Rinat Akhmetov. Portrait of an Oligarch
Data from report The Center for Economic Strategy, "Oligarchic Ukrainian Capital," writes Our money.
Ukraine's richest man. He has exerted significant influence in the energy, metallurgy, media, and freight transport sectors. He has interests in oil and gas, finance, and telecoms. His assets also include a land bank of 123 hectares and a commercial real estate portfolio.
Almost all of Rinat Akhmetov's assets in Ukraine and abroad are consolidated into vertically integrated companies (the largest of which are Metinvest and DTEK) under the umbrella of the SCM holding company. At one point, Rinat Akhmetov closed the retail chain and sold gas stations, insurance companies, and telecommunications companies.
During the invasion, several of Akhmetov's factories were destroyed. He owns four of the ten most damaged Ukrainian oligarchic enterprises.
In anticipation of the creation of the oligarch registry, Rinat Akhmetov closed his media holding.
Rinat Akhmetov. Portrait of an Oligarch
Rinat Akhmetov. INDUSTRIES OF INTEREST
Almost all of Akhmetov's companies are concentrated within the SCM Group. However, some companies (such as Zeonstroy) are suspected of being connected to Rinat Akhmetov.
METALLURGY
Metinvest Group mines ore and coking coal, refines it, and manufactures rolled metal products and metal goods at its facilities. Metinvest also includes American coal mining companies, along with its European metallurgy assets.
Metinvest Group is a vertically integrated group of metallurgical and mining companies. It comprises metallurgical and mining production facilities located in Ukraine, Europe, and the United States, as well as a sales network covering all key markets. Its products are supplied to 75 countries.
The parent company of Metinvest Group is Metinvest BV
On September 19, 2019, a journalistic investigation was published into Akhmetov and Novinsky, which stated that companies affiliated with them had effectively monopolized the coking industry by acquiring PJSC Dniprovskyi Iron and Steel Works and Yuzhkoks in Dnipropetrovsk Oblast, circumventing the AMCU's merger permitting procedure.
Rinat Akhmetov. Portrait of an Oligarch
Rinat Akhmetov. Fuel and Energy
DTEK Group mines and enriches coal, supplying it to its own thermal power plants and coke plants. According to the Antimonopoly Committee of Ukraine (AMCU), DTEK's share of total thermal coal production is 64,6%. DTEK is the largest of the three main buyers, collectively consuming 94,4% of thermal coal: 71% of the coal goes to the power plants of DTEK Dniproenergo, DTEK Vostokenergo, and DTEK Zapadenergo.
Previously, the company had two mines in Russia, but this is no longer the case.
Proven natural gas reserves at DTEK Naftogazvydobuvannya's fields exceed 30 billion cubic meters. As of June 2019, the company operates 26 wells with depths exceeding 5,4 meters. According to information on its official website, DTEK is focused on gas production.
THE PROPERTY
SCM's commercial real estate is managed by ESTA Holding. The company constructs and operates properties in Kyiv and other major cities (before the war in Donbas, the majority of its real estate holdings were in Donetsk). ESTA Holding manages 11 properties in Ukraine, four of which are currently under its control. Akhmetov also owns an apartment in central London through a company it controls, valued at approximately $200 million.
RINAT AKHMETOV: dossier, biography, and compromising information
Rinat Akhmetov. TRANSPORT
Akhmetov has two major assets in freight transport and logistics, which he uses to transport his own ore, metal, and coal. The first is Lemtrans (the largest private operator of gondola cars).
The second is Portinvest (a tenant in the Yuzhny and Mariupol seaports). Between 50% and 70% of the cargo shipped through Ukraine's deepest port, Yuzhny, is SCM Group goods.
According to information on Portinvest's website, the company operates in the following ports: Yuzhny, Chornomorsk, Odesa, Mariupol, Berdyansk, and Izmail. Portinvest officially owns only Yuzhny (Yuzhny Marine Terminal LLC: 24.4 hectares), and only operates in the others. The company provides freight forwarding services for all of the above ports.
As part of an investment project, Portinvest is building a terminal near the small Adzhlyk Estuary. For this purpose, the company acquired a 65-hectare plot of land from the private company Prichaly Komintern in 2012 and a 40-hectare plot from Terra-Spetsinvest and Terra-Kominvest in 2013.
TELECOM
Ukrtelecom
Interests in satellite television
Akhmetov also owned the telecommunications group VEGA (Farlep-Invest), but sold it to Vodafone in 2021.
