You're reading: Billionaire Firtash arrested on suspicion of mob activity

Ukrainian billionaire Dmytro Firtash was arrested in Vienna on suspicion of organized crime and bribery based on a. warrant that an American court granted to the U.S. Federal Bureau of Investigation, stated the Austrian Interior Ministry.

Firtash, a chemicals and energy tycoon worth an estimated $2.3 billion, was detained without incident late on March 12 in the immediate vicinity of his business premises, Austrian News Agency reported.
Two top assistants to Firtash, Robert Shetler-Jones and Group DF CEO Borys Krasnyansky, could not be immediately reached for comment. 

No one at Firtash’s Federation of Employers of Ukraine was available for comment. However, Firtash’s Group DF holding company described his arrest as a “misunderstanding” that should be “resolved in the very near term”, according to the Financial Times. The group claims that Firtash’s arrest “is not connected with the (political) situation in Ukraine, or the group’s activity in Europe and America, but involved an investment project from 2006.”

According to Mario Hejk, a spokesperson for the Federal Criminal Police Office, noted that the FBI has been investigating the 48-year-old suspect since 2006 and that the arrest has nothing to do with the current political turmoil in Ukraine. The businessman and philanthropist was arrested at the request of the FBI on suspicion of involvement in the creation of an organized criminal group. 

“As a result of the FBI’s years’ long investigation and warrant issued by a U.S. district court, Vienna’s district attorney issued a nationwide arrest order for the businessman,” Hejk said. 

Deutche Welle reports that the Austrian police told them that Firtash will be extradited to the U.S. “soon”.
Ukraine’s Interior Ministry didn’t issue a warrant for Firtash’s arrest, according to Interfax-Ukraine. Ukraine’s Foreign Ministry confirmed his arrest on the afternoon of March 13.

Criminal underworld connections

Firtash figured prominently in WikiLeaks, the secret U.S. diplomatic cables that were leaked in 2010.
In a Dec. 8, 2008, meeting, then-U.S. Ambassador to Ukraine William Taylor allegedly wrote that gas-trading mogul Firtash told of needing permission from alleged Russian crime boss Semyon Mogilevich to do business in Ukraine during the lawless 1990s. Firtash denied the remarks. 

Mogilevich remains on the FBI’s 10 most wanted list of fugitives and is believed to be hiding in Moscow.
Firtash’s Group DF controls chemical producers Ostchem and Crimea Titan, a number of regional energy supply companies, banks Nadra and Pravex, one of the country’s leading television stations Inter, Ukrainian News information agency, and several minor media outlets. Critics say he has acquired assets in questionable privatization auctions. He also made a fortune supplying natural gas to Ukraine through RosUkrEnergo, which he co-owned with Russia’s Gazprom. 

According to the Financial Times, Firtash had joint business interests with Russian billionaire Arkady Rotenberg, reportedly Russian President Vladimir Putin’s close friend and judo sparring partner. Firtash also has business ties with Serhiy Lyovochkin, who headed former President Viktor Yanukovych’s administration until he resigned on Jan. 17.

Timothy Ash, an analyst with Standard Bank in London, called Firtash’s arrest an “absolutely seismic development on so many different levels. Firtash is probably in the top two of Ukrainian oligarchs in terms of wealth/influence across borders. Historically he had close ties to Russia via the energy sector, and perhaps even to Putin.

“Firtash’s Ostchem energy company enjoyed a big gas discount from Gazprom even when Naftogaz was still paying top dollar so had a very ‘special’ relationship,” Ash wrote. “I also think it sends a strong message to Russia that the West is willing to go down the financial sanctions route unless it backtracks over Crimea and over broader policy towards Ukraine. For Ukraine I think this sends the message that Western loans will come at a price of a broader clearing up of the business environment …”

Firtash was the beneficiary of a notorious court decision in Ukraine in 2013 concerning the “return” of $2 billion worth of gas from state-owned Naftogaz Ukraine to UkrGaz-Energo, which was part-owned by Firtash via his Centrogaz Holding AG registered in Austria. UkrGaz-Energo was founded by Naftogaz and Swiss-based RosUkrEnergo AG in February 2006 on a 50 percent parity basis. In turn, RosUkrEnergo had two owners: Russian gas monopolist Gazprom and Centragas Holding AG. The most successful period in UkrGaz-Energo’s activity lasted from April 2006 until April 2008, when the company was a monopoly gas importer and supplier of gas to industrial enterprises, earning Hr 865.6 million in 2006 and Hr 940.8 million in 2007, according to Ukrainian News agency. 

The company lost its lucrative position after Yulia Tymoshenko became prime minister in 2008. Her government repeatedly tried to compel UkrGaz-Energo to pay Naftogaz dividends for its business activity, but failed. In October 2008, the government sued to liquidate the public-private joint venture. According to an appellate court ruling, the two founders – Naftogaz and RosUkrEnergo – had to take liquidation measures together, but a liquidation commission was never formed. 

Once Viktor Yanukovych became president in 2010, Firtash decided to strike back. In 2012 UkrGaz-Energo decided to sue Ukrtransgaz, the gas transit subsidiary of Naftogaz, demanding 4.86 billion of cubic meters of gas from it. Not surprisingly, considering the level of corruption during Yanukovych’s rule, the Kyiv Commercial Court took UkrGaz-Energo’s side and in April 2013 ordered Naftogaz to transfer 4.75 billion of cubic meters of gas worth nearly $2 billion to the plaintiff via Ukrtransgaz.

Philanthropic causes
Over the years, Firtash’s charities have promoted Ukrainian culture and education. He established a Ukrainian studies program at Cambridge University, and he gave millions to help renovate and expand the campus of the Ukrainian Catholic University in Lviv. In 2013 he organized a Ukraine festival in central London and has promoted Ukrainian cultural and folk preservation projects throughout Ukraine. Besides owning a residence in Vienna, he owns luxury property in England where he has employed the likes of Raymond Benedict Asquith, the third Earl of Oxford and Asquith.