“Red lines” of oligarch Zhevago

Stories about foreign investors performed by Zhevago are for Ukrainians. For Western audiences, Zhevago’s PR people are trying to make him out to be a victim of political persecution.

Over the past few months, a large-scale PR campaign has been taking place in Ukraine in the interests of oligarch Konstantin Zhevago. Its goal is, in Putin’s style, to warn the Ukrainian authorities and President Zelensky personally about the so-called “red lines” that he must not cross. They are trying to strengthen the warning with theses about the political persecution of Zhevago, fabricated criminal proceedings and the need to protect foreign shareholders of Ferrexpo.

Realize the absurdity of the situation - if, for example, in the United Kingdom the majority shareholder of a company was suspected of billions of dollars in fraud, bribery, and the company itself was accused of not paying taxes on a particularly large scale - would the argument about the need to protect foreign investors be a reason to ignore law and justice?

Stories about foreign investors performed by Zhevago are for Ukrainians. For Western audiences, Zhevago’s PR people are trying to make him out to be a victim of political persecution. Which looks as comical as possible, given last year’s suspicion by NABU regarding the episode with a potential bribe from Zhevago for the head of the Supreme Court, Knyazev. Bribes to judges are not what victims of the regime and oppositionists do. And NABU is not a body that can be accused of political persecution.

Let me remind you that a bribe of $2.7 million, but then it somehow gradually decreased, according to NABU detectives, was given to Knyazev for the decision in the case of the sale of 40.19% of the shares of the Poltava Mining and Processing Plant. Before the consideration of the case in the Supreme Court, oligarch Zhevago also launched a large-scale PR campaign claiming that the “evil” oligarch Kolomoisky was trying to take away his enterprise.

But how does the “good” oligarch Zhevago differ from the “evil” oligarch Kolomoisky?

Both had a systemic bank, which was driven to bankruptcy. But Kolomoisky handed over the bank to the state on time - and today PrivatBank is the most profitable bank in the country. Zhevago left more than 10 thousand depositors of the Finance and Credit Bank with nothing. He did not stop, and after that he brought the Union Bank in Liechtenstein to liquidation. I personally looked into this story just recently; at that time, Ukrainian journalists avoided this topic.

Both had strategic enterprises that had to be nationalized due to their inability to meet wartime challenges. But Ukrnafta today transfers record profits to the state budget, and KrAZ, driven to bankruptcy, was never able to fully launch the production of trucks needed by the army.

Both were facing criminal charges. But Kolomoisky at least had the courage to stay in the country when suspicion was declared on him, and Zhevago fled Ukraine in 2019 and never returned. A recent attempt to return him to his homeland through extradition proceedings also ended unsuccessfully.

And although Zhevago is trying to convince everyone that the French court’s decision to refuse his extradition “confirms signs of political persecution and pressure, the fabrication of the case” - the reality is different. As can be seen from the text of the decision itself, no one justified him. The reason why the court rejected Ukraine’s request is security and related to the war. They have such liberal justice, even criminals should be safe.

The key difference between them is that Kolomoisky will not escape responsibility.

And Zhevago?

Since September 2019, Konstantin Zhevago has been a suspect in the case of withdrawing more than $113 million from the Finance and Credit bank. The failure of the SBI and the Office of the Prosecutor General over these 5 years to bring the case to prosecution allows Zhevago’s lawyer to actually mock law enforcement agencies, claiming that they themselves understand perfectly well that the case is falsified and hopeless.

Why is the indictment still not in court if more than $113 million has been seized from Zhevago’s Swiss bank accounts and there is a real prospect of returning these funds to the country?

The court case has been ongoing for more than a year on the claim of the Deposit Guarantee Fund against Zhevago for the recovery of $1 billion for damage caused to the Finance and Credit Bank. The case has not yet moved forward in the court of first instance. What is most surprising is that the amount of losses declared by the Foundation is indecently incommensurate with the amount of losses in cases that law enforcement officers are investigating.