RINAT AKHMETOV: dossier, biography, and compromising information
In addition, such decisions are retrospective, meaning they apply to previous periods.
Rinat Akhmetov. FOOD AND AGRICULTURAL SECTORS
a) Harvist Holding: Kyiv, Zhytomyr and Donetsk regions, land bank - 123 thousand hectares (jointly with SmartHolding).
b) "Artvainers": among the beneficiaries are close relatives of Akhmetov, Bakhmut, Donetsk region (vineyards - Odessa, Kherson, Nikolaev regions).
c) UMG Agro: export of agricultural products.
d) "UMG Trading" - sales of ash and slag materials and mineral fertilizers.
RINAT AKHMETOV: dossier, biography, and compromising information
RETAIL
The retail segment was represented by the Brusnichka grocery store chain (Ukrainian Retail LLC). However, in 2019, the group shuttered this business.
ENGINEERING
The companies manufacture equipment for SCM Group's mining operations. Initially, they were independent divisions but later became part of DTEK:
a) CORUM Druzhkovka Machine-Building Plant (Druzhkovka, Donetsk region);
b) Krivoy Rog Mining Equipment Plant (Krivoy Rog);
c) "Miner's Light" (Kharkov).
RINAT AKHMETOV: dossier, biography, and compromising information
Rinat Akhmetov. Regulations in Which There Are Inherent Interests
Law on Duty on Export of Scrap Metal
Scrap metal is a raw material for metallurgical production. To prevent scrap metal from being exported from Ukraine and reduce its price, an export duty was introduced. In 2019, the duty rate was increased from €42 to €58 per ton, and the law was extended for three years. 38 In December 2021, the duty rate was set at €180 per ton for five years.
DECISIONS AND RESEARCH OF THE ANTIMONOPOLY COMMITTEE
The Antimonopoly Committee must strictly monitor compliance with competition principles and ensure that monopolists do not abuse their position. To limit market influence, the AMCU has the authority to impose financial and administrative sanctions, including the forced breakup of monopolies. Consequently, for SCM businesses, the AMCU's position is often a key factor in ensuring stability.
Thus, in early 2019, the AMCU acknowledged that DTEK had a significant market share but was not a monopoly in the electricity market. With the change of power in Ukraine, the AMCU's position changed, and the committee fined the group's companies several times.
Following the Revolution of Dignity, the Antimonopoly Committee began to scrutinize the oligarchs' businesses. Since then, more than two dozen investigations have been conducted, some of which resulted in fines significant by Ukrainian standards and even forced separations. In total, the fines amounted to over $300 million, or 40% of the total fines imposed by the AMCU between 2014 and 2021. The second-largest fine in the AMCU's history was also issued against oligarch companies (the first was against a tobacco manufacturer and distributor).
But this has not yet proven to be an effective tool. Firstly, even large fines represent only a small portion of the revenues generated by abuse of monopoly power. Secondly, there is a problem with implementation. Companies are sued by the AMCU even for small fines, let alone large ones. Not a single large fine imposed on oligarchs' businesses has been paid. Overall, according to the AMCU, only 20% of fines imposed were paid between 2015 and 2021. This problem has been confirmed by Andriy Kostin, Chairman of the Parliamentary Committee on Legal Policy, and Denis Malyuska, Minister of Justice.
Harsher sanctions are even less effective. For example, the committee used to typically approve all mergers and acquisitions. Even if the AMCU had no intention of doing so, companies eventually managed to persuade the committee. This was the case, for example, with the acquisition of Dnipro Coke by Akhmetov's Metinvest (although there were certain restrictions on operations for the first three years).
The courts also overturned forced separations. This happened with Firtash's nitrogen plants, which purchased gas at inflated prices (from group companies) and sometimes suspended production. In addition to threatening the effectiveness of antitrust policy itself, this creates risks for the implementation of the oligarch law (see the next section for more details). One of the four criteria under this law is control over a monopoly. However, there are no clear algorithms for determining whether a company is a monopoly (except perhaps for natural monopolies).
FOOD AND AGRICULTURAL SECTORS
a) Harvist Holding: Kyiv, Zhytomyr and Donetsk regions, land bank - 123 thousand hectares (jointly with SmartHolding).
b) "Artvainers": among the beneficiaries are close relatives of Akhmetov, Bakhmut, Donetsk region (vineyards - Odessa, Kherson, Nikolaev regions).
c) UMG Agro: export of agricultural products.
d) "UMG Trading" - sales of ash and slag materials and mineral fertilizers.
