July, 21

The last Poroshenko’s cleansing

05/18/2017 12:39:00 pm
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The achievements of the presidential team in the war against traditional opponents among the financial and industrial groups made it possible to proceed to an offensive against the FIG, which until now was officially listed as Poroshenko’s ally.

Although business conflicts with it began immediately after his coming to power in 2014. I am talking about the Brinkford group of David Zhvania and Mykola Martynenko.

In case of success in neutralizing the next fellow oligarchs, the chances of P.Poroshenko to win in the presidential and parliamentary elections of 2019 increase sharply, since opponents who are deprived of economic power cannot effectively resist the head of state and his associates from the "Family-2".

Gasmen with Komsomol cards

The origins of the business of D.Zhvania and M.Martynenko go back to the 1990s, when their first capitals were gained in quite traditional ways for that time.

The young and energetic former secretary of the Komsomol City Committee Martynenko gets acquainted with the same young and energetic Zhvania, the son of the ideology department head of the Central Committee of Georgia’s Communist Party, who has come to Ukraine for permanent residence.

In 1994, Zhvania became the manager of Torhovyj Dim LLC, founded by Martynenko, in 1995 he was appointed as director of economics of the same enterprise, which was engaged in a completely "adult", super-profitable, and therefore extremely dangerous business, closely related to the crime - the supply of gas.

The media wrote a lot about the nuances of this "business" in the context of criminal cases against former Prime Minister Yuliia Tymoshenko, who at the same time launched her corporation UESU.

In his turn, in 1996 M.Martynenko became one of the co-founders and co-owners of Brinkford Ukraine Limited, a subsidiary of Cyprus offshore company Brinkor ltd., Created by D.Zhvania.

In 1997, the partners explored a new promising direction: Brinkford became a supplier of nuclear fuel for Ukrainian nuclear power plants.

No, they did not privatize the manufacturer and did not build their own enterprise for the loan money. The reactor fuel assemblies were and still are manufactured by the Russian TVEL corporation and this is a sphere of really high technologies.

Brinkford was modestly content with the role of intermediary, buying fuel from the Russians and then reselling it to the state-owned company Enerhoatom, but at a more expensive price.

Why Enerhoatom did not purchase fuel assemblies directly from the manufacturer if it is cheaper? This question should have been asked by National Anti-Corruption Bureau investigators, and then president of Ukraine and the head of Enerhoatom should have answered it.

Well, only for 1997-2000, the partners "raised", according to some estimates, about $200 million. Big money for those times.

It should be understood that these $200 million were eventually taken out of the pockets of Ukrainian citizens - as the cost of nuclear fuel is included in the tariff for electricity generation, approved for Enerhoatom.

By the way, now Martynenko is accused of a very similar "business operation": in 2013-2014, the associated with him Austrian company Steuermann bought uranium concentrate in Kazakhstan for $57.47 million and then sold it to the state-owned company Vostochny Ore Mining and Processing Enterprise for $74.75 million, easily "earning" $17.28 million.

Thus, it can be concluded that, despite the existence of a legal business, all these years, a significant portion of the income of the Brinkford group’s owners was gained via shadow schemes.

The attractiveness of such a "business" is explained in terms of invested costs and revenues.

To make a profit from legal production, first you need to properly spend money on the purchase of new equipment, invest serious money in promoting your product on the market, etc. In a word, investments cannot be repulsed instantly in the classical business.

But if you are a smart guy with a high position (in 2006-2014 Martynenko led the parliamentary committee on the fuel and energy complex) and you can enter into president’s or prime minister’s office without an appointment, you can easily negotiate making money, as they say, from the air. Without any investment.

However, the Criminal Code treats such a "business" as receiving undue benefits and corruption.

But until recently, the group of M.Martynenko and D.Zhvania did not have real problems with law enforcement agencies. What has changed?

They could not share...

D.Zhvania assures that in 2007 he left the operating management of the Brinkford holding and now does not influence anything there.

However, on the clarifying question about the shares in the Brinkford business, he replied: "In my understanding, nothing has changed. Everything has remained on a partnership basis".

The absence of joint business is also denied by Martynenko's purchase of a small 2.48% stock of shares in Diamant Bank, connected with D.Zhvania and his partner Ihor Kerez, who can also be associated with the Brinkford group. This deal took place recently, in early February.

