You're reading: Ukraine’s Scrooges

Numbers show Ukraine's richest not that generous.

More of the world’s billionaires and millionaires are pledging to give away much of their fortunes for the betterment of society, while Ukraine’s richest prefer to keep a tight hold on their money.

While some have started charitable foundations, critics say the comparatively small amounts involved show a stronger desire among Ukraine’s elite for public relations than for the genuine philanthropy needed to build a nation.

The luxury lifestyles of Ukraine’s rich may be explained by how they acquired their fortunes.

Many of them got rich by acquiring Soviet assets through privatizations widely seen as dubious.

When Pierre Omidyar, owner of the eBay online website trader, was propelled to billionaire status in 1997, he didn’t really know what to do with all the money he got.

“It was a surreal experience,” Omidyar admitted, explaining that prior to eBay’s success he had lived rather modestly.

When Forbes estimated that his wealth had reached some $4.6 billion by 2001, Omidyar and his wife Pam announced that they had made a bold decision: Most of their wealth will be given away to charity.

U.S. billionaire Pierre Omidyar, the founder of eBay auctioning website, and his wife Pam, pledged to give away most of their fortune to charity.

“We have more money than our family will ever need. There is no need to hold on to it, when it can be used today to help solve some of the world’s most intractable problems,” the couple said.

A growing number of the world’s richest people have in recent years announced that they will give a large share of their wealth away to charity – during or after their lifetime.

The Giving Pledge, organized by Bill Gates and Warren Buffett, America’s richest men, encourages wealthy people to make a public promise to give away the majority of their wealth to charity organizations or causes of their choice.

Pledges – from entrepreneurs as varied as New York Mayor Michael Bloomberg and Facebook founder Mark Zuckerberg – have reached $125 billion.

Such commitments made by the world’s richest people – many of whom succeeded as true entrepreneurs by transforming novel ideas into business success – continue to contrast starkly with the self-declared charity initiatives of Ukraine’s richest.

Ukraine’s richest individuals are a totally different breed of billionaires to the likes of Omidyar.

“Comparing Ukrainian and Western wealthy people is comparing apples to oranges,” said Taras Kuzio, a Ukraine expert at the Washington-based Center for Transatlantic Relations.

Comparing Ukrainian and Western wealthy people is comparing apples to oranges.”

– Taras Kuzio, a Ukraine expert at the Washington-based Center for Transatlantic Relations.

“Rich people in the [U.S. and developed countries] in many cases achieved their wealth by creating something. In Ukraine, as well as in other post-Soviet countries, the wealth was acquired by a very small group of people often through a massive grab of state property, for which none of them has ever been held accountable.”

When Ukraine’s richest declare they are “giving back” to society, their annual donations rarely exceed one percent of the wealth they have accumulated.

And usually, according to Kuzio, the money is spent more on “charity initiatives” that are heavy on self-promotion, rather than on lifting society.

Kuzio doubts that Ukrainian oligarchs will give more back to society than they current do without pressure.

“Until that happens, they’ll only tend to give money for PR reasons,” he said.

Two of Ukraine’s richest billionaires, Rinat Akhmetov and Victor Pinchuk, declined to respond to questions from the Kyiv Post about the Giving Pledge initiative.

Charity crumbs

According to a 2009 financial report by the Victor Pinchuk Foundation, its annual charity spending totaled $13.8 million.

That’s approximately half a percent of the current estimated wealth of Pinchuk, who became one of Ukraine’s richest individuals under the authoritarian and notoriously corrupt presidential rule of his father-in-law, Leonid Kuchma.

Today, Pinchuk, whose wealth is estimated in the Kyiv Post’s 2010 ranking of the richest Ukrainians at $2.2 billion, continues to live a lavish lifestyle and rubs shoulders with the world’s most influential individuals, such as former U.S. President Bill Clinton.

Pinchuk reportedly spent more than $6 million in one shot this month to bring such influential friends together to celebrate his 50th birthday at a posh French ski resort.

They’ll [Ukrainian oligarchs] only tend to give money for PR reasons.”

– Taras Kuzio, a Ukraine expert at the Washington-based Center for Transatlantic Relations.

