Squeezed businesses and spheres of influence of the leaders of the "Donetsk People's Republic"
Just a year and a half ago, Donbas was one of the most prosperous regions of Ukraine. Donetsk was on par with Kyiv in wealth and glamour, surpassing other regional centers in Ukraine and even Russia. The region's gross regional product accounted for approximately 15%, comparable to Moscow's share of Russia's GDP (17%). Since the start of the war, the region's economy, according to the National Bank of Ukraine, has fallen threefold. Ukrainian and foreign businesses began leaving Donbas en masse, mothballing what couldn't be exported: factories, equipment, and real estate. However, these abandoned assets soon found new owners. And those businessmen who dared to stay were forced to negotiate with the new authorities. The forgotten concept of "roof" has returned to common usage. However, "roof" is no longer simply a cohesive team of musclemen with brass knuckles, rebar, and Stechkin rocket launchers. Roofs also have machine guns, grenade launchers, and heavy equipment.
The decisive factor is the superiority of manpower. Authority lies with the one who has the most bayonets. (In this publication, we will deliberately omit the aspect of the influence of "vacationers" as it cannot be analyzed due to their constant rotation and lack of involvement in the redistribution of local markets.) The leader of the "DPR" and the unofficial leader of the "Republican Guard," formed on the basis of the "Oplot" brigade, whose leader was Zakharchenko, Alexander Zakharchenko, has the greatest number of bayonets and, accordingly, the greatest economic power in the region. In second place is the head of the "DPR Security Council," Alexander Khodakovsky. Next comes Donetsk's negotiator for the Minsk agreements, Denis Pushilin, and finally, the former commander-in-chief of the "Novorossiya" army, Igor Strelkov-Girkin (no longer present in the Donbas, but successfully making money in Russia thanks to him).
We attempted to assess the economic power and financial status of the Donbas leaders using information from our high-ranking sources in Moscow and Kyiv, listening to statements from the leaders themselves, and evaluating data provided to us by Ukrainian companies that have lost control of their assets in the Donbas.
#1. Alexander Zakharchenko
Alexander Zakharchenko
With approximately four to five thousand fighters, Alexander Zakharchenko currently controls most of the liquid assets of Donetsk and surrounding cities. Former Oplotov fighters, now "DPR" guards, "oversee" supermarkets, restaurants, cafes, and shopping centers, and act as fronts for still-operational industries.
The region's new owners are particularly interested in grocery retail, where cash turnover remains rapid. One of the most notable "acquisitions" of Zakharchenko's structures is the well-known Ukrainian grocery chain "ATB," previously owned by a group of Dnipropetrovsk businessmen. The company operated 152 stores in the territory of Donbas not controlled by Kyiv. In late 2014, the chain began gradually closing its stores, citing the inability to ensure the safety of its staff. However, soon after, the stores began to be occupied by people claiming to be "DPR" officials. Some stores continued to operate under their previous names, while 20 were renamed "First Republican Supermarket." According to ATB-Market, control over them was transferred to Alexander Zakharchenko's wife, Natalia.
"We now have no access to our assets in that area," Anna Lichman, a representative of ATB-Market in Dnipropetrovsk, told us. "No one informed us that we were losing our retail space. It was taken away from us unceremoniously. Our former employees in Donetsk don't deny that Alexander Zakharchenko's wife is behind this."
Besides ATB, retailers cite the Zakharchenko family as overseeing the Amstor chain of stores, which is formally owned by Smart Holding, a company owned by prominent Ukrainian tycoons Vadim Novinsky and Alexander Vagorovsky. Following an unrelated corporate dispute between the two businessmen, the chain's operations were suspended nationwide. However, supermarkets continued to operate under their previous names in separatist-controlled territory.
"Vagorovsky, a minority shareholder in the holding, manages the network in the rebel areas," Evgeny Zagorulko, a representative of Smart Holding, told me. "While we (the largest shareholder, Novinsky – P.K.) have no influence over our assets there, he somehow found a way around it. I'd say he's clearly on friendly terms with the separatist leadership."
Amstor's central office in Donetsk declined to comment on the situation.
It must be said that Zakharchenko had previously been associated with retail trade, even before the war.
According to our data, before the start of his political career, Alexander Zakharchenko was a sales agent for the major Ukrainian chicken producer Gavrilovskie Kurchata in Donetsk. Zakharchenko's poultry sales generated approximately 10-15 million hryvnias.
The Gavrilovskie Kurchata company neither denied nor confirmed its working relationship with Alexander Zakharchenko, stating that anyone could become a sales agent and sell their signature chicken.
Our sources among Ukraine's largest wholesalers say Zakharchenko's entourage also ensures the security of food deliveries from Ukraine. "Literally everyone wants their piece, from minor guard commanders who take in kind to top officials who sell our goods," shares a representative of one of the supplier companies.
