Konstantin Zhevago: The Rise and Fall of a Dollar Billionaire
A child prodigy from the provinces, Europe's youngest billionaire, a banker, and the owner of nearly 60 enterprises and commercial entities. All this is Konstantin Valentinovich Zhevago, the most enigmatic oligarch of modern Ukraine. A man almost everyone has heard of, but far from everyone knows his face.
We will tell stories of the oligarch's dizzying rise and spectacular falls.
Konstantin Zhevago. The Beginning of the Journey
Zhevago Konstantin Valentinovich Born in 1974 in the village of Iultin in the Magadan region, Zhevago's family soon moved to Ukraine. So, Konstantin Valentinovich spent his youth in the small town of Dneprorudne in the Zaporizhia region. After finishing school, he went to study in Kyiv, and at the same time, he set out to conquer the capital. And he succeeded. Already in his second year at the Kyiv State University of Economics (then the D.S. Korotchenko Kyiv Institute of National Economy), Zhevago began earning extra money. More precisely, at 19, he became the financial director of Finance and Credit CJSC. You'll agree, not every second-year student can boast such a position. There are several versions of his successful career rise. According to one, the young man from the provinces was helped by his classmate Sergei Cherepovets, who would later become Zhevago's business partner. His father held leading positions in construction and transportation until 2005, so he was easily able to help his son and his friend. Another theory holds that Zhevago's older brother, Oleg, helped him achieve success. He would later chair the supervisory board of Finance and Credit Bank. However, this latter theory is less credible. Oleg Zhevago joined the business his brother had already built and never made much of a splash. So, it's likely that Konstantin Valentinovich simply knows how to choose his friends well.
However, none of these connections explains why a 19-year-old from Dniprorudny, with no work experience whatsoever, was heading a newly formed and such a large organization. Most likely, at that point, Zhevago became a figurehead—a front man.
Konstantin Zhevago
So, the young financial director Zhevago and his partners quickly got their bearings and began their business by buying and selling securities during the voucher privatization that began in Ukraine in the turbulent 90s. All of this was done through the investment company "Finance and Credit." The young talents acquired small stakes, then consolidated them, turning them into large ones, and then sold them to foreign companies and strategic investors. They acquired shares in consumer companies: beer, tobacco, and oil and fats.
In 1994, Zhevago and his associates purchased the Bank for Business Cooperation, which was renamed Finance and Credit that same year (a little later, the people involved in this structure would become known in business slang as "dates" due to the abbreviation "FinIK"). From this point on, a new story began.
The Dates Saga
Finance and Credit Bank became one of the flagships of Konstantin Zhevago's business empire, which flourished for over 20 years. According to the bank, as of 2015, its main shareholders were F&C Realty PJSC (41,58%), Askania LLC (45,92%), and Industrial Construction LLC (6,78%), with Konstantin Valentinovich being the primary beneficiary.
Konstantin Zhevago: The Rise and Fall of a Dollar Billionaire
According to the National Bank of Ukraine (NBU), the bank ranked 10th among 127 banks operating in the country in terms of total assets as of July 1, 2015 (UAH 38,88 billion). However, this did not save the institution from problems. The onset of the 2014 crisis crippled FiK. Incidentally, many believed the bank was of interest to someone for the possibility of gaining control over one of Zhevago's businesses. The most frequently mentioned was the President's interest in the AvtoKRAZ plant, an enterprise that worked for the defense industry.
So, the crisis began with delayed payments and non-return of deposits to clients. Bank representatives talked about temporary difficulties, but within six months it became clear that Finance and Credit was on the brink. In early 2015, the NBU and Zhivago himself tried to save the bank: Valeria Gontareva (Read more about it in the article Valeria Gontareva. The Glitter and Machinations of the Queen of Coins) allocated 1,5 billion hryvnias (700 million in February and 750 million in June), with Kostiantyn Valentynovych expected to raise another 5 billion hryvnias. Zhevago's infusions were made, but the amount proved insufficient, and on September 17, 2015, the NBU board declared Finance and Credit insolvent.
Konstantin Zhevago: The Rise and Fall of a Dollar Billionaire
One would feel sorry for Konstantin Valentinovich here, if not for two "buts." First, in August, the National Bank unexpectedly switched Finance and Credit to "normal operating mode." Essentially, the bank was left to the owner and his management team for a month to plunder. They split up large deposits, siphoned off assets, and transferred collateral to companies close to the oligarch. The question arises: how could the main financial regulator even take such a step? It's all about kickbacks. Typically, such schemes involve a 30% kickback. This kickback will benefit the NBU, represented by Valeria Gontareva.
