All In The Family: The Sequel

Editor’s Note: This article is the start of the “Oligarch Watch” series of reports supported by Objective Investigative Reporting Program, a MYMEDIA project funded by the Danish government. All articles in this series can be republished freely with source credit and are available in the Russian or English languages. Contact [email protected] for details. Content is independent of the donor.

Story At A Glance

Petro Poroshenko is, in many ways, the ultimate insider: He was a co-founder of Viktor Yanukovych’s disgraced Party of Regions and served the former president as his economic minister, served as foreign minister under former President Viktor Yushchenko and served for five years on the board of directors of a corrupt, non-transparent National Bank of Ukraine. He has the keen ability to change political tack when needed.

One person who studied with him, Vitaly Bala, said Poroshenko doesn’t trust many people – common for those who built their fortunes in the gangster capitalism era of Ukraine’s early independence years.

Nonetheless, his approachability before assuming the presidency in 2014 made him popular. During two revolutions, he waded into crowds on his own, in contrast to the bodyguard-protected, Soviet-style apparatchiks who dominated politics. He also, importantly, took the right side in both revolutions.

He is widely suspected of making a deal two years ago with exiled billionaire oligarch Dmytro Firtash, the so-called “Vienna Agreement,” in which Poroshenko agreed not to prosecute Firtash, in exile in Vienna, and other Yanukovych alllies in exchange for support in the May 25, 2014 presidential election. Poroshenko admits to meeting Firtash in Vienna, but denies any deal.

A return to authoritarianism under Poroshenko is unlikely. His temperament is softer and the nation has changed. However, Poroshenko is now unpopular. While winning the May 25, 2014 election with 55 percent of the vote, a poll by the Rating agency released in August shows his approval rating has dropped to 6.4 percent – close to the ratings that denied Yushchenko re-election in 2010. Rather than changing course to meet the public’s demands, the president appears to be digging in, putting him on a collision course with the electorate.

Yanukovych’s kleptocratic rule was a family affair

At the time, many readers considered the Kyiv Post front page from March 2, 2012, to be a bold and daring look at ex-President Viktor Yanukovych’s inner circle of loyalists installed in powerful jobs. Looking back, the coverage seems tame and restrained, especially this sentence: “The impression that loyalty rather than qualifications is the determining factor in these appointments is worrisome to many people.” Almost everyone in this photograph has been driven into exile after their patron, Yanukovych, fled power on Feb. 22, 2014, during the EuroMaidan Revolution. His younger son, Viktor Yanukovych Jr., drowned. What hasn’t changed are some of the habits of Ukraine’s five presidents. As shown on page 1, President Petro Poroshenko has installed loyalists and current or former business partners in key positions. Is this good for the nation?

All in the Family: The Sequel

He is the president of Ukraine, living in a luxurious mansion in the suburbs of Kyiv with a high fence concealing a vast estate that even has its own chapel.

He’s one of the founders in 2000 of the now-defunct Party of Regions. His son is a lawmaker. His business is on the rise when the rest of the country is struggling to crawl out of a deep recession.

No, this is not a story about Viktor Yanukovych, the disgraced former president who fled after riot police and snipers from behind police lines gunned down protesters demanding a break from cronyism, kleptocracy and nepotism nearly three years ago during the EuroMaidan Revolution.

This is the story about his successor and vehement critic, Petro Poroshenko.

But is he really very much different?

An oligarch president

“They have a symmetrical, mirror-like image in many ways,” says Igor Lutsenko, a lawmaker from the opposition Batkivshchyna Party and former EuroMaidan Revolution activist. “The difference is that Poroshenko is more sensitive to Western demands and Western support. But in all other things, he is just the same.”

Like Yanukovych, Poroshenko has shown a proclivity to monopolize power and surround himself in government not with professionals whose credentials are based on merit, but with close friends, business partners and other loyalists – some of whom are accused of massive corruption.

But in contrast with the previous president, Poroshenko is more constrained by Ukraine’s emboldened civil society and a public less fearful of state power. He has, as a consequence, not built a fully centralized, let alone authoritarian, regime.

Ukraine’s future may depend on whether Poroshenko succumbs to the more sinister inclinations of his predecessor, or meets society’s demands for rule of law and an end to systemic kleptocracy. The outcome of the ongoing struggle will determine whether Poroshenko goes down in history as a national hero or ends his political career in disgrace, like his four predecessors.

Poroshenko did not agree to be interviewed by the Kyiv Post for this profile.

When asked at a press conference in June on how different from his predecessor he is, Poroshenko answered: “You see the difference yourself.”

He added that his son, Oleksiy, got elected to parliament in 2014 in a competitive way and his confidant Yuriy Lutsenko, appointed prosecutor general on May 12, is bringing positive changes and reforms.

Yanukovych built his massive billion-dollar Mezhyhirya mansion and established a crony and kleptocratic “family capitalism” style of government as president from 2010-2014. After years of serving as a political front man representing the interests of Donbas-based oligarchs, he had finally taken his place among their ranks.

On contrast, Poroshenko made the leap to president after having established himself in prior years as an oligarch with his own business empire, television channel, political party and mansion.

Early life

A glance into the early life of Poroshenko, who owns a diversified business empire spanning from the Roshen confectionary group to banking and shipbuilding, provides insights that could explain what drives him as a person, and his behavior as president.

Poroshenko was born in the Soviet Union, in Bolgrad, Odesa Oblast, a city of 15,000 people located 700 kilometers south of Kyiv in the far southwestern corner of Ukraine. When he was a schoolboy, his family moved away from Bolgrad, with its strong ethnic Bulgarian makeup, to the city of Bendery, now part of Moldova’s Russian-speaking breakaway Transdniester region.

