Party of Captured Regions. How the war became a game-changer for key oligarchs and gangsters in Eastern Ukraine

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The war as a game-changer

In his article that recently appeared on the pages of the Russian newspaper Izvestiya, Victor Medvedchuk offers a medley of geopolitical arguments and a noteworthy tidbit.

“Since 1991, Ukraine existed as two countries: an anti-Russia and a second Russia. The East, a big Russian-speaking region, earned most of Ukraine's currency. Naturally, this could not but affect the political representation in the Ukrainian government. The southeast had more human and financial resources, which in no way fit the narrative of a pro-Western Ukraine. People who lived there were too proud, too free, and too rich,” writes the Russian president's pal.

However, once the invasion began, the biggest oligarchs took a pro-Ukrainian stance, and today Medvedchuk can only count on Yanukovych's fugitive associates and all sorts of shady businessmen making money in the occupied territories.

By now, the business community of the southeast has made a stand: Rinat Akhmetov, Viktor Pinchuk, Dmytro Firtash and smaller businessmen are donating millions to the country's defense. Meanwhile, their corporate lawyers are meticulously calculating the losses incurred by their enterprises to make financial claims to the aggressor state. The amounts are sizable: thus, Akhmetov's System Capital Management has lost $17 billion. In such a setting, the “overly rich” people of Eastern Ukraine, whom Medvedchuk lays his hopes on, are hardly willing to act as Putin's advocates. Moreover, the oligarchs’ political influence is shrinking in step with their economic power. Meanwhile, Ukraine does not mince words with those who try to play a double game in a war. Aircraft engine manufacturer Motor Sich was nationalized under martial law, ending the effective rule of its president emeritus Vyacheslav Boguslayev, who had authorized the plant to continue supplying engines for Russian helicopters even during the invasion. Boguslayev was accused of high treason and taken into custody.

«Orthodox Christian» oligarchs siding with Ukraine

The fate of Rinat Akhmetov's partner Vadym Novynskyi, co-owner of the Metinvest group of steel and mining companies and owner of the Smart Holding Group, is a vivid example of the trend. A former Russian businessman who entered the Ukrainian market with the protection of former Russian Ambassador Viktor Chernomyrdin, Vadym Novynskyi received Ukrainian citizenship from President Yanukovych in 2012, and a year later, he became a Supreme Rada deputy from the pro-Russian city of Sevastopol, joining the Party of Regions faction. Vadym Novynskyi had extensive economic interests in Ukraine, ranging from steel companies to banks and soccer clubs, and was ranked among the country's richest people.

Novynskyi was a classic agent of Russian influence in Ukrainian politics. In 2014, he was among the sponsors and organizers of the Opposition Bloc party, which united former Party of Regions members seeking to remain in politics after the collapse of the Yanukovych regime, and also became a deputy from the new bloc. The new government tried to pressure Novynskyi, stripping him of parliamentary immunity in 2016 at the instigation of the Prosecutor General's Office, but the case against him was eventually dropped. In the 2019 parliamentary elections, he again became an MP, elected by the first-past-the-post system, this time from Mariupol, home to Metinvest's key assets: the Azovstal steelworks and the Illich Iron and Steel Works. These plants accounted for 40% of Ukraine’s steel production.

Moreover, Novynskyi is the largest sponsor of the Ukrainian Orthodox Church of the Moscow Patriarchate and is even a deacon of that denomination. For a long time, Novynskyi partnered with a little-known St. Petersburg businessman Andrei Klyamko, the sponsor of an Old Believers' branch associated with Putin's entourage. Church connections were a massive help in Vadym Novynskyi's business. When he suddenly fell under Russian sanctions in late 2018 (via the scheming of his pro-Russian rival Viktor Medvedchuk), the Orthodox oligarch continued to visit Russia with the protection of Patriarch Kirill: in particular, in 2019 he tagged along with the Ukrainian Church delegation to visit the Trinity Lavra of St. Sergius near Moscow and had an audience with the head of the Russian Orthodox Church. Just a year later, the sanctions against Novynskyi were lifted.

Novynskyi actively contributed to the campaign against the granting of autocephaly to Ukrainian Orthodoxy, lobbying the ROC, which did not want to lose its numerous and wealthy Ukrainian parishes. Novynskyi warned that a civil war could break out in Ukraine if the Constantinople Patriarchate granted the Ukrainian church the Tomos (autocephaly document).

One could easily assume that Novynskyi would have remained an active agent of Russian influence in Ukrainian politics and religious life if Russia had not invaded Ukraine in the most literal way: with its troops. As Mariupol was ravaged by one of the most brutal blows of Putin's military machine, local factories owned by Akhmetov and Novynskyi ended up destroyed (with the battle for Azovstal being one of the key moments of this military campaign). According to Ukrainian Forbes, Metinvest lost almost two-thirds of its estimated business value.

Oligarch Novynskyi clearly did not expect such backstabbing from his former metropolis and took a pro-Ukrainian stance in the first days of the invasion. His group of companies declared its commitment to supporting the country's defenders, donating more than 10 million euros to the AFU and territorial defense. Novynskyi personally condemned the Russian aggression, and on July 6, 2022, he prematurely resigned his mandate as a people's deputy because his Mariupol district remained in Russian-occupied territory.

