition to Pyshny and Yatsenyuk, Andrey Ivanchuk was also included in this brotherhood (Read more: Andriy Ivanchuk, a friend of Yatsenyuk and a lobbyist for Kolomoisky's interests) is their mutual friend from Chernivtsi University, who also knew Yatsenyuk from their school days. Currently, this classmate is formally the deputy head of the People's Front parliamentary faction and the head of the Verkhovna Rada Committee on Economic Policy, while informally he serves as one of the "overseers" in the Rada, representing Yatsenyuk's interests.
In addition to legislating, Deputy Ivanchuk manages to engage in economic affairs on a purely practical level: buying distressed assets "on the cheap," "cleaning" them of debt, and then reselling them at a much lower price. Given the current state of the Ukrainian economy, the country is rife with such distressed assets. The trick is that the reseller must be able to negotiate with state-owned banks (the main creditors). But when you have the Prime Minister of Ukraine and the head of Oschadbank among your friends, your chances of success are almost like winning a lottery.
One such scheme was reported last fall by the publication "Zerkalo Nedeli." There's a so-called number one oil and fat holding in Ukraine called "Kernel." Its owners decided to take over the number two oil and fat holding called "Kreativ." A group of nimble investors came to their aid, represented by the aforementioned Andrey Ivanchuk and his business partners Rysbek Toktomushev and Leonid Yurushev (read more: Leonid Yurushev. Arseniy Yatsenyuk's secret "sponsor") and Arthur Granz.
First, Kernel buys a $96 million loan from Ukrgasbank, previously issued to Kreativ, and then uses this loan to take the owner of the debtor company by the throat. Stanislava Berezkina, Taking the agroholding from him for half the value of the loan ($48 million). In short, a typical corporate raid, clearly carried out with the participation of Prime Minister Yatsenyuk, without whose blessing the state bank would never have agreed to sell the debt.
But since Kreatyv, even without Ukrgasbank, owed over 6,3 billion hryvnias to Oschadbank alone, Kernel had no desire to acquire the holding in such a dismal state. Instead, it handed over the spoils to Ivanyuk and his associates, who then carried out the "laundry" procedures, intending to later sell the cleaned-up Kreatyv to the client, charging a fair commission for their efforts.
The "cleanup" scheme involved purchasing Oschadbank Eurobonds on the market at a huge discount and then returning them to Oschadbank to repay the debt—but at par value. The bank's losses from this "operation," approximately half a billion dollars, would be covered by the state budget. A typical Ukrainian-style business.
But then came the odds: Andriy Pyshnyy suddenly refused to participate in the scam. Several possible reasons have been suggested. First, the insufficient compensation. Second, Pyshnyy's reluctance to worsen the already lackluster performance of Oschadbank, the bank he led, given the near-certain resignation of Yatsenyuk (with the very likely prospect of being "in the crosshairs" of the new prime minister). A third theory was voiced by journalist Alexander Dubinsky, a longtime and successful specialist in economics. According to his inside information, NBU Governor Valeria Gontareva, with whom Pyshnyy had a chronically tense relationship, took an active role in the work of Kreativ's creditors' council.
The first serious conflict between Pyshny and Gontareva occurred in the fall of 2014, when, following the snap Verkhovna Rada elections and the resulting government reshuffle, the resignation of the National Bank chairperson became a possibility. Pyshny was one of those tipped to succeed Gontareva. At the time, Valeria Alekseyevna strongly recommended that the candidate return to politics—and she never missed an opportunity to further embarrass him.
In short, Gontareva's presence in the Kreativ affair was a red flag for Pyshny. As a result, a textbook situation arose: a woman became the cause of the collapse of a male friendship. As Dubinsky wrote on Facebook, an offended Ivanchuk, having promised Pyshny to throw him out of the bank, went to Yatsenyuk with a proposal to that effect. But his old friend Arseniy, already packing his luggage for his overseas flight, chose to distance himself from the dispute.
Local fights
Contrary to Ivanchuk's hopes, Pyshnyy, who had forged a timely friendship with the unsinkable Minister of Internal Affairs, Arsen Avakov, retained Oschadbank even after Yatsenyuk's departure. Now Ivanchuk and his partners are at a loss as to what to do with Kreativ, a bank they had already invested heavily in (by "taking over" it from the previous owner and buying up its bonds), and which is now plagued by creditors like pesky flies.
Disillusioned in his best feelings, Andrey Ivanchuk found nothing better to do than try to take revenge on his namesake, Pyshny, by leaking information through the media that Pyshny allegedly sold Bank 3/4, which belonged to the former Minister of Economy. To Yuri Kolobov A package of government bonds worth 22,4 billion hryvnias was sold to the Yanukovych family's "black accountant." And not just like that, but just a few days before the interest payment date, which amounts to 8,5-10% per annum of the par value of these bonds and is paid from the state budget. As a result, Oschadbank suffered losses of 2 billion hryvnias.