The president’s allies say they moved because Poroshenko’s father, Oleksiy, received a job as a top executive at an automotive repair plant. But residents in Bolgrad have said the Poroshenko brothers had a reputation for getting involved in fights, noting that the reason the family left Bolgrad may have been related to an incident involving Poroshenko’s elder brother, Mykhailo.

Petro Poroshenko demonstrated a short temper during his youth. While serving in the Soviet army, he was in 1984 sent to serve in a strategic missile unit in Kazakhstan as a penalty for a fight with two other conscripts.
From 1982 to 1989, Poroshenko studied international economics at the Kyiv Institute of International Relations, a prestigious university where children of top Soviet officials and those of big bosses from Soviet satellite countries studied. At the university, Poroshenko met Mikheil Saakashvili, who went on to become Georgia’s president and now serves as governor of Odesa Oblast.

Poroshenko took part in the family business starting from the late 1980s, though details remain clouded by the reluctance of the president and his relatives to discuss in detail the early years of their family and the formation of their now-vast business empire.

Brother dies

Poroshenko was dealt a heavy blow when his elder brother Mykhailo died tragically in 1997, but family members do not discuss the incident in detail.

In a Kyiv Post interview, Poroshenko’s son Oleksiy, a lawmaker in parliament, got nervous when asked about what happened to his uncle.

“To be honest, at that time I was quite small, and I don’t remember or have the information. So I can’t provide you with any insider information,” he told the Kyiv Post, adding: “I know that he died when he was fairly young, but how and in which circumstances – I don’t know.”

In Poroshenko’s official biography published on the presidential website, details of his business career are limited to 1993-1998, when he headed the Ukrprominvest diversified business group.

Friends made during his service in the army became his business partners. Then he made the shift into politics, ultimately ushering associates along with him into the highest levels of government

“Poroshenko’s problem is that he’s a businessman of the 1990s, so he doesn’t trust anyone,” said political analyst Vitaly Bala, referring to the chaotic early days following independence when business was ruthless, often involving gangster-style hits and racketeering. Bala studied alongside Poroshenko at university in Kyiv.

Poroshenko’s wife Maryna was born in the Russian city of Lipetsk, where Poroshenko later bought a confectionary.

Her father, Anatoly Perevedentsev, was a deputy health minister of the Ukrainian Soviet Socialist Republic.

Filaret, the patriarch of the Ukrainian Orthodox Church, ex-presidents Viktor Yushchenko and Leonid Kuchma and President Petro Poroshenko (from left to right) on Victory Day on May 9, 2015. (UNIAN)

Kuchma’s protege

Poroshenko emerged as a politician under President Leonid Kuchma and borrowed patterns of behavior from him, said Sergii Leshchenko, a lawmaker from the Poroshenko Bloc, yet a fierce critic of the president himself.

Similarly to Kuchma, Poroshenko plays several scenarios at the same time and arbitrates among several business-political clans, Leshchenko added.

Unlike Yanukovych, who has been more or less consistent in his political positions, Poroshenko has changed tack many times and served in many different Ukrainian governments. Having backed Viktor Yushchenko before and after the 2004 Orange Revolution, he was briefly economy minister under Viktor Yanukovych.

Petro Poroshenko, then economy minister (at far left) and then President Viktor Yanukovych (front, right) are at the Transmash factory in Luhansk on Oct. 16, 2012. Poroshenko served as economy minister for nine months during Yanukovych’s presidency. (UNIAN)

Critics accuse him of extreme conformism, arguing that he has always jumped onto the bandwagon of the winning side.

Start with oligarchs

Poroshenko’s path into politics started in 1998, when he joined the then highly influential United Social Democratic Party of Ukraine, or the so-called “oligarch party,” which was headed by Viktor Medvedchuk, who was then an ally of Kuchma and is today a close friend of Russian President Vladimir Putin. In that year Poroshenko was elected to parliament for the first time.

Two years later, he left Medvedchuk’s party and created his own party – Solidarnist.

In 2000 Solidarnist merged into the Party of Regions, which later became Yanukovych’s power base. Poroshenko, ironically, was one of its co-founders.

But in 2001 he switched to the political camp of Viktor Yushchenko’s Our Ukraine, which was opposed to Kuchma and Yanukovych. According to Ukrainian political analyst Kostyantyn Bondarenko, Poroshenko then decided that Yushchenko’s political project “was more promising.” Poroshenko was also tied to Yushchenko, as he was the godfather of Yushchenko’s twin daughters.

Petro Poroshenko, then a lawmaker (left) and presidential candidate Viktor Yushchenko (second from left) on Dec. 28, 2004 on Maidan Nezalezhnosti in Kyiv. Poroshenko was then an ally of Yushchenko, who came to power as president thanks to the pro-Western Orange Revolution, defeating his competitor Viktor Yanukovych. (UNIAN)

“The Party of Regions at that moment didn’t have any bright leaders, they didn’t have Yanukovych, who became the party’s chairman only in 2003,” Bondarenko says.

After two terms as a lawmaker with Yushchenko’s camp, Poroshenko went on to head the National Security and Defense Council in 2005, the supervisory board of the National Bank of Ukraine in 2007 to 2012 and the Foreign Ministry in 2009 to 2010.

Petro Poroshenko, then secretary of the National Defense and Security Council, plants a tree on April 17, 2005. Then Prime Minister Yulia Tymoshenko (second from left), then President Viktor Yushchenko and then Kyiv Mayor Oleksandr Omelchenko (next to Yushchenko) are in the first row in the background. (UNIAN)

Poroshenko switched sides again in 2012, when Yanukovych appointed him economy and trade minister. He lasted less than a year on the job, however.

