Vasyl Khmelnytsky and Andriy Ivanov: planted oligarchs

Vasyl Khmelnytsky and Andriy Ivanov: planted oligarchs

He is considered to be one of the largest owners of real estate in the capital: they say that Vasily Khmelnytsky bought up half of Kyiv, and these rumors are not far from the truth. He seized land plots under Kuchma, Yushchenko, and Yanukovych, under Omelchenko, Chernovtsy и Klitschko, and plans to continue his business under any government. For a man who quietly and unnoticed sat in parliament for sixteen years, switching parties and factions, this is certainly possible!

Vasyl Khmelnitsky: How a Welder Became a Millionaire

His biography is highly atypical for a Ukrainian oligarch: a simple working man who joined the ranks of the aristocracy on his own, not through family connections or marriage—a perfect plot for a novel about the great American dream realized in the vastness of the former Soviet Union! But in this case, it's more like a script for a new "Brigada," albeit without the daring chases in BMWs, but much more cynical.

Khmelnitsky Vasily He was born on September 10, 1966, in the village of Bayan-Aul in the Pavlodar region of the Kazakh SSR, to a family of classic virgin land farmers: his father worked as a tractor driver, and his mother as a painter on construction sites. After serving their Komsomol membership, they returned home to Ukraine in 1969, to the town of Vatutine in the Cherkasy region, where their sons, the elder Valery and the younger Vasily, grew up. Incidentally, nothing is known about the oligarch's older brother: the world would never have known about him if Vasily hadn't mentioned him in one of his interviews—when he was trying to explain how he became rich. He did it poorly, and no one understood.

Vasily wasn't a good student at school, eking out only Bs and Cs, and he wasn't particularly good at sports. For someone like him, the only option in the USSR was vocational school. So in 1981, after finishing eighth grade, he enrolled in Vocational School No. 2 in Vatutino, joining the gas-electric welding group. This was followed by military service (1984-86), serving in the Strategic Missile Forces in the Arkhangelsk region. Judging by his lack of advanced education and physical fitness, he likely served in a supply company or even a construction battalion attached to a missile unit. But demobilized soldiers keep such things to themselves, assuring their childhood friends that they served in the toughest special forces or at the controls of their homeland's nuclear shield.

The demobilized welder had only one path - to become a welder, but in his native Vatutino this had no prospects.

And then it was like in the movie "Brother": Valery Khmelnitsky had by then moved to Leningrad, where he worked at the port, took evening classes at the Institute of Commerce, and had connections in the semi-criminal underworld of the nascent business community. So his parents sent Vasily to live with his older brother—they said, "Who knows, maybe he'll find him a job!" Arriving in Leningrad in 1986, Vasily found a job in construction in his field and also enrolled in evening classes—but only at the Electrotechnical Institute (LETI, now the St. Petersburg State Electrotechnical University). He received a room in a dorm, hoping for a room in a communal apartment and a permanent Leningrad residence permit. However, the welder still didn't have enough money, and at first, according to Skelet.Org, Vasily tried to earn extra money on weekends as a loader. By his own admission, it was a rather unproductive waste of time: "Hard work doesn't always bring good earnings," he later said, cautionarily. However, in 1987, Vasily Khmelnitsky joined a crew of "moonlighters," where one could earn 25 to 50 rubles a day, and then found work at a construction cooperative. It was there that he met and became close with Alexander Varvarin.

Brothers Dmitry and Alexander Varvariny were rather enigmatic figures in Russian business in the early 90s. The initiator, leader, and brains of their duo was Dmitry: a mathematics graduate with a thesis in probability and statistics, capable of instantly calculating the prospects of any undertaking. Finding nothing appealing in the dull work of an engineer, he and his brother founded the Onyx construction cooperative in the 80s, then abandoned it (to Alexander), switching to the export of scrap metal and timber through joint ventures. But a bright mind alone wasn't enough: connections among domestic officials and acquaintances with foreign businessmen were required, as well as good relations with the predatory criminal underworld. They had to fork out a lot: first in cash, then in shares in the business.