Pinchuk’s Foundation spokesperson said the party was a private event which they cannot comment on.

Unable to reach Pinchuk, his foundation also declined to answer whether he would join the Giving Pledge initiative.

With billions of dollars of assets spread across industry, energy and mass media, the amount spent on his birthday and charity could be considered pocket change for Pinchuk. Moreover, a close look at how Pinchuk spends for charity shows how it’s often less about giving back, and more about making friends and polishing his rather tainted image.

The healthcare and community outreach programs, as well as student scholarships, account only for about a quarter of the foundation’s total budget, or around $3 million.

This is half of what the tycoon reportedly spent on his birthday party.

The Ukrainian billionaire chose to spend almost one-third of his foundation’s annual charity dole outs outside of Ukraine, donating it to support Clinton’s Global Initiative.

In addition, about $3.6 million went to finance PinchukArtCentre, the billionaire’s snazzy contemporary art center located in downtown Kyiv.

The Pinchuk Foundation’s international projects, including Yalta European Strategy Summit (YES), an annual gathering of Ukrainian and foreign politicians and businessmen in a Crimean Black Sea resort, were worth $1.4 million, according to the Foundation’s annual report.

It also showed that in 2009 the foundation spent $1.5 million on administrative expenses.

In contrast, its program for improving pre-natal care had a budget of around $977,000.

Meanwhile, the AntiAIDS foundation run by Pinchuk’s wife Olena (Kuchma’s daughter) spent around $1.5 million in 2009.

The majority of these funds were used to fund its international projects and direct financial aid to hospitals, orphanages and HIV-positive people.

According to Pavel Pimenov, the AntiAIDS foundation spokesperson, the international projects with the total budget of $500,000, are carried out jointly with the Clinton Global Innitiative and the Elton John Foundation, which received grants from Pinchuk to implement charity projects in Ukraine.

Overall the Pinchuk Foundation claims to have spent $57.4 million on charity since 2006, while his wife’s AntiAIDS Foundation reports an overall budget of $7.5 million.

On Dec. 17, Olena and Viktor Pinchuk announced plans to give an additional $11.3 million for charity healthcare and educational projects. But Pimenov could not immediately provide the details and the time span of the Pinchuk’s pledged charitable contribution.

Rinat Akhmetov, Ukraine’s richest man with a fortune estimated at $23.6 billion in a Kyiv Post ranking published this month, appears to spend even less than Pinchuk, despite having 10 times his wealth.

According to information provided by Akhmetov’s Development of Ukraine Foundation, it spent $7.7 million on charity programs in 2009.

Is Rinat Akhmetov, by far Ukraine’s richest man, giving his fair share back to Ukrainian society?

More than 80 percent of this was spent on healthcare and educational programs, with administrative expenses totaling $663,000.

This amount equals to less than 0.05 percent of Akhmetov’s current wealth.

In 2010, Akhmetov’s charity budgets appear to have decreased: In the first 10 months of this year, the Foundation spent $4.2 million.

“Charity” in Ukraine is pure PR, with “people giving candies or bananas to orphans for St. Nicholas Day and having the media report about it.”

– Daria Nepochatova, project manager with the Ukrainian Benefactors’ Forum.

At the same time, its administrative expenses already exceeded those in 2009, totaling $850,000. Akhmetov’s Development of Ukraine Foundation claims to have spent Hr 331 million since 2005, or about $53 million.

Akhmetov’s foundation seems to have received much more as the recipient of a foreign grant this year than the amount it had spent this and last year. On Dec. 10, it received a pledge of $95 million from Swiss Global Fund to Fight AIDS, tuberculosis and malaria.

Daria Nepochatova, project manager with the Ukrainian Benefactors’ Forum, a nongovernmental organization uniting various charity groups in Ukraine, says that often “charity” in Ukraine is pure PR, with “people giving candies or bananas to orphans for St. Nicholas Day and having the media report about it.”

In addition, she says, fund raising campaigns sometimes spend as much money on management and promotion as they end up collecting.


An example to follow

Giving Pledge co-founder Gates, whose net worth is valued at some $54 billion and who has already committed most of his fortune to charitable programs, has also encouraged giving back among the wealthy individuals in other countries.