Bondarenko said that Poroshenko had managed to have good relations with all governments because he is a businessman.

“Big business can’t be opposed to the authorities because otherwise it would lose its profits,” Bondarenko said. “In Europe it’s the same – when a new political force comes to power, business gradually starts orienting itself towards it. (Poroshenko) is still a businessman foremost.”

War-time president

Despite having served Viktor Yanukovych, Poroshenko joined the EuroMaidan Revolution, which toppled the disgraced president on Feb. 22, 2014. At that time, he was known mostly as a pro-Western lawmaker whose business was suffering from Russia’s ban on the imports of Ukrainian confectionary products.

While Yanukovych was seen as a Soviet-style apparatchik who was uncomfortable with direct contact with ordinary people, Poroshenko was not afraid of facing crowds.

On Dec. 1, 2013 Poroshenko unexpectedly appeared out of the crowd to placate radical protesters who were clashing with the police in front of the Presidential Administration. It didn’t help, but Poroshenko stood out among opposition politicians as brave and decisive. His public approval rating grew steadily. Just four months later,

Poroshenko won the early presidential election with almost 55 percent support, as voters sought to quickly and decisively choose a new national leader after Yanukovych fled, and the country faced war with Russia over Crimea and the eastern Donbas region.

“A good education, a flexible mind and fast reactions” helped Poroshenko to seize the moment, said Vasyl Gorbal, a former Yanukovych party lawmaker and banker who studied alongside Poroshenko during their university days.

“It’s no secret that he spoke to (the EuroMaidan Revolution’s) opponents… So he probably had more information than his other colleagues, (and) could analyze it faster and come to a decision,” Gorbal added.

Faces enemies

On Feb. 28, 2014, before being elected president, Poroshenko tested his skills as a power broker when he arrived in the soon-to-be-annexed Crimea to negotiate with local politicians and persuade them to deal with Kyiv. But he failed to meet anyone, recalling later that the local authorities proposed meeting at a local bath and laundry complex near Simferopol – an offer that he refused. An angry crowd of locals attacked him with shouts of “Russia” and “Out of Crimea” in front of Crimea’s parliament.

On April, 24, 2014, Poroshenko risked making a one-day visit to Luhansk, which was already under Kremlin-backed separatist control. He had to storm through a blockade of hundreds of pro-Russian locals at Luhansk Airport. Later in May, he claimed that separatists had tried to kidnap him.

“When I traveled to Luhansk Oblast, my car was fired at and there was an attempt to take our entire group hostage,” he told journalists.

Firtash deal?

Dmytro Firtash, a Yanukovych ally who has been a partner of Russia’s Gazprom in supplying natural gas to Ukraine and European markets, claimed that he played an important role in clearing Poroshenko’s path to the presidency. Firtash said that in April 2014 he had met in Vienna with Poroshenko and Vitali Klitschko, the heavyweight boxing champion turned politician whom polls predicted in 2013-2014 would win the early presidential election. Firtash claimed to have convinced Klitschko to back down from his presidential ambitions and back the candidacy of the more experienced Poroshenko.

“The main thing is that we got what we wanted: Poroshenko is the president, and Klitschko has become the mayor (of Kyiv),” Firtash said at a court hearing on his extradition to the United States in a bribery case. Both Poroshenko and Klitschko have admitted to meeting Firtash in Vienna, but denied seeking Firtash’s blessing for a political power-sharing agreement or offering him legal protection from prosecution.

In spite of the EuroMaidan Revolution bringing him to power, Poroshenko has not moved to purge ex-Yanukovych allies from key government positions. He has been accused of consistently violating the lustration law, which envisages firing top Yanukovych-era officials. The lustration law does not apply to Poroshenko, first because he is an elected official, and second because he served under Yanukovych for less than a year.

Instead, Poroshenko “is exploiting fossils of the Yanukovych era at the Central Election Commission and the Constitutional Court,” Leshchenko said.

Like Yanukovych, Poroshenko appears to trust only a narrow inner circle of political allies. And he expects them to follow his own working regime.

Ihor Rainin, President Petro Poroshenko’s chief of staff (L), is a protege of Boris Lozhkin (R), his predecessor on the job. (UNIAN)

‘Control freak’

Borys Lozhkin, Poroshenko’s chief of staff who resigned on Aug. 29, describes Poroshenko’s working schedule in his book Fourth Republic in the following way: “We work 15-16 hours per day. A working day looks like this: I’m in the office at about 10-10:30. We leave at about 2 a.m… We always work on Saturdays. We almost always work on Sundays.”

Hard-working, a night owl who has suffered in past years from diabetes, a control freak – that’s how people who know Poroshenko well describe him. The president’s other qualities reportedly include strong English language and diplomacy skills, toughness in negotiations, bravery and ability to seize the moment. All are features that helped him to come to power.

But critics also notice an authoritarian streak similar to that of his predecessor. Both Poroshenko and Viktor Yanukovych have been accused of using the Prosecutor General’s Office and other agencies to crack down on political opponents and as a form of leverage, pressuring lawmakers into backing pro-presidential initiatives, for example.

Yanukovych jailed his political nemesis, Yulia Tymoshenko, and her ally, Yuriy Lutsenko, the former interior minister and current prosecutor general. Similarly, prosecutors loyal to Poroshenko have temporarily jailed close confidantes of oligarch Igor Kolomoisky and Radical Party leader Oleh Lyashko.