Anatoly Sobchak was named among Dmitry Varvarin's patrons and shareholders—they had known each other since Leningrad University, where Sobchak taught in the law department. It was after Sobchak's election as a deputy of the Supreme Soviet and then as chairman of the Leningrad City Council that Varvarin made his breakthrough into big business, creating the joint venture "Orimi Wood," founded by the Orion cooperative and the American companies "D NSTE" and "Wood Mize r." He literally bought up timber reserves, which were then exported on the ships of the Baltic Shipping Company, which in January 1990 was transformed into a leased enterprise under new ownership. Orimi Wood quickly became the country's second-largest timber exporter, after Soyuzlesekport.

During this process, Dmitry Varvarin realized he needed to assemble his own team at Orimi Wood. So, in 1989, his brother Alexander brought Vasyl Khmelnitsky, whom he knew well from the Onyx cooperative. Unexpectedly, the welder showed signs of being a shrewd businessman, and most importantly, this world-weary young man was a good addition to Dmitry Varvarin's entourage. Thus began the career of the future oligarch Vasyl Khmelnitsky.

Vasyl Khmelnytsky and Andriy Ivanov: planted oligarchs

Orimi comes to Ukraine

In the early 90s, when private businesses were still dreaming of privatizing the oil and gas sector, Dmitry Varnavin devised an original and almost honest scheme. His subsidiary, Orimi-Oil, offered oil producers a service for reconstructing old wells, which resulted in several-fold increases in production. Varnavin kept his engineering know-how secret, but his business interest lay in the fact that 50% of the excess oil produced was transferred to Orimi-Oil as payment for the service. This oil was then sent to refineries, processed, and then distributed throughout Russia as gasoline, diesel fuel, and fuel oil. Since the products were sold domestically, this scheme didn't generate foreign currency at the time, and Dmitry Varnavin considered it a secondary priority—so he appointed his brother to manage it. Vasily Khmelnitsky became Alexander Varnavin's deputy, receiving the title of "Head of the Information Department." What he actually did was anyone's guess.

In 1992, Orimi-Oil began supplying petroleum products to Ukraine. A branch was registered in Kyiv on July 22, 1992, and then a subsidiary, Danapris Ltd., was established. Khmelnitsky was offered the opportunity to go to Ukraine and head Danapris as the Varvarins' director and trusted confidant. The word "trust" was no empty phrase back then, as the complete instability of the Ukrainian market (primarily due to hyperinflation) meant that firm figures and sums were unheard of. Deals were often concluded on a whim, and the risk of scams and rip-offs was therefore very high.

Andrey Ivanov

And then another fateful meeting for Khmelnitsky took place. Ivanov Andrey Anatolievich — a former Soviet naval officer who served in the Black Sea Fleet from 1987 to 92 (combat unit commander on the cruiser Moskva), was hired by the Samara branch of Orimi-Oil. First as an engineer, then as one of the branch's managers, where he particularly distinguished himself in the battle against competitors. And since the Samara branch began supplying petroleum products to Ukraine through Danapris LTD JSC, Vasily Khmelnitsky and Andrey Ivanov became very close through their shared work. So much so that they became lifelong friends and business partners—at least to this day.

But at that time, Andrei Ivanov had a different surname: journalists once unearthed his registration data for 1997, in which he appeared as Andrei Dirnberger. But in 2003, under the same information (same address, DRFO code, etc.), he was registered as Andrei Ivanov. This very secretive man refused to explain the mystery of his name change, but it is known that his mother and sisters are also Ivanovs (as is his wife, Natalia).

