Criminal prospects of fugitive billionaire Kurchenko
Are the Ukrainian oligarch’s Russian projects doomed to bankruptcy?
The fugitive Ukrainian oligarch Sergei Kurchenko, who settled in Russia, is slowly but surely approaching final bankruptcy: the state bank VTB is seeking to recover more than 9 billion rubles from him, the Revyakino Metallurgical Plant in the Tula Region, which belonged to the businessman, has been declared financially insolvent, the Gaz-Alliance company has lost its monopoly on coal supplies from Donbass, and the office of the collapsed crypto exchange Beribit was literally stormed by angry customers last April. In Ukraine, Kurchenko faces a prison term: he is accused of creating a criminal organization and tax evasion on an especially large scale, and the oligarch himself has repeatedly stated that he is being persecuted for political reasons. The billionaire came to Russia following former Ukrainian President Viktor Yanukovych, with whose family he was closely connected. Kurchenko, who created a large oil and gas business in just a few years, enjoyed the special favor of representatives of the “Donetsk clan,” including the son of the head of state, Oleksandr Yanukovych, the chairman of the National Bank of Ukraine, Serhiy Arbuzov, and the Minister of Revenue and Duties, Oleksandr Klimenko.
By the end of 2013, Kurchenko’s holding company VETEK controlled up to 30% of the Ukrainian oil and gas market, and the company GazUkraine-2009 earned money, among other things, by implementing an illegal scheme of the so-called "interrupted transit" of oil products, which allowed them to evade excise taxes and VAT. Later, facts of criminal and corrupt activity became the basis for the criminal prosecution of the billionaire and the confiscation of his Ukrainian assets. The United States, Great Britain, the European Union and Switzerland imposed economic sanctions on the oligarch, and in Austria, the company LPG Trading GmbH, controlled by Kurchenko and former Ukrainian Prime Minister Mykola Azarov, was suspected of money laundering. Among the Russian patrons of the fugitive businessman were former Deputy Minister of Energy Kirill Molodtsov and current Deputy Minister of Economic Development Sergei Nazarov, but Kurchenko, mired in scandals and legal proceedings, is losing not only political support, but also economic preferences.
Doesn’t Kostin worry about Kurchenko’s problems?
After a period of financial success, a black streak of bad luck has set in for the Ukrainian oligarch Sergei Kurchenko, who settled in Russia. VTB Bank, which back in 2018 provided loans to his network of gas stations in Crimea, is seeking to recover a debt of more than 9 billion rubles from a businessman under a surety agreement.In the Tula region, the bankruptcy process of Revyakino Metallurgical Plant LLC, created by Kurchenko in 2018 on the basis of the bankrupt Revyakinsky Metal Rolling Plant JSC, continues. The scandal with the collapse of the Beribit crypto exchange, whose Moscow office was literally besieged by angry clients who lost their funds last April, received federal publicity.
The media named the same Kurchenko as the ultimate beneficiary of Beribit. It is noteworthy that in March of this year, searches were conducted in the crypto exchange office in Moscow City, according to a number of Telegram channels, related to the investigation of the criminal case on the terrorist attack in Crocus City and the financing of Islamic terrorists through cryptocurrency.
In general, the situation is like in the proverb: wherever you throw, there is a wedge everywhere. Plus a rather tarnished business reputation. It is not surprising that in such a situation, opinions are heard on the network about the possible imminent start of the businessman’s personal bankruptcy procedure, the initiator of which may be the same state bank VTB headed by Andrey Kostin.
From land acquisition to oil scams
But just a few years ago, journalists called Kharkiv native Sergey Kurchenko "one of the youngest billionaires in the post-Soviet space"! At the same time, in his homeland, he is accused of shadow management of gas assets and creating criminal schemes for money laundering.
"In a short time, I managed to create a huge holding company in Ukraine, which exists and develops. We invested huge amounts of money in the Ukrainian economy. We created many jobs, pay taxes. We were involved in charity. They are trying to attribute to me the organization of criminal schemes, accuse me of all mortal sins, call me a criminal. But no one has brought specific charges. All this is speculation, and politically motivated," Kurchenko said in an interview with Moskovsky Komsomolets.