Yanukovych-lite

Poroshenko’s authoritarian impulses and scale of repression are far less than Viktor Yanukovych’s. But these protective tactics are stonewalling crucial reforms that, among other consequences, prevent Ukraine from establishing an independent and effective law enforcement system – including judiciary, prosecution and police.
Poroshenko’s loyalists at the Prosecutor General’s Office have opened numerous investigations against critics of prosecutorial corruption, including ex-deputy prosecutors general Davit Sakvarelidze and Vitaly Kasko. In another high-profile case, a court in Vinnytsia, Poroshenko’s political base, sentenced a protester who tore up the president’s portrait to four-and-a-half years in prison on hooliganism charges in April.

Yanukovych’s allies also took over many of Ukraine’s media outlets and introduced censorship there, while Poroshenko and Roman Nasirov, head of the State Fiscal Service, have been accused of pressuring critical journalist Savik Shuster through tax inspections and the cancellation of his work permit.
Poroshenko has denied persecuting opponents for political reasons and cracking down on free speech.

Freewheeling bloc

People who worked with both Poroshenko and Viktor Yanukovych admit there are significant differences in their management style. Poroshenko is prone to substantive debate, while Yanukovych “could end up with some (irrelevant) memories… and start talking about tennis and stuff like that,” said Gorbal, an ex-Party of Regions lawmaker and the governor of Lviv Oblast under Yanukovych.

Gorbal also says that the Bloc of Petro Poroshenko, the fractious pro-presidential faction with 143 members, more than any other in the 423-member body, is a much more liberal political grouping than the Party of Regions.

Petro Poroshenko, then a top official of then-President Viktor Yushchenko’s Our Ukraine party, speaks at a congress of the party on Nov. 12, 2005. (UNIAN).

“In the Party of Regions’s parliamentary faction, voting differently from the rest of the faction was a big event, while in the Poroshenko Bloc it seems to be the rule,” Gorbal said. “I can count just a few cases when some lawmakers (of Yanukovych’s party) voted differently.”

One reason of Poroshenko’s liberalism is that “the system of decision-making was less flexible in Yanukovych’s times,” Gorbal says.

Leshchenko agreed that both the current political system and Poroshenko’s political style are much less authoritarian than under Yanukovych.

“The Party of Regions was a monolith,” Leshchenko said. “There were people there who were ready to die for Yanukovych and fled with him… Poroshenko doesn’t have such people… You can’t pursue an authoritarian line with such an amorphous structure.”

In contrast with Yanukovych, Poroshenko doesn’t try to force a majority in parliament into his party and doesn’t seize competitors on the chocolate market, Leshchenko said.

This spring, however, Poroshenko copied Yanukovych’s coalition-building methods when 11 lawmakers switched to his faction.

“While Yanukovych was able to control the country in an authoritarian way, Poroshenko can’t do this,” said political analyst Bala. “People identify themselves in a different way. There were the Revolution of Dignity, the war, and many other factors that don’t allow Poroshenko to be like Yanukovych.”

Reputation matters

Unlike Viktor Yanukovych, who resisted demands that he release his political foe Yulia Tymoshenko from prison, Poroshenko is more susceptible to both Western pressure and civil society’s influence. After two years as president, he relented to months of pressure to fire loyalists, most recently former Prosecutor General Viktor Shokin.
And unlike Yanukovych, Poroshenko cherishes his reputation in the West.

Oleksandr Zinchenko (front, left), then-President Viktor Yushchenko’s ex-chief of staff, accuses Petro Poroshenko (at right in background), then secretary of the National Defense and Security Council, of corruption and abuse of power on Sept. 5, 2005. Poroshenko resigned following the accusations. (UNIAN)

“Poroshenko (has said he) wants to become a member of the European Parliament after his presidency. He doesn’t see himself in Rostov breaking pencils,” Leshchenko said, referring to a much-ridiculed incident when Yanukovych angrily broke a pencil during a news conference in Rostov following the EuroMaidan Revolution.

Offshore, tax schemes

Just like Viktor Yanukovych, Poroshenko has had problems with transparency and accountability. Recently, the biggest of them was the April 3 publication of documents showing that Poroshenko has an undeclared offshore firm in the British Virgin Islands. The publication is part of the Panama Papers, a massive leak of documents from Panama’s Mossack Fonseca consulting firm.

Above left): A customer leaves a recently opened Roshen outlet near Zhytomyrska metro station in Kyiv on April 14, 2015. The Roshen confectionary is part of Poroshenko’s business empire. (Volodymyr Petrov)

Critics said Poroshenko’s failure to declare the company is a violation of the law, and may indicate intent to optimize or evade taxes. Poroshenko denied the accusations, insisting he has relinquished the management of his businesses, ultimately to a blind trust. The claim was this year confirmed in a statement by Rothschild Wealth Management & Trust.

Channel 5 conflict

One more problem is a potential conflict of interest with Poroshenko’s ownership of Channel 5, one of Ukraine’s main television channels.

He has been consistently criticized for his reluctance to sell the channel. His former chief of staff Borys Lozhkin explained in his book that, if sold, the channel would probably be bought by a rival oligarch. But he never explained what makes Poroshenko different from other oligarchs who keep unprofitable but influential television channels as necessary attributes of their power.

Poroshenko has regularly urged businesspeople to be diligent taxpayers, but ex-journalists of his channel claim that management paid a portion of salaries under the table to minimize, perhaps evade, tax obligations.

The channel’s executives have told journalists that the company doesn’t want to support corrupt officials with taxes, Khrystyna Bondarenko, an ex-journalist of Channel 5 told the Kyiv Post. That implies that Poroshenko doesn’t trust even the tax agency, although it is headed by one of his loyalists.

Reporters of the channel have been issued two bank cards by International Investment Bank, which is co-owned by Poroshenko.

