Zelensky’s office hiding how it spends oligarchs’ donations to fight COVID-19

On March 16, President Volodymyr Zelensky met with the country’s richest businessmen and oligarchs in his office and asked them to contribute to fighting COVID-19. Some agreed.

“I told them frankly: ‘This country has been feeding you for a long time. The time has come for you to help the country,’” Zelensky later said of his meeting.

That same day, Zelensky appointed himself the head of the newly-created Coordination Council for Countering the Proliferation of COVID-19. Then he launched a fund for gathering the businessmen’s money.

For a month, the President’s Office faced criticism over the fund’s lack of transparency. Then, finally, Kyrill Timoshenko, the council’s secretary and one of Zelensky’s top aides, publicized the numbers.

He said the fund had gathered almost Hr 375 million ($14 million) and listed medical equipment on which it was spent. But the President’s Office never explained who specifically had given the money and what institutions received the aid. 

The Kyiv Post asked the council to reveal this data in a freedom of information request, but received a strong rejection.

It is a private matter, Zelensky’s office said in an email on June 22. It also stressed that the fund does not belong to the President’s Office. 

But the fund was created under the patronage of Zelensky’s Office and is managed by his aides. Moreover, the fund has gathered more money than what Timoshenko said, the Kyiv Post has discovered.

In a country where oligarchs already have a significant influence on state institutions, the president asking them for money is controversial — especially when the administration hides information about the money’s origin and ultimate destination, finance experts believe.

“It’s not normal when the president meets oligarchs and asks them to do something for him which practically can be called corruption because the president gets some electoral benefits from the fact that they are solving one of his problems,” investment banker Serhiy Fursa told the Kyiv Post. “The oligarchs never do this for nothing.”

“It is an unhealthy situation and we see that, as a result of this, entire ministries and industries are given under the control of certain oligarchic groups,” he said. 

On March 17, the day after the meeting with Zelensky, one of the people in attendance, Ihor Petrashko, was appointed the economy minister. Petrashko was the deputy director of UkrLandFarming, an agricultural company that belongs to Oleh Bakhmatyuk, a fugitive Ukrainian businessman accused of misusing Hr 1.2 billion ($44.7 million) of refinancing from the Central Bank. 

Petrashko did not respond to a request for comment.

The Rich

In the photograph, two of the most powerful and richest oligarchs in the country, business rivals Rinat Akhmetov and Igor Kolomoisky, are sitting at the table next to each other. Zelensky is in front of the two billionaires. They are surrounded by the president’s aides and other businesspeople.

Zelensky’s press service shared the image of the meeting at the President’s Office on March 16. Who else is shown is still an open question: The majority of the businessmen are not facing the camera. 

At the gathering, the president asked the businessmen to donate Hr 12-13 billion ($500 million), 35 times more than what the fund eventually managed to attract, according to the numbers shared by the President’s Office on May 5.

Zelensky also asked the oligarchs and businessmen to take patronage over regions in Ukraine where they have business interests and help fight coronavirus there.

Many businessmen were responsive and cooperative with Zelensky. Some also did not mind telling the Kyiv Post the sums they gave to the president’s fund, something Zelensky’s office called a private matter and declined to reveal.

Two charities, Monsters, Inc. and Prime, gathered money for the fund started by the President’s Office. This chart shows which businessmen and oligarchs donated through these charities to the fund and how much they gave. (Kyiv Post)

Some of the largest contributions to the fund came from two men, Kyiv oligarchs Victor Pinchuk and Yuriy Kosyuk.

Pinchuk is the second richest person in the country, with a $1.3-billion net worth, according to estimates by Forbes. He did not attend the meeting with the President, but was represented there by Fadi Hraibi, a top manager of one of his businesses, Interpipe. 

Interpipe then transferred Hr 55 million ($2 million) to one of the fund’s accounts, Pinchuk’s spokesperson told the Kyiv Post. This was a small part of his $10 million donation for fighting COVID-19.

The fund received that very same amount from Kosyuk, the fourth richest person in the country with a fortune of $1.1 billion, according to Forbes. 