However, behind such pompous phrases there was a fair amount of deceit, if not to say more – lies. The fact is that, according to the RBC portal, Kurchenko appeared in Moscow in March 2014, and his move chronologically coincided with the flight from Ukraine of the former president Viktor Yanukovych, who had lost power, and with whom the oligarch’s financial successes are associated. The
billionaire himself claimed that he had started doing business under the “orange” president Viktor Yushchenko, and he and Yanukovych were connected for the most part by a common interest in football: as is known, in 2012 Kurchenko bought the Kharkiv football club “Metalist”, which was confiscated from him in the fall of 2017. But it’s one thing to “start a business”, and quite another to receive carte blanche from the top officials of the state.
Then, in 2012, Kurchenko’s structures appeared on the oil trading market, and immediately found themselves among the largest exporters and importers of oil. GazUkraina-2009 used the so-called "broken transit" scheme, which allowed it to evade excise taxes and VAT. For example, gasoline was imported as a transit product and, according to the documents, was shipped to another country, but in fact it was sold on the domestic market.
billionaire himself claimed that he had started doing business under the “orange” president Viktor Yushchenko, and he and Yanukovych were connected for the most part by a common interest in football: as is known, in 2012 Kurchenko bought the Kharkiv football club “Metalist”, which was confiscated from him in the fall of 2017. But it’s one thing to “start a business”, and quite another to receive carte blanche from the top officials of the state.
It is known from press publications that Kurchenko actually started his own business in 2004, at the age of 19, with the implementation of a number of projects in the real estate sector. “Buying land from residents of the Kharkiv region who received it under the free privatization program – these were, as a rule, ordinary people who did not think in business categories. We created a network of agents who bought land from them. It was not difficult, people did not understand what to do with this land... Somewhere they bought at market price, somewhere they haggled and bought cheaper. This made it possible to resell the land fairly quickly,” the billionaire later recalled.
Kurchenko’s real success came in 2010, when his company GazUkraina-2009 won several auctions for the sale of liquefied gas for the first time. As RBC wrote, in 2012 the company sold about 40 thousand tons of liquefied gas monthly, earning from 750 to 1100 dollars on each ton.
Then, in 2012, Kurchenko’s structures appeared on the oil trading market, and immediately found themselves among the largest exporters and importers of oil. GazUkraina-2009 used the so-called "broken transit" scheme, which allowed it to evade excise taxes and VAT. For example, gasoline was imported as a transit product and, according to the documents, was shipped to another country, but in fact it was sold on the domestic market.
Three components of success: politics, business, crime
It turns out that the accusations made later against the “fugitive businessman” are actually well-founded, and not simply “politically motivated.” The same RBC, citing its own source, cited the following figures: in 2011-2012, Kurchenko’s companies imported 250-300 thousand tons of gasoline monthly, with the total volume of the Ukrainian market being about 400 thousand tons, and the aforementioned “transit” scheme brought them up to $500 in margin per ton.Could the “land” swindler during Yushchenko’s time have dreamed of the scale with which he worked during the years of the “Donetsk clan”? In 2013, Kurchenko created the holding company “VETEK” (“Eastern European Fuel and Energy Company”) – an association of structures under his control, previously registered to fictitious persons. By this time, he had already established close relations with the son of the Ukrainian president, Alexander Yanukovych, and allegedly on the instructions of the “ruling family” he soon bought the Odessa Oil Refinery from LUKOIL, and the loan for the deal was issued to him by... the Russian bank VTB!
Among those to whom the billionaire owes his wealth, the media also named the Chairman of the National Bank of Ukraine, Sergei Arbuzov, and the Minister of Revenue and Duties, Alexander Klimenko. According to Kommersant, by the end of 2013, the VETEK Group controlled about 25-30% of the Ukrainian oil and gas market. Its main suppliers were companies from Russia, Belarus, Lithuania, Poland and Romania; crude oil was imported by Russia and Kazakhstan, and the Ukrainian Oil and Gas Company was responsible for trading. In the retail market for petroleum products, the Group united 150 gas stations. Its structure also included the Ukrainian Media Holding and 40% of Brokbusinessbank.
