WikiLeaks about UKRAINE: FIRTASH MAKES HIS CASE TO THE USG (December 2008)

Reference ID Created Released Classification Origin
08KYIV2414 2008-12-10 07:07 2010-12-01 23:11 SECRET Embassy Kyiv

VZCZCXYZ0000
RR RUEHWEB

DE RUEHKV #2414/01 3450752
ZNY SSSSS ZZH
R 100752Z DEC 08
FM AMEMBASSY KYIV
TO RUEHC/SECSTATE WASHDC 6884
INFO RUCNCIS/CIS COLLECTIVE
RUEHZG/NATO EU COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUEAIIA/CIA WASHDC

S E C R E T KYIV 002414

SIPDIS

DEPT FOR EUR/UMB
EEB/ESC/IEC FOR SGALLOGLY AND LWRIGHT
DOE FOR LEKIMOFF, CCALIENDO, RBOUDREAU
USDOC FOR 4231/ITA/OEENIS/NISD/CLUCYK

EO 12958 DECL: 12/10/2018
TAGS EINV, ENRG, EPET, PINR, PREL, POL, UP
SUBJECT: UKRAINE: FIRTASH MAKES HIS CASE TO THE USG
REF: A. KYIV 2383 B. KYIV 2294

Classified By: Ambassador for reasons 1.4 (b) and (d)

¶1. (S) Summary and Comment: Controversial Ukrainian oligarch Dmytro Firtash, best known as co-owner of gas intermediary RosUkrEnergo (RUE), called upon the Ambassador on December 8. Firtash did not explicitly state why he requested the meeting, nor did he ask the USG for anything, but he spoke at length about his business and politics in a visible effort to improve his image with the USG. The soft-spoken billionaire, arguably one of Ukraine’s most powerful people, expressed strong support for President Yushchenko and equally strong contempt for Prime Minister Tymoshenko. He claimed that he had thwarted a coalition between BYuT and the Party of Regions (PoR) at the last minute, and was now working to build a coalition between Yushchenko’s supporters and the PoR.

In a lengthy monolog, Firtash described his evolution as a businessman from his beginnings as a food trader to the creation of RUE. Firtash claimed that Tymoshenko was working with Russia to eliminate RUE, and cited examples meant to prove that she was making political concessions to Russia to gain its support to do so. He acknowledged ties to Russian organized crime figure Seymon Mogilevich, stating he needed Mogilevich’s approval to get into business in the first place. He was adamant that he had not committed a single crime when building his business empire, and argued that outsiders still failed to understand the period of lawlessness that reigned in Ukraine after the collapse of the Soviet Union. He said he cared truly about Ukraine, and saw Russian business interests overtaking the economy as the biggest threat to the country’s security. Comment: Firtash’s arguments and allegations are clearly self-interested; he sees Tymoshenko as a clear threat to his business. End summary and comment.

Firtash Seeks to Improve His Image
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¶2. (C) Ukrainian billionaire Dmytro Firtash, best known as co-owner of controversial gas intermediary RUE, sought a meeting with the Ambassador on December 8. Accompanying Firtash to the meeting was political consultant and AmCit Zev Furst, and Andras Knopp, the Hungarian-born number two at RUE. Firtash never specifically stated why he had sought the meeting, nor did he extend any specific requests to the Ambassador, but in the course of the conversation it was clear he tried to use the meeting to portray a positive image of himself. Furst said he was attending as a “friend and advisor” to Firtash and during the course of the meeting stated that the USG might have misperceptions about Firtash. At one point during the meeting, Firtash began to talk about “mistakes he might have made,” but diverted the conversation when Furst waved him off.

