Vitaliy Gaiduk: The Forgotten Billionaire of Donbass
Over the past five to eight years, prominent oligarchs have begun to disappear from Ukraine. Some of them actually fled to Russia or Israel, others received asylum in Europe, but many never left, simply ceasing to appear in the media and in public. Ukrainians have already begun to forget the faces and names of these first domestic billionaires and former ministers who once governed the Ukrainian economy and shaped Ukrainian policy, including foreign affairs. However, Donetsk oligarch Vitaliy Haiduk has no desire to be remembered. He wanted to leave the scene long before the second Maidan, and, according to Skelet.Org, not to indulge in a well-deserved vacation in a Spanish villa or a mansion in picturesque Koncha-Zaspa.
The Birth of ISD
Vitaly Anatolyevich Gaiduk was born on July 19, 1957, in the village of Khlebodarovka in the Volnovakha district of the Stalino (now Donetsk) region. In 1980, he graduated from the Donetsk Polytechnic Institute with a rather interesting specialty: engineering and economics in the mechanical engineering industry. However, the young Gaiduk wasn't yet drawn to the factories: he spent about a year at his alma mater, trying to secure a place in graduate school there. Then, through a good connection (or, as they used to say, "great connections"), he was hired at the Donetsk regional center of AvtoVAZtekhservice. In the USSR, this was the only official auto repair chain (the only alternative being garage DIYers) through which it was still possible to obtain scarce components. The line for ordinary car owners formed months in advance, with a separate line for "inner circles" and overtime for VIPs. Both the authorities and criminal gangs vied for influence over the service stations. So, even getting a job as a mechanic there was considered a great success, and advancing a career without someone's patronage was practically impossible. But Vitaly Gaiduk rose from economist to deputy director of economics there from 1981 to 1987. This allowed him to acquire high-level connections in all sectors in Donetsk and the surrounding region, as well as, rumor has it, start-up capital.
In 1988, 31-year-old Vitaly Gaiduk unexpectedly won a personnel competition (an innovation during the perestroika era) for the director's position at the Zuevsky Energy-Mechanical Plant (ZEMZ). It's hard to say what prompted him to trade his cushy job at a service station for a plant producing aerial work platforms, but the secret to his victory is well-known. Skelet.OrgThe fact is that the city of Zugres, where the plant is located, is subordinate to the Khartsyzsk City Council, and the first secretary of the Khartsyzsk City Committee of the Communist Party of Ukraine from 1986 to 90 was Serhiy Tulub – at that time a close friend of Vitaliy Haiduk, and later a multiple-time Minister of Fuel and Energy, Minister of the Coal Industry of Ukraine, and head of the Cherkasy Regional State Administration.
Sergey Tulub
As soon as Ukraine gained independence and declared its intention to build a market economy, Vitaliy Haiduk immediately decided that managing the plant wasn't enough; he'd also like to own it. And in 1992, he began the privatization process of his ZEMZ, which became the first privatized enterprise in Ukraine, receiving the corresponding certificate from the State Property Fund, No. 1. Moreover, since the legislative framework at the time didn't yet provide for any shares, ZEMZ was privatized through transfer to collective ownership—and later, it was broken up into smaller units. This led to the plant subsequently being subjected to repeated corporate raids.
Gaiduk was involved not only in his ZEMZ plant but also in a bit of business, primarily barter transactions, which were common at the time. After the 1994 local elections, he became close to Volodymyr Shcherban, the chairman of the Donetsk Regional Council, whose deputy he became in December of that year. Accordingly, when Volodymyr Shcherban became the head of the regional administration (governor) in 1995, Gaiduk was appointed his deputy there as well. It was then that Gaiduk, who owned Vizavi CJSC and his business partner, Azovstal, met. Sergei Taruta, who established his own company, Azovintex, at the plant, the Industrial Union of Donbass (IUD) corporation was established. The corporation's founders also included the Donetsk regional branch of the Academy of Technological Sciences of Ukraine and the Donetsk Chamber of Commerce and Industry, headed by Olga Pshonka, the prosecutor's wife. Viktor PshonkaInitially, the ISD corporation was engaged in the supply of gas to industrial and municipal enterprises in the region.