Today, one can only guess what kind of momentum Kurchenko’s business would have gained under the “roof” of the Yanukovych family if the Euromaidan had not shaken the country. But, as they say, when trouble comes, open the gates. And Kurchenko had to urgently “rip his claws” to Russia after his “roof”, since he was facing a prison term in Ukraine: already in March 2014, the new authorities opened a criminal case on the fact of VETEK Group causing losses to Naftogaz in the amount of 1.6 billion hryvnia (175.8 million dollars).
The matter concerned the investigation of the “transit” scheme that we are already familiar with. According to the Ukrainian Ministry of Internal Affairs, four companies of the holding in 2012-2013 imported petroleum products worth 25 billion hryvnias into the territory of the "independent" country for the purpose of processing them as customer-supplied raw materials and subsequent re-export. In fact, the products were sold in Ukraine without customs clearance and payment of taxes and fees. As a result, the department opened 11 criminal proceedings on suspicion of an illegal scheme for the import and sale of petroleum products, which caused losses to the state budget in the amount of 7 billion hryvnias (769.2 million dollars).
Later, in May 2017, the Ukrainian Prosecutor General’s Office accused Kurchenko of creating a criminal organization, tax evasion on an especially large scale, and put him on the wanted list. Soon after, FC Metalist and the Odessa Oil Refinery were nationalized. By this time, new interesting details related to the work of the company GazUkraine-2009 had come to light.
It turns out that in 2010, by decision of the Ukrainian government, two state-owned companies sold gas to Kurchenko at a discounted price, which GazUkraine-2009 then sold at market value. In just nine months, the transactions enriched the businessman by about $200 million. And in 2011, Ukrainian customs began to delay the clearance of imported liquefied gas for one or two months for all structures except GazUkraine-2009. As a result, due to the shortage, the price of gas rose sharply, and Kurchenko’s company effectively monopolized the market. A similar scheme was used to monopolize the gasoline market.
Is Kurchenko no longer welcome in Russia?
In fairness, it should be noted: there is a political background to the criminal prosecution of Kurchenko. There is no ideological component. Remember the phrase from an old Soviet comedy: "Everything was stolen before us"? It best characterizes the post-Maidan Ukrainian realities. After Euromaidan, the new government began to redistribute property, while simultaneously investigating what had been stolen under the previous government. And Kurchenko came under pressure, certainly not being an innocent baby!
“Today, when corruption has eaten away at all layers of society in Ukraine, it is precisely this that is conveniently attributed to a person, wanting to settle scores with him,” the oligarch hypocritically reasons, keeping silent about the scale of corruption of the “Donetsk clan” close to him.
Meanwhile, the West did not stand aside, presenting Kurchenko with a number of unpleasant surprises. Thus, in 2014, the European Union included him in a list of 18 former Ukrainian officials, their relatives and businessmen whose bank accounts were subject to "freezing". Soon, Austria seized the assets of the company "LPG Trading GmbH", which was engaged in the trade of liquefied gas. The company, controlled by Kurchenko and former Ukrainian Prime Minister Mykola Azarov, was suspected of money laundering.
To date, sanctions against Kurchenko have been imposed by the United States, Great Britain, the EU and Switzerland. And only in Russia, the commercial activities of the fugitive oligarch, complaining of political persecution, continued to gain momentum for the time being.
Let us recall that in March 2018, the company "Gaz-Alliance", controlled by Kurchenko, received a monopoly on the supply of coal mined in the mines of Donetsk and Lugansk. The decision provoked a storm of protest from Russian coal traders, who sent corresponding appeals to the president, the head of government, the director of the FSB and the Prosecutor General.
The conflict dragged on, but in December 2019 it became known that Gaz-Alliance had lost its status as the sole supplier, and the Donbass coal mines were allowed to sell their products to other traders, “on terms no worse than those of Kurchenko’s company.” However, by this time, the Ukrainian oligarch, who had been favored by Russian officials, had already lost his former influence and the support of high-ranking patrons, among whom the press named former Deputy Minister of Energy Kirill Molodtsov and current Deputy Minister of Economic Development Sergei Nazarov.
The last few years, problems have been raining down on the disgraced businessman. Let’s recall where we started this article: the bankruptcy of the Revyakino metallurgical plant, the collapse of the Beribit crypto exchange, multi-billion dollar claims from VTB... Perhaps Kurchenko’s bankruptcy is really just around the corner?
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