Seeking patterns in the Ablyazov schemes: the “revolutionary” possibility

Could stolen funds through the multi-billion diversion schemes of Kazakhstan’s champion swindler and ex-banker Mukhtar Ablyazov have ended up in the hands of Ukrainian extremists who had a hand in massacres against loyalists to the “old regime” in Odessa and elsewhere? And could, therefore, Ablyazov pin his hopes on an extradition to Ukraine rather than to the Rusian Federation in the hope to get away with hundreds of millions, possibly billions, in assets within Ukraine’s jurisdiction bought with diverted funds belonging to Kazakh taxpayers and Ablyazov’s former wreckage bank BTA (now Kazkommertbank) and get his share in the revenue plus a more comfortable life in exile than France has offered him so far? Some elements in recent events, such as the disclosure of activities of neo-nazi tycoons in Ukraine linked to the present-day government, the exposure of ultranationalist forces in Russia and their links to the likes of Ablyazov, together show a pattern that makes the possibility of the funding of “revolutionary” underground groupings with all but open support of American state agencies become more and more plausible by the day.


Seeking patterns in the Ablyazov schemes: the “revolutionary” possibilityThe sacking of one of Ukraine’s most notorious mobsters, Igor Kolomoisky, possibly (though far from probably) to be followed by legal action against his mafia-styled organisation, has dimmed hopes for that slightly. But the possibility that part of the stolen BTA funds have ended up in the pockets of the likes of Kolomoisky (as well as of his Russian counterparts which was earlier strongly suggested by the arrest of one of Russia’s ultranationalist leaders connected with the Ablyazov files) changes Ablyazov’s self-styled “political” image from that of victim of persecution to instigator of subversion, starting in Ukraine with the possible aim to extend the “revolution syndrome” to Russia, Kazakhstan and other Central-Asian republics. It helps at least a bit to explain the staunchness with which Ablyazov and his supporters stick to the culprit’s false image of “persecuted liberal” by the monstrous governments of former Soviet republics (except Ukraine of course) in chorus with Washington’s “anti-Putin” crusade. The most hallucinating part of that story is that America’s state and semi-state agencies (i.e. state-funded and carrying out state orders under the guise of private enterprises) must somehow have been involved in the diversion of part of the stolen funds from BTA in the direction of subversive organisations a bit everywhere in the former Soviet Union where, in contrast to Ukraine where they work openly, operate underground.

Outstanding in the nomenklatura of Ukraine’s billionaire-mobsters who took their opportunity in the “revolution” remains the name of Igor Kolomoisky, Ukraine’s second-richest tycoon and hawkish anti-federalist campaigner, shortly after the “Maidan-revolution” appointed governor of the Dnepropetrovsk province. Kolomoisky has his own “private army” consisting of mercenaries, originating, among other sources, of soldiers of Fortune sent by America’s Blackwater corporation. His militiamen have been responsible for the mass murder in Odessa in the winter of 2013/’14. But Kolomoisky also happened to own the country’s largest bank, Privat Bank, which in the winter of 2014/’15 was in the process of being bailed out for the equivalent of roughly a billion US dollar, following fund diversion schemes during the previous decade. It was not so much the government bailing out the faltering bank, but the International Monetary Fund. According to available information, part of the money “lost” on non-repaid loans at the time include part of those funneled away through Privat Bank by Mukhtar Ablyazov, Kazakhstan’s banker/swindler who robbed the bank he used to control, BTA, of billions in dollars using the same method.

Recently, however, a breach in the ruling clique in Kiev due to a split-up between “moderates” around President Poroshenko and his “radical” armed allies has started to cast a shadow over Ablyazov’s hopes in Ukraine. “Ukraine’s president fired powerful tycoon Ihor Kolomoisky as a regional governor on Wednesday in a risky move that could affect the internal balance of power and Kiev’s fight against Moscow-backed separatists,” Reuters wrote in a news report posted on March 25 this year  []. “The 52-year-old Kolomoisky has been at the center of a political storm since armed and masked men, apparently loyal to him, briefly entered the offices of the state-owned oil monopoly UkrTransNafta in the capital Kiev last Thursday night after its director, his ally, was summarily replaced. As governor of the eastern industrial region Dnipropetrovsk region, Kolomoisky, a banking, energy and media tycoon with a fortune that Forbes put at $1.8 billion last year, has been a valuable ally to the Kiev government in arming and financing militia groups and volunteer battalions there to hold off pro-Russian separatists. Commentators said dismissing Kolomoisky was a tough decision for Poroshenko who was under pressure from radical deputies to curb what they said was a dangerous power play in Ukraine’s capital city still gripped by political tension as an uneasy ceasefire holds in the east. Russian officials have increasingly portrayed Poroshenko as weak and suggested he faces a major challenge trying to rein in the oligarchs, as well as what it calls the “party of war”. A statement on Poroshenko’s website said the President had dismissed the hard-nosed, tough-talking mogul during a meeting on Tuesday after the oligarch had offered to step down. Kolomoisky is, alone among the so-called oligarchs, credited with taking firm action against separatism in the east – successfully snuffing out rebel attempts to seize control of Dnipropetrovsk last year. As such, he has been a pivotal figure.”