In early December, he received his first response when India’s third-richest man, Azim Premji, transferred $2 billion to charity. His fortune is estimated at $17.9 billion.

The initiative has also been followed by Russian tycoon Vladimir Potanin, whose wealth is estimated at $10.7 billion.

In February, Potanin, ranked by Forbes as Russia’s 7th richest man, announced plans to hand his entire fortune to charity during the next decade.

People in these [Eastern European] countries are still living according to so-called Western ideals, which really don’t exist anymore.”

– Anthony Kleanthous, senior adviser on Sustainable Development and Economics of World Wide Fund for Nature.

Experts, however, see Potanin’s move as an exception for post-Soviet billionaires.

According to Anthony Kleanthous, senior adviser on Sustainable Development and Economics with the UK office of World Wide Fund for Nature (WWF), Eastern European countries simply haven’t reached the stage when caring for their communities is considered essential and necessary.

“People in these countries are still living according to so-called Western ideals, which really don’t exist anymore,” said Kleanthous.

He noted that after the financial crisis, selfish spending on luxury items, such as cars, yachts and expensive mansions is more and more considered obscene, as wealthy people are increasingly expected to give back to their communities.

Giving times to come

Both Akhmetov and Pinchuk have their supporters who widely praise their work as a breakthrough for Ukraine’s richest.

In an article in TIME magazine, which named Pinchuk as one of the 100 most influential people in the world in 2010, Elton John praised his work in the fight against HIV and anti-Semitism.

“Through his work in all these fields, Victor shows his love of our planet and makes the world a better place to live,” he wrote.

Nepochatova singles out Akhmetov’s foundation as a model of charitable work and PR mix.

“When I see the results of Akhmetov’s work, I really start thinking more positively about Akhmetov personally, because we see systematic work, accountability, and concrete results. Even though there is also PR involved and his personal media appearances, we also see concrete results,” she said.

Would you rather prefer the money to stay in their [oligarchs] accounts? People in Ukraine are just not at the stage when they treat giving seriously and expect it from their wealthy compatriots.”

– Richard Harrison, co-author of World Giving Index 2010.

The focus should not be on Akhmetov and Pinchuk alone, experts say. Ukraine has another 50 individuals whose net worth stands between $200 million and $6 billion.

Many of them do not appear to be active in supporting charities. And none have come out pledging to give large portion’s of their wealth to society.

The practice of giving is generally weak in Ukraine, according to the World Giving Index 2010, a report on charitable behavior in different countries of the world published by London-based Charities Aid Foundation.

In the report, Ukraine scored 150th out of 153 countries, on par with Serbia and only a little higher than Burundi and Madagascar.

The survey shows that only 5 percent of Ukrainians are likely to give money to charity, while less than 20 percent are willing to donate their time or help a stranger. In comparison, 70 percent of people give to charity in Australia, which scored number one.

Richard Harrison, who co-authored the report, says that much more should not be expected from Ukraine’s wealthy tycoons.

He explained the extremely low giving levels by the difficulties Ukraine is experiencing as a nation caught up in crony capitalism after the fall of communism. Harrison said Ukrainian oligarchs shouldn’t be criticized for giving too little, or making their giving part of the self-promotion campaign.

“This is what the earlier years of philanthropy should normally look like, as even as it is, wealthy people probably have good intentions,” Harrison said. “Would you rather prefer the money to stay in their accounts? People in Ukraine are just not at the stage when they treat giving seriously and expect it from their wealthy compatriots,” he said.

Nepochatova is confident that the practice of donating and giving, especially among Ukraine’s richest people, will keep growing, not least because of the example set by the Giving Pledge initiative.

The first professionally managed charity organizations only started to appear in Ukraine in mid-2000s, so there is still a lot of time for the oligarchs to catch up and sort out their priorities, Nepochatova added.

In the coming years, “I am sure that at least one of Ukraine’s top 10 richest people will give away all of his wealth,” she said.

“Keep in mind that our richest people only just started to turn 50, so they start thinking about such things as the meaning of life,” she added.

Kyiv Post staff writer Vlad Lavrov can be reached at [email protected]

Read also ‘Pinchuk spouses to spend Hr 90 million for public health and education programs‘.

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