In 1993, the sale of Russian petroleum products in Ukraine was carried out using rather complex schemes. For example, Nordex negotiated direct oil deliveries to Ukrainian refineries in exchange for barter shipments of agricultural produce. Vasyl Khmelnitsky proposed a scheme to Orimi-Oil involving the Zaporizhzhia Metallurgical Plant: through barter or with karbovanets (coupons) earned from gasoline sales, metal or raw materials were purchased and exported. Then, the traditional Orimi Wood mechanism was activated: the proceeds were transferred to the accounts of offshore companies through which the company operated, and then the foreign currency earnings were returned to Russia as investments and used for privatization. However, Dmitry Varvarin disapproved of the metal scheme. Khmelnitsky then took action independently and recruited Andrey Ivanov (Dirnberger), persuading him to move to Ukraine and start a large-scale business there. In 1994, they bought out the Varvarin brothers' stake in the Ukrainian branch of Orimi for half a million dollars and created their own company, Real Group, continuing their partnership with Orimi Wood.

Vasyl Khmelnytsky, Andriy Ivanov, the Greens, and the Zaporizhstal takeover

However, in the mid-90s, the era of oil barter deals was ending, and Russia's Orimi Wood re-registered as Orimi and became heavily involved in timber exports, construction, steamships, and tea production (Princess Nuri and Princess Kandy), losing its position in the oil business. Younger, more powerful Russian oil companies set their sights on Ukraine, moving from wholesale sales to a complete takeover of the Ukrainian fuel market—taking over refineries and creating their own gas station networks. Only very large businesses with their own sources of oil supply could resist this. Therefore, for example, the rather difficult battle between Khmelnitsky and Ivanov for Zhitomirnaftoprodukt (they needed to acquire a controlling stake) proved futile: the partners had no petroleum products. They were forced to sell the enterprise to someone who did, and thus it ended up under the ownership of the Privat Group.

As early as 1995, Vasyl Khmelnytsky decided to expand as far as possible to participate in the mass privatization that had begun in Ukraine, applying the experience accumulated earlier in Russia.

But one of their first such investments—the acquisition of a 15% stake in the Poltava Diamond Plant—demonstrated that owning a small stake in the company only allowed for passively awaiting modest dividends. After this, Vasyl Khmelnytsky and Andriy Ivanov preferred to operate on a larger scale, either acquiring controlling stakes or taking control of them.

After revising their business strategy, they decided to focus on metal exports—fortunately, global market conditions were conducive to this. Since Khmelnitsky and Ivanov had had a lucrative business relationship with Zaporizhstal Director Vitaly Satsky since 1993, they decided to launch their large-scale metallurgical business with this plant. Its privatization process dragged on for several years, but followed a scheme that perfectly embodies the popular term "privatization." The very idea of ​​selling one of Ukraine's most profitable enterprises was pushed through its director, Satsky; the president's wife, Lyudmila Kuchma (with whom Vasyl Khmelnitsky had established a business relationship); Eduard Shifrin, a representative of the Hong Kong offshore firm Linfull Intl Ltd. (he handled Zaporizhstal's export deals); and Alexander Schneider, co-owner of the company Midland.

First, in 1997, through the efforts of Satsky and the State Property Fund, Zaporizhstal was transformed into a public joint-stock company. Then, with the help of Satsky, the state-owned controlling stake was transferred to the control of Vasyl Khmelnytsky. This was accompanied by a veritable scam and spectacle: Khmelnytsky created and headed a so-called "Center for the People's Economy," which applied for "effective enterprise management" and immediately received official approval from the State Property Fund (with the help of Lyudmila Kuchma and her husband), after which the plundering began. By 2000, three-quarters of the shares had already been purchased by Midland (Shifrin and Shnaider), Zapad-Reserve (Satsky and FC Metallurg President Igor Dvoretsky), and the Khmelnitsky-Ivanov duo (or rather, Khmelnitsky-Dirnberger), who bought 33% of the shares for $70 million. The final point in the "privatization" was put in 2001 by Midland, who bought the last 25% of the shares from the State Property Fund for just $13 million. And this despite the fact that the company's annual profit, according to estimates, Skelet.Org, exceeded $100 million per year! Later, in 2007, Khmelnitsky and Ivanov sold their 33% stake in Zaporizhstal for $400 million!

