Five years after the EuroMaidan Revolution ousted President Viktor Yanukovych from office, assets that used to belong to his son Oleksandr Yanukovych are divided among businessmen closely linked to the Bloc of Petro Poroshenko, the party of Yanukovych’s successor.
During the reign of Yanukovych, his elder son Oleksandr accumulated a substantial fortune. A bank, TV channels, gas fields, energy companies and a number of other assets came to be under the control of Oleksandr Yanukovych’s Management Assets Company, or MAKO group for short.
However, after Yanukovych and his family fled the country in February 2014, the assets controlled by Yanukovych’s son fell into the hands of new power brokers – such as the pro-presidential lawmaker Maxim Efimov and businessman Vitaliy Kropachev – who is rumored to act on behalf of Ihor Kononenko, the deputy head of the Bloc of Petro Poroshenko – as well as the president himself, whose bank received an inflow of Yanukovych’s money. In an earlier interview, Kropachev denied being anyone’s proxy.
Yanukovych’s coal
Eastern Ukraine, the so-called Donbas region, is not only the home of the former president, but the country’s fossil fuel heartland, rich in coal. By the time of Yanukovych’s fall, MAKO group was the second largest coal producer, behind DTEK, owned by billionaire oligarch Rinat Akhmetov, one of the top allies of the former regime.
MAKO group owned mines, processing plants, gas fields and, most importantly, it had indirect control over Donbasenergo, a power generation company that had a share of approximately 10 percent of Ukraine’s heat-generating market in 2013.
Even after the Yanukovych family fled to Russia, MAKO group operated freely, and was able to sell off its assets through the Donbas Financial Accounting Center – an intermediary shell company controlled by Oleksandr Yanukovych.
The buyers were Kropachev and Efimov.
Kropachev was a relatively unknown figure prior to 2014, doing business in his hometown Torez, a city of 50,000 people 740 kilometers east of Kyiv, now occupied by Russian-backed separatists. The city is infamous as the crash site of a Malaysia Airlines Flight MH17, which was shot down by a Russian BUK anti-aircraft missile on July 17, 2014, taking the lives of 298 people.
Kropachev’s biography prior to 2014 has a number of interesting features, with the Torez businessman becoming a regional lawmaker from Yanukovych’s Party of Regions, surviving an assassination attempt (which he claimed was ordered by Oleksandr Yanukovych). He later sponsored the infamous Tornado battalion, in which he officially was registered as a soldier, and which had a number of convicted criminals in its ranks. The battalion fought in the Donbas on the side of Ukraine, and was later dissolved, with eight of its members being convicted for looting and assault.
Then in 2015, Kropachev began buying the assets of Yanukovych’s inner circle, including those belonging to MAKO group.
Kropachev couldn’t be reached for comment. He gave one interview before – to Ekonomichna Pravda in 2018. In it, he said he wasn’t anyone’s proxy, but rather an independent businessman who only seems obscure to the wider public because until recently his activities were focused on Torez.
But Ukrainian media link Kropachev’s rapid rise to help provided by Kononenko, President Poroshenko’s right-hand man.
Kropachev met Kononenko back in 2015, reportedly through Anton Gerashchenko, a lawmaker from the 81-member People’s Front faction in parliament, who knew both men. (Gerashchenko, while saying that he indeed knows both men, denies introducing them to each other.)
The Torez businessman soon began buying up a number of high profile assets, including major mining and refining plants – Ukraina, Komsomolskaya (Myrnogradskaya), and Krasnolimanskaya – which had belonged to Oleksandr Yanukovych and his business partner Ihor Gumenyuk. Kropachev calls Gumenyuk his friend.
Kropachev’s companies then took control of the supply chain of Centerenergo, a state-owned energy company that provides heat to the nation’s capital and which generates 18 percent of Ukraine’s heating output. All of the coal supplied to the state-owned energy company is either produced or processed by Kropachev’s mines and refining plants. Strangely, the supply tender for Centerenergo was won without competition, as Akhmetov’s DTEK, which had previously supplied Centerenergo with coal, and which still had the necessary capacity to continue doing so, did not take part in the bidding.
Ties between Kononenko and Kropachev began to turn up in numerous reports by journalists.
Sergii Leshchenko, a lawmaker who recently withdrew from Poroshenko’s faction in parliament, in his TV blog on the opposition Channel 24, alleged in mid-November that Kropachev, through Kononenko, is buying assets in the energy sector for the current political and business elite.
However, things may not be going as planned for the businessman: The privatization of Centerenergo, which had been scheduled for Dec. 13, and which Kropachev had been the clear favorite to win, was canceled, as the only other bidder was alleged to have ties to Russia. The initial bid was set at Hr 5.9 billion ($220 million).
Leshchenko told the Kyiv Post that the selloff was canceled due to the public outcry over the Russia-linked bidder, but other experts have said it was due to a conflict between Kononenko and Ihor Nasalyk, Ukraine’s energy minister, whose business interests were being harmed by Kononenko’s activities.
Nasalyk didn’t answer questions from the Kyiv Post prior to publication.
Schemes, an investigative journalism project by Radio Svoboda/Radio Free Europe, in July videoed Kropachev entering the building in which Kononenko has an office. Kropachev denied having any ties to the lawmaker, telling the journalists that he had been visiting a sports club in the same building – although the entrance he used doesn’t lead to the sports club.
