Archive for July 13th, 2017

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Nibbling away at Novinsky

July 13, 2017

The Ukrainian headlines will be anything but the subject of this blog entry.  The headlines will be of Mikhail Dobkin being subject to 3 successful Verkhovna Rada votes regarding his criminal investigation.  The first vote in favour of allowing criminal prosecution, another allowing for his arrest and yet another allowing for his detention.  (As a reader can see, stripping a parliamentarian is not a simple process.)

Also the legislation relating to pension reform successfully made it through the Verkhovna Rada,

Yet again the Verkhovna Rada failed to appoint the NABU Auditor.

All to be expected as a last minute rush to get legislation through the Verkhovna Rada (or further delay it) occurs with little over 24 hours left in the final plenary week before the parliamentary holidays.

However, away from the Verkhovna Rada the empire of MP Vadim Novinsky and his Smart Holdings Group  continues to be subject to both prosecutor and judicial attention.

There is not very much that can be said of Mr Novinsky that can paint him in a positive light – and a potted history is required to explain why, for it is relevant.

Mr Novinsky is a Ukrainian billionaire of the Opposition Block (and formerly of the Party of Regions).  He is however Russian – and a well connected Russian within Russia and Ukraine since the 1990s.

He is also a Russian Orthodox (Moscow Patriarch) of the swivel eyed hard core type.  Indeed prior to becoming the Ukrainian president, in Februray 2014, a certain Petro Poroshenko called him an “Orthodox Bitch”.  Mr Novinsky has openly mocked the Ukrainian effort to appeal to His All Holiness Bartholomew 1, the Archbishop of Constantinople, New Rome and Ecumenical Patriarch, to release the Kyiv Patriarchate from subordination to the Moscow Patriarchate within the Russian Orthodox Church.

Mr Novinsky regularly stokes the Orthodox fires in Ukraine and is also under investigation for allegedly falsely imprisoning and assaulting senior members of the Kyiv Patriarch clergy when it refused to play the part former President Yanukovych and others wanted it to.

Naturally a reader should not expect Mr Novinsky to go to jail – no genuinely “big fish” have gone to jail during the 3+ years President Poroshenko has been fighting corruption and criminality among the elite.  Neither should a reader expect any “big fish” to go to jail any time soon (let alone for a proportionately long time for the crimes committed).  For the foreseeable future, Mr Novinsky’s problems will not have incarceration among them.

Suffice to say that among Mr Novinsky’s outstanding connections in Russia, they naturally include Patriarch Kirill and Archimandrite Tikhon Shevkunov, President Putin’s personal priest – as well as other elite clergy that lead what is a Russian Orthodox Church well infiltrated by the Russian security services.

To expand upon those outstanding Russian connections, and without going into the details of the “smaller fish” and all the business entities that connect, Mr Novinsky’s business career took off after arriving in Ukraine in 1996 with Luk Oil.  Behind a subsequently very swift climb in the business world, Mr Novinksy can thank Russian oligarch Alisher Usmanov, Russian politician Viktor Chernomyrdin (aided and abetted by Mr Chernomyrdin’s good friend at the time, then Ukrainian president Leonid Kuchma) and a very dodgy character called Andrei Klyamko (who is associated with the notorious organised crime group Tambov).

Mr Klyamko was officially a co-owner of Smart Holdings (an umbrella structure) with Mr Novinsky until 2014 (and in all probability unofficially still is).  Matters of perception considering the events of 2014 no doubt dictating a move from formal to informal co-owner.

It certainly helps to have a leading Tambov man as a business partner when buying up large parts of the Ukrainian economy during the 1990s and 2000s – and raiding and stealing other enterprises you don’t want to buy.  Perhaps that is why, when engaging in criminality to create a business empire, people can mysteriously fall from their high rise apartment windows (such as the Head of the State Property Fund Mikhail Chechetov during the early days of business empire), or otherwise cease they to be a potential problem another way.

