Parties' Funding: How Pro-Russian Oligarch Viktor Medvedchuk Is Regaining Power in Ukraine

19 July 2019 16:23

Video from the Parties' Funding series where Hromadske looks into the funding of five leading parties who are set to enter the next parliament

Since the beginning of the war in the Donbas, oligarch Viktor Medvedchuk and his group have strengthened their positions in Ukraine. According to the latest ratings, political party Opposition Platform – For Life is in second place in the pre-election rally and will have at least 30 MPs to bring to the Ukrainian parliament. Medvedchuk's big political comeback is one of the biggest paradoxes of Petro Poroshenko’s presidency. Hromadske looks at how this became possible.

All Aboard!

When Medvedchuk returned to Ukrainian politics last summer as a member of Vadym Rabinovich’s For Life party, he had an ambitious plan to unite all politicians in the pro-Russian spectrum.

In practice, he managed to partially implement this. The so-called RosUkrEnergo group or the “gas workers” – half of the faction of Opposition Bloc (15 MPs) headed by Yuriy Boyko and Serhiy Lyovochkin who are business partners of oligarch Dmytro Firtash – joined the alliance of Russian President Vladimir Putin’s kum (Putin is the godfather of Medvedchuk’s daughter Daryna – in Ukraine and Russia, that’s known as a ‘kum’ -ed.). The union spawned a new party: Opposition Platform – For Life, which nominated Yuriy Boyko as a presidential candidate. On the eve of the first round of presidential elections, Medvedchuk took Boyko to Moscow, where they both met with Russian Prime Minister Dmitry Medvedev.

From left to right: Prime Minister of Russia Dmitry Medvedev, Ukrainian MP Yuriy Boyko and businessman Viktor Medvedchuk during a meeting in Moscow, Russia, March 22, 2019
Photo: EPA-EFE / EKATERINA SHTUKINA

Even before the alliance with Medvedchuk, Boyko’s team had its own plan for the presidential campaign. On November 14, 2016, Boyko, during the Conciliatory Council of heads of parliamentary factions punched Radical Party leader Oleh Lyashko. His political partner, Lyovochkin, then told Hromadske that “in the future, when the parliament considers the candidacy of Mr. Boyko for the post of the prime minister, this story will come back to haunt him.”

The "gas workers" hoped that Boyko would get to the second round of presidential elections, and would then lead the second-largest faction into parliament, which would open the way to a broad coalition and the post of head of government.

As a result, Medvedchuk was able to unite specifically the pro-Russian camp of Ukrainian politicians. But some of the politicians from the south and east have moved away from outright pro-Russian rhetoric over the past five years. That is another wing of the Opposition Bloc faction – led by Vadym Novynskyy and Borys Kolesnikov – a business partner and friend of the owner of SCM Corporation, Rinat Akhmetov. They did not agree to an alliance with Medvedchuk, and Boyko – for doing the opposite – was expelled from the faction. They still got to retain the Opposition Bloc brand, however.

For the presidential campaign, Akhmetov’s friends nominated their own candidate, MP Oleksandr Vilkul. In the first round, he scored 4.15% of the vote and finished eighth.

“If Vilkul had supported Yuriy Boyko as the highest-rated candidate from the opposition, Boyko would certainly have gone to the second round, ahead of Poroshenko,” said Nestor Shufrych, Medvedchuk’s associate.

But even if Boyko had received the sum of votes for him and Vilkul, as evidenced by the data of the Central Election Commission, it would not have gotten him to the second round. In this case, he would be only third. In reality, Boyko came in fourth place in the elections (11.67% of the votes).

Fight between MPs Oleh Lyashko (center) and Yuriy Boyko (right) at a meeting of the Conciliation Council of Parliament in Kyiv, November 14, 2016
Photo: Volodymyr Strumkovskyy / UNIAN

Even before the start of the presidential campaign, businessmen who knew Akhmetov were discussing rumors about a proposal that Medvedchuk allegedly made to the owner of SCM: if the Akhmetov part of Opposition Bloc joined the Medvedchuk and Boyko alliance, Medvedchuk would provide for ships carrying products from Akhmetov’s metallurgical plants to pass through the Kerch Strait freely. Russia systematically blocks the passage of Ukrainian ships through the strait in the area of the newly built bridge. However, we could not confirm this information officially.

Akhmetov’s close associates, in particular, Novynskyy, who owns Metinvest holding with him, emphasize that the oligarch had stopped participating in the Opposition Bloc in 2016 and does not affect the decision-making process in this party.

The Opposition Bloc went to the parliamentary elections separately again, but the latest sociological polls show that the party’s rating is within the margin of statistical error. Whilst the Opposition Platform – For Life is in second place, according to findings from sociologists.