“One card has an official salary, which is minimal,” Bondarenko said. “And the second card is for the shadow salary.”

Porohsenko’s son Oleksiy has allegedly imposed strict fines for journalists for violations, which were deducted from the “shadow” salary cards, she said.

“Once I was fined Hr 3,000 and another time Hr 2,000,” Bondarenko said. “There was no way to prove you were fined.”

Oleksiy Poroshenko denied the accusations, saying that he was involved in Channel 5 only as an adviser on cost-cutting. He said he had not been in charge of any decisions at the channel.

Several other journalists have also spoken out about the shadow salaries at the channel.

The channel’s chief editor, Volodymyr Mzhelsky would not comment.

Flashes of arrogance

In January Khrystyna Bondarenko asked Poroshenko a question at a news conference as a journalist of independent Hromadske TV, and received a mocking response from the president, who said she “had had more viewers at Channel 5.”

“This is the way a feudal lord talks to his subordinates,” Bondarenko said, adding that Poroshenko had never apologized.

Poroshenko’s palace

Another parallel with Yanukovych is Poroshenko’s luxurious suburban residence, which by its extravagance has been compared with his predecessor’s Mezhyhirya estate.

Journalist turned lawmaker Igor Lutsenko has filmed Poroshenko’s residence using a drone. The estate includes a spacious white mansion resembling the U.S. White House, two smaller houses and even a chapel. The total area of the buildings is over 1,300 square meters, according to the state register of real estate. Poroshenko also has a land plot of over 3.3 hectares in the same area.

In August 2015 Poroshenko also leased a 0.7 hectare land plot on the banks of the Dnipro River next to his estate. The lease runs until 2064, at $1,000 per year. Ukrainian law bans the purchasing of river banks and sea shores.
Lawmaker Igor Lutsenko believes the cost of the lease is at least 100 times below the market price.

“This land should be available to everyone, but he restricted access to it,” he said. “We can make parallels with … Mezhyhirya here,” he added, comparing Poroshenko’s estate with the famous palatial residence owned by Yanukovych.

Poroshenko also has a land plot of some 0.5 hectares in the upscale Pechersk district of Kyiv, according to the state register. This plot is part of the territory of an 18th century fortress that is protected by the state. Radio Liberty reported in 2014 that Poroshenko had started construction on this land plot, which violates the law on the protection of historic heritage, and that the work had damaged the territory.

Poroshenko’s son, Oleksiy, argued that the Mezhyhyria parallel was unfair.

“About the mansions: When people elected Poroshenko, everyone knew where (the mansions) came from, journalists filmed them with drones and from the ground,” he told the Kyiv Post, insisting that his father as an oligarch owning a massive confectionary business, could easily explain his wealth and expensive lifestyle. “Where

Yanukovych got his mansions from – that’s a completely different story.”

The grey cardinal

Both Poroshenko and Yanukovych handed key jobs to close allies. Poroshenko has preferred to entrust government to business associates. And like Yanukovych’s cronies, several allies of the incumbent president face major corruption accusations.

Viktor Yanukovych’s son, Oleksandr, was his “grey cardinal” who, along with his business partners and other associates, was accused of running large-scale corruption schemes and illegally seizing large chunks of the economy.
Poroshenko’s grey cardinal and right-hand man in parliament is Ihor Kononenko, a deputy head of the Poroshenko Bloc. Kononenko and Poroshenko are co-owners of the International Investment Bank and have been acquainted for 30 years, since serving in the Soviet military together. The ties between them are so strong that Poroshenko has told Leshchenko not to write about Kononenko because he is “a member of his family,” Leshchenko told the Kyiv Post.

Vitaly Shabunin, head of the Anti-Corruption Action Center’s management board, speaks at a rally in favor of appointing an independent prosecutor general on March 28. Ex-prosecutor generals Vitaly Yarema and Viktor Shokin, current Prosecutor General Yuriy Lutsenko and top prosecutors Yuriy Stolyarchuk and Yuriy Sevruk (all pictured above) are Poroshenko loyalists who have failed to deliver justice, according to critics. (Volodymyr Petrov)

“If Poroshenko leaves, Kononenko as a politician will disappear,” Leshchenko says.
Kononenko’s style of leadership is different from that of the Party of Regions, which was a much more authoritarian and centralized structure. Unlike Yanukovych and his allies, Kononenko does not place his friends in the most important positions, Leshchenko said.

Instead, he has created a more business-like management structure and delegates functions to people who are not his friends or relatives, he added. One of Kononenko’s top confidantes is Oleksandr Hranovsky, another lawmaker from the Poroshenko Bloc.

Lawmakers Ihor Kononenko (left) and Oleksandr Hranovsky (right) are seen as President Petro Poroshenko’s grey cardinals and have been accused of corruption and interfering with law enforcement. They deny the accusations. Prosecutor General Yuriy Lutsenko (center), a Poroshenko loyalist, has come under fire for failing to combat corruption or curb the alleged interference of Kononenko and Hranovsky with law enforcement. (Kostyantyn Chernichkin)

Neither Kononenko nor Hranovsky would comment to the Kyiv Post.

“Kononenko is the president’s man, and Hranovsky is Kononenko’s man. It’s a matryoshka within a matryoshka,” Leshchenko said, referring to the traditional Russian nesting dolls.

Odesa Port Plant

Ihor Kononenko and Oleksandr Hranovsky are targets of numerous corruption accusations. Specifically, they have been accused of profiteering from state-owned firms by appointing their placeholders. They deny the accusations.
One of the alleged schemes is linked to a contract concluded in October between the Odesa Port Plant and Antra, a little-known Austrian company. Under the deal, Antra supplied natural gas to the plant in exchange for ammonia and other fertilizers that are produced.

