Archive for June 10th, 2015


Pulling the political wool – Saakashvili and Trukhanov?

June 10, 2015

Politics, as we all know, can be little more than smoke and mirrors, the outcome being the electorate getting lost in the labyrinth and only those directly politically responsible having any plan  of the maze.  Even colleagues are prone (or deliberately) lost too.

Ethics are sacrificed at the alter of what is expediently possible – and normally swiftly – rather than what could and should be, and indeed what has been promised or is expected, pursued to a successful conclusion.  Jacek Saryusz-Wolski once said to your author “Politics is the art of making maximum, within the limits of what is possible.”  (To which, although not relevant, your author replied “And diplomacy is the art of letting others have it your way.’)

That is a normal state of affairs everywhere.

In a nation, or region, that is meant to be undergoing serious reforms, it is often much more prevalent/noticeable.  Politically, there is often a need to give something to the historical elites in order that they give up power/loosen their grip on power/refrain from trying to usurp power again.  That may take the form of a de jure or de facto amnesty on nefarious acts past, it may be they keep some of their ill-gotten spoils in return for a quite retirement but surrender any projected gains, or indeed smoke and mirrors are employed to distance them from their interests, whilst they retain their interests nonetheless, yet abandoning the political stage in order to give the appearance of “progress” or “reform”.

This is, perhaps begrudgingly, accepted by all sides in order that the “new elite” do not create an ousted, yet well connected and still influential, enemy of the “old guard”.  Distasteful it may be, yet there is an argument for its necessity in mitigating a “roll-back” to the old elites and old ways sometime in the future whilst the new team attempt reform/change.

Thus in Odessa, there is the high-profile “new political elite” in the shape of Governor Saakashvili, and the long established and nefarious political “old guard” in the shape of Mayor Trukhanov when it comes to local governance.  It seems exceptionally unlikely that Governor Saakashvili will become, as governors past were, involved in dodgy little deals such as the sale of prime Oblast land for a fee.  Such things become known very quickly and his ego would not suffer the public ridicule for such a minor and unnecessary nefarious faux pas.

However, there is a political need for Governor Saakashvili to either directly take on Mayor Trukhanov, or find a political compromise where both emerge a “winner” – though perhaps the electorate loses just the same.  Thus any such compromise would probably require no shortage of smoke, mirrors, blinds and political subterfuge to leave the voting public ignorant of their real loses in a perceived political gain.

Mayor Trukhanov is indeed a nefarious individual, as well as a political “man for hire”.  To be extremely generous, he having gone from Regionaire, to independent (Kolomoisky backed), is a “political survivor”.  Alternatively, being less charitable, there is a phrase relating to “honour” and “thieves” that may be appropriate.

His “business” history and the forceful way he goes about it are well known.  He himself acknowledges his business association with one of Odessa’s most (in)famous mafia bosses Alexander (Angel) Angert, a one-time nemesis of Yuri Lutsenko when Interior Minister.

Mayor Trukhanov is on record, when talking of his relationship with Mr Angert, stating “I have not studied his biography , his past, I did not take a certificate from the district department of his criminal record.  I did not care about people’s past.  He worked openly, he was not hounded by the authorities.  In a word, a decent, normal person.  Since then, (1990’s ed) we have a relationship.  He’s a free man, and I do not attach any significance to talk about his criminal past.”

A statement that is somewhat veneered, as to cut to the chase, in the crazy, lawless 1990’s Messrs Angert and Trukhanov, amongst other things, dealt in “security” together.  Those who know what Ukraine and Russia was like in the 1990’s know exactly what “security” means, and how “contracts” were obtained.

Mr Angert, also owns a company called “Рост” – “Growth” in English.  It is fronted by a Russian gentleman called Alexander Zhukov, who regularly (very regularly) successfully “lobby’s” city hall for contracts.  Indeed, Mayor Trukhanov is also on record stating “I have no relationship with this company , even though I know it well.” – something of an understatement, for Mayor Trukhanov insures it continues to prosper.  Indeed the above statements by the Odessa Mayor perhaps calling into question not only his morality, but also the ethical undercurrent within the snake pit that is City Hall.

Mayor Trukhanov also knows intimately a company (former company on paper) of Igor Markov – “Союз” or “Union” well too.  Amongst other things it holds the city wide rubbish collection contract.  Mr Markov, despite any paperwork however, is still in control of “Union” even whilst in self-exile in Moscow.  Mayor Trukhanov does very well from this via a “back-door agreement” where our Mayor has day to day control.  For those wondering about the “on paper” comment, “Union” was bought by a “Turkish investment company”, yet still jumps through the hoops of the personal whims of Messrs Markov and Trukhanov as all with eyes that care to look can clearly see.

Mayor Trukhanov also has his own individual vested interests of course.  He has been a “businessman” in Odessa since the 1990s after all.

His has “dealings” in the Odessa port.  He has “interests” in car-parking schemes.  He has an undeclared interest in both “Growth” and “Union”.  He also has significant personal interest in a business unit (believed under the umbrella of Growth) that deals with all road repairs and road building throughout Odessa.  Something that is very profitable now, and should Governor Saakashvili tackle new roads and road maintenance as he claims he will, then $billions in contracts will head the way of Mayor Trukhanov in the complete absence of any other large local contractor and the slow death of “Ukravtodor”, the State road agency.  A regional road maintenance/building monopoly?  Certainly.