Kyiv Investment Group

Besides this, for almost ten years, they received not only dividends from the plant's shares but also profits from companies that profited from it. For example, Stil Trek LLC (established by offshore companies), through which scrap metal was supplied to the plant. Incidentally, Ivanov's younger sister, Irina, chaired the supervisory board of Stil Trek. They also owned the private security company Zaporizhstal-Security (the plant's security), and stakes in Zaporizhzhia Coke and the Zaporizhzhia Iron Ore Plant.

However, another little-known scandal was connected to the privatization of Zaporizhstal. Although Khmelnitsky claimed to have borrowed the money to purchase the shares from Shifrin (and supposedly repaid them with his first profits), Russian sources offered a different version of events. Specifically, Khmelnitsky received the money for Zaporizhstal from Dmitry Varvarin, who convinced him of the potential of such an investment for Orimi Wood. At the same time, Varvarin invested in Ukrainian politics by financing the election campaign of the Green Party of Ukraine (PZU), which in 1998 entered the Verkhovna Rada with 5,4% of the vote—and Vasyl Khmelnitsky became a deputy on their list. And so, when the time came, as they say, to pay dividends and repay debts, Dmitry Varvarin was assassinated in St. Petersburg on March 10, 2000. Just a few months after his death, the Orimi empire was torn to pieces. The main theory behind the murder was Varvarin's conflict with the owners of the Baltic Shipping Company. But whatever the case, Khmelnitsky was never forced to pay back anything. And after that, Andrei Dirnberger decided to become Ivanov...

Kyiv Investment Group (KIG) of Vasyl Khmelnytsky and Andrey Ivanov

Vasyl Khmelnitsky and Andrey Ivanov created this holding company in 2003 to manage both their own investments and those of other shareholders. KIG, in turn, is managed by KIG Capital Management, a company with offshore roots. Initially, Vasyl Khmelnitsky was the company's primary owner, holding 75%, but his stake has since been reduced by allocating smaller stakes to leading top managers, and Andrey Ivanov immediately became its director (with 25%).

Kyiv Investment Group (KIG) of Vasyl Khmelnytsky and Andrey Ivanov

They invested in everything that could generate a stable profit, striving to acquire, if not controlling, then at least significant stakes. One of KIG's first acquisitions (not counting enterprises acquired before its creation) was ZAO Khlib Kyiva (40%) and Kyivmlyn (50%), which controlled the capital's bread market. While this seemed like a promising investment, Khmelnytsky insisted on eliminating "social bread" and raising prices for baked goods, while the Kyiv City Council (the other co-owner of the enterprises) categorically blocked these initiatives. Ultimately, in 2008, realizing that the crisis would drive Khlib Kyiva into losses, KIG sold its stake.

This wasn't Vasyl Khmelnytsky's only attempt to gain control of strategic monopolies with guaranteed consumption of goods and services. In 2004-2005, he hatched plans to buy up the capital's utilities sector, even managing to acquire 18% of Kyivenergo and some stakes in Kyivgaz and Kyivvodokanal, intending to merge them into a joint venture, Kyivenergoholding. Khmelnytsky openly stated that he wanted to make them "profitable," meaning raise utility rates. The project stalled in 2006: the capital's authorities, who were responsible for this privatization, Alexander Omelchenko He was not re-elected as Kyiv's mayor. His successor, Leonid Chernovetsky, although he supported the plan, wanted his son-in-law to have a stake in it. Vyacheslava Suprunenko). The matter ended with KIG selling its shares in KyivEnergo to Rinat Akhmetov in 2007, and Kyivgaz and the water utility to Suprunenko's structures.

Khmelnitsky and Ivanov were much more successful in their dealings with capital real estate.