Sergey Taruta
Many years later, Taruta claimed that Vitaliy Gaiduk "never headed or worked for the ISD corporation." Technically, he wasn't lying: Gaiduk never held any positions at the ISD; he was its founder, co-owner, and chief lobbyist. As early as 1995, Gaiduk had ensured that all gas supplies and payments in the Donetsk region were handled exclusively through the Industrial Union, which brought the corporation enormous amounts of easy money. Furthermore, it was he who kept the Energia corporation (Lazarenko, Tymoshenko, the Pinchuks, and Arshava) from entering the region. But where and through what schemes did the ISD "obtain" this gas? Sources reported that in the mid-90s, ISD worked closely with the Uzbek mafia led by Gafur Rakhimov (one of Islam Karimov's "nukers"), who controlled gas production in his country. Taruta reached an agreement with him, and Gaiduk devised lucrative schemes through which their Asian partner received cash through the offshore company Eastern Distribution. It was reported that, while developing these schemes, ISD and Rakhimov decided to remove Itera from the Ukrainian market, leading to the murder of the company's director, Alexander Shvedchenko, in Kyiv. The Ukrainian-Uzbek gas alliance was cemented by the acquisition of a 39% stake in Uzbekneftegaz by Gaiduk and Taruta.
In fact, the rise of ISD in the 90s left behind a string of bloody murders—which, however, were never solved. One of the first victims associated with the corporation was the director of the Alchevsk Metallurgical Plant, shot by unknown assailants in 1995, immediately after the Industrial Union of Donbass began its takeover of his plant.
Naturally, the existence of such a rapidly growing entity couldn't have escaped the attention of the Donetsk region's unofficial ruler. Gaiduk and Taruta were reluctant to share their profits with Akhmetov, but while they succeeded under Volodymyr Shcherban, under his successor, Sergei Polyakov, the region quickly fell into the hands of both Akhmetov and the corrupt prosecutor's patent leather shoes. Gennady VasilievWith Viktor Yanukovych's appointment as Chairman of the Regional State Administration, Akhmetov became a full-fledged co-owner of the Industrial Union of Donbass and, for several years, effectively dictated its terms. This is why, in the late 1990s and early 2000s, IUD had the image of Akhmetov's "branded" corporation. This image was very grim: the corporation had a rather unsavory reputation for being "bloody." Even worse were its methods for absorbing state-owned enterprises: first, Gaiduk and Akhmetov's associates created intermediary firms within the factories, monopolizing sales and pocketing all the profits. Then, they forced the enterprises into debt, and then bought out these debts and seized controlling stakes.
Vitaly Gaiduk. Golden Years
Rumor has it that in 1998, Vitaliy Haiduk was offered the position of head of Naftogaz Ukrainy, but allegedly turned down the tempting position in favor of Ihor Bakai. If this is true, the reasons for this refusal can only be guessed at. However, when in 2000, Fuel and Energy Minister Serhiy Tulub, an old friend of Haiduk's, offered him the position of deputy, he didn't hesitate for a day. However, before he had time to settle in Kyiv, Tulub was ousted from the Yushchenko-Tymoshenko government and transferred to Yevhen Marchuk's position as deputy secretary of the National Security and Defense Council, a man who merely weaved inept intrigues. However, Haiduk remained in his position, and at the same time became the first deputy head of the central office of the newly formed Party of Regions, whose co-chairs in 2000-2001 were Mykola Azarov, Petro Poroshenko, Efim Zvyagilsky, Leonid Chernovetsky, Vladimir Rybak and Valentin Landyk.
In Kinakh's government, he became Minister of Fuel and Energy, and in Yanukovych's government, he was promoted to Deputy Prime Minister for the Fuel and Economic Complex (FEC). This was despite the fact that the Gaiduk-Taruta duo's relationship with Akhmetov's team had deteriorated, and a split occurred within the ISD in 2002.
Back in 2000, Igor Prasolov, one of the first Donetsk businessmen to fall under Akhmetov's sway and who had been involved in "financial optimization" schemes at ISD, convinced him to create a separate company to provide investment and consulting support for Rinat Leonidovich's business. The company was named System Capital Management (SCM), and Prasolov himself was appointed its director. Following this, ISD's joint assets were rapidly subordinated and registered under SCM: initially, SCM representatives served on the supervisory boards and management boards, and then ownership changed hands. Ultimately, Akhmetov effectively transferred most of ISD's metallurgical enterprises to his name, including Azovstal, as well as the media group (Ukraine TV channel), Shakhtar football club, and Digital Cellular Communications. ISD was then left with only one major enterprise—the Alchevsk Metallurgical Plant. However, already in 2003, ISD acquired 98,81% of the shares of the Dnepropetrovsk Metallurgical Plant named after Dzerzhinsky and 42,26% of the shares of the OJSC Dnepropetrovsk Metallurgical Plant named after Petrovsky.
