Friday, November 17, 2006

Shcherban and the 'Regiony'

I've posted previously about the recent return to Ukraine of disgraced former governor of the Sumy oblast, Volodymyr Shcherban, and how $2m of SCM's money helped bail him out of a Florida jail.

Others excellent analysts have also provided comments on this affair.

An article in this week's 'Bez Tsenzury' publication sheds light on Shcherban's earlier career in Donbas, on his links with Rinat Akhmetov, Yukhim Zvyahilskiy, the late Akhat Bragin and Yevhen Shcherban, and on the tensions and fissures in what is commonly called 'the Dontesk clan'.

I've loosely translated some bits below:

"The initial march of Volodymyr Petrovych Shcherban into politics and power took place during the first murky years of the formation of the Ukrainian state and the capitalization of the economy.

When Yevhen and Volodymyr Shcherban (distant family namesakes) arrived in 1994 into the country's parliament, the older residents of the VR named them "meat-hackers". Volodymyr Petrovych still resents this, declaring that he has never stood behind a counter with knife in hand. The two influential Donechchany hammered together their initial capital in merciless conditions. They avoided being linked to any serious criminal cases although Volodymyr Shcherban was allegedly involved in some relatively minor commercial machinations. There was a scarcity of many products and basic commodities at that time and Shcherban, being by the director of large stores and warehouses, was involved with their deliveries and distribution - including to the tables of influencial party bosses.

The omnipotent Yukhym Zvyagilskiy helped Shcherban to avoid 'both prison, and ruin" in those years. But after becoming mayor of Donetsk he rapidly found common language with Akhat Bragin, Rinat Akhmetov and Yevhen Shcherban, who all rose to the top by natural selection during this epoch of racketeering. They dispatched a team to parliamentary and local elections of 1994 using new 'PolitTekhnologiya'. Bribery of electorate was achieved with the aid of mass distribution of vodka, sausage, macaroni etc. The former PartNomenklatura was shocked when the results of voting were revealed, and the era of "red directors" came to an end. The concepts of "authority" and "business", became unseparable.

Shcherban's trade mark "Dyelo Vsyekh" became a monopolist supplier for products in Donetsk region. Yevhen Shcherban successfully developed its business in the agrarian sector and in the market for coal and metal. Bragin also switched to these fields of operation after his racketeering past. Their political "roof" was provided by the Liberal Party of the Ukraine. After the flight abroad of its chairman Igor Markulov, Volodymyr Shcherban took over this position.

This "Big Three" (Akhmetov was still in the shadow of Bragin) during that year successfully switched their activities to gain control of the majority of the industrial enterprises of Donbass. Having gained such a powerful a base, Donetsk, by the end of 1995 was no longer hiding its presidential ambitions. "Whether anyone wants or not, Volodymyr Shcherban will become the President of the Ukraine," declared Yevhen Shcherban. However Bragin several times carelessly publicly insulted Kuchma by calling him a nominal President only, and said the true masters of the country are "Donetski". Special services twice took him in handcuffs to the capital for "prophylactic discussions".

From the beginning of 1996 the Shcherbans, shaping up for the forthcoming presidential battle, established contacts with a number of influential politicians, including the then prime minister Yevhen Marchuk. Volodymyr Petrovych did not hide his personal ambitions. In an interview in "Dzerkalo Tyzhnya" he promised that the next president of the country would be from Donbas. In order to achieve his ends, Shcherban was prepared to use the miners as weapon. He practically led the so-called miners' strike committee and, according to Pavlo Lazarenko, he was preparing to execute a coup d'etat with the aid of the miners.

For some this was all too much. An answer followed without delay. In October 1995, at the Shaktar stadium, Brakin was blown up and killed during a football match. At the beginning 1996 several prominent Donetsk businessmen were also killed in just a few months. In July the same year Volodymyr Shcherban was removed from his governor's post by President's Kuchma's decree; and that autum Yevhen Shcherban and his wife were shot dead at Donetsk airport.

Who " moistened" the "Donetski" is unclear even now. On one version indicates that Russian oligarchs may have been involved because they were being 'shut out' of Donetsk; another version implicates Kyiv special services - attempting to restore control to this, the most important region of the country. Finally, according to the Prosecutor General's office, the murders were ordered by former premier Pavlo Lazarenko, who was attempting to clear the Donbas of rivals to his Dnipropetrovsk corporation "United Energy Systems of Ukraine" [EESU]. It was Lazarenko that insisted Kuchma sign an edict to sack Shcherban from the governorial post. [I recall there were rumors also that Shcherban had previously ordered 'a hit' to be made on Lazarenko, something Shcherban denied on his recent return to Ukraine..LEvko]

There is also speculation that the murders were the consequence of vendettas between the leading 'Donechchany' (this is a theory held by the deceased ex- minister of internal affairs Yuriy Kravchenko).

The march of the "Donetski," and of their leader Volodymyr Shcherban into 'big politics', was stopped in its tracks and he then left the country for the first time for a prolonged stay in the USA. However, the unity of political power and capital took even stronger root.

Rinat Akhmetov inherited Bragin's business empire, including the Shakhtar soccer club. Together with Vitaliy Hayduk and Sergiy Taruta they strengthened the business positions of their newly-created "Industrial Union of Donbass" corporation. They successfully lobbied for Viktor Yanukovych to be appointed Donetsk oblast governor. Together they did everything possible not only to weaken the financial influence of Shcherban in the region, but also to practically destroy his businesses.

So perhaps the two million dollars bail money paid by Akhmetov, which guaranteed the release of Shcherban from an American prison, can be considered as a 'pay-off' for his demolished businesses in Donbas. But, most likely, this sum is a simple 'advance' paid for future collaboration, and he is certainly not just to be "an assistant to people's deputy Akhmetov", as Akhmetov ironically stated.

"Volodymyr Petrovich Shcherban has colossal experience,and reputation,and if he will be required in politics, then this depends on the people who he invites," said Akhmetov. So it is becoming understood that the alighty oligarch sees the refugee in politics again, for example in the role of party leader. According to information provided by some 'Regionaly' themselves, interrelations betweem party money bag Akmetov, and premier Yanukovych are not altogether smooth. Reliable sources repeatedly report to Akhmetov that Yanukovich is acting behind-the-scenes to form his own sphere of influence both inside the party and in the parliamentary fraction. Volodymyr Shcherban could become another center of influence in the "Regional" medium.

Shcherban would act as a guard dog for Akhmetov, particularly as Yanukovych and Shcherban do not have a good mutual relationship because Victor Fedorovych used administrative resources to the liquidate the Donetsk businesses of Volodymyr Petrovych after his predecessor as governor fell into disgrace.

Many influential 'Regionaly' are dipleased by the triumphal return of the "prodigal son". It is possible that an attempt may be made to appoint Shcherban a governor again. A second term of governorship in the Donetsk oblast could become compromise. Rumors such as these are already covering some local businessmen with a cold sweat."

The author ends his piece by suggesting that Akhmetov is a smart businessman, and that the $2m investment may provide a good return.

Today's 'Bez Tsensury' publication also provides detailed information of Shcherban's disgraceful activities and extortion of local businesses in Sumy while he was governor there, and helps explain why many Ukrainians are so fearful of the rapacious 'Donchany'.
The way the ruling authorities deal with the Ukrainian Shcherban in the weeks and months to come will provide good indication as to how they intend to govern the country. Allowing him to return with impunity is not a good start..

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