Back in 2003, having reached an agreement with "San Sanych" (Omelchenko), they began buying up state-owned enterprises in Kyiv and the surrounding region that owned large tracts of land. The purpose of their development business was to build commercial projects on this land: shopping centers, hotels, luxury housing, and the like. One of the first to fall was the capital's "Svarka" plant—a former welder, Khmelnytsky, converted one of its workshops into the "Gorodok" shopping center. Among the most recent victims was the legendary Kyiv Motorcycle Plant, which was purchased in 2012 for 59 million hryvnias by Khmelnytsky's Capital Index Group LLC. The purchase was made and closed, as only 29 hectares of the plant's land were at stake. Ukrvino (4 hectares) suffered a similar fate, and Kyivgazprylad (1,7 hectares near Lukyanivska metro station) was also evicted. Some enterprises were driven to the brink of ruin or bankruptcy between 2004 and 2006 with the help of KyivEnergo and Kyivvodokanal, controlled by Khmelnytsky: they were presented with astronomical bills for electricity and water, after which their land was confiscated.

Land was also plundered through shell companies (Troyanda, 20 hectares), Tarasovka, Buzivske, Novaya Ukraina, and even entire agricultural complexes (Khotovsky, 1500 hectares). The latter acquisition caused quite a scandal: the land was hastily allocated on October 1, 2007, at an unscheduled meeting of the Kyiv City Council, during which deputies generously distributed over 2 hectares to Khmelnytskyi's structures (housing cooperatives). It turned out that some of the shell companies were established by the Cypriot offshore company Densec Limited, which also founded the KyivEnergoHolding joint venture and several other Kyiv Investment Group projects.

Among Khmelnytsky's scandalous acquisitions was a pumping station in Chapayevka (Holosiivskyi district), on the grounds of which some kind of mansion was built. According to the sign on the gate, it was still a pumping station; according to the documents, it was some kind of health resort complex – after all, laws prohibit residential construction in this protected area, so they had to be "disguised." But according to local residents, this mansion sometimes hosted such distinguished guests that they were terrifying to behold.

Interestingly, the pump station's territory is legally owned by the Estonian company AS Nelgilin, where Andrei Ivanov's wife worked, and whose director was his former head of security. Even more interesting is that mysterious Estonian-registered companies had been supporting Vasily Khmelnitsky's business since the early 90s, and their founder was a certain "Erik from St. Petersburg." For example, Albor, a company part of the KIG holding company that built the Gorodok and Libyd Plaza shopping centers, was founded by Klamens, an Estonian-registered company.

Vasyl Khmelnytsky's most famous acquisition is the capital's Zhulyany Airport, which Master-Avia LLC took on a long-term lease in 2011. Master-Avia's founders are: Akers Invest LLC (Vasyl Khmelnytsky), Aviagroup LLC (Andrey Ivanov), and the scandalous Freelance Group LLC. Yuri Ivanyushchenko, better known as Yura EnakievskyIn 2015, he transferred his stake to South African businessman Willem Martinus de Beer, who is considered a front man. Ivan Avramov – Ivanyushchenko, now the "overseer" of Ukrainian business. Meanwhile, Zhulyany remains on a long-term lease with Khmelnytskyi, who is already exploring the possibility of relocating the airport, allegedly because it is constrained by sprawling urban development. But in that case, the current Zhulyany site would likely go to Khmelnytskyi's companies.

Assets of Vasyl Khmelnitsky and Andrey Ivanov

Vasyl Khmelnitsky: "GAK" dealings

During the 2006 Kyiv City Council elections, Khmelnytsky and Ivanov created and financed the Kyiv Civic Action Committee (HAC). Oleksandr Pabat was appointed party leader. Because Pabat was a peculiar character (lacking charisma and poor communication skills), they tried to keep him out of the public eye. Voters viewed the HAC as a social movement.