Ex-Deputy Prosecutor General Davit Sakvarelidze, who has investigated the scheme, claims that the plant effectively supplies fertilizers to Antra at below-market prices, which deprives it of revenues.

Olga Tkachenko, until recently a member of the plant’s executive board, used to be an aide to Hranovsky and chief executive of Hranovsky’s Sky Mall shopping center. Odesa Oblast Governor Mikheil Saakashvili said in December that Tkachenko could be linked to lawmakers of the Poroshenko Bloc. Hranovsky did not respond to Kyiv Post requests for comment. Nashi Groshi, an anti-corruption watchdog, reported on May 19 that a court had banned the National Anti-Corruption Bureau of Ukraine from accessing Viber messages written by Tkachenko.

Centerenergo

Another company that is allegedly linked to Kononenko is power producer Centerenergo.
Samopomich Party lawmaker Victoria Voytsytska and Poroshenko Bloc lawmaker Sergii Leshchenko have accused Kononenko of influencing the state company through his placeholders in its management and siphoning money out. Leshchenko wrote in his blog this year that Kononenko was behind a court ruling that blocked a competition for the job of Centerenergo’s chief executive in April.

Ukrzalizyntsa

Sergii Leshchenko claimed in January that Kononenko’s placeholders had been appointed to state-owned railway monopoly Ukrzaliznytsa. Kononenko has also been lobbying against increasing Ukrzaliznytsa’s freight shipping tariff, a step to remove hidden subsidies for vested interests.

Abromavicius scandal

Another high-profile corruption scandal around Ihor Kononenko erupted on Feb. 3, when then-Economy Minister Aivaras Abromavicius said Kononenko had “interests” at ammonia shipping company Ukrkhimtransamiak and had been trying to install his protégé as the chief executive of the firm.

Kononenko has also been trying to have his people appointed to Derzhzovnishinform, a market research company, powder metallurgy companies and to the National Accreditation Agency, Abromavicius said.

Abromavicius also said that Kononenko had been trying to impose his protégé Andriy Pasishnik as a deputy economy minister. In March the National Anti-Corruption Bureau of Ukraine filed a notice of suspicion for Pasishnik, accusing him of illegally interfering with a government official’s work. The case against Pasishnik was sent to court on April 25.

The Prosecutor General’s Office said later that it had found no proof of Abromavicius’ accusations against Kononenko, triggering speculation that prosecutors were covering up for him. Kononenko, who was suspended as a deputy head of the presidential faction in January, was reinstated in the job on May 12.

Energomerezha

The National Anti-Corruption Bureau of Ukraine is also investigating a Hr 346 million ($13.8 million) embezzlement case against Energomerezha, a firm that acquired debt claims from state regional power company Zaporizhzhiaoblenergo. According to Sergii Leshchenko and sources cited by Ukrainska Pravda, Ihor Kononenko is lobbying for Energomerezha’s interests.Critics accuse Leshchenko of being biased in favor a rival businessman, Kostyantyn Grigorishin.

Ukrprominvest

Last October British journalist Graham Stack and ex-Security Service of Ukraine Chief Valentyn Nalyvaichenko also accused Ihor Kononenko of money laundering. The alleged laundering scheme involved moving money from Ukrprominvest, a group founded by Kononenko and Poroshenko, to the British Virgin Islands through offshore companies Intraco Management Ltd and Ernion.

According to payment orders published by Stack, Kononenko’s daughter, Daria, received money from Intraco Management Ltd. The Panama Papers leak revealed that Intraco is owned by Serhiy Zaitsev, a deputy CEO of Roshen. Blogger Denys Kazansky has published documents according to which Intraco paid for Daria Kononenko’s studies and recreation abroad, as well as for Poroshenko’s charter flights.

In April the liga.net news site published customs documents according to which Intraco bought jet fuel from Russian gas giant Gazprom in 2014. Zaitsev was quoted in domestic media denying wrongdoing, insisting the purchases were made while a jet was refueling at a Russian airport where other suppliers were not available.

Another controversy has emerged around allegations that Oleksandr Hranovsky and his partner Andriy Adamovsky illegally seized the Skymall shopping center in Kyiv from Estonian businessman Hillar Teder. In May a London court ruled in favor of Teder, ordering the mall to be transferred to his firm Arricano Real Estate.

Hranovsky has also admitted getting $700,000 in cash from his partners in a British Virgin Islands court, according to the court records. He did not include the money in his declaration.

Kononenko-Hranovsky

Oleksandr Hranovsky has also been repeatedly accused of interfering with the prosecutorial and judicial system on behalf of Poroshenko and Kononenko. He denies influencing judges and prosecutors.

Hranovsky and Ihor Kononenko are believed to control the anti-corruption department at the Prosecutor General’s Office, which has been accused of routinely fabricating political cases.

In May Radio Liberty filmed Hranovsky meeting with a major judge and the head of the Kyiv Institute for Forensic Research, while investigative journalist Dmytro Gnap took a picture of Hranovsky meeting with Serhiy Lysenko, a prosecutor who threatened to beat up a photographer last year and who faces corruption accusations.

Corporate family

Borys Lozhkin, who stepped aside as Poroshenko’s chief of staff in late August, is also a former business partner of Poroshenko.

Together they bought and co-owned KP Media, a holding company that until 2009 included the Kyiv Post, the English-language newspaper founded by American Jed Sunden in 1995.

Poroshenko’s decision to appoint Lozhkin, a long-time media tycoon, as his chief of staff suggests that public relations is paramount for him, Gorbal said.