ISD also began investing in foreign companies: its first purchase was a 79,48% stake in the Dunaujváros Iron and Steel Works (Hungary). A scandal quickly erupted around it: it was discovered that Gaiduk had created corrupt schemes to sell Ukrainian electricity to the company at reduced rates. Subsequent acquisitions included the DAM-2004 Iron and Steel Works (Hungary), the Polish Huta Czestochowa Iron and Steel Works, the Lozenc Rolling Mill, and a refractory materials plant in Chrzanów. Moreover, the idea of expanding the business into Europe and avoiding mergers with Russian companies belonged to Vitaly Gaiduk, who, since around 2001, had taken a sharply anti-Russian stance on the economy – both as a co-owner of ISD and as Deputy Prime Minister. It was reported that his resignation in December 2003 was initiated by Putin and was the result of Gaiduk's categorical rejection of the Ukrainian-Russian consortium project to manage the gas transportation system.
However, Vitaliy Gaiduk did not disclose the true reasons for his stubbornness, insisting that he was acting in Ukraine's interests. However, people privy to his schemes reported Skelet.OrgThe point is that this consortium, as well as Putin's gas policy in Central Asia, undermined the larger business plans of Gaiduk and Taruta, who were making big money on Uzbek gas—and not just in Ukraine. For example, in 2002, ISD won a tender to supply Uzbek gas to the European Union, and the deal simply fell through. Gaiduk's anti-Putin stance was further fueled by the contract between the Khartsyzsk Pipe Plant (KhTP) and Gazprom for the supply of large-diameter pipes to Russia: after Akhmetov took over KhTP, ISD lost this lucrative contract, and Gaiduk did not shy away from simple revenge against Akhmetov and Gazprom.
After the final division of ISD, its main owners remained Vitaliy Haiduk (50,1%) and Serhiy Taruta and Oleh Mkrtchan (49,9% between them). In addition, in 2004, they created the Industrial Group consortium, to which they transferred all of ISD's non-metallurgical assets: the Ukrainian Dairy Company (through the Cypriot company Tibbetts Holdings Limited), the Evolution Media publishing house (the proUA and UGMK portals, the Kommentarii newspaper, and the phl photo service), and the Ukrainian Independent TV Corporation (along with Firtash), a number of football and hockey clubs (Stal, Metallurg, Sokol). In 2006, Vitaly Gaiduk's net worth was estimated at $1,77 billion, and a year later, it was $2,7 billion.
In 2006, Vitaliy Haiduk briefly returned to public politics. This return was preceded by a scandal in December 2005, when Viktor Yushchenko allegedly signed a decree appointing Haiduk as Deputy Prime Minister for the Fuel and Energy Sector (in exchange for promises to bring the Donetsk region into line). However, Fuel and Energy Minister Ivan Plachkov and Naftogaz CEO Oleksiy Ivchenko vehemently opposed the appointment. In response, the Dniprovskyi Iron and Steel Works, part of the ISD, filed a lawsuit invalidating the contract between Naftogaz, Gazprom, and RosUkrEnergo. This once again exposed Haiduk as an oligarch seeking revenge on his opponents through political and economic means.
Vitaly Gaiduk and Victor Baloga
Vitaliy Haiduk found a place in power in October 2006: he was appointed Secretary of the National Security and Defense Council. Whether it was a coincidence, but it so happened that for the next few months, the presidential government was locked in a fierce standoff with the parliamentary "anti-crisis coalition" and the Yanukovych government—while Haiduk's ISD and Akhmetov's SMK continued their battle for big business. And yet, at the very height of the crisis, Haiduk, according to Skelet.OrgHe refused to support Yushchenko's overly radical plans and resigned in May 2007, replaced by the compliant Ivan Plyushch. Vitaliy Haiduk never held a high-ranking position again, although in 2008 he began actively supporting Yulia Tymoshenko and was again promised the post of deputy prime minister. However, he received only the title of adviser to the prime minister. A couple of years later, he disappeared from view altogether.
