Rinat Akhmetov – He who pulls the strings (part one)

Despite President Volodymyr Zelensky’s drive to curb the influence of Ukraine’s oligarchs, the wealth and influence of their leading representative, Rinat Akhmetov, continues to grow.

Kyiv Post asked Novoe Vremya’s political journalist Dmytro Bobritsky How does Akhmetov defend himself and his interests, and who are his main auxiliaries. Here is Bobritsky’s response reflecting his understanding of the situation and not necessarily our position.

Akhmetov’s powerful system of lobbying private interests 

Rinat Akhmetov's business in the public sector is safeguarded by First Aide to President Serhiy Shefir, Prime Minister Denys Shmyhal, and more than a hundred lawmakers.

According to official data, there are approximately 100,000 people working at Akhmetov’s enterprises. As of November 2021, his total net worth is estimated at $11 billion. He is the richest and most influential businessman in Ukraine.

The national scale of his business allows him to keep a powerful informal lobbying structure. In doing so, he is also assisted by his own TV channels, which broadcast information that is directly or indirectly beneficial to his business or criticizes his personal opponents or adversaries of his business empire.

Akhmetov has built the most powerful system of political lobbying machine, which is run by his seven closest managers. They have loyal lawmakers, government officials, and TV channels at their disposal.

The heart and soul of Akhmetov’s business is the SCM Group – a management company he founded in the city of Donetsk in 2000. It incorporates the energy business of Soviet-era thermal power plants and renewable energy (DTEK); Metinvest Holding; Bank PUMB; the country’s largest landline operator, Ukrtelecom; the 2009 UEFA Cup champion football club Shakhtar Donetsk; and other assets.

SCM’s top figures. Who stands behind the wheel of Akhmetov’s lobbying apparatus?

The key figures responsible for lobbying the businessman’s interests in politics are seven representatives of his companies: SCM Director of Public Relations and Communications Natalya Yemchenko; Adviser to the Chief Executive Officer of the media holding Media Group Ukraine Iryna Miliutina; DTEK’s Chief Executive Officer Maksym Timchenko; his Deputy Dmytro Saharuk; GR Specialist Felix Zinchenko; and Metinvest CEO Yuriy Ryzhenkov, who is assisted in his current role by Dmytro Tevelev – an experienced functionary who previously worked for four years at a state agency responsible for regulating the stock market.

According to our sources, Natalya Yemchenko of SCM is in charge of selecting and ensuring access to media support for certain opposition politicians: Dmytro Razumkov, Volodymyr Hroysman, Ihor Smeshko, and Oleh Liashko. Yemchenko influences how often and in which situations these people appear on the air. In addition, she manages a media tech back office, which looks a lot like a “political farm.” Responding to journalists, Yemchenko denied her role as a consultant to the aforementioned politicians.

CEO of DTEK Maksym Timchenko handles lobbying in the energy sector. The sources say that not only does he coordinate the management of the company, but also controls the network of loyal parliamentarians and masterminds information campaigns aimed at obtaining even more favorable conditions from the government regulators on the electric power market. Members of President Zelensky’s top team are negative about Timchenko. They complain he is pressuring them in order to obtain the desired concessions.

The person assisting Timchenko in carrying out the tasks of the media frontline is his right-hand man in the company – Dmytro Saharuk, the executive director of DTEK, who also coordinates the work of the PR department at DTEK. Felix Zinchenko, a subordinate of Saharuk, is a DTEK GR employee. He directly coordinates the lobbyists in the Verkhovna Rada.

When responding to a request from journalists to explain his reasons for contacting the top politicians and clarify his role in the media campaigns, Timchenko denied the existence of any informal cooperation with the parliamentarians. However, there is a photo taken in the Verkhovna Rada session hall of Zinchenko asking Volodymyr Moroz, a lawmaker from the Opposition Platform — For Life (OPFL) Party, in a message dated July 2021, not to support an amendment to the bill on the facilitation of connecting new consumers to the domestic electricity networks suggested by Chairman of the Verkhovna Rada Committee on Energy Andriy Herus, but to support an amendment to the bill tabled by the Energy Ministry.

Besides that, Akhmetov’s business structures have created a separate advertising agency, Stories.UA, which, according to the sources, cooperates with public opinion leaders on a commercial basis. It is headed by Iryna Miliutina, advisor to the Chief Executive Officer of the media holding Media Group Ukraine. Various Ukrainian experts are invited to comment on Akhmetov’s reputation.

Who in the government is involved in lobbying?

First of all, Serhiy Shefir, first aide to President Volodymyr Zelensky, has been spotted lobbying Rinat Akhmetov’s interests. Shefir is a close friend of Zelensky; he used to work as a screenwriter for the stand-up performances of Kvartal 95 on Ukrainian television back when Zelensky was an actor.

From the very beginning of Zelensky’s presidential career, Shefir secured himself an informal position as a communicator with the oligarchs. Now, according to the information from the presidential press po ol, Shefir communicates only with Akhmetov.