Lozhkin is believed to manage relations with oligarchs including Rinat Akhmetov, Serhiy Lyovochkin and Ihor Kolomoisky. Historically, he has run media assets for rival oligarchs and served as a liaison among them.
“He communicates with oligarchic clans,” Sergii Leshchenko said.

Lozhkin’s role is comparable to that of Lyovochkin, who was the chief of staff for Yanukovych, Leshchenko added. Like Lozhkin, Lyovochkin was seen as the liberal pillar of the president’s entourage and a tool of oligarchic influence.

“The Lozhkin-Kononenko duo can be compared to the Lyovochkin-Klyuyev tandem,” Leshchenko said, referring to Andriy Klyuyev, who was also a chief of staff for Yanukovych.

But Gorbal said that Lyovochkin had had a much greater political weight under Yanukovych and “was playing his own game,” unlike Lozhkin.

“Lyovochkin worked even under (Ukrainian President Leonid) Kuchma, and the administrative experiences of Lyovochkin and Lozhkin are incomparable,” he added.

Lozhkin has been trying to cast himself as a reformer, arguing that it was his idea to invite Georgian reformers to Ukraine. Leshchenko disputes his reformist credentials.

Lozhkin’s tax scandal

Boris Lozhkin’s image has also been tainted due to a corruption scandal. In 2013 Integrity International Holdings Ltd, a British Virgin Islands firm owned by Lozhkin, sold his UMH media group to tycoon Serhiy Kurchenko, a Yanukovych ally, for $315 million. The money was not included in any of Lozhkin’s Ukrainian property declarations. Moreover, it’s not clear if the sale was taxed in Ukraine.

In 2014 Austrian authorities opened a money laundering investigation into the sale but Deutsche Welle reported in April, citing Austrian prosecutors, that it had been closed due to the reluctance of the Prosecutor General’s Office of Ukraine to provide information on the matter.

“Shokin didn’t want to investigate this criminal case,” Leshchenko wrote in his blog in April. “This is a real Offshoregate that’s being covered up by the president’s servile prosecutor general.”

Lozhkin did not reply to a request for comment.

Kostyantyn Grigorishin

Another prominent figure who has business ties to Poroshenko is Zaporizhia-born tycoon Kostyantyn Grigorishin, until recently a Russian citizen who holds a diversified portfolio of business assets in Ukraine. Grigorishin, who was reportedly granted Ukrainian citizenship this year, used to co-own the Sevastopol Sea Plant and Kyiv, a firm that has 6.4 hectares in the city center.

Informed sources said Grigorishin clashed viciously with Boris Lozhkin and ex-Prime Minister Arseniy Yatsenyuk over influence at state companies and agencies. Critics have described Grigorishin as another Poroshenko grey cardinal, though Sergii Leshchenko, who has himself faced criticism for being close to Grigorishin, says his influence is overestimated and is incomparable to Ihor Kononenko’s.

Grigorishin was at the center of a major corruption scandal centered on purchases of transformers for state-owned power company Ukrenergo. In 2015 Ukrenergo said it planned to buy transformers for over Hr 500 million from Zaporizhtransformator, a firm controlled by Grigorishin. The company’s transformers were 72.6 percent more expensive than those of German engineering company Siemens.

Grigorishin has been accused of profiteering from Ukrenergo due to his ties to Poroshenko. Yury Kasich, Ukrenergo’s CEO, previously worked at Grigorishin’s companies. He denied the accusations. Subsequently the plans were cancelled under public pressure, though in February Zaporizhtransformator won another Ukrenergo supply contract.

Valeria Gontareva

Other people with business links to Poroshenko include Information Policy Minister Yuriy Stets, who used to be the chief producer at Poroshenko’s Channel 5, and National Bank Chief Valeria Gontareva, who was a co-founder of investment bank ICU, which has managed the president’s assets.

Like Poroshenko, Gontareva was also involved in the scandal around the Panama Papers. The offshore leak revealed that she had business ties to top executives from Russia’s VTB Bank before she became the central bank’s head.

Critics said this could imply a conflict of interest, while she denied the accusations.

Meanwhile, Oleh Gladkovsky, a deputy secretary of the National Security and Defense Council, co-owned bus maker Bogdan with Poroshenko until he bought out Poroshenko’s stake in 2009. According to the Panama Papers leak, Gladkovsky owns Teckford Investments Financial Corporation, a British Virgin Islands firm affiliated with bus maker Bogdan.

Nina Yuzhanina

Nina Yuzhanina, a lawmaker from the Poroshenko Bloc and a potential candidate to become head of the State Fiscal Service, reportedly used to be the chief executive of Express-Inform, a firm that co-founded Poroshenko’s Channel 5. She has also worked at European Auditing Group, which reportedly provided auditing services to Poroshenko’s firms.

Contacted by the Kyiv Post, she refused to answer questions on whether she had worked at any Poroshenko firms in the past, or done work for them.

Another manager linked to Poroshenko, ex-Roshen executive Dmytro Vovk, is the head of the National Commission for Energy and Utilities Regulation. This puts him in the crucial position of controlling utility tariffs.

Kostyantyn Vorushylyn

Kostyantyn Vorushylyn, the head of the state-financed Deposit Guarantee Fund that has paid out at least $3 billion since 2014 to bank depositors who lost their money in Ukraine’s banking scandal, has done business with Poroshenko. He has previously worked for such Poroshenko assets as the International Investment Bank, Bogdan Corporation and Mriya Bank, which now belongs to Russian-owned VTB Bank. He denied any conflict of interest.