RETAIL
The retail segment was represented by the Brusnichka grocery store chain (Ukrainian Retail LLC). However, in 2019, the group shuttered this business.
Rinat Akhmetov. Mechanical Engineering
The companies manufacture equipment for SCM Group's mining operations. Initially, they were independent divisions but later became part of DTEK:
a) CORUM Druzhkovka Machine-Building Plant (Druzhkovka, Donetsk region);
b) Krivoy Rog Mining Equipment Plant (Krivoy Rog);
c) "Miner's Light" (Kharkov).
REGULATIONS IN WHICH THERE ARE INHERENT INTERESTS
Law on Duty on Export of Scrap Metal
Scrap metal is a raw material for metallurgical production. To prevent scrap metal from being exported from Ukraine and reduce its price, an export duty was introduced. In 2019, the duty rate was increased from €42 to €58 per ton, and the law was extended for three years. 38 In December 2021, the duty rate was set at €180 per ton for five years.
DECISIONS AND RESEARCH OF THE ANTIMONOPOLY COMMITTEE
The Antimonopoly Committee must strictly monitor compliance with competition principles and ensure that monopolists do not abuse their position. To limit market influence, the AMCU has the authority to impose financial and administrative sanctions, including the forced breakup of monopolies. Consequently, for SCM businesses, the AMCU's position is often a key factor in ensuring stability.
Thus, in early 2019, the AMCU acknowledged that DTEK had a significant market share but was not a monopoly in the electricity market. With the change of power in Ukraine, the AMCU's position changed, and the committee fined the group's companies several times.
Following the Revolution of Dignity, the Antimonopoly Committee began to scrutinize the oligarchs' businesses. Since then, more than two dozen investigations have been conducted, some of which resulted in fines significant by Ukrainian standards and even forced separations. In total, the fines amounted to over $300 million, or 40% of the total fines imposed by the AMCU between 2014 and 2021. The second-largest fine in the AMCU's history was also issued against oligarch companies (the first was against a tobacco manufacturer and distributor).
But this has not yet proven to be an effective tool. Firstly, even large fines represent only a small portion of the revenues generated by abuse of monopoly power. Secondly, there is a problem with implementation. Companies are sued by the AMCU even for small fines, let alone large ones. Not a single large fine imposed on oligarchs' businesses has been paid. Overall, according to the AMCU, only 20% of fines imposed were paid between 2015 and 2021. This problem has been confirmed by Andriy Kostin, Chairman of the Parliamentary Committee on Legal Policy, and Denis Malyuska, Minister of Justice.
Harsher sanctions are even less effective. For example, the committee used to typically approve all mergers and acquisitions. Even if the AMCU had no intention of doing so, companies eventually managed to persuade the committee. This was the case, for example, with the acquisition of Dnipro Coke by Akhmetov's Metinvest (although there were certain restrictions on operations for the first three years).
The courts also overturned forced separations. This applies to Firtash's nitrogen plants, which purchased gas at inflated prices (from group companies) and sometimes suspended production. In addition to threatening the effectiveness of antitrust policy itself, this creates risks for the implementation of the oligarch law (see the next section for more details). One of the four criteria under this law is control over a monopoly. However, there are no clear algorithms for determining whether a company is a monopoly (except perhaps for natural ones), other than a decision by the Antimonopoly Committee of Ukraine (AMCU) following an investigation. Furthermore, such decisions are retrospective, meaning they apply to previous periods.
Rinat Akhmetov. Conclusions on Environmental Impact Assessment
At the end of 2017, Ukraine's Law on Environmental Impact Assessment (EIA) came into force. Its adoption was a prerequisite for implementing the Association Agreement with the EU, but it was only implemented on the second attempt due to lobbying by the agribusiness community, which led to its veto by the president.
SCM Group companies (metallurgy, fuel, and energy) are the largest polluters in Ukraine. Therefore, they must comply with the approved environmental standards of the Ministry of Energy and Ecology. Thus, through the Internal Affairs Committee (IAC) procedure, the government and the public can influence the approval of environmental pollution.
At the first stage, an enterprise planning to carry out an activity potentially harmful to the environment (a list of such activities is included in the Law "On Internal Affairs") publishes "Notifications of Planned Activities" in the Unified Register of Internal Affairs Organizations on the Ministry's website.