Kosyuk is the main owner of Myronivsky Hliboprodukt, or MHP, the largest poultry producer in Ukraine. The company transferred Hr 55 million, MHP’s spokesperson told the Kyiv Post. 

Under the presidency of Zelensky’s predecessor Petro Poroshenko, Kosyuk donated $600,000 to a fund affiliated with the then-president. The money he donated was then paid to U.S. lobbyists from the BGR group, which was hired by Poroshenko aids, the Kyiv Post uncovered.

MHP told the Kyiv Post that Kosyuk did not intend to ask the President’s Office how it spent his money, as this would violate the relationship of trust it has with its partners.

Poroshenko, an oligarch in his own right, did not show up at the meeting with Zelensky in mid-March.

Another major contributor was Andrey Stavnitser, an Odesa-based businessman and co-owner of the largest private cargo port in Ukraine. His companies donated Hr 46.6 million ($1.7 million) to the fund, his press person told the Kyiv Post.

After meeting the President, Stavnitser wrote on Facebook: “Frankly, it was a very new experience for me when the state invites you for cooperation and asks for help. Usually, we try to stay away from each other and often act contrarily.” 

Three businessmen from Dnipro — Gennadiy Butkevich, Viktor Karachun, and Yevhen Yermakov — donated Hr 10 million ($370,000). They made a transfer from a charity belonging to ATB, a chain of supermarkets they own, ATB’s spokesperson told the Kyiv Post.

An Hr 28 million ($1 million) donation came from Vodafone Ukraine, owned by Azerbaijani businessman Nasib Hasanov, the company told the Kyiv Post.

Ukrainian President Volodymyr Zelensky greets the world’s largest cargo plane, the Ukrainian-made Mriya carrying medical equipment, at Boryspil International Airport outside Kyiv on April 23. The President’s Office called this humanitarian aid. However, it turned out to be a commercial supply for the Epicenter chain of stores. Epicenter later said that it would donate part of this cargo to hospitals. (President’s Office)

However, many of the businessmen who attended this gathering with Zelensky decided not to give their money to the fund initiated by the president and chose to act on their own. 

That is what Serhiy Tigipko did. He is a former top politician and businessman who owns the TAS Group, which is involved in finance, real estate, and agriculture. His spokespeople confirmed that Tigipko was at the meeting with Zelensky but chose not to transfer his money to the fund. Instead, he is helping those hospitals that approach his charity directly.

Vladyslav Chechotkin, a founder of Rozetka, the popular online shop that sells everything from cellphones to lawnmowers, said that he and his company did not give the money to the presidential fund and helped to fight COVID-19 independently. 

Vyacheslav Klimov, a co-owner of Nova Poshta, a Ukrainian postal and courier company, also donated, but not to the fund. He spent Hr 25 million ($926,000) fighting COVID-19. However, his company helped the President’s Office to deliver tons of medical equipment to hospitals for free, Nova Poshta’s press secretary said. 

Some took Zelensky’s call too enthusiastically — like Kharkiv businessman Oleksandr Yaroslavsky, the owner of DCH Investments Management, which owns Kharkiv International Airport. He launched his own anti-crisis council on countering COVID-19, even though the Kharkiv authorities already had one. 

Yaroslavsky fought with a local governor Oleksiy Kucher over this. In response, Kucher made a post on Facebook accusing Yaroslavsky of purchasing medical equipment from his own brother and allowing him to profit from the pandemic. Kucher later deleted the post. According to Ukrainska Pravda, Zelensky personally forced the governor to make up with Yaroslavsky. 

Yaroslavsky’s spokesperson declined to say whether her boss donated to Zelensky’s fund directly.

Oligarchs Akhmetov and Kolomoisky did not give money to the fund. 

The wealthiest man in Ukraine, Donetsk oligarch Akhmetov owns the System Capital Management (SCM) holding company. He decided to give Hr 300 million ($11 million) to fight COVID-19, but spent this money independently. He did, however, give the fund 300,000 antibody tests for coronavirus, Akhmetov’s press secretary told the Kyiv Post.