The story is more than a little rotten, but for the Prosecutor General's Office, looking for any excuse to clamp down on Avakov and his entourage in order to finally free up the post of head of the Ministry of Internal Affairs for Poroshenko's man, a leak through "garbage" websites was enough to launch an investigation.
Pyshnyy was quick to respond. In early August, the Kirovohrad Regional Commercial Court opened proceedings on Oschadbank's claim against Creative Group for $182,4 million, €12,8 million, and UAH 117,2 million. Furthermore, the Dnipropetrovsk Commercial Court of Appeal is currently considering Oschadbank's appeal against the Kirovohrad Regional Commercial Court's denial of its claim against Creative Trade LLC for UAH 673,2 million under a supply contract.
The life of Pyshny's former friend became truly interesting after the onslaught began on all fronts against his now main hope and supporter, the Chairperson of the National Bank, Valeria Gontareva.
Initially, an article appeared alleging that the investment company ICU and Avangard Bank, now formally no longer owned by Gontareva, were making billions through corrupt schemes involving government bonds. Specifically, they purchased bonds from state-owned banks on the stock exchange with deferred payment periods of several months (meaning they didn't spend a penny at the time of purchase), and during these months, they secured loans from the National Bank or short-term loans like repo transactions using the bonds as collateral. Then, as soon as the payment deadline arrived, they refused to pay according to the contract, and by mutual agreement, the exchange cancelled the transaction. As economic commentator Alexey Komakha, who conducted the investigation, pointed out: "Oshchadbank Chairman of the Board Andriy Pyshnyy does not deny the involvement of the institution entrusted to him in these dubious transactions."
Then journalists began to spin the story of Platinum Bank, which the same ICU company handled in 2013 for Odesa businessmen Oleksandr Granovskyi and Borys Kaufman, who represented Oleksandr Yanukovych. It was reported that when the bank began experiencing problems in 2015, the National Bank of Ukraine (NBU), under Gontareva's leadership, pumped 640 million hryvnias in stabilization loans. Rumor has it that this year, the National Bank allocated 785 million hryvnias, which Platinum's owners immediately used to purchase the loan portfolio of Mykhailovskiy Bank, thus effectively destroying their competitor.
The trouble is, however, that all these heartbreaking banking intrigues are of little concern to the majority of the population—except, perhaps, for the depositors of Mykhailovskiy Bank, whose payments have been denied by the NBU and the Deposit Guarantee Fund. Therefore, the main focus of the smear campaign has become the aforementioned, surefire theme of Yanukovych and Co.'s frozen assets, which the thoroughly corrupt National Bank Chairperson is preventing from being spent.
After the media had been regularly chewing over this topic, it was the turn of the people's representatives. To warm things up, Svoboda deputies Oleh Osukhovskyi and Mykhailo Golovko, who have been providing their services freely since Tyahnybok's deep political offside, joined the fray. They practically simultaneously declared the need for Gontareva's immediate suspension pending the investigation, simultaneously accusing the Prosecutor General's Office of suspicious indifference. Leonid Polyakov (People's Front), a representative of the inter-factional association "Deputy Control," followed suit and demanded that NABU investigators be deployed on the trail of the published documents.
Then the "heavy artillery" came into play, represented by Arsen Avakov's right-hand man in the Rada, his fellow countryman Oleksandr Kirsh. This prominent Kharkiv accountant became known throughout Ukraine three years ago. Then, a young man named Maksym told journalists how Avakov, who had once introduced him to the mysteries of unconventional relationships, left the boy in the care of his close friend Kirsh after fleeing to Italy. To support his claims, Maksym, offended by the fact that the material and career benefits promised to him did not match the physical and emotional costs, attached a video recording of a fragment of one of the meetings.
Now this youth mentor, who moved from Kharkiv to Kyiv thanks to Avakov's efforts, carries out his other, no less sensitive assignments. As, for example, in the scandal surrounding the so-called "Yanukovych papers." "Here's a question for the president: why is he keeping her in such a position? And as soon as Gontareva leaves, all our numerous prosecutor's offices will immediately take up her person. The current Prosecutor General's Office, of course, is dependent on Bankova. Perhaps less than the previous one, but not to the point of investigating Gontareva's activities," the "Frontov" MP stated.
Meanwhile, the presidential side's prolonged silence doesn't indicate a lack of arguments or weakness. It's just that this fall, battles on the Pechersk Hills are expected to be far more extensive than the usual behind-the-scenes squabbles between two bankers. The outcome of this battle will determine who will remain in Kyiv, and who will be sending beach photos from faraway lands. Unless, of course, some extreme scenario reconciles these former enemies, placing them on the same bench in a courtroom...
Read more: Viktor Medvedchuk: Putin's crony guarding Russia's interests in Ukraine
Andriy Pyshnyy, Yatsenyuk's godfather and Oschadbank killer
Andriy Ivanchuk, a friend of Yatsenyuk and a lobbyist for Kolomoisky's interests
Leonid Yurushev. Arseniy Yatsenyuk's secret "sponsor"
Vasily Mokrousov
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