Alexander Zakharchenko has also made his mark in the petroleum products market, where until recently the decisive influence belonged to Sergei Kurchenko, one of the oligarchs closest to the elder Yanukovych (more commonly referred to as "the Family's wallet"). According to our information, Kurchenko received the task of overseeing gasoline sales and delivery in the self-proclaimed republics from the Kremlin's Donbas overseers a year ago. Kurchenko's oil trading companies, based primarily in Crimea, were supposed to establish supplies for the region's civilian and military needs—to replace the flow from mainland Ukraine, which had been declining since the beginning of the "LPR/DPR" blockade. Alexander Zakharchenko also supported the monopoly of the "Family's wallet," demanding that local dealers sell only "Crimean gasoline." Also in November 2014, Zakharchenko appointed Yevgeny Fainitsky, Kurchenko's lawyer, as "Minister of Energy of the DPR."
The leader of the "DPR" publicly promised that the price of 92-octane gasoline would drop from 25-26 to 19-20 hryvnias per liter (2-3 hryvnias less than in Ukraine). But the monopoly of the Moscow-based oligarch, in alliance with Zakharchenko, led the self-proclaimed republics to a fuel crisis. Gasoline prices rose even further, with a liter of 92-octane gasoline reaching 26-27 hryvnias (52-54 rubles). "DPR" officials tried to hold down prices, but gas stations began closing altogether. The resignation of "Minister" Fainitsky didn't help the situation: it was reported that he was even "shut down in the basement," although no evidence was found to support this.
Alexander Zakharchenko chose the Donetsk Oblast Financial Administration building as his office. It is here, rather than in the regional state administration building, that the head of the "DPR" spends most of his working time. Zakharchenko travels in a motorcade of five luxury SUVs, including a Mercedes GL and a Lexus GX.
"Let's not have any illusions. The Kremlin knows the true value of these people. They stay in their positions only as long as they demonstrate complete control. As for internal squabbles and property redistribution, these aren't critical issues for Moscow. The main thing is not to overdo it. After all, they can bring things to a halt in a flash, and everyone in Donetsk should remember that," a source close to the presidential administration commented on the "DPR" leader's manners.
We asked Alexander Zakharchenko to comment on the information presented. A week ago, we sent a written request to his press secretary, Alena Alekseyeva. We invited Alexander Zakharchenko to choose a convenient format for the conversation. Alekseyeva confirmed receipt of our request. However, a week later, we have still not received a response.
#2. Alexander Khodakovsky
Alexander Khodakovsky
The second most influential person in the "DPR," Alexander Khodakovsky, has less power than Zakharchenko. The commander of the Donetsk Alpha unit of the SBU, and now the head of the "DPR Security Council," commands between one and two thousand armed fighters from the "Vostok" brigade.
But Khodakovsky's influence is enhanced by his close ties to the old Donetsk elites, who have retained their assets there. Moscow is also eyeing him as a potential quick replacement for Zakharchenko. Khodakovsky himself positions himself as a potential future leader of the region, willing to negotiate with anyone.
In public speeches, Khodakovsky advocates for the reintegration of Donbas into Ukraine, but while maintaining close ties with Russia. He states that he is not a supporter of joining the Russian Federation, but insists on a special status for the territory. Khodakovsky, as a more moderate figure, is also supported by the entourage of Rinat Akhmetov, who remains influential in the region: the main enterprises of Akhmetov's SCM Group continue to operate in the "DPR" territory. In this situation, the oligarch's entourage is also forced to provide political and other support to the head of the "DPR," Zakharchenko.
Political tensions, competition for revenue streams associated with Rinat Akhmetov, and smuggling goods from Ukraine are the main causes of tension between the two leaders of the "DPR." "Vostok" fighters control the western borders of the "DPR" and have a share in the smuggling of food products from Ukraine, competing with Zakharchenko's men.
(In general, during periods of calm, protecting the flow of goods is the main source of income for all armed groups on both sides of the conflict in Donbas. Representatives of the Ukrainian state engage in smuggling protection with the same zeal as the separatists. Businessmen are subjected to bribes for transporting goods by both security forces and civilian officials ensconced along the demarcation line—from health services to special forces of the tax police. As a result, the price of cargo crossing the demarcation line increases by 2-2,5 times.)
Until recently, Vostok secured alternative gasoline supplies from Ukraine and sales to the "DPR," specifically to the Parallel gas stations owned by Rinat Akhmetov. However, with the tightening of the blockade of the rebel areas, sales at the Parallel network have virtually ceased. Volunteers also report that Vostok, until recently, escorted and secured humanitarian aid from the Rinat Akhmetov Foundation.
Connections between Khodakovsky and Akhmetov's interests were evident from the very first days of the conflict in Donbas. Rumors ascribed Akhmetov's sponsorship of Vostok in exchange for forceful support for his initiatives and the escort of SCM Group industrial cargo through the territory of the so-called "DPR." Whether this is true or not, Khodakovsky's fighters still guard the billionaire's enterprises and the Donbass Arena stadium (one of the Euro 2012 venues).
Until recently, Khodakovsky's group also focused on medications delivered from Ukraine. However, due to the blockade, the volume of medication supplies has decreased significantly. Overall, the tightening of the blockade and the lack of military action are intensifying competition among armed groups. To optimize costs, the leaders of the armed groups regularly resort to downsizing, announcing "cleansing the ranks and getting rid of random people." Specifically, Khodakovsky last announced cuts in his brigade two months ago.
In a telephone conversation, I asked Alexander Khodakovsky to comment on the information contained in this material. The leader of "Vostok" stated that such matters are discussed only in person, not over the phone, but also noted that it might be unsafe for me to travel to Donetsk now.
#3. Denis Pushilin
Denis Pushilin
All of our interlocutors question this man's authority in the "DPR." Pushilin has neither his own army nor influential patrons. However, he manages to occupy a prominent position in the separatist hierarchy as deputy chairman of the "DPR People's Council," and he also represents Donetsk at the Minsk negotiations.
Another source we spoke with, who worked on the now-defunct "Novorossiya" project, described the deputy chairman of the People's Council as "a complete...": "A petty, greedy adventurer and a man without any agenda other than profit. He steals everything that's lying around. The usefulness of people like that is that sooner or later they're made scapegoats. That's what will happen with Mr. Pushilin."
At the height of the Russian Spring, the former curator of the Donetsk MMM network was talked about as a man of that same Rinat Akhmetov. According to our sources in Moscow and Kyiv, Pushilin received tens of millions of rubles to create a network of pro-Russian agitators in Donetsk starting in the winter of 2014. The money was allocated for organizing rallies, purchasing food for activists, transportation, and equipment. Large sums were used to organize the May "referendum." According to our sources, Pushilin handled the financial support for all events of the early "DPR" and secured the bulk of the funds for himself. This angered the other newly-appointed leaders. In June 2014, an assassination attempt was made on Denis Pushilin, killing his assistant, but the MMM man himself was unharmed.
Coordinators of the defunct "Novorossiya" believe that most of the funds allocated to the early "DPR" were simply stolen. Large sums were embezzled, including from private donors.
Little is known about Pushilin's current business activities, however.
We asked Denis Pushilin by phone to discuss the topics raised in this article. The deputy chairman of the "People's Council of the DPR" said he would comment on our information via email, but has not responded since.
#4. Igor Strelkov-Girkin
Igor Strelkov-Gyrkin
The Kremlin removed Girkin, "Commander-in-Chief of Novorossiya," from its list of war managers a year ago. However, months of his vigorous activity in Donbas helped build a reputation that is now being successfully converted into cash. Returning from the war, Strelkov-Girkin founded the "Novorossiya" social movement, which has been used to raise funds for what was billed as humanitarian aid to Donbas and other regions of southeastern Ukraine. "The movement will be built exclusively on volunteer principles; anyone can join us—monarchists and communists alike," said the former reenactor. Seeking donors, the former commander-in-chief embarked on a tour of Russian cities, accompanied by like-minded individuals and PR consultants. In Perm, for example, photographers spotted Girkin in a motorcade of two Mercedes S500s.
In a short time, the former commander-in-chief's movement became the most prominent and wealthy foundation supporting Donbas, while remaining independent from the Kremlin. As his ex-wife, Vera Girkina, told us, the movement now controls millions of rubles.
"He's made a killing in this war, and the Novorossiya movement is his main project," Vera Girkina told me. "Plus, Igor was very generously rewarded for the Slavyansk campaign. I don't know if he accepted it or not, but it could have been as much as 15 million rubles. Overall, the foundation, as far as I know, is operating successfully, but money is also being siphoned off. Even though Igor himself is squeaky clean, illicit embezzlement is inevitable; everyone's hovering around you, wanting a piece of the action."
According to Girkina, some of the humanitarian aid ends up on the border between Russia and the Donetsk region and is then sold as merchandise: "People empty their pockets to help Donbas. And ultimately, they turn this humanitarian aid into commercial profit. Material goods were never important to Igor; he wasn't greedy and didn't like stealing. But now he turns a blind eye to it. I don't understand it."
Vera Girkina herself now lives with her two children in the Rostov region, not far from Millerovo. She says she went there at the insistence of her ex-husband. "We were sent here at the start of the war. Girkin demanded we sit tight and keep quiet, supposedly because he was concerned for our safety. But the problem is that Igor, having become rich, essentially abandoned us. It's impossible to sit tight and keep quiet when you have minimal resources and two children, one of whom is ill. I'm aware of his affairs and keep in touch with our mutual friends. I recently wanted to contact his former boss, Malofeev, but Konstantin told me he no longer wants to have anything to do with anyone close to Girkin."
In response to a request for comment on the information provided, Strelkov-Girkin's press secretary, Anastasia Mikhailovskaya, stated the following:
"Igor Ivanovich won't comment on this nonsense. The information about 15 million is a lie, as is the fact that Vera lives in the Rostov region. Vera lives at her registered address, in her apartment in Khimki. Better yet, tell me, why are you writing all this? You were already beaten in Donetsk, and do you know how many of these crazy militias are roaming around Moscow right now?"
Author: Pavel Kanygin
Новая газета
Subscribe to our channels in Telegram, Facebook, Twitter, VC — Only new faces from the section CRYPT!