Dnipro oligarch Kolomoisky, an owner of the Privat Group of companies, said he did not have any money to contribute. 

“It is a pity that I have an asset freezing order from the English court and limited allowed expenditures,” Kolomoisky told the Kyiv Post. 

A London court froze $2.6 billion of his and his business partner’s assets in connection with the PrivatBank fraud scandal, litigation Ukraine’s authorities brought to the U.K. legal system.

Other businessmen who, according to the media reports, either attended the mid-March meeting with Zelensky or agreed to help did not respond to the Kyiv Post’s requests for comment. Among them were Andriy Verevskyi, the founder of Kernel; Bakhmatyuk, the owner of Ukrlandfarming PLC; and Vadym Novynsky, the owner of the Smart Holding Group.

Money mess

Based upon the comments of business people who contributed to the fund, it must have received more than the official Hr 375 million ($14 million) that the President’s Office revealed on May 5. The Kyiv Post calculated that the actual amount of donations could stand at approximately Hr 413 million ($15 million).

At the March 16 meeting, the President’s Office decided that there was no need to create a separate bank account for the fund and that they should use one of an existing charity. 

Stavnitser then suggested involving an Odessa charity he has ties to. It is called Monsters, Inc., like the name of the animated children’s film. The President’s Office liked this idea.

Monsters, Inc. gathered almost Hr 363,000,000 ($13.5 million) from Ukraine’s oligarchs and businessmen, founder Katherine Nozhevnikova told the Kyiv Post. 

Altogether, the charity’s account received 40 transactions from companies and individuals. The contributions ranged from Hr 200 to Hr 55 million, she said.

An airplane carrying protective gear from China for Ukrainian medical workers landed in Kyiv on April 30. It was the last of over 25 flights organized by the President’s Office in order to supply medical equipment for Ukraine’s fight against COVID-19. (President’s Office)

However, her cooperation with the President’s Office did not last long. 

On April 5, she approached them with a letter asking to withdraw from the project.

Nozhevnikova explained that this happened for a few reasons. First, the Odesa region urgently needed help and her charity was overloaded with local projects apart from this presidential one. The other reason, she said, was that the President’s Office was the one giving the final word on everything, and she had no power to influence decision-making. 

A week or two after she informed the President’s Office about her desire to leave the project, Nozhevnikova learned the name of the charity which was to step in and replace Monsters, Inc.

It is called Prime and belongs to Latvian native Boris Baum, a top manager who worked for Russian-Ukrainian VS Energy and has business ties Pinchuk and Kolomoisky. Now he works as a freelance adviser to the deputy head of the President’s Office, Timoshenko. 

He chaired Prime on April 5, the same day that Nozhevnikova quit the project. She then transferred the rest of the money, Hr 19.3 million, to Prime’s account.

However, the math is wrong. 

Baum told the Kyiv Post that his charity had gathered Hr 50 million. (ATB and Vodafone confirmed that they had transferred their contributions totaling Hr 38 million to Prime’s account.)

Nozhevnikova gathered Hr 363 million, including from Pinchuk, Kosyuk, and Stavnitser. 

What this means is that the sum of these two numbers does not make Hr 375 million, the amount the President’s Office said it had received.

Nozhevnikova says she wants more transparency. She intends to reveal the names of the businessmen who donated money, but cannot do this until she receives permission from them. 

“Try to understand me. I do not want to fight with the President’s Office, nor do I want to fight with the businessmen involved. They have their own agreements (with each other), which I, unfortunately, am not aware of,” she said. 

Nozhevnikova will do her best to make it public, she said. 

Another stumbling block is an international audit Nozhevnikova has been demanding starting from April. Such an audit has started, the President’s Office told the Kyiv Post in an email from June 22.

Nozhevnikova questions this because, she said, they have not yet agreed on who will pay for it. Some of the businessmen do not want their charitable contributions to be spent on this. 

“My reputation is more important to me than all of them together,” Nozhevnikova said. “But to fight with them…honestly, I’m not that big.”