President Petro Poroshenko greets newly appointed Prime Minister Volodymyr Groysman (C) at the parliament in Kyiv on April 14.  (Volodymyr Petrov)

‘Vinnytsia clan’

However, not all of Poroshenko’s allies are his current or former business partners. Some are politicians from his political and business base in Vinnytsia.

While Yanukovych appointed his loyalist from his native Donbas region Mykola Azarov as prime minister, ex-Verkhovna Rada Speaker Volodymyr Groysman, a protege of Poroshenko, was appointed as prime minister on April 14. Groysman, from 2006 to 2014 the mayor of Vinnytsia, long a political power base for the president, has long been Poroshenko’s ally. Poroshenko’s Roshen confectionary is a major regional employer by virtue of having a local factory.

Though Groysman is a Poroshenko loyalist, he could become more independent due to the political weight of the prime minister’s office.

“He has his own ambitions,” Leshchenko said. “I don’t think he’s like (ex-Verkhovna Rada Speaker Volodymyr) Rybak, who burned in the same fire as Yanukovych.”

Groysman, a native of Vinnytsia, has brought with him to Kyiv a number of allies colloquially known as the “Vinnytsia clan.” These include Deputy Prime Minister Volodymyr Kistion; Oleksandr Sayenko, the Cabinet’s chief of staff, and Social Policy Minister Andriy Reva.

The Vinnytsia clan has been compared with Yanukovych’s Donetsk clan, though their sizes and influence are very different.

While Yanukovych’s placeholders from Donetsk controlled all branches of government and the economy, the up-and-coming Vinnytsa clan is more modest. “To count members of the Vinnytsa clan, the fingers on two hands would be enough,” Leshchenko said. “For Yanukovych’s Donetsk clan, all the fingers and toes wouldn’t be enough.”
Shokin ‘part of family’

Another Poroshenko protege, Viktor Shokin, was the prosecutor general in 2015-2016.

Shokin has been close to Poroshenko since at least 2005, when he was a deputy prosecutor general, Yegor Sobolev, a lawmaker from the Samopomich Party, told the Kyiv Post.

He is so loyal to Poroshenko that his spokesman said in February that “the president’s word is the law for Shokin.”
Leshchenko said that Poroshenko considers Shokin “part of the family.”

That is one of the reasons why Poroshenko stubbornly refused to fire Shokin until February, despite increasing pressure from civil society and the West. Shokin was criticized for failing to send a single high-profile corruption case to court and for sabotaging prosecutorial reform.

With Shokin out of office, Poroshenko appointed another loyalist and ex-head of his faction in parliament, Yuriy Lutsenko, as prosecutor general on May 12. Lutsenko has been linked to Poroshenko since the time when both of them were part of President Viktor Yushchenko’s inner circle. Poroshenko was the secretary of the National Defense and Security Council, while Lutsenko was the interior minister under Yushchenko.

Common threads

Poroshenko and Viktor Yanukovych are quite different in intellect and temperament. They have different inner circles. Yet both fall far short not only of civil society’s demands but also the demands of the Ukrainian people, judging by polls that show plummeting voter support for Poroshenko.

Activists wear masks depicting President Petro Poroshenko and then-Prosecutor General Viktor Shokin flushing criminal cases down a toilet bowl at a rally on June 17, 2015. Poroshenko and Shokin were accused of sabotaging corruption cases against ex-President Viktor Yanukovych and his allies. (Kostyantyn Chernichkin)

“Any president would be more open compared to Yanukovych because he was a political tyrannosaurus – a fossil that came to power by accident in the 21st century and the head of a criminal gang that’s been involved in banditry for 20 years,” said Sergii Leshchenko, the lawmaker and former investigative journalist. ”But society still wants a more modern, transparent and honest politician (than Poroshenko).”

Surveys back up Leshchenko. A poll conducted by the Rating polling agency in late August shows Poroshenko ranks third with an approval rating of 6.4 percent – dangerously close to the unpopularity that denied Yushchenko re-election in 2010.

Mykola Tomenko, an ex-member of parliament and the Poroshenko Bloc, argued that “Poroshenko has two problems: greed and distrust. He’s greedy in the sense that he views every government program as his own business project and seeks to appoint a loyalist of his to oversee it, because he’s sure that anyone else would steal,” he told the Liga.net news site in May. “His distrust is manifested in the fact that, other than his narrow circle of cadres, he doesn’t see anyone who he can work with… For Poroshenko, Ukraine is no more than a bigger version of Roshen.”
Tomenko has changed his view on Poroshenko several times.

In 2005 he accused him and other allies of then-President Viktor Yushchenko of corruption, yet by 2014 he was on the campaign trail with Poroshenko during the presidential election.

But he left the Poroshenko Bloc’s faction in 2015 and was expelled from parliament in February.

“When I supported him during the presidential election, I thought that the businessman Poroshenko could become the statesman Poroshenko,” he said “But this didn’t happen.”

Petro Poroshenko Biography

Petro Poroshenko
Date of birth: Sept. 26, 1965.
Place of birth: Bolgrad, Odesa Oblast; then moved to Bendery, Moldova; his political and business base was in Vinnytsia.
Wealth: $858 million, sixth richest person in Ukraine, according to a 2016 Forbes ranking.
Key Assets: Roshen confectionary, Fifth Channel, Leninska Kuznya shipyard.
Personal: Married to Maryna Poroshenko; two sons and two daughters.
Praised for: Signing an association agreement with the European Union that secured the West’s political and trade support for Ukraine; going against corrupt power structures by supporting the 2004 Orange Revolution and 2013-14 EuroMaidan Revolution.
Criticized for: Obstructing legal and economic reforms; covering up for controversial allies accused of corruption.