Similarly, Martynenko denies involvement in Steuermann. While Zhvania confirms that this is their joint enterprise.

And all because the partners got to loggerheads, i.e. they quarreled.

In the media, there are many interviews with both D.Zhvania and M.Martynenko, who vaguely outline the causes of the conflict and the status of new relations, including in business.

However, it can be assumed that the split began after Zhvania did not get into the upper part of the electoral list of Narodnyj Front at the 2014 early parliamentary elections.

According to the fugitive Verkhovna Rada deputy Oleksandr Onyshchenko, Martynenko formed that list on a "paid basis".

As a result, Zhvania moved on the majority constituency in the Odessa oblast and lost, being left out of big politics.

Obviously, the disagreements seriously weakened the Brinkford group and to some extent predetermined its present unenviable situation.

Though the successful strengthening of positions after Euromaidan began shortly after Narodnyj Front party came to power, M.Martynenko was considered its "gray cardinal" and "purse".

Then the partners succeeded in promoting their business partner Serhiy Pereloma, who headed the Brinkford holding, to the position of the first deputy chairman of the board of Naftohaz of Ukraine.

He was also appointed as a chairman of the supervisory board of the state enterprise Odessa Port Plant, a major producer of mineral fertilizers.

It is no wonder that very soon the OPP suddenly abandoned the services of Naftohaz and started receiving gas from the Antra GmbH, registered in Vienna, which probably took it from the same Naftohaz.

But the Austrian intermediary did not sell this gas to the enterprise, but transferred it on a tolling basis, where the raw material supplier is also the owner of the finished product.

A small part of this product remains as a payment for the processing enterprise. The scheme turned out to be deliberately unprofitable for the state enterprise.

It got deeper and deeper in debt and losses. According to the then-governor of Odessa Mikheil Saakashvili, the losses of OPP from a single contract with Antra are $93 million.

At the same time, the intermediary again received a good profit out of a clear sky without any investment in business development – in a word, very similar to the branded mannerism of the owners of Brinkford group.

The media wrote that M.Martynenko is behind the scheme, and now the NABU is engaged in the investigation of machinations around the OPP.

But it was also noted that interest in this enterprise was shown in the business environment of the president in office.

Thus, Olha Tkachenko who was previously an assistant to the Verkhovna Rada deputy Alexander Granovskiy became a member of the board of OPP.

This is the business partner of Ihor Kononenko who is a personal friend of the president and the first deputy head of the Poroshenko Bloc parliamentary faction.

Such a key area as the sale of finished products was entrusted to O.Tkachenko at OPP.

And she also signed, in particular, contracts for the supply of mineral fertilizers at below-market prices to the Newscope Esates Ltd registered in London.

It seems clear that representatives of the presidential "Family-2" did not want to share their income with colleagues from the group of M.Martynenko – therefore, criminal proceedings on financial improprieties in OPP were instituted in the Prosecutor General's Office of Ukraine and then in the NABU.

It should be taken into account that the department for the investigation of economic crimes of especial importance in the Prosecutor General's Office of Ukraine is called in the media "the department of Granovskiy-Kononenko", hinting at the influence of these deputies on certain decisions.

It is also interesting that only the supply of gas to OPP by Antra was the focus of investigators. And the mentioned contract with Newscope Esates did not interest the Prosecutor General's Office of Ukraine for some reason…

A case of embezzlement and machinations in the state-owned United Mining and Chemical Company (UMCC) appeared later in proceedings of the NABU.

The UMCC includes Irshansk Mining and Processing Plant (Zhytomyr oblast) and Vilnohirsk Mining and Metallurgical Integrated Works (Dnipropetrovsk oblast).

According to the Verkhovna Rada deputy Serhiy Leshchenko, referring to the results of his own investigation, the activities of UMCC was controlled by M.Martynenko.

The former minister of economic development and trade, Aivaras Abromavičius, stated at that time the pressure from I.Kononenko who allegedly insisted on appointing his people to the management of the UMCC.

Fatal mistake

So it turns out that the resonant criminal proceedings of the Prosecutor General's Office of Ukraine and NABU are stacked against the group of M.Martynenko-D.Zhvania, which is push out of its traditional spheres of influence.