All of the above is just the tip of the nefarious Trukhanov iceberg, but it is not really necessary to keep listing his “interests” – interests that naturally conflict with his being Mayor of Odessa.  It is also probably wise to stick to what is in the public domain, or at least generally known, rather than to stray into what is known personally, and that may not fall into the above public categories.

Whatever the case, Governor Saakashvili faces the political choice to confront and defeat a known nefarious fellow, and a man currently who is a “Kolomoisky man” (after his Mayoral campaign was funded by Ihor Kolomoisky) – or strike a political deal that prima facie when presented to the public, meets the needs of both men and yet can be spun as a “win” for the public.  A pulling of the political wool over the eyes of the constituents.

If so, how, and the pluses and minuses of such a political deal?

Before going any further dear readers, keep a watchful eye on the forthcoming City Hall reshuffle – in particular on the position of Deputy Mayor.  It will be an indicator as to who will have the upper hand in City Hall between these two.

Now, back to any hypothetical political deal.  What will it look like?

Governor Saakashvili’s priorities would be to transfer Mayor Trukhanov from being a “Kolomoisky man” to a “Saakashvili/Poroshenko man”, being seen to tackle corruption, generate reform, and attract FDI, as well as tackle Oblast wide infrastructure issues – as is expected of him.

There is a requirement to drastically reduce any local institutional resistance within the local governance bubble as swiftly as practicable.  This to be done without tainting his own local image of having no linkage with the existing corrupt local elite, and by inference, being unlikely to get involved with any small, grubby little corrupt deals.

There would be a need to radically clean the image of the Mayor if he is to publicly come “onside” – less so perhaps if he comes “onside” behind the curtain, but nevertheless a cleaner image has to be achieved.

Mayor Trukhanov has a choice of facing down Governor Saakshvili and continuing his indiscreet nefarious activities that are in complete conflict with his public office, or finding a way to continue those nefarious activities whilst enjoying a “good working relationship” with the internationally known, anti-corruption/reformist Governor (and President’s man).

A squalid political deal is there to be struck, simply for both local government heads to avoid an unnecessarily public confrontation that one will inevitably lose messily.

The most obvious way would appear to be that Mayor Trukhanov “untangles” himself for his nefarious and conflicting interests with that of his public office – yet retaining most of/all of their revenue stream.  Thus, the contracting business entities under the umbrella of “Growth” owned by his mafia friend will have to be spun off/flipped title/”sold” to others – perhaps an opaque “Turkish investment company” (or similar) as occurred to Mr Markov’s “Union”.

Needless to say the ownership behind those behind those of such an investment company (however many times removed it is deemed necessary to be) remains the current owners.  Their political minions within City Hall insuring they still get more than a fair share of City contracts.  Mayor Trukhanov’s monopoly over Odessa roads can continue, albeit masked via a “bona fide” foreign contractor as inferred by Governor Saakashvili.

Governor Saakashvili, of course, can claim FDI into Odessa, Odessa Oblast and into local government contracts – whether it be a “Turkish investment company” or any other externally registered business entity.  As long as the usual Cypriot or Riga based companies are not used, fewer questions will be asked.  US, UK, Poland, Czech somewhere in the organagram all make it seem quite respectable prima facie to far too many – and what counts is the impression of “honest foreign” companies” winning contracts for a “reformed local governance model”.

Having publicly denounced his vested interests and being “reborn”, the once nefarious Mayor can become a “Saakashvili ally”.  In short, having sold out Ihor Kolomoisky for political survival, he gains the protection of the Governor (which reads President) – even in the event after the City Hall reshuffle, power behind the curtain shifts to a new Saakashvili-friendly Deputy Mayor and Mayor Trukhanov remains as a decoration attending free lunches and saying nothing of importance that is not written for him, whilst his interests continue to accumulate wealth behind a maze of smoke and mirrors.

Grubby enough for Odessa politics?  It seems to fit well enough, and with few political casualties – as long as the “Growth” lawyers do an outstanding job of inserting robust legal methods of hiding who owns what along the way – several times over to be safe.

As for the undoubtedly new dates of incorporation for any such foreign contracting winners that may be questioned in the public domain?   Well, isn’t it common practice in business to create special purpose vehicles/companies for specific projects/contracts specifically because their limited liability protects all other business units under the same umbrella from contagion should something go wrong?

Hypothetically, some may ponder just how busy the lawyers for “Growth” may become over the next few months if Governor Saakashvili and Mayor Trukhanov attempt to find a “working relationship”.  One may also wonder perhaps, given the readership of this blog, whether certain agencies are now about to pay any attention to the activities of the said lawyers opening entities in various foreign jurisdictions too.  It always pays to know details others don’t think you know, or aren’t sure if you know, after all.

Anyway, something to keep a watchful eye on if a miraculously fruitful working relationship between Governor and Mayor appears despite the odds.  Keep a cynical eye on contract winners and appointed sub-contractors of the future.

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