Alexander Pabat

Ivanov-Khmelnitsky's partners were Igor Balenko, founder of the Furshet chain and husband of singer Asia Akhat; Sergey Spekary, chairman of the board of Kyivgaz; Yaroslav Filatov, owner of Kyivvodokanal; and the owner of the Epicenter retail chain. Galina Gerega, the founder of Sintez Bank, a very influential but secretive businessman Alexander Loifenfeld.

It is not surprising that with such support, the State Anti-Corruption Committee entered the Kyiv City Council and wielded significant influence there, which it directed toward the corruption of its sponsors and founders.

Money doesn't smell!

The Kyiv Investment Group invested not only in metallurgy, utilities, and real estate, but also in banks. Vasyl Khmelnytsky owned three: National Investments Bank, Real Bank, and Khreshchatyk Bank, the latter of which long played a role as one of KIG's main sources of income. Main, but not the only, or even the largest. Khmelnytsky's largest creditor was and remains Russia's Sberbank, which in 2007-2008 provided his construction holding company, UDP, with a $250 million loan. However, due to the onset of the financial crisis, only $175 million was repaid, but Sberbank also financed Khmelnytsky's other major purchases and construction projects. Moreover, according to Khmelnytsky himself, this was possible thanks to his close relationship with Herman Gref, chairman of Sberbank since 2007 and one of Vladimir Putin's favorite liberal economists. Which, in fact, has repeatedly given rise to suspicions: was Vasyl Khmelnytsky a planted Cossack? The curious thing is that this is precisely how he began in 1992, arriving in Kyiv as Dmitry Varvarin's envoy.

However, Khmelnytsky never had a passion for politics, although he often used it to his advantage – pragmatically, even cynically. In 2002, he financed the election campaigns of two parties at once: his own Green Party and Lyudmila Kuchma's Women for the Future, to whom he was heavily indebted for their support during privatization in the 90s. However, he didn't have to spend any of his own money, and he primarily had to monitor their spending to ensure it wasn't embezzled by party functionaries. However, in that election, both parties failed to reach the electoral threshold, so Vasyl Khmelnytsky had to fight his way into the Rada in a by-election in the 82nd single-mandate constituency in the Zaporizhia region. Rumor has it that the vote count was deliberately disrupted in order to force a rerun, in which Khmelnytsky participated.

From 2002 to 2006, he bounced around the Rada, switching from the People's Power faction to the People's Choice faction, then to the Union, and then to the BYuT. In the 2006 elections, Vasyl Khmelnytsky was elected on the Tymoshenko Bloc list, but with the creation of the Party of Regions-CPU-SPU coalition, he defected, taking with him several more "carcasses"—which marked the beginning of the political crisis that led to the early elections of 2007. In those elections, he was elected on the Party of Regions list (No. 100), as he was in 2012 (No. 37). Khmelnytsky could afford to buy favorable seats: in 2013, Focus magazine estimated his fortune at $888 million (21st place on the list of the richest Ukrainians).

Vasyl Khmelnytsky with his wife Zoya Litvin

However, by 2015, his assets were estimated at only 143 million. The onset of the crisis primarily affected real estate and related businesses, and in recent years, Vasyl Khmelnytsky had focused exclusively on these. Simultaneously, his main creditor, Sberbank, began experiencing certain difficulties, not so much economic as political in nature. It would seem that Khmelnytsky should have demonstrated his business acumen, which once helped him exit the metallurgy industry before the global price collapse and shift his focus to new business areas. But for some reason, he stubbornly clings to investments in construction real estate and continues to build new projects—and seek new sources of financing. Thus, back in February 2014, having defected from the Party of Regions faction to the new parliamentary group "Sovereign European Ukraine," Vasyl Khmelnytsky suddenly became an ardent supporter of European integration. And in 2016, as the owner of the construction company UDP, he attended the European Business Summit with a project to create an industrial park in Bila Tserkva and a proposal to invest a quarter of a billion euros in it.

Sergey Varis, for Skelet.Org

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