Ukraine turns up pressure on exiled oligarch Dmytro Firtash

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Ukrainian authorities have increased pressure on one of the country’s richest oligarchs in exile, Dmytro Firtash, by expanding a corruption investigation into his energy businesses.

Security services announced on Tuesday that a further three managers of Firtash’s companies have been charged with embezzlement, bringing the total number of managers charged to 15. Investigators also seized £157mn worth of property belonging to Firtash and assets totalling £4.2mn owned by the charged managers.

The alleged scheme involved regional gas companies linked to Firtash siphoning off gas from Ukraine’s state transportation system from 2016 to 2022. The estimated damage to state coffers amounts to £380mn, according to Ukrainian investigators.

In a statement, Firtash’s company, Group DF, denied the charges and described them as “corrupt pressure”. It called on Ukraine “as a country at the forefront of the fight for European values, (to) respect the rule of law and refrain from engaging in unlawful business expropriation”.

Ukraine is under pressure from its western partners and financiers to reduce the influence of oligarchs and clean up a culture of corruption which has persisted since the country declared its independence from the Soviet Union. For decades, different business interests in Ukraine have battled for control or influence over the highest offices of the state in a bid to gain or maintain assets as well as state contracts.

“This is a move against Firtash because [the regional gas companies are] the foundation of his control over the gas supply system,” Tetiana Shevchuk, legal counsel of the Anti-corruption Action Centre in Ukraine.

Firtash was a partner of Russia’s state-owned gas giant Gazprom in Ukraine’s lucrative gas distribution business. He gradually gained influence and was a backer of Viktor Yanukovych, the disgraced pro-Russian president of Ukraine who was ousted from power in 2014. That year, Firtash fled to Austria, where he has been stuck fighting a US extradition request for allegedly bribing Indian officials.

He attempted to strike a plea deal in November, according to a letter from US lobbyist Ben Barnes detailing he was paid an initial $100,000 to secure a meeting with the US Department of Justice.

Even if Firtash manages to reach a deal with the US, he may not be able to return to Ukraine. In 2021, he was sanctioned in Ukraine for allegedly supplying Russian military companies with titanium and his personal assets and bank accounts were frozen.

Oleh Arestarhov, a head of communications for Group DF, said the sanction charges had been challenged in court but the hearings were repeatedly adjourned because Ukraine’s security services did not come with the underlying evidence.

In 2021, Ukraine president Volodymyr Zelenskyy introduced a “de-oligarchisation” law, which has yet to be fully implemented. The law was in part motivated by Zelenskyy trying to push back against oligarchs who were eating away at his ratings, Shevchuk said.

After Russia’s invasion last year, Zelenskyy continued his crackdown on the oligarchs, including stripping them of some of their most valuable assets. Ukraine’s 24-hour United News broadcast, whereby all the news channels broadcast the same content, meant that the oligarchs lost their ability to influence the political agenda through their media.

“We can say that the oligarch system as it used to be doesn’t work anymore,” said Shevchuk. “In a way they’ve become ordinary businessman trying to protect their assets.”

Firtash is not the only big player in Ukraine being pushed out of his former stronghold.

Ihor Kolomoisky is reportedly still in Ukraine though wanted in the US for money laundering. Kyiv has sued him in London’s High Court for allegedly embezzling billions of dollars from PrivatBank, a lender that was nationalised in 2016. His shares in Ukraine’s state oil company were also nationalised, in November 2022.

Others, such as Rinat Akhmetov and Viktor Pinchuk, have managed to ride the tide, including by selling their media assets.

All of Ukraine’s oligarchs have lost money and assets because of the war.

Most of the destruction has occurred in Ukraine’s south east and eastern regions — the country’s industrial base, with many cities and towns such as Mariupol being almost wiped off the map.

The prewar system of oligarchs could still make a comeback when the conflict is over, said Shevchuk.

“It’s a huge question . . . whether it will reoccur, whether we will have new oligarchs, for instance someone who will gain huge profits from reconstruction.”