You're reading: Ukraine’s richest enjoy lavish lifestyles abroad

If Ukraine’s European Union membership hopes fizzle because of foreign policy fiascos under President Viktor Yanukovych, the least affected will be the very rich and influential oligarchs who back him.

Although they make most of their money in Ukraine, where they have a stranglehold over politics and the economy, many of them spend a large share of their time in Europe, owning the most luxurious of property and leading extravagant lifestyles.

And as average Ukrainian citizens struggle to get approval for EU visas, standing at embassy lines where they are humiliated with probing checks into their finances and personal lives, many of Ukraine’s richest travel freely across Europe and the rest of the world, some flashing foreign passports along the way. Some of them may stop by the world’s top and most expensive schools to visit their children.

While Ukraine’s leadership continues to waver on whether the nation gets better business and political deals from either East or West, Alexander Paskhaver, president of the Center for Economic Development in Kyiv, said the country’s wealthiest have made their personal geopolitical choice a long time ago.

For many of them, Ukraine is merely a place to make money, exploiting cheap labor and rich natural resources. With their lifestyles, it is clear that “our businessmen don’t want to be in Russia,” Paskhaver said. “They chose the West,” especially “for their kids,” he said.

Take, for example Rinat Akhmetov, Ukraine’s richest man, a longtime backer of Yanukovych and a lawmaker who rarely shows up in parliament.
According to British newspapers such as the Financial Times and Daily Telegraph, Akhmetov owns one of London’s most expensive residential properties. It was revealed this year that he doled out some $211 million for a penthouse in the Knightsbridge One Hyde Park residential complex.

 

But if Akhmetov does live there, he does not appear to want Ukrainians back home to know about it. Asked to comment on Akhmetov’s real estate acquisitions and where he spends most of his time, his spokeswoman Olena Dovzhenko said that the record-holding penthouse was a “portfolio investment” made by Akhmetov’s holding company System Capital Management and “was not used by Akhmetov.”

Anna Terekhova, the spokesperson for System Capital Management, would not respond to a Kyiv Post inquiry about who uses the One Hyde Park property.
Dovzhenko insisted that Akhmetov mainly resides in Donetsk. His trips abroad this year mainly coincided with the away games of his Shakhtar soccer club, she added.

In an interview this month, Akhmetov’s 23-year old son Damir acknowledged that he has been living abroad for the past 14 years. He said that he currently resides in London.

Should members of the Akhmetov family get homesick in London, they could very well stop by for a cup of British tea at the $124 million 10-bedroom Kensington villa purchased years ago, according to the Daily Telegraph, by the Victor and Olena Pinchuk family.

Victor Pinchuk became a billionaire snapping up some of Ukraine’s best industrial assets while his father-in-law, Leonid Kuchma, served as Ukraine’s president from 1994 until 2005. The office of the Victor Pinchuk Foundation did not return Kyiv Post inquiries about the London-based property.

There’s more. Fellow billionaires Igor Kolomoisky and Gennadiy Bogolyubov, co-owners of Ukraine’s so-called Privat business group which control lucrative assets spanning energy, banking, ore mining and passenger airlines, have in past interviews admitted to spending much of their time abroad.

Kolomoisky, who carries an Israeli passport and heads one of Europe’s most influential Jewish organizations, reportedly prefers posh and quiet Geneva.

London is the choice for his partner Bogolyubov, a major financial backer of the Chabad-Lubavitch Jewish religious movement. Sticking with tradition, neither responded to inquiries about their residential preferences and lifestyles.

Jonathan Hewlett, head of London residential sales at Savills, one of the U.K.’s leading real estate agencies, points out that the influx of high net-worth individuals from the former Soviet Union is one of the hottest trends on the market.

“The higher the price, the greater percentage of buyers comes from Russia and CIS countries,” Hewlett said. “Generation of wealth out there has been and still is huge.”

While acknowledging that some Ukrainian clients, like Akhmetov or Pinchuk, go for record-breaking deals that became the chat of the town, average Ukrainian buyers tend to go for more modest and less-hyped deals.

As Hewlett explains, clients from Ukraine typically seek a four or five bedroom family accommodation in the $3 million-$30 million price range. Their main requirements, according to Hewlett, are central location and a safe neighborhood.

Ukraine’s richest also look to London to keep their wealth safe.

As Dmitry Cherniavskiy, a partner at London-based Tax Consulting U.K. and son-in-law to Privat Group’s co-owner Bogolyubov said earlier this year in a Kyiv Post interview, he gets increasing number of requests from Ukraine and CIS countries to set up family offices in London.

People who seek his services are affluent and want to concentrate management of private property, corporate rights, trusts and arrange inheritance for the second and third generation of their descendants, Cherniavskiy said.

The key attraction of British jurisdiction, he explained, is an extremely favorable tax regime for high net worth foreigners coming to the country on investor visas.

As Cherniavskiy explained, having invested in the U.K. at least one million pounds, which often means simply putting them in a local bank and purchasing securities, a foreigner becomes a U.K. tax resident, providing a seven-year tax break on all income earned overseas, and a fixed tax of 30,000 pounds per year afterward.

“Even using offshores in this case [becomes unnecessary],” Cherniavskiy said. “Through a trust agreement you create a family office holding structure, and you can absolutely legally declare in the U.K. what you have earned.”

As the result, Hewlett said, clients from Uzbekistan, Moscow and Ukraine are now considered as some of the most desirable clients for the upscale real estate brokers, as the ones who end up paying top prices. Their only competition in this area comes from oil-rich Qatar.

See also related story: ‘Ukraine’s richest double net worth in five years, control more of GDP’

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