The poll, which was conducted by the sociological group Rating in early July , shows that 13% of voters, who said they would be going to the polls, are ready to vote for the Medvedchuk and Boyko union.

It would seem that such a preliminary result is evidence of revenge from the pro-Russian forces. However, the director of the Foundation for Democratic Initiatives, Iryna Bekeshkina is convinced that it is not.

“Compared to 2014, the pro-Russian electorate has decreased. But then the east and partially south practically ignored the elections. Now they are actively participating in elections on a par with other regions,” says Bekeshkina.

President Volodymyr Zelenskyy has repeatedly stressed that his party Servant of the People has ruled out the possibility of a coalition with the former Party of Regions people. Therefore, premiership plans currently look unrealistic for Boyko.

However, rumors about Medvedchuk’s desire to become deputy speaker of parliament from the opposition, on the contrary, do not seem all that unrealistic.

Former Party of Regions MPs Oleksandr Vilkul (left) and Vadym Novinskyy are going to the parliamentary elections separately (in the photo - MPs in the Parliament, November 26, 2018)
Photo by Volodymyr Hontar / UNIAN

Teleconferences and Cinema

On the eve of the 2014 snap elections, Medvedchuk was an undesirable political ally. It was then that the US government imposed sanctions on him, and his associates were afraid that a similar fate might befall them if Medvedchuk were on the same lists as them. Today, his party is second in second place, according to the rankings. How has Medvedchuk managed to clean up his reputation in five years?

“In 2014, there was an active phase of the war, the nation was consolidated. Everything connected with Russia was rejected, the degree of that was much higher than now. Time played in his [Medvedchuk] favor. Now, throughout this period, propaganda has tested the boundaries of a threshold that can’t be crossed. And he has moved farther and farther away,” explains political consultant Borys Tizengauzen.

Another reason, according to Tizengauzen, is the purchase of media resources, in particular, national information channels. Officially, they do not belong to Medvedchuk, but to his comrade – MP Taras Kozak. After the acquisition of the ZIK channel in June 2019, Kozak created the Novyny holding (“News”), which includes outlets 112, NewsOne and ZIK.

“Who owns the channels, who purchased them – is publicly known. But who controls them – that’s confidential information,” says Vasyl Nimchenko, a colleague of Medvedchuk and member of Opposition Platform – For Life. He, as always, refers to Article 32 of the Constitution on non-interference in the personal life of citizens.

Nimchenko repeatedly mentioned this provision of the law earlier, emphasizing that Medvedchuk does not occupy government posts and is not obliged by law to report on his income.

The channels belonging to Kozak’s holding champion the development of events that are advantageous to Medvedchuk and advertise his party, Opposition Platform – For Life. This is evidenced by the monitoring data of the Institute of Mass Information. According to the study, 112 and Newsone are among the top three leaders for getting orders for custom-made materials.

The co-chairman of the Opposition Platform – For Life, Boyko, also has supporters among the TV channels. According to another study, he is supported by Inter TV channel, which belongs to his fellow party member, Lyovochkin. Medvedchuk recently appeared on Inter, almost immediately after his election as head of Opposition Platform’s political council.

“In June, the subject of Medvedchuk was brought up at Inter almost on a daily basis. A year ago there was no mention of him at all. Although Boyko became a resident at Inter a few years ago," explains Natalia Ligachova.

Media organizations and journalists, among them former employees of ZIK, who after Kozak’s purchase of the TV channel began to quit, urged against putting media resources into the hands of one political force, namely the Opposition Platform – For Life.

Thus, four nationwide information channels are in the hands of Opposition Platform – For Life functionaries. Three of them were bought less than a year before the parliamentary elections.

Those who took part in the ZIK purchase agreement did not contact the Anti-Monopoly Committee for its approval. This can be explained by threshold indicators of 4 million euros for two participants in the concentration, the head of the committee Yuriy Terentyev notes.

According to the presidential adviser on political issues Mykyta Poturayev, TV channels like ZIK cost much more: “Each such channel probably costs $15 million minimum.”

The protest at the ZIK office when information appeared that Medvedchuk was about to buy the TV channel on March 28, 2018. In the summer of 2019, he bought it through a colleague Taras Kozak
Photo by Volodymyr Hontar / UNIAN

Detector Media calculated that according to the declarations, Kozak had slightly less than $2 million before buying ZIK. Hence, someone else probably put forward the money to buy the channel.

“There are questions about the sources of funds. As you know, maintaining three channels is already not cheap. On average, it’s $700,000 per month [...] where Kozak can get that kind of money is not clear. The main thing is that no one has yet denied these rebukes in the media – that the channels were bought to benefit Medvedchuk,” says Ligachova.