Shady businessmen and bandits in the service of Russia

Various shady businessmen and outright gangsters are faring much better in the new reality. The Donbas saga of Serhiy Kurchenko, who served as the unofficial treasurer for Yanukovych’s family during his presidency and went on to manage the “nationalized” Donbas assets of Ukrainian oligarchs Akhmetov and Novynskyi, was the talk of the town. The predatory system built by Kurchenko has been compared to the colonial empire of the East India Company. Eventually, his Russian handlers were forced to replace Yanukovych's former associate with a purported Russian “investor”: Yevgeny Yurchenko, a former top manager at Svyazinvest and the United Aircraft Corporation. He was supposed to cover up the infusion of Russian public funds into the Donbas economy.

But there are other examples. In January 2020, the National Anti-Corruption Bureau detained Luhansk businessman Vitaliy Kolyesnikov in Kyiv. A well-known fraudster in his hometown, this time, he attempted to bribe the head of the State Property Fund Dmytro Sennychenko to install his man as the director of the Odesa Port Plant. Soon Kolesnikov was out on bail and fled to the “Luhansk People's Republic”, where he obtained a passport and Russian citizenship.

In the fall of 2022, he was already very active in the annexed Donbas. Here is a list of his “LPR” assets: Gefest VTEK Corporation, Geftek, Romulagroprod (commerce), Donbass Stroy-Inzhiniring, MSK (construction), Komsnab (timber trade), Konstruktor (metal trade), Stroigazmontazh (construction materials trade), UK Medicine (pharmaceuticals reseller).

Serhiy Gorokhov, a former Party of Regions MP and protégé of ex-Governor of Luhansk Oleksandr Yefremov (under house arrest for separatism), is also doing well in the “LPR”. Until 2014, Gorokhov owned the Marshal pipeline valve factory, actively supported Yanukovych during the Maidan, and then stood at the origins of the “LPR”. However, he was hardly a believer in the “people's republic” cause. As Kommersant wrote in 2015, the owner moved the Marshal plant to Russia’s Voronezh Region.

Returning to the Donbas in 2017, Gorokhov stepped in as one of Kurchenko's associates, to run the Luhansk branch of Vneshtorgservis until 2021 (the organization controlled 14 mines formerly owned by Akhmetov, as well as the Alchevsk Metallurgical Complex). Gorokhov praised Kurchenko's period of predatory management as the “new dawn” of the coal industry. After Kurchenko's empire fell into the hands of Russian investor Yurchenko, Gorokhov resumed his tenure as the manager of Marshal and received a seat on the general council of the Russian organization Delovaya Rossiya. Meanwhile, Ukraine has launched criminal proceedings against him.

The occupation of the Donbas has pushed the most infamous characters to the forefront. Thus, underworld kingpin Armen Gorlovsky (“of Horlivka”, real name Armen Sarkisyan), well-known in the criminal world of the Donbas since the 1990s, was reported to have become the “supervisor” of prisons in the occupied Ukrainian territories with the blessing of the Russian authorities. Sarkisyan was considered the right hand of another Donbas gangster, Yura Yenakievsky (real name Yuriy Ivanyushchenko), a friend of Yanukovych’s and a loyal servant of his regime. For one, in 2014 Armen Gorlovsky was recruiting thugs for anti-Euromaidan mercenary combat units, the so-called Titushkas.

After the creation of the “DPR”, Gorlovsky's men engaged in the robbery and murder of local businessmen. As for Yuriy Ivanyushchenko, the collapse of Yanukovych's regime made him a wanted man on multiple charges (illicit enrichment on an especially large scale, embezzlement, and more), but as early as in 2017, all criminal cases against him were dropped, and he found patrons in the new government. Together with his business partner Ivan Avramov (who had had interests in the shadow coal business in the Luhansk Region), he was reported to control “Seventh Kilometer”, an Odesa market.

After the Russian annexation, Ivanyushchenko's property in the Donetsk Region was also technically nationalized by the “DPR” authorities in September 2022, but his assets are de facto managed by the aforementioned Sarkisyan, who is on friendly terms with the separatist «mayor» of Horlivka, Ivan Prikhodko. At the time, the “DPR” authorities also imposed sanctions against several other shady Donbas businessmen: Alexander Baturin, Gennady Uzbek, and Sergei Kiy (former president emeritus of FC Shakhtar Donetsk).

While this may have been a propaganda stunt on the part of the “DPR” authorities, who are secretly willing to offer a piece of the pie to “socially desirable” actors in the annexed region, Russia has enough domestic claimants for the scarce profitable assets of the Donbas, already ravaged by the eight-year conflict, and could redistribute them in the newcomers’ favor (Prigozhin and Kadyrov, for instance, are likely expecting a reward for their fighting zeal).

Since the start of the war, the Kremlin has been trying to discern the outlines of a “peace party” in Ukraine, but in the absence of one, Russia will have to assemble such a “pro-Russian support group” from scratch, using whatever is at hand, from traitors Yanukovych and Medvedchuk to local businessmen with underworld tendencies who will embody the “patriotic capital”. The Kremlin will present these wannabe peacekeepers as proof that an alternative Ukraine purportedly exists, even though hardly anyone will take them seriously, especially in Ukraine, which has become immune to any pro-Russian illusions.