After undergoing public comment, the final version is published. The conclusion to the EIA outlines a series of environmental requirements that the entrepreneur must comply with. Ignoring these requirements or acting without the EIA is grounds for termination of operations.
One example of the influence of the Internal Affairs Directorate on the DTEK group's business is public pressure regarding air pollution at the DTEK Pridneprovska TPP.
DECISION OF THE NATIONAL COMMISSION FOR REGULATORY OF ENERGY AND PUBLIC SERVICES
4.1. "Rotterdam+"
The procedure for establishing the projected wholesale market price (WMP) for electricity, better known as the "Rotterdam+" formula, was approved by the National Commission for State Regulation of Energy and Public Utilities (NKREKU) and came into effect in the second quarter of 2016. Coal-fired thermal power plants sold electricity to the unified wholesale market at this price. The coal price was calculated using the formula "price in the Amsterdam-Rotterdam-Antwerp (ARA) ports plus the cost of its delivery to Ukraine." The resulting figure is factored into the price of electricity supplied by thermal power plants. This method applies to all coal supplied to thermal power plants, including coal mined in Ukraine.
It benefited DTEK companies, which control the majority of coal production and thermal energy production in Ukraine (using coal). The fuel component in the electricity price structure of thermal power plants reaches 80%. After the implementation of the Rotterdam+ formula, Akhmetov's thermal power plants began selling their electricity at a 15-20% premium. However, this does not mean that the cost of the coal they purchased actually increased to the level stipulated in the formula.
According to estimates by the Association of Energy and Utilities Consumers, as of September 2019, Ukrainian consumers overpaid for electricity by approximately UAH 49 billion as a result of the implementation of the "Rotterdam+" formula. Preliminary estimates by the National Anti-Corruption Bureau place the total damage at UAH 15 billion.
Following the implementation of the new electricity market model on July 1, 2019, the Rotterdam+ formula was automatically cancelled.
4.2. Green tariff
The state guarantees the purchase of energy from renewable sources produced in Ukraine at a fixed tariff calculated in euros. DTEK is an active producer of electricity under feed-in tariffs.
In mid-January 2019, Solar-Farm-1 LLC, owned by DTEK VED, launched the largest solar power plant in Ukraine (one of the top 3 in Europe) with a capacity of 200 MW in the Nikopol district of the Dnipropetrovsk region.
The Nikopolska Solar Power Plant (SPS) is the second solar energy project in DTEK's portfolio. The company's first project, the 10 MW Tryfonivska Solar Power Plant (SPS) in the Kherson region, was launched in 2017.
In 2019, the company announced plans to complete construction of the 240 MW Pokrovskaya Solar Power Plant, meaning it will receive more guaranteed revenue for green energy.
As the cost of solar panel production, and therefore the cost of solar generation, decreases, maintaining a high fixed tariff is illogical. The cost of building solar power plants in Ukraine fell from an estimated €1250/kW in 2015 to €709/kW in 2017. A more reasonable approach would be to introduce auctions for the purchase of energy produced from renewable sources.
On April 25, 2019, the Verkhovna Rada adopted a bill introducing auctions for the sale of electricity from renewable sources (the so-called green auction). The transition period will last until 2030.
4.3. Electricity export
Until recently, DTEK controlled the majority of electricity exports to EU countries and effectively subsidized other consumers. Electricity generated at thermal power plants was sold to the wholesale market operator at higher prices, based on the "Rotterdam+" coal pricing formula, and purchased on the market by DTEK's energy exporting company at lower, average market prices. Currently, the group's share of exports is significantly smaller.
POTENTIAL RISKS
One of the indicators of a significant share of Rinat Akhmetov's companies' industrial assets is their operations in regulated or highly concentrated markets. Consequently, favorable decisions from the Antimonopoly Committee and regulators—the National Commission for Regulation of Energy and Public Utilities (NKREKU), the National Commission for Regulation of Communications and Informatization (NKRSI), and a potential transport regulator—are crucial for lobbying the oligarch's interests.
When privatizing enterprises that are important to the economy, it is possible to adopt special legislation that may also take into account the interests of the business group.
Rinat Akhmetov. SPORT
Rinat Akhmetov's largest sports asset is the Shakhtar Donetsk football club, based in his hometown of Donetsk. Akhmetov became the club's president in 1996. Shakhtar is considered Ukraine's richest football club, having spent hundreds of millions of dollars on player contracts and the construction of the Donbass Arena stadium, which, including the surrounding parkland, cost $400 million. Large investments and shrewd management have enabled Shakhtar to become one of the most successful teams in Eastern Europe.