“Billionaire banking tycoon Igor Kolomoisky was appointed governor of Dnipropetrovsk Oblast, a region in the east of the country that includes Ukraine’s third-largest city, in March last year. He had one job: prevent the territory from falling into the hands of pro-Moscow rebels,” one background report posted by Business Insider [] on the occasion of the event was to read. “Although he was a close ally of President Petro Poroshenko’s new government in Kiev, neither had the financial nor military clout to achieve that aim. So Kolomoisky decided to build his own private army of volunteers, equipped with heavy weaponry. He paid for all of this from out of his own pocket. The recruits came from Ukraine and Europe. There are even a couple of Americans. Estimates suggest Kolomoisky could call on over 20,000 troops and reserves. His Dnipro Battalion, also known as Dnipro-1, includes around 2,000 heavily armed fighters. The unit is reported to have cost the banking billionaire $10 million to set up. They helped play a key role in halting the advance of the Moscow-backed rebels from their strongholds in the neighbouring Donetsk and Luhansk.  However, there are doubts about where the troops’ ultimate loyalties lie — to the government in Ukraine or to their regional paymaster. Last week, armed men in masks stormed the headquarters of state-owned oil company UkrTransNafta in the Ukrainian capital Kiev, following the sacking of its director Oleksander Lazorko, a key ally of Kolomoisky.” In other words: the “vultures of the revolution” are now at each other’s throat – reminding one of the English Republic under Oliver Cromwell. But for all it matters, to maintain a private army of that size should cost a lot more than just 10 million greenbacks, even in an impoverished country like Ukraine. This, in turn, suggests “external auxiliary funding” clearly pointing in the direction of the likes of Kolomoisky’s former business partner Mukhtar Ablyazov.

In the case of Privat Bank, there appears to be blood on the trail as well. “Russian investigators have launched a criminal case against Ukraine’s Interior Minister and the Dnepropetrovsk region’s governor on suspicion of the “organised murder” of civilians in eastern Ukraine,” The Moscow Times wrote in a recent news report published on June 18. “Investigators plan to explore further charges against Interior Minister Arsen Avakov and billionaire governor Igor Kolomoisky, including the use of prohibited means and methods of warfare, as well as the abduction of journalists and obstruction of their lawful activities, the statement added. The two will soon be placed on an international wanted list. Since early April, the two have “knowingly and with the intention of killing civilians” orchestrated a series of criminal activities committed by Ukrainian troops, the National Guard and the ultranationalist group Right Sector, as well as members of the special Dnyepr battalion, which was created and financed by Kolomoisky, Investigative Committee spokesman Vladimir Markin said. Investigators further allege that the pair ordered the abductions of Russian journalists reporting on events in eastern Ukraine.”

As for Kolomoisky’s financial dealings, the western backers of the “revolution” apparently prefer to look the other way – and the IMF appears to be no exception to that. “The Ukrainian revolution has been very bad for business in the country. But for Igor Kolomoisky’s Privatbank there has been compensation of almost a billion dollars in state funds: publicly, rival Ukrainian commercial banks call that favouritism; privately, Ukrainian business as usual, one report on the development [] reads. “Privatbank is Ukraine’s largest commercial bank. Since the replacement of the Ukrainian Government in February, and the start of the International Monetary Fund’s (IMF) financial aid programme in April, Privatbank has been the largest beneficiary of what the IMF and the Ukrainian Ministry of Finance are calling Emergency Liquidity Assistance (ELA) to the country’s banks. Published measurements of Privatbank’s share of ELA range from 36% to more than 40% of the additional financing which has flowed out of Ukrainian state funds into the commercial banks. Just how much Kolomoisky benefits, along with related companies to which Privatbank lends much of its loan book, [remains unclear].”