Kononenko also denies having any connections to Kropachev, saying they have met a couple of times during business meetings but that is as far as it goes. However, when Ekonomichna Pravda business news website alleged that the two have business ties, Kropachev did not deny the claim.
After his alleged meeting with Kononenko, Kropachev bought at least five mines, three coal refining plants and two gas extraction companies that together owned seven drilling licenses from Yanukovych’s MAKO group.
Internal competition
But Kropachev’s luck ran out in 2018.
First, in mid-February 2018, the National Anti-Corruption Bureau of Ukraine searched Kropachev’s office. According to the investigative journalism project Bihus.info, the bureau was investigating tenders in which Kropachev’s companies had won without competition, receiving contracts worth over Hr 1 billion ($27 million).
Later, Efimov, a former regional member of Party of Regions and now parliamentarian from the pro-Poroshenko faction of which Kononenko is deputy head, bought Donbasenergo, the main asset of Oleksandr Yanukovych’s energy empire, together with the Rossiya (Kotsubynskaya) and Novgorodok mines.
With both Donbasenergo and Centerenergo out of reach, Kropachev had lost the chance of creating a full-cycle holding similar to DTEK – the Akhmetov-owned energy holding company that controls everything from extracting coal to generating and supplying heat to factories and households.
Efimov on the other hand, in a span of 12 months acquired mines and Donbasenergo energy plants that had previously been owned by Oleksandr Yanukovych.
There has been speculation in Ukrainian media that Efimov took over the assets of Yanukovych’s son in Ukraine in exchange for his assets in Russian-occupied Crimea. These included Efimov’s Wind Parks Ukraine, and Fuhrlaender Wind Technology, which were substantial assets in Crimea prior to its occupation by Russia.
Efimov in his response to Kyiv Post wrote that he has nothing to add to his previous interviews, in which he claimed never to have met nor talked with Oleksandr Yanukovych. He also says that while he has met Korpachev and Kononenko, he has no business relations with them.
Recently the infamous Parkovyi exhibition center in downtown Kyiv, known for hosting a helipad built for Yanukovych, which had been owned by people associated with the former president, was also acquired by Efimov and promptly reregistered under the name of his 82-year-old mother – raising further questions.
Gas extraction
Kropachev also acquired two gas extraction companies owned by Oleksandr Yanukovych through MAKO group’s top manager, Eduard Slynko. The companies – the Interregional Gas Company and Reconstruction of Technological Wells – were bought and merged, and brought with them seven gas extraction licenses for gas fields in Kharkiv and Luhansk oblasts, making the company one of the top-five private gas license holders in Ukraine.
Television
Oleksandr Yanukovych’s business empire was not limited to fossil fuels. In 2011, he bought, through proxies, Tonis, the oldest independent TV channel in Ukraine. The Prosecutor General’s Office in 2015 confirmed Yanukovych was behind the purchase.
Tonis remained a small station with a small audience up until 2017, when it was purchased by Volodymyr Makeienko, a six-time lawmaker from Yanukovych’s Party of Regions. The TV channel was rebranded as Pryamii, hired some of the most popular hosts in Ukraine, and got a studio in an expensive office building Parus.
Because this spending hardly matched Makeienko’s latest publicly available income declaration, and because the station has taken an aggressively pro-Poroshenko stance ahead of the presidential elections, many analysts and Ukrainian media have been alleging that the ex-lawmaker is a proxy owner, while the station de facto belongs to Poroshenko or one of his closest allies.
Both Makeienko and Poroshenko denied it.
Bank’s millions
Last but not least is the All-Ukrainian Development Bank owned by Oleksandr Yanukovych. A police investigation has turned up evidence that throughout the presidency of his father, the younger Yanukovych used the bank to launder money using shell companies and fictitious investors.
The bank’s license was canceled in 2015, with Hr 2.75 billion ($100 million) belonging to Yanukovych’s inner circle in its accounts being frozen.
However, in 2016, Kyiv courts began unfreezing the accounts of 12 companies and 33 people, most of whom were bank personnel, saying that prosecutors had been unable to prove that the money had been obtained illegally.
Journalists from the Schemes investigative project reported in November that Hr 2 billion ($70 million) held under the names of bank employees had been withdrawn from the bank by first transferring it to the International Investment Bank, where they were again frozen, only to be released again under a court decision in February 2018.
The International Investment Bank, through which the money of Yanukovych’s bank was released, is owned by Poroshenko.
The Schemes report alleged that the owners of the bank accounts were proxies. Clerks and junior managing staff of the bank allegedly owned millions of dollars, with one office manager, one clerk, and one head of a department together owning $15 million. The lawyer representing the trio told the court that they had received a loan from a man named Yashar Khodzhaev.
That name is important: Khodzhaev came up as the owner of an office building in which a company named Tantalit is based. Tantalit was the nominal owner of Mizhyhirya, the luxurious residence used by Yanukovych before and during his presidency.
Schemes’ journalists contacted the people whose names were used to withdraw these millions of dollars. They claimed that they had never heard of, nor held substantial amounts in the All-Ukrainian Development Bank.
Poroshenko’s International Investment Bank, which helped release the money, said it did nothing illegal.