According to MP Serhiy Leshchenko, Poroshenko could have prevented the growth of Medvedchuk’s influence on the media market. But didn’t. According to Leshchenko, channel 112 violated the law: the media had a license only for regional broadcasting, and not an all-Ukrainian one, and the license was for entertainment content, not informational content.

“The National Council [of Ukraine for Television] controlled by the President turned a blind eye to everything. And for that, Poroshenko received total support of 112 during the elections,” Leshchenko said in an interview with gordon.ua.

Putin’s pal looks after his image not only via media resources he controls but more recently, also through movies. In August 2018, a scandal erupted around the filming of a biographical film about the poet and dissident Vasyl Stus, whose public defender in 1980 was Medvedchuk. The scenes of the trial were cut from the script, in which Medvedchuk admitted Stus was guilty.

According to actor Hennadiy Popenko, Medvedchuk’s representatives had pressured the filmmakers. This news prompted a public reaction back then, and the film crew decided to film the court scene later due to "the importance of the topic and taking into account the number of requests from the public."

Speaking to Hromadske, director Roman Brovko said that in the final version of the film, Medvedchuk’s name and surname would not appear on screen: “This is a legal issue. If he, as a person mentioned in this film, had given his written consent for his name to be used in the frame, then it could have been done.”

However, Brovko assured that the actor looks very similar to Medvedchuk, and all the lines in the scene do not deviate from the transcript of the 1980 hearing.

Three weeks before the parliamentary elections, Revealing Ukraine premiered at the Italian Taormina Film Fest. The producer of the film was Oliver Stone, known for his pro-Russian views. The main storytellers in the film were Putin, Medvedchuk himself and his wife Oksana Marchenko.

Revealing Ukraine is a continuation of Stone’s other project, Ukraine on Fire, which sets out the Russian version of the events of the Revolution of Dignity. In the new project, the filmmakers continue to speak with Putin about the armed conflict in the east, and Medvedchuk appears in the role of "opposition leader." The only Ukrainian TV channels present at the film premiere in Taormina were channels 112 and NewsOne.

Viktor Medvedchuk with his wife Oksana Marchenko at the opening ceremony of the film festival in the Italian city of Taormina, June 30, 2019
Photo: Taormina Film Fest

Oil and Friends

How and thanks to whom did Medvedchuk earn the money for the party and television channels? He admits that he does not have any commercial structures, because he cannot afford them due to sanctions imposed on him by the U.S. government. This applies to companies both in Ukraine and in Russia. But on both sides of the border, Medvedchuk’s businesses directly or indirectly belong to his relatives and colleagues.

During Poroshenko’s presidency, Medvedchuk became a beneficiary of a fuel business. It begins at the Russian oil fields and ends at Ukraine’s gas stations. His team controls the companies owned by people associated with Medvedchuk.

In Russia, NZNP Trade produces oil from one of the largest oil fields, the controlling stake of which is indirectly owned by TV host Oksana Marchenko, Medvedchuk's wife. As journalists of the Skhemy (“Schemes”) program found out, even the state-owned Rosneft was not able to take part in the competition for production rights. Oil in Russia is processed at the Novoshakhtinsk Refinery, 60% of which is also owned by Marchenko, and 33% is mediated by Medvedchuk's associate Taras Kozak, writes Russian outlet Proekt.

The Russian product is delivered to Ukraine through the Samara-Western Direction oil product pipeline – that’s how about a third of the volume of diesel fuel comes through into the country. The company that controls it, is in turn controlled by Medvedchuk through a figurehead, Shustrova Live program notes.

In 2015, as a result of a decision of the Rivne Economic Court, the oil product pipeline was passed into the ownership of PrykarpatZakhidTrans LLC, which is owned by a Swiss company belonging to German Anatoly Schaefer. According to a Shustrova Live investigation, he is a bogus owner and acts in the interests of Medvedchuk.

There are several companies operating around the Samara-Western Direction oil product pipeline. The company Proton Energy, which is owned by Israeli citizen Nisan Moiseyev, buys the energy-producing material. Also, his company Glusco Ukraine sells fuel at retail price through its own network of gas stations. And Petro Belz’ Wexler Group controls the fuel terminal in Novohrad-Volynskyi. Both entrepreneurs depend on the supply of fuel from Russia through the above-mentioned oil product pipeline.

“Surnames are not important. The main thing is that without a person to make a deal with Rosneft on deliveries, there would be no business,” explains Serhiy Golovnov, editor-in-chief of biz.censor.net.ua. For Belz and Moiseyev, this person is Medvedchuk.

According to the Shustrova Live project, during Poroshenko’s term in office, Medvedchuk managed to gain control of more than 30% of diesel fuel imports in Ukraine.