Why did only the withdrawn $113 million turn into a criminal case and suspicion? Or was the remaining $900 million withdrawn legally?

Back in 2019, the NBU received a decision against Zhevago for UAH 1.5 billion. The oligarch personally guaranteed that the Finance and Credit bank would return part of the issued refinance. The official reason why the NBU has not yet implemented the decision is that Zhevago has no assets in Ukraine.

Have highly qualified specialists from the NBU heard about the mechanism for implementing decisions abroad? About Zhevago's estates in France and England? What, after all, is wrong with the Ferrexpo shares that he owns openly and openly? What is the difference between Medvedchuk’s yacht “Royal Romance”, seized and put up for sale, and Zhevago’s yacht “Z”?

I want to emphasize that bringing Zhevago to justice is not only about satisfying the public demand for justice. Yes, this was very relevant at the beginning of a full-scale invasion. But now it is, first of all, about filling the state budget of a warring country. This is about the survival of Ukraine. About whether the law enforcement system in a war can prove its effectiveness and direct its forces to what is really important.

The practice of “tik-tok justice”, when the punishment for a crime comes down to a loud press release from law enforcement officers, the payment of a large (or not so large) bail, and a day later the defendant is released and the crime is forgotten - this is not the tool with which you need to fill the budget .

It is clear that the oligarch Zhevago has a reliable cover - the Ferrexpo company, whose shares are traded on the London Stock Exchange, and foreign investors. But the investors themselves do not say that these foreign investors need to be protected.

Did Ferrexpo’s foreign shareholders need protection when a deposit of $150 million disappeared from Ferrexpo’s accounts in a bank controlled by the oligarch Zhevago? When funds from a $110 million charitable program, which the company transferred to a charitable foundation controlled by the oligarch Zhevago, disappeared in an unknown direction. When Ferrexpo sponsorship funds for FC Vorskla turned not into a new stadium, but into a “loan” to the offshore company of the oligarch Zhevago. When the Poltava Mining and Processing Plant sold production “waste” at reduced prices to gasket companies, and then at market prices to real buyers. Cancellation of dividend payments, motivated by the Ukrainian court’s decision on the debts of the Poltava Mining and Processing Plant not in favor of Zhevago.

But investors like BlackRock are reacting differently. They do not ask for government protection and do not issue loud press releases. They sell Ferrexpo shares and invest in other companies - if in December 2023 BlackRock owned 7.5% of the shares, then according to the latest data it owns just over 3.5%.

Frankly speaking, they are not interested in Ferrexpo’s problems. For BlackRock, which manages a total investment portfolio of $10 trillion, the $20 million Ferrexpo stock portfolio is only 0.0002% of its assets. The same goes for other shareholders.

They are classic minority shareholders who invest in a “safe harbor”. Public, transparent, calm companies that conduct their business in accordance with the best global corporate practices, as an English public company Ferrexpo should be. They do not want to be a “shield” for the majority shareholder in his personal conflict with the state.

It was probably this realization that forced Zhevago to take such a cynical step as the bankruptcy of the Poltava Mining and Processing Plant. The initiator of the case was the company “Oxygen” controlled by Zhevago (control is confirmed by the official reports of Ferrexpo, for example, for the first half of 2022, page 42-43, look for “Kislorod PCC”).

The orchestrated bankruptcy of the Poltava Mining and Processing Plant is not a red line for you, Mr. Zhevago? Have you coordinated this step with your foreign investors, whose protection you constantly talk about? What do they think of the best global corporate practices?

In fact, this story is not about “red lines”, it is about something else. Zhevago’s case, like Kolomoisky’s case, is about the ability of the Ukrainian government and law enforcement system in war conditions to achieve effective results and return stolen funds. This is about the inevitability of punishment.

While the Ukrainian people have been fighting for the right to have an independent state for the second year, oligarch Zhevago lives peacefully in an estate worth €35 million in the center of Paris. Oligarch Zhevago is the one whose assets will be enough to compensate the state for losses. They will be enough at least to finance several dozen battalions - no, not Monaco - but the Ukrainian military.