Vitaliy Gaiduk: An oligarch retreats into the shadows
In 2008, Gaiduk was reportedly preparing Yulia Tymoshenko's first visit to Moscow, during which he once again found common ground with the Russians. Then, in 2009, a significant event occurred in the world of Ukrainian business: Vitaly Gaiduk sold his stake in ISD to the Russian company Evraz (having initially ceded it to Taruta and Mkrtchyan, who then resold it to the Russians). Moreover, despite the crisis, he received a very good price for it: the official amount of the deal was not disclosed, but journalists reported variously $1,3 billion, and even as much as $3 billion! The money was transferred through Vnesheconombank, but Gaiduk did not receive it immediately; his stake was bought out in installments over two years.
But the fate of this money has become the subject of rumors and speculation. In particular, numerous sources Skelet.Org They claimed that between 300 and 400 million dollars of this money was spent on Yulia Tymoshenko's election campaign, which allegedly guaranteed Vitaliy Gaiduk the post of First Deputy Prime Minister if she won.
Between 2008 and 2013, news reports repeatedly reported new court decisions in the case of Donetsk resident Lyudmila Mykytina, whose five-year-old granddaughter, Mashenka, was run over and killed by the driver of Vitaly Gaiduk's official SUV in the spring of 2000, right outside his boss's home (although most of our sources believe Gaiduk himself was behind the wheel, later persuading the driver to take the blame). Incidentally, it later emerged that the SUV had been stolen from the EU and had come into Gaiduk's possession through criminal channels. At the time, the ISD corporation brushed off the crime, awarding the deceased Mashenka's mother and grandmother a whopping 5 hryvnias (as stated in a memo from the corporation's garage manager). Then, the ISD decided to pay for the girl's funeral, but its managers demanded receipts not only for the coffin and wreaths but also for "church services" (funeral service, candles, etc.). When Lyudmila Mykytina began filing lawsuits for compensation, she was threatened with criminal charges for extortion and even physical violence. Fortunately, she was unharmed, but in 2007, the ill-fated SUV and its driver suddenly "drove off a bridge into the river," as police later reported. Mykytina, however, continued to fight—and to increase the compensation amount. In December 2012, the Voroshilovsky Court of Kyiv ruled in favor of Mykytina's claim for 200 million hryvnias—money that Vitaliy Gaiduk could have allocated from his billion-dollar fortune. However, this never happened, and after that, the media stopped reporting on the further development of the case and on Lyudmila Mykytina in general.
Apparently, Gaiduk decided to put his money to good use, investing primarily in expanding his stake in the Industrial Union. It was also reported that he allocated 400 million hryvnias for the construction of the VIAN Arena equestrian complex near Kyiv, occupying 50 hectares. He also hired Dutch world champion Anke van Grunsven as head coach, ostensibly to "train future Ukrainian Olympians." However, these "future Olympians" somehow ended up being Gaiduk himself, his family, friends, and business partners. His assets also included the Ukrainian Mining and Metallurgical Company, the Gdansk Shipyard, the Hyatt Hotel in Kyiv, the Kyivmiskbud-6 Trust, the Construction Products Plant, and a vast amount of Kyiv real estate. For example, at one time, the Industrial Group acquired a four-story building and a substantial plot of land on Franka Street, right next to St. Volodymyr's Cathedral. Gaiduk acquired ten (!) plots of land, each measuring 12-25 acres, in Koncha-Zaspa, a villa in Barcelona, Spain, and construction companies he controlled built several high-rises in Kyiv. In short, between 2005 and 2013, Vitaliy Gaiduk's Donbas metallurgical capital slowly but surely transformed into Kyiv real estate, agricultural enterprises, sports clubs, and shares in foreign companies and enterprises. But in 2013, he partially sold even this, as if anticipating the enormous upheavals to come—and then, like a swoop!
Indeed, after the Euromaidan, Vitaliy Haiduk was mentioned only occasionally, but there was no fresh news about him. The only evidence that Haiduk was alive and hadn't left was a few lines in an October 2016 announcement about the death of Bohdan Hawrylyshyn, the founder of the Ukrainian Renaissance Foundation (a branch of the Soros Foundation). Among those attending his funeral was Vitaliy Haiduk, mentioned as the chairman of the supervisory board of the Kyiv branch of the International Institute of Management (MIM-Kyiv). Afterward, Haiduk returned to the shadows, once again disappearing from public view and the press. However, his brief reappearance sparked a flurry of rumors and gossip about what one of Ukraine's richest men is currently up to, and whether it might be connected to the activities of his business partner, Serhiy Taruta, who dreams of reclaiming the Donbas from Rinat Akhmetov.
Sergey Varis, for Skelet.Org
Subscribe to our channels in Telegram, Facebook, Twitter, VC — Only new faces from the section CRYPT!