Firtash’s Support for President Yushchenko...
---------------------------------------------

¶3. (C) In the meeting, which lasted two and a half hours, Firtash told the Ambassador that he was not a public person, but had recently been pulled deeper into Ukrainian politics. He admitted that he has “loyally served” as an unofficial advisor to President Yushchenko during tense gas negotiations with Russia and political crises dating back to the Orange Revolution in 2004. He reported that he met with the Yushchenko at his dacha (cottage residence) three times in the last week at the President’s request. He described himself as a close friend and confidante of the President -- someone the President can trust totally. In his view, Yushchenko made a possibly fatal political error during the Orange Revolution in that he and Tymoshenko propagated the concept of two Ukraines -- an orange, more democratic Ukraine, and a blue Ukraine represented by the Party of Regions (PoR) and more focused towards the status quo. He added that this divisiveness throughout Ukraine is exactly what Russia hoped to cultivate in order to control Ukraine. Firtash felt the only way to unify Ukraine during the current political and economic crises was to form a coalition between the President’s supporters and the PoR in order to stop what he termed, “Tymoshenko’s plans to offer up the country to Russia on a silver platter.” (Note: On the evening of December 9, BYuT, Our Ukraine/People’s Self Defense Party, and the Lytvyn Block formed a coalition, keeping Tymoshenko in power and rebuffing Firtash’s hopes for a coalition between the President’s supporters and the PoR. End note.)

...And Contempt for Tymoshenko
------------------------------

¶4. (C) Firtash defined Tymoshenko as an accomplished oligarch who had made deals with Moscow that would leave Ukraine vulnerable to Russian oligarchs in the future -- something neither he nor Ukrainian billionaire and PoR backer Rinat Akhmetov could stand by and watch happen. Firtash referred to Tymoshenko’s title of “gas princess” as a misnomer; he explained that Tymoshenko did make lots of money off of a corrupt, perpetual gas debt scheme during the 1990s, but she knew nothing about the gas business. XXXXXXXXXXXX to give the false impression that she was not actively involved in business. He believed that Tymoshenko’s hatred for him stems from Tymoshenko’s missed opportunity to develop her own RUE back in 2005, when she was Prime Minister for the first time.

¶5. (C) Firtash stated that he felt Russia was strongly supporting a BYuT and PoR coalition and that such a coalition was about to be finalized on December 7, with only Regions leader Viktor Yanukovych needing to sign. He claimed that he torpedoed the coalition at the last moment by convincing Yanukovych that an alliance with Tymoshenko would never last. Firtash recounted that on December 6, Tymoshenko was on nearly every Ukrainian TV channel and in every newspaper, prophesying that a BYuT and PoR coalition agreement would be signed on the evening of December 7. Firtash was visibly delighted as he recounted how he used his television station INTER to air an interview in which Yanukovych refuted Tymoshenko’s claim that a BYuT and PoR coalition was a done deal (Ref A). Responding to a question by the Ambassador on whether he worked with Akhmetov to derail a BYuT/PoR coalition, Firtash said that they had worked separately, even if they were pursuing the same goal.

¶6. (C) Firtash said he and Akhmetov both wanted a coalition between the President’s supporters and the PoR. He claimed that he had brokered a subsequent meeting between Yanukovych and Yushchenko for the evening of December 8. He was not sure if Yanukovych and Yushchenko could form a new coalition, but saw it as the only way out of Ukraine’s prolonged political strife.

From Humble Beginnings...
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¶7. (C) Firtash described himself as a simple person who grew up in the village of Synkiv in the Ternopil oblast in Western Ukraine. Firtash explained he had very humble beginnings -- his father taught driver education and his mother worked in a sugar factory. He added that since his parents hated communism, they did not benefit from valuable contacts that could have helped him get into a university, which was his childhood dream. Firtash said he shared his parents’ disdain for the Communist party and only agreed to join the Communist youth movement Komsomol after being locked in a party member’s office for two days without food or water.