According to a Skhemy investigation, the Security Service of Ukraine (SBU) contributed to the elimination of Medvedchuk’s competitors in the supply of liquefied gas. MP Leshchenko assures that Medvedchuk was helped by the Poroshenko-controlled Antimonopoly Committee of Ukraine (AMCU) and the SBU – it is because of these statements that Medvedchuk has been suing Leshchenko for the third year.

"Dove of Peace"

After the start of Russia’s aggression in 2014, Medvedchuk became an informal negotiator between Poroshenko and Putin. He was the only one who flew directly from Kyiv to Moscow, despite the ban on direct flights between countries. And all for the sake of negotiations about the release of the hostages.

During Medvedchuk's stint in the Trilateral Contact Group in Minsk, three major prisoner exchanges took place. Usually, in the lead up to them, he met with Putin.

Medvedchuk attended the first two exchanges in person. At that time, his contribution to this was only written about with reference to the press service of Ukrainskyi Vybir (“Ukrainian Choice” – Medvedchuk’s NGO and news portal). Poroshenko reported on the successful release of the military through press secretary Svyatoslav Tsegolko.

The last big exchange took place on December 27, 2017 and, unlike the previous ones, top state officials were present. The presidential commissioner in the Trilateral Contact Group, Iryna Herashchenko was then at the Mayorsk checkpoint, where the exchange took place. President Poroshenko flew to Kharkiv to meet the released prisoners who were brought there by helicopters. After that, he flew with them to Kyiv, and in the plane posed with academic Ihor Kozlovskyy who had been released from captivity.

During the three large exchanges that took place with the help of Medvedchuk, more than 300 Ukrainians were released. However, after the last exchange in 2017, the process stopped. Medvedchuk blamed this on Poroshenko.

Participants of the negotiation process for the release of prisoners in Minsk, Belarus, on June 23, 2014. From left to right: Nestor Shufrych, Viktor Medvedchuk, and Leonid Kuchma
Photo: EPA / STRINGER

Political allies and Medvedchuk-controlled media pushed the idea that he is a kind of “dove of peace” – the only one who is able to ensure an effective exchange of prisoners.

Newly elected president Zelenskyy said he did not want to involve Putin’s pal in the negotiation process. Medvedchuk replied that he always did it in the “interests of the country, not the president, and therefore it is impossible a priori to withdraw him from the negotiation process ”.

Medvedchuk proved the validity of this statement recently, when he organized the release of four Ukrainian citizens from the “Donetsk and Luhansk people's republic's” captivity, without having a mandate from the state. Zelenskyy was indignant that this was done "for the elections".

“Medvedchuk simply realized his principle – that negotiations should be conducted in the Kyiv- Moscow-Donetsk-Luhansk quadrangle. When these territories and their leadership are perceived not as an object, but as a subject of legal matters. As equals among equals,” says Vasyl Nimchenko.

In its election program, Opposition Platform – For Life, offers to negotiate directly with the militants to resolve the conflict. The official leadership of the state is against this. When it becomes necessary to build up the image of the main "peacemaker", loyal media come to the rescue.

Viktor Medvedchuk, head of the Opposition Platform - For Life Party's political council with liberated Ukrainians from Russian captivity at Minsk airport, Belarus, June 28, 2019
Photo: EPA-EFE / TATYANA ZENKOVICH

Sworn Friend

Medvedchuk and a group of businessmen and politicians close to him increased their assets and influence under Poroshenko’s presidency. The fifth president positioned himself as a defender of the “Ukrainian Ukraine” and the only politician who is able to stand up to Putin. Yet Poroshenko did not stop the growing influence of the Russian President’s pal in Ukraine.

Poroshenko himself stressed that he perceived Medvedchuk as an actual representative of Putin in Ukraine and spoke with him exclusively on the subject of the exchange of Ukrainian prisoners, and when the exchanges stopped, he stopped doing it. That’s how he explained Medvedchuk's night visits to the Presidential Administration.

In February 2019, during an informal conversation with Hromadske, one of the then-friends of the president explained Poroshenko’s passivity to the question of Medvedchuk: “When you start a war, you need to think about how you will end it. Since 2015, we have been at war with [oligarch] Ihor Kolomoisky. Under these circumstances, also starting a war with Medvedchuk would be a gamble, because then we would not win any of them.”

During the last year of Poroshenko’s presidency, channels 112 and NewsOne learned how to combine the critical statements of Putin’s pal towards Ukrainian authorities with informational support of Poroshenko’s presidential campaign.

The fact that Medvedchuk and his group strengthened their positions in Ukraine during the war with Russia is one of the biggest paradoxes of Poroshenko’s presidency.

This material is part 4 of 5 of the Parties' Funding series where Hromadske looks into the funding of the five leading parties set to pass the 5% threshold and enter the next Ukrainian parliament.