Are Russian businessmen and former Ukrainian government officials buying strategic assets in Ukraine?

COMMENTARY

There is little doubt that the business ties between Russia and Ukraine are still strong despite the strained political relations between the two countries. The Ukraine-Russia conflict is in part due to yet another revolution in Ukraine, Russia’s “annexation” of Crimea, and escalating tension between US and Russia.

There are numerous indications that the Yanukovych cabinet, most of which has settled in Moscow to avoid prosecution in Ukraine, is continuing to influence politics and business in their former country. It should be of no surprise given the amount of financial resources the former Ukrainian politicians and officials control and the level of corruption and incompetence demonstrated by the Poroshenko administration that they are able to continue to influence Ukraine’s economy and politics. There is also a legal argument that as despicable as Yanukovych was to some factions and to the West when he served as President, he was legally elected, and illegally overthrown, and replaced by individuals who are fundamentally no different from Yanukovych and his former cabinet.

Without digressing or defending Yanukovych, the argument for Russian influence on Ukraine is compelling. Consider for example a curious case of one Russian businessman with a peculiar sounding name (for all the English speakers). Journalist Ruslan Yakushev recently wrote an article exposing someone named Mr. Fuks, a Russian businessman who Yakushev alleges is actively buying up Ukrainian assets. The publication is called, “Who Is Mr. Fuks?”

Yakushev’s article in Obozrevatel indicates that a strategic Ukrainian company, DonbassEnergo, may be sold to the Russians, and the person who has been sent to Ukraine to broker the deal is a Moscow businessman named Pavel Fuks. According to Yakushev, Fuks is a product of the criminal 1990s – a time when the Soviet system had been displaced by one run through criminal syndicates analogous to those that thrived during America’s “roaring” 1920s. Granted, many former Soviet business people were a product of a dubious transitional period characterized by absence of the rule of law.

Apparently, in 2006 Mr. Fuks became the Chairman of the Board of Directors of MosCityGroup, a Moscow based real estate development company that boasted about major development deals in and around Moscow, and raised a great deal of funds. Borrowing funds from Moscow investors and alleged syndicates, Fuks’ development business crashed during the global economic meltdown, and Fuks was recruited to buy up Ukraine’s assets, Yakushev explains in his publication.
Allegedly, Fuks has been recruited by KGB and (subsequently) FSB a long time ago, and more recently by the Yanukovych loyalists and Moscow based criminal syndicates to buy up Ukraine’s strategic assets on their behalf. Yakushev alleges that Fuks is a proxy for nefarious Russian interests. It is not surprising that Mr. Yanukovych would disclaim any associations with the likes Mr. Fuks or his kind.

According to the Yakushev article, “Ukraine is the main area of Fuks’ business. His task is to use the money of the Russian criminal circles to buy out promising Ukrainian gas and oil fields, energy companies, and other tactical assets for his Russian friends. “In particular, it is already known that Fuks is negotiating the purchase of Donbassenergo. This is being reported by a source in the Department of Counterintelligence and Protection of State Interests in the Area of Economic Security of the Security Service of Ukraine (SBU). The final owner of Donbassenergo is former Ukrainian President Yanukovych’s son,” explains Yakushev’s article.

Yakushev further explains that Pavlo Zhebrivskyi, the head of the regional military and civil administration, confirms that Oleksandr Yanukovych owns 34% of the Donbassenergo shares. Essentially, Fuks is a figurehead; he buys Ukraine’s assets, which were looted by Yanukovych and his cohorts, for the Moscow criminal circles.

The example of Mr. Fuks in the Obozrevatel is an example of what is likely happening systemically in Ukraine – economic takeover by Russian interests. This should not be a surprise. In fact, Ukraine is a lot more dependent on Moscow for its energy than we think. Right now the war is waged on the energy front, and Russia has already reached Kyiv. According to Yakushev, it is a known that Pavel Fuks is a friend and partner of the infamous Ukrainian businessman Serhiy Kurchenko, a close ally and confidant of the Yanukovych family, points out Yakushev. But, he is not alone.

Extrapolating from the Yakushev article about the so-called notorious operative Mr. Fuks, it should not be surprising if many of the strategic Ukrainian assets end up being controlled by a Russian businessmen or the former Ukrainian government officials residing in or near Moscow. In fact, Pavel Fuks is merely a symptom of the strong influence that Russia and the deposed Yanukovych cabinet continues to wield in Ukraine.

Alex Kushnierenko is an executive in the energy industry, with a Ph.D. in Forestry and Natural Resources, residing in the San Francisco Bay Area, United States.