In these latter days, Shefir got tired of political games and focuses largely on his main job in Kvartal 95, our sources among governmental officials claim. Nielsen’s television audience measurement ordered by the Television Industry Committee (TIC) reveals that there are fewer and fewer people watching Kvartal’s TV programs. Thus, according to the data from Forbes.ua, in 2019, almost 17.5% of the Ukrainian TV audience watched “Vechirniy Kvartal” – a flagship comedy show produced by Kvartal 95 Studio, and by 2021, this number dropped to 13.9%.

Novoe Vremya’s  sources in the Servant of the People Party leadership have noted that the president’s closest ally has changed his course of action. Sometimes he turns into an instrument of Akhmetov’s lobbying. Thus, this summer Akhmetov’s DTEK demanded from the authorities an increase in profits from electricity by influencing the legislative field.

To benefit the very same Donetsk businessman, Shefir suggested freezing market relations in one segment of the energy power market for a couple of months, banning traders from trading in energy and stipulating that the consumers should buy 90% of energy directly from its producer, namely DTEK. One of the laws did actually provide for such norms.

Rinat Akhmetov's business in the public sector is safeguarded by First Aide to President Serhiy Shefir, Prime Minister Denys Shmyhal, and more than a hundred lawmakers.

Incumbent Prime Minister of Ukraine Denys Shmyhal should also be included in the list of the top lobbyists. Back in time, he used to work for DTEK, holding the position of the Director of Burshtyn TPP, and also served as deputy CEO for Social Affairs in the company’s division in western Ukraine (2017-2019). Among his advisers, there is former top manager of DTEK Ihor Maslov.

In March 2020, Minister of Energy and Environmental Protection Oleksiy Orzhel decided to resign upon learning the fact that Shmyhal was going to be his new boss after Oleksiy Honcharuk had been fired. The new prime minister was considered by Ukrainian politics and representatives of the electric power market as a nominee from the oligarch.

Within a few months, Victor Pinchuk’s Interpipe group sent Zelensky a strongly worded letter. In the letter, they accused DTEK of causing an “unnatural 40% rise in electricity prices” for companies that resulted from the shutting down of nuclear power units. It increased the share of energy produced by DTEK’s coal-fired power plants in the grid. The prime minister denied accusations of lobbying for Akhmetov’s interests.

Besides, Shmyhal did not significantly reduce the cost of the feed-in tariff. Earlier, the Ukrainian government introduced a concession rate for purchasing the energy generated by private solar and wind power plants. Akhmetov’s wind and solar power plants are the key beneficiaries of green pricing in Ukraine. Even in a rich country like Germany, the rates are half the rate of those in Ukraine.

DTEK’s opponent and Chairman of the Parliamentary Committee on Energy, Housing, and Utility Services Andriy Herus stated that a minor reduction in the feed-in tariffs was “an act of simulation” rather than a real step towards fair rates in the green industry.

Shmyhal also allowed Akhmetov and DTEK to return state-owned mines (Dobropillia Coal) in Donbas Oblast without carrying a proper audit; he even paid the aforementioned businessman from Donetsk compensation from the state budget. Earlier, Akhmetov’s energy company leased the mines from the government for 49 years. This is the standard period for a long-term lease in Ukraine; it is designed to encourage the owner’s investment in the facility. But Akhmetov decided to break the lease after 11 years.

“Returning Dobropillia Coal while being recompensed for it is a crime against the country. After doing so, coal production in the mines was slashed by three times. It means that almost all the resources (raw materials and equipment) at them were exhausted, and then they were handed over back to the government,” Orzh el said.

The ex-minister also points out the close connections between DTEK and the prime minister based on Shmyhal’s active role in protecting Olha Buslavets, the former Minister of Energy,  from termination. On the Ukrainian energy market, Buslavets is best known as a market force specialist when it comes to shutting down nuclear power units in favor of thermal energy. A week of downtime of a nuclear power unit brings millions in income to DTEK.

Energy Minister German Halushchenko also ended up being involved in the lobbying system of the Ukrainian billionaire – he was appointed as minister after two failed attempts to appoint Yuriy Vitrenko, the acting chairman of the Energy Ministry to this very position. It seems like  SCM and the president’s office have found a manager they were able to agree on.

David Arakhamia, the head of the Servant of the People parliamentary faction, had stated before that Halushchenko’s candidature had been suggested to the parliament. According to the information, it was done by the abovementioned friend of Zelensky, Serhiy Shefir.

After taking office, Halushchenko had six months to inspect the supply of coal to Ukrainian thermal power plants, being sensible of the fact that already in the summer the books didn’t meet. Nonetheless, Halushchenko did not push DTEK, which is the largest owner of the TPPs, to procure coal. As a result, there is an energy crisis looming over Ukraine due to a lack of coal in the warehouses as early as in February that could lead to emergencies in the energy sector, states ex-minister Orzhel.