And it seems that the partners can oppose nothing to this systematic pressure.

The first wakeup call for them was on July 14, 2016 when S.Pereloma was detained as part of an investigation of embezzlement at OPP. However, he was released then and the case seemed to hang in the air.

This fact was obviously regarded by the group as favorable for itself. And the group was wrong. The investigation went on after a while.

The "Family-2" simply never forces events, preferring to act for sure: 2 steps forward – 1 back, slowly but surely moving towards the goal.

But for the second time, on April 20 of this year, M.Martynenko himself was placed under detention in addition to S.Pereloma.

And it is hardly a mere coincidence that almost immediately after that, on April 24, a temporary administration of the Deposit Guarantee Fund was introduced to Diamantbank owned by the owners of Brinkford. Let us recall that the DGF is managed by another long-time business partner of the president Kostiantyn Vorushylin.

And the National Bank of Ukraine was led by Valeriya Gontaryeva until May 10. She was also involved in the business of P.Poroshenko prior to her appointment to the NBU.

So the NBU takes a decision on its bankruptcy and the bank goes directly under the control of the DGF right after the detention of one of Diamantbank's owners.

Formally – for nonfulfillment of standards of regulatory capital. But, according to the head of the bank's board Oleg Khodachuk, the shareholders have already increased the capital of the bank for $11 million and were ready to add another $28 million.

However, firstly, it took more time for this, and secondly, M.Martynenko's arrest had aggravated the situation.

A lot of assets were left in the real estate industries when the bank was classified as bankrupt: hotels, recreation centers, business centers, etc. All of them belong to the bank's owners and were credited to its balance sheet in order to bring the financial indicators in line with the requirements of the NBU, O. Khodachuk explains.

Now all this property is already in the hands of the DGF. And if they decide to liquidate the bank, all this property will go under the hammer at auction.

It may happen that the concerned parties from the "Family-2" will be the buyers, because, one way or another, all the processes around the Brinkford group are connected with them.

Its future seems rather pessimistic. Having lost the access to all kinds of "schemes" in state-owned companies, M.Martynenko-D.Zhvania's group is deprived of serious financial backing.

The loss of its bank aggravates the situation yet more. Furthermore, Brinkford had lost control of the Luhansk Cartridge Works and Luhansk Machine-Tool Plant in 2014 after the appearance of the "LPR".

The current status of Stroyindustriya Bakhchysarai Works is also incomprehensible because of the Crimea annexation.

Zaporizhia Abrasive Plant, Konstar Kryvyi Rih Turbine Plant, Kovelselmash Plant and Polesia Granite Consolidation, Unisteel Kryvyi Rih Metal mini-Works are left from the industrial assets of the group.

The last one, by the way, was stopped in 2012 and has not resumed the production of zinc plating since then. This is a pretty illustrative example of the managerial talents of the Brinkford owners in the legal business.

Perhaps, only Zaporizhiabrasive can now bring real incomes to them.

But this, of course, is still not enough to finance the presidential or parliamentary election campaign –except perhaps its own nomination in the majority constituency.

Or to stand a bail for release from custody as part of the investigation of existing criminal proceedings.

In this regard, the decision of M.Martynenko to withdraw from the deputy mandate of the Verkhovna Rada in December 2015 when allegations of corruption in his address only started to become intense seems erroneous too.

Appearingly, it was an element of childish bravado: allegedly, even without a mandate and outside the walls of the Rada (which give saving immunity from criminal prosecution), I stay an influential political figure.

Now, as part of the mopping up which is close to the People's Front, the DGF can expect the renewal of the Prosecutor General's Office of Ukraine's interest in a story with the mysterious disappearance of about 500 thousand tons of bauxite from the government reserve.

They were once stored on the territory of Zaporizhiabrasive and had disappeared after the coming of new owners from the Brinkford group.

The investigators believe that these bauxites were simply processed at the plant, i.e. were stolen from the state.

But at the turn of the 2000s, the owners of the plant managed to persuade the prosecutor's office and the SBU that there was no embezzlement, but shrinkage, outage and weathering.

And the SBU with the prosecutor's office had easily believed at that time that 500 thousand tons of ore can literally be blown away by the wind. It seems that the right time for a fresh eye at this version has come.

Vitaliy Krymov, OstroV