On paper, Ablyazov’s cases involving Ukraine look a lot more remote. In the long course of proceedings concerning the Ablyazov files in England the most outstanding case involving assets located in Ukraine is known as the Stantis case, named after the firm behind the schemes under control of Ablyazov – which he denied under oath which was to contribute to his 22-months sentence for perjury. “Stantis Limited is a Cypriot company which appears to have made advances in 2007 totalling some $80 million to three Ukrainian companies (Praym-Stroy LLC, Galena LLC, and Max-Well Medical Centers LLC),” a court ruling dated November 6 2012 [] read. “The bank alleged that Stantis is a creature of Mr Ablyazov, through which he holds assets, and that he is its true UBO. However, the gravamen of the bank’s complaint under this heading was that Mr Ablyazov dealt with Stantis’s assets, in breach of the freezing order, by assigning its rights to repayment of these advances made by it. In particular, the judge focussed on four agreements: (a) a series of agreements dated July through October 2010 but in fact executed in December 2010 (after the freezing order) under which Stantis assigned to another Cypriot company, Nitnelav Holdings Limited, its rights to repayment of these advances (the alleged dealing with frozen assets); (b) a loan agreement dated 13 April 2007 (the so-called “short form agreement”), whereby Alterson Ltd made a loan of $80 million to Stantis, due for repayment on 30 March 2014; (c) a loan agreement also dated 13 April 2007 (the so-called “long form agreement”) whereby Alterson made the loan of $80 million to Stantis and was also given the rights (not found in the short form agreement) both to demand repayment at any time on 360 business days notice and to assign its rights at any time in its sole discretion; and (d) an agreement dated 1 June 2009 (prior to the freezing order) under which Stantis agreed with Alterson that Alterson can demand that Stantis immediately assigns to Alterson or to another entity determined by Alterson all Stantis’s rights under the advances made by Stantis to the companies named above, in consideration for which assignments, if demanded, the loan from Alterson to Stantis would be considered as repaid. In sum, therefore, it appears that Alterson advanced $80 million to Stantis; Stantis advanced the money onwards to the three Ukrainian companies; the short form agreement said nothing about Alterson’s rights to repayment other than that it was to occur on 30 March 2014 (after 7 years); the long form agreement however gave Alterson additional rights to demand earlier repayment or to require the assignment of Alterson’s rights to the $80 million; the June 2009 agreement appears to be a form of “cut-through” agreement whereby Alterson could secure Stantis’s obligation to repay its advance from Alterson by demanding the assignment of Stantis’s loans to the Ukrainian companies.

Subsequently, the court sums up the evidence that the Stantis case belongs indeed to the list of Ablyazov’s embezzlement schemes as follows: “(i) Stantis’s sole director was Mr Batyrgarejev, who, as stated above, worked exclusively for Mr Ablyazov; (ii) Mr Ablyazov’s case that Stantis rejected. Mr Ablyazov’s own witness statement (his third, dated 16 April 2010) had included Stantis as one of the companies by which he held his interest in BTA Ukraine. He did not identify Stantis as an independent company whose business might be damaged by the receivership order; (iii) Mr Batyrgarejev’s statement dated 4 June 2010 had referred to Stantis as a “holding company” or “nominee company”, not as an operating company, and this was confirmed by his solicitors, Stephenson Harwood, in their letter dated 12 July 2010 to the court; (iv) In effect, Stantis was a mere conduit for channelling funds for Mr Ablyazov’s projects. That was in effect how a Mr Anuar Aizhulov, a former director of Eastbridge who worked in various roles for Mr Ablyazov until 2009, whose name was on the short form agreement, the long form agreement and the 2009 agreement (although he denied that he had signed the latter two documents), and who had given oral evidence at trial, described Stantis. He said that it was a “special purpose vehicle used in transactions where Mr Ablyazov would organise funding for Ukrainian projects”. What projects those were supposed to be remained unspecified, however. Could the true nature of at least some of them ever be revealed in a London courtroom? Unlikely so – but possibly so. In a Moscow courtroom? More likely so. In a Kiev courtroom? Hardly so…