¶8. (C) Firtash told the Ambassador he attended an occupational institute before be drafted into the army in 1986 and studied to become a fireman after completing his military service. In 1991, when the Soviet Union collapsed, Firtash stated his parents thought it was the end of the world and he was concerned about making a living during unpredictable times. He added that he felt he was “between two countries -- one that had ended and one that was beginning.” He described his future as unknown, stating he was “living in a country with no laws and no taxes.” Firtash also described himself as a “natural businessman” without a university education who “had a nose” for business opportunities, and who would make the best of the uncertainty.
¶9. (C) (Note: The Ukrainian newspaper “Ukrainska Pravda” researched Firtash’s life and reported that Firtash was not highly educated, but was a highly decorated soldier who had used his contacts to build a canned goods and dry milk business which shipped goods first to Uzbekistan. According to press reports, Firtash’s first wife and business partner Mariya Kalinovska was given credit for Firtash’s first business success. This business then turned into a profitable canned goods production factory and a transportation company registered in Germany. Firtash and Kalinovska were married from 2002-2005, with Kalinovska reportedly receiving a large divorce settlement, despite efforts by former Fuel and Energy Minister Yuriy Boyko to misrepresent the true scale of Firtash’s wealth. End note.)

...To Powerful Oligarch
-----------------------

¶10. (C) Firtash gave a detailed account of how he got into the gas business. Firtash explained that his food and commodities business, which he started in Chernivtsi in Western Ukraine with his wife Mariya, was first called KMIL, and later expanded into High Rock Holdings. Due to his commodities business, he became acquainted with several powerful business figures from the former Soviet Union. Firtash said he met Ukrainian businessman Igor Bakai in Turkmenistan who was selling cars in Ashgabat, but had bigger plans. According to Firtash, Bakai convinced then Ukrainian President Kravchuk to give him permission to buy gas exclusively for the Ukrainian market in Turkmenistan. Firtash noted that Bakai’s success also sparked Firtash’s interest in the gas business. (Note: In 1993 Bakai then formed the Respublika company, which later became Intergas, which set the precedent for profitable gas trading between Turkmenistan and Ukraine. Bakai would go on to be the first Head of Ukraine’s state oil and gas company Naftohaz from 1998-2001. End note.)

¶11. (S) Firtash also described the gas business in Ukraine during the mid 1990s as particularly dangerous. Firtash said that then Prime Minister Pavel Lazarenko had hired criminals to run the Ukrainian government and used his position as Prime Minister for corruption. He added that Tymoshenko headed Ukrainian Energy Systems, where she earned her fortune. Firtash claimed that Lazarenko, Tymoshenko, and Lazarenko’s Assistant Igor Fisherman divided and conquered the Ukrainian gas market. He stated that Lazarenko ordered the killings of Donetsk Governor Yevgen Scherban in 1996 and the head of Itera in Kyiv for not sharing Lazarenko’s gas business philosophy. (Note: Igor Fisherman was known in the Ukrainian press as Mogilevich’s right hand man who was also High Rock Holding’s financial director during the late 1990s. End note.)

¶12. (C) Another such businessman was Igor Makarov, who founded the Itera gas trading company in 1992, which provided Turkmen gas to former Soviet republics. Firtash claimed that Makarov hired a former KGB head as his security chief to direct Makarov’s gas trading empire in Central Asia. Firtash recounted that he gave Itera food commodities through High Rock Holdings, which Itera used to buy gas in-kind from Turkmenistan. Makarov then paid Firtash in cash with the proceeds of his gas sales. According to Firtash, Makarov refused to pay Firtash $50 million in 2001, which drove Firtash to explore his own gas trading business, ousting Makarov at the same time.

¶13. (C) According to Firtash, he hired Hungarian-born businessman Andras Knopp to negotiate new gas trading deals with Kazakhstan, Turkmenistan and Uzbekistan. Since these Central Asian countries trusted Firtash as a reputable businessman, they agreed to sign with Firtash’s EuroTransGas (ETG) company, leaving Makarov’s business in ruins.

¶14. (S) Firtash also recounted that Makarov invited him to dinner in Kyiv in January 2002, shortly after Firtash had signed the gas deals with Central Asia. Firtash added he went to that dinner not knowing if he would be beaten up or even killed for having taken Makarov’s business from him. According to Firtash, Makarov was there with his head of security, Semyon Mogilevich, Sergei Mikhas, from the Solnstevo Brotherhood