The club owner also used this popularity to support his political ambitions and that of his colleagues from the Party of Regions. Fugitive President Viktor Yanukovych was a key figure at major events at the Donbass Arena, frequently congratulating Shakhtar fans on their victories—from the VIP box, the media, and even the football pitch. This activity was especially noticeable during the election season.
Besides Yanukovych, other influential politicians of this party could often be seen at Shakhtar matches: Borys Kolesnikov (member of parliament of several convocations, former vice-prime minister and former minister of infrastructure in the government of Mykola Azarov (2010–2012)), Serhiy Lyovochkin (former head of the Presidential Administration of Yanukovych 2010–2014, member of parliament of several convocations), Andriy Klyuyev (former member of parliament, First vice-prime minister – minister of economic development and trade (2010–2012) in the Azarov government, Secretary of the National Security and Defense Council of Ukraine (2012–2014) during the Yanukovych era).
Major events, such as the opening of the Donbass Arena or Akhmetov's birthday, held at the same stadium, were attended by the highest officials of all political parties, businessmen, and popular actors, which also demonstrates the level of influence of the Donetsk oligarch.
Besides Shakhtar, Akhmetov is informally linked to the Mariupol football club (formerly Illichivets) from the city of the same name—another professional team that competed at the highest level in Ukraine before the full-scale invasion. Its results and budget are much more modest, but it is based in the Donetsk region, which was the main region for Akhmetov's business and political activities. Mariupol, while not directly financed by the Donetsk businessman's structures, certainly has a direct connection to him.
Unofficially, the Mariupol club served as Shakhtar's farm team for a long time, serving as a platform for young players from the Donetsk club's academy to gain experience. For example, in the 2011-2012 season, the number of Shakhtar players on loan reached 21 on the Mariupol club's roster, out of a roster of 30-32 players for the season.
At the top management level, it's also easy to trace connections to Akhmetov's business. A significant figure in Mariupol's recent history, Volodymyr Boyko, became the club's president in 2010, when the Ilyich Iron and Steel Works, where he served as chairman of the board, was acquired by the Donetsk oligarch's Metinvest Group.
RELIGION
Akhmetov has financed the construction and restoration of mosques on several occasions. Mosques in Donetsk and Kazan were restored in 2012. In 2019, Akhmetov donated a $5 million plot of land to the Crimean Tatar Community for the construction of a mosque for 5,000 people.
According to Detector Media, during 2021, on Akhmetov’s TV channel (as well as channels Medvedchuk и Firtash) PR materials about the UOC-MP appeared, but the oligarch has no PR with the WTO.
Rinat Akhmetov. Foreign Assets
Although most of Rinat Akhmetov's businesses are located in Ukraine, he owns several enterprises abroad. Metinvest, co-owned by Akhmetov and NovinskyMetinvest has foreign assets in the mining and metals industries: United Coal Company in the US, Ferriera Valsider and Metinvest Trametal in Italy, Spartan in the UK, and Promet Steel in Bulgaria. All of these companies were part of a vertically integrated group and were heavily dependent on supplies from Metinvest's facilities in Ukraine. After the outbreak of full-scale war, Metinvest made its foreign assets more independent.
Real estate rose in Akhmetov's list of most valuable assets on February 24, 2022. Akhmetov owns numerous commercial and private properties in Ukraine, as well as two residences abroad: an apartment at One Hyde Park in London, for which he paid £136,4 million in 2011254, and a villa on the French Riviera worth €200 million255. Akhmetov's son, Damir, owns a villa on Lake Geneva worth 60 million Swiss francs.
Rinat Akhmetov. Activities during a full-scale war
Ukraine's richest man, Akhmetov, played a key role in the outbreak of the Russian-Ukrainian war in 2014. His actions, or rather inactions, made it easier for Russian-controlled separatists to gain a foothold in his region of influence—Donetsk. In 2022, Akhmetov avoided this mistake and is now the biggest supporter of the Ukrainian resistance among other oligarchs.
According to the Rinat Akhmetov Foundation, the total amount of aid distributed by organizations controlled by the oligarch reached $100 million as of the end of September 2022. This includes humanitarian aid (distribution of food, medicine, and essential supplies, evacuation from war-torn regions, creation of the largest online archive of war witnesses), and military support (uniforms, personal protective equipment, vehicles, drones, thermal imagers, fortifications, and medical personnel).
translation Skelet.Org
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