A reader can also draw their own inferences regarding any President Putin/Klyamko/Tambov connection from 1990’s Saint Petersburg and any symbiotic, successful relationships that followed.

By the mid 2000’s Mr Novinsky owned (and/or otherwise controlled) mines, energy, metallurgy plants, agriculture, pig farms, banks, and shipyards, including interesting purchases in Ukraine, Moldova and Bulgaria that were on occasion immediately “flipped” to Alisher Usmanov.  Deals involving Roman Abramovich are also strongly rumoured.

In 2007, Mr Novinsky exchanged his metallurgy plants for a reasonably decent minority share in Rinat Akhmentov’s SCM entity.  Thus via Mr Novinsky’s outstanding connections in Russia Mr Akhmetov got a never-ending supply of cheap Russian money if and when required for expansion, and Mr Novinsky had a business partner in Ukraine that left him not only de facto untouchable, but also within the inner sanctums of the Party of Regions – and direct access to the Yanukovych body itself.  Here however is it perhaps necessary to underline that business partners does not equal friendship.

Of the acquired Novinsky assets, it is the Smart Holding shipyards that are currently of interest – or two of them in particular.  The shipyards of Kherson and the Black Sea Shipyard at Mykoliev.

Over the past 4 or 5 years, Mr Novinsky has been accused by many – most vocally Yulia Tymoshenko – of deliberately killing the Ukrainian shipbuilding industry by buying the shipyards, closing down tooling shops, laying off the workforce, and then, via deliberately defaulted contracts with other Smart Holdings companies, bringing the shipyards to bankruptcy.

Indeed both Kherson and BSS Mykoliev Smart Holdings shipyards are currently subject to bankruptcy via proceedings brought by Smart Holdings’ Balaklava Mine entity in Sevastopol.

If a reader is pondering why a billionaire would buy Ukrainian shipbuilding yards simply to degrade the workforce skill sets and bankrupt and close those assets, then of course it is necessary to consider who benefits?  And who benefits from a degraded and depleted Ukrainian shipbuilding industry if not the Russian shipbuilding industry – and in a time of war, The Kremlin?

When adding Mr Novinsky’s provocative socio-religious actions and statements to what can be perceived to be deliberate economic and infrastructural sabotage, a reader may ponder just who, if anybody, Mr Novinsky actually works for (part time or full time or ad hoc) and perhaps who really sent him to Ukraine in the 1990s and with what task?

Indeed so broad and lofty are his Russian connections, so great his wealth, and so provocative his oratory and actions, Mr Novinsky is probably a greater and more dangerous irritant to Ukraine than (the over-hyped) Viktor Medvedchuk.

Whatever the case, the Kyiv courts on 13th July arrested all assets relating to the Mykoliev Black Sea Shipyard, including all shares.  Bankruptcy on hold.  A pre-trial investigation into nefarious contract changes lowering required inward investment/development per sale clauses surrounding the Kherson shipbuilding yard is also underway.

No doubt considerable compensation for contractual breaches will be sought from Smart Holdings by the State, for it was the State that sold these shipyards to Mr Novinsky with contractual obligations.  In short the State will seek money from Mr Nevinsky (and the invisible Mr Klyamko).  This notwithstanding the alleged criminality surrounding illicit changes to the contracts themselves post sale.

The State is clearly attempting to chip away at Mr Nevinsky and his history of corporate raiding, regular contractual breaches, and generally nefarious business life since his arrival in the 1990s.  Smart Holdings has been raided several times by law enforcement recently.

However caution is required, for despite a clear criminal history (albeit it remains to be seen if any evidence can or will equate to a successful prosecution) and very questionable loyalties, the way the State is tackling Mr Novinsky may well be perceived as persecution rather than prosecution – especially when ultimately Mr Novinsky will not go to jail – instead possibly “losing” assets and “suffering” some historical financial “corrections” being a far more likely outcome.

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