In its economic response to Russia’s seizure of Crimea from Ukraine, the US is apparently trying to pry open not just the records of shell companies, but also the code of silence around allegedly corrupt energy deals.
Last week, the US announced that Russian President Vladimir Putin had invested in the trading firm Gunvor, a rumor the company has long denied. And the Ukrainian government arrested the CEO of Naftogaz, Yevhen Bakulin, as part of an investigation into corruption that the country’s interior minister says cost the state $4 billion.
People started asking where the investigators’ information came from. Then Dymtro Firtash, another wealthy Ukrainian tycoon, was released from prison in Austria, where he awaits hearings to determine if he will be extradited to the United States on charges of bribery that he has called “purely political.”
Is there a connection? Rumors abound that Firtash’s release—after posting a record-setting €125 million/$174 million in bail—may be a sign of his willingness to chat about the opaque business dealings in the Russian oil industry. A US Treasury spokesperson would only say that the sanctions process “includes gathering and assessing information from all sources—incorporating classified and unclassified information—and multiple layers of legal review.”
Taras Berezovets, a former Ukrainian government official and political consultant, speculated that Firtash might be talking to authorities (Russian), but it should be noted that Berezovets has been a political foe of Firtash. An oil business analyst and a former Gazprom official told Reuters that Firtash would have knowledge of whether Ukrainian officials and businessmen were receiving kick-backs in the Russian gas business, which could create an opportunity for the prosecution of Gazprom on behalf of its American investors.
Firtash hasn’t publicly commented on the speculation, but he has shown a willingness to talk about such issues in the past, at least privately—according to a US diplomatic cable revealed by Wikileaks, he voluntarily met with the US ambassador to Ukraine in 2008 to decry Russian interests taking over Ukraine and bolster his own image. At the time, he said he had been forced into working with Russian criminal figures against his will:
The Ambassador asked Firtash to address his alleged ties to Russian organized crime bosses like Semyon Mogilievich. Firtash answered that many Westerners do not understand what Ukraine was like after the break up of the Soviet Union, adding that when a government cannot rule effectively, the country is ruled by “the laws of the streets.” He noted that it was impossible to approach a government official for any reason without also meeting with an organized crime member at the same time. Firtash acknowledged that he needed, and received, permission from Mogilievich when he established various businesses, but he denied any close relationship to him.
Firtash has been a major player in the Ukrainian-Russian natural gas nexus, which has been dominated by businessmen with political connections. In particular, Firtash was, with the Russian oil company Gazprom, co-owner of RusUkrEnergo (RUE), a trading firm that held a monoply on importing Russian gas into Ukraine from 2006 to 2009. He was also close to ousted Ukraine President Viktor Yanukovych.
But now Firtash is entangled with US law enforcement. A Swiss company he controls, Bothli, is alleged to have paid bribes to obtain Indian mineral concessions as part of a joint venture with Boeing, and the US Federal Bureau of Investigation has asked that Firtash be extradited to the US to answer questions about the deal. While the investigation isn’t connected to his business in Ukraine, it hasn’t taken long for analysts to speculate about what US investigators could really be interested in.
But even faced with US courts and penalties that might threaten his fortune, Firtash has good reason not to talk. Quartz’s Steve LeVine, who has written extensively on the criminal state of Russia, said he has never heard of a senior figure such as Firtash revealing secrets about corruption in Moscow, especially if it goes to the heart of the regime.
An omertà—the code of silence in a criminal organization—binds Putin, the oligarchs, and the Russian security system in an organic whole that benefits all; there is no record of any shattering that effective oath. Oligarchs like Mikhail Khodorovsky have been thrown in prison by Putin’s regime and journalists have been killed for revealing less compromising information.
Which puts Firtash between rock and a hard place.