Secondly, Finiki received a court ruling prohibiting the Enforcement Service, the NBU, and the banks holding correspondent accounts from seizing or forcibly debiting funds from their accounts. The court ruling was presented to those Ukrainians who had won lawsuits against the bank and were attempting to recover their deposits.
Konstantin Zhevago: The Rise and Fall of a Dollar Billionaire
The entire Zhevago empire
Today, Konstantin Zhevago's empire includes approximately 60 enterprises in which he is either the owner or a controlling shareholder. Let's take a look at Zhevago's most notable holdings.
Poltava Mining and Processing Plant. In 1996, Zhevago became deputy chairman of the board of the Poltava Mining and Processing Plant. This position came after Konstantin Zhevago privatized one of Ukraine's strategic enterprises, which had fallen into bankruptcy, for next to nothing. The future oligarch was able to pull off the transaction thanks (again) to his friendly ties with Alexey Kucherenko, the former Minister of Housing and Utilities, and businessman Sergey Veselov. The deal, according to unofficial estimates, was worth $21 million.
Ferrexpo. In 2001, Zhevago registered the management company Ferrexpo in Switzerland. Its main asset is the Poltava Mining and Processing Plant. A year later, Ferrexpo received a license to develop the Yeristovsky Mining and Processing Plant, the largest iron ore deposit in Eastern Europe. In 2007, the oligarch became the first Ukrainian to list a company on the main market of the London Stock Exchange.
Kremenchug "AvtoKrAZ"The "crown jewel" of Zhevago's plant collection was threatened with bankruptcy in 2015. The plant owed 578,9 million hryvnias to the state-owned Oschadbank, which had opened three lines of credit but had never received the money back. Oschadbank threatened to seize AvtoKrAZ's assets and auction them off. However, on February 25, 2016, the Poltava Regional Court ruled against the plant, and the case remains pending.
JSC Rosava. It was created in 1998 on the basis of the state-owned enterprise Rosava OJSC jointly with the Amtel holding company. The raider attack on Rosava was launched by Vadim Grib, the owner of the TEKT group of companies (Read more about Vadim Grib in the article Vadim Grib. He was called the number one raider, but he was hired by the SBU.). Rumor has it that Grib was the perpetrator of the attack, while Zhevago was the real customer.
Next, to become the owner and create a tire holding company, Zhevago executed a brilliant scheme. He filed a lawsuit against the state-owned enterprise Rosava in 2011. The formal reason for initiating the lawsuit was the company's debt of 1,4 million hryvnias. Zhevago's ultimate goal was to take over the company. The oligarch succeeded in taking control of Rosava. Afterward, the bankrupt Valsa enterprise (Belotserkovsky Tire Plant No. 2) transferred the rights to use its trademark to Rosava.
Pharmaceutical corporation "Arterium"It was created in 2005 through the merger of Kyivmedpreparat OJSC (a pharmaceutical company producing antibiotics) and Halychpharm OJSC, both owned by Zhevago. This merger was considered one of the most significant events in the Ukrainian pharmaceutical market.
Zhevago also acquired Kyivmedpreparat through corporate raiding, getting rid of minority shareholders during the merger, represented by Tomas Fiala's Dragon Capital, a company no less experienced in corporate raiding.
Kyiv shipbuilding and ship repair plant. Zhevago received it after tragic events. In 2002, the plant's president and controlling shareholder, Viktor Ionov, was beaten in the courtyard of his dacha and died from his injuries. The beating appeared to be a domestic incident, but immediately afterward, a corporate conflict erupted around the enterprise, and by 2006, it was completely controlled by Zhevago.
Konstantin Zhevago: What are your plans for the future?
On March 31, 2016, a post by People's Deputy of the Radical Party Lyashko Andriy Artemenko appeared on Facebook (Read more about it in the article Mafioso Andrey Artemenko: Dossier and biography of the scandalous Radical Party deputy) of the following content:
"Not for an hour..." That was the response from the distinguished Minister of Fuel and Energy of Ukraine, Volodymyr Demchyshyn, when I placed on his desk a draft memorandum on the creation of a consortium for the construction of an LNG terminal and the diversification of natural gas supplies to Ukraine from Qatar. So, Mr. Minister, we'll do without you and your corruption schemes and kickbacks. It's high time you were consigned to the dustbin of history. The initiative of private capital and the desire of the Qatari Minister of Energy and Industry to diversify consumers and expand into new markets have done their job, and we secured Qatar's consent to supply Ukraine with up to 5 billion cubic meters per year, which we discussed with the management of Ras Gas.
Some talk, and we do. Here's an example of the RPL's implementation of its economic program to pull Ukraine's economy out of its tailspin... And you talk about a coalition..."
So, as we understand it, Konstantin Zhevago is embodying that very “private capital initiative that did the trick” with RasGas Company, Qatar’s second-largest liquefied natural gas producer (created 15 years ago by state-owned Qatar Petroleum and ExxonMobil).
And then Konstantin Valentinovich, perhaps driven by his natural optimism, embarks on a mega-adventure. Concluding agreements in the face of poorly predictable hydrocarbon price dynamics, the absence of an LNG terminal in Ukraine, and a de facto ban on the passage of liquefied gas vessels through the Bosphorus is more likely a disaster than a victory.
Of course, it is possible that Zhevago relies on his experienced business partner Oleg Lyashko (Read more about Oleg Lyashko in the article Militant radical Lyashko). It's no wonder Lyashko claimed he had a "golden share" in the future new coalition he planned to form with the BPP and the People's Front. Zhevago likely also wants to get in on the action. But the "share" clearly didn't work.
As we understand, Konstantin Valentynovych hasn't had enough of being a member of parliament. Speaking about Zhevago's parliamentary tenure, it's worth noting that he's among the most notorious absentees in the Verkhovna Rada, practically never attending its sessions. According to monitoring published by Opora, between 2002 and 2006, Konstantin Zhevago never spoke from the podium of the Verkhovna Rada and never submitted a single bill or request. And in 2008, according to data released by Deputy Speaker Mykola Tomenko, Zhevago was absent from 114 of 116 sessions.
Yes, it's worth remembering that Kostyantyn Zhevago almost always supported Yulia Tymoshenko in politics. While he largely got away with it during Viktor Yanukovych's presidency, his business collapsed with Petro Poroshenko's rise to power—it's well known that Poroshenko and Tymoshenko are mortal enemies. And while Yanukovych and the "Family" were guided by the cold-hearted calculation that Poroshenko was taking revenge on all of Tymoshenko's allies, their dealings with Zhevago were guided by the cold-hearted calculation that Poroshenko was seeking revenge against all of Tymoshenko's allies.
The Weaknesses of the Oligarch
As they say, the rich life is different. Konstantin Valentinovich isn't used to denying himself anything. He's a real man, so his weaknesses are typically masculine: expensive cars and football.
Zhevago owns an Aston Martin One-77 supercar. It's the only model available in Ukraine, out of 77 worldwide, and its price fluctuates around $2 million. The car cruises the capital's roads with a unique license plate, "KVZ," which easily identifies Konstantin Valentinovich Zhevago.
An Aston Martin ONE-77 sports car purchased by Konstantin Zhevago for $2 million. License plates: KVZ (Konstantin Valentinovich Zhevago)
In 2006, Zhevago, or more precisely the company "Ferrexpo", acquired a controlling stake in the Poltava football club "Vorskla".
In his 2014 tax declaration, Kostiantyn Zhevago declared an income of 5 million hryvnias. Specifically, he received 140,306.48 hryvnias of income from Ukraine (salary), another 133,952.82 euros (2,508,566.29 hryvnias) from the Netherlands, and $200,000 (2,720,734.54 hryvnias) from Switzerland. Neither the deputy nor his family own any declared vehicles.
It is worth noting that Forbes magazine recognized K. Zhevago as the youngest self-made billionaire in Europe.
Incidentally, Konstantin Valentinovich is a well-known philanthropist. In 2011, he made a generous donation of £100 to St. Mirie Primary School in South London. The reason for such generosity? It's simple: Zhevago, his wife, and children were planning to move to London and were laying the groundwork.
—
Konstantin Zhevago is a shining example of how to find the right direction and pursue your goals. Perhaps his iron grip stems from a Napoleon complex.
Arina Dmitrieva, Skelet.Org
KONSTANTIN ZHEVAGO: DATA FOR DECEMBER 2022
Subscribe to our channels in Telegram, Facebook, Twitter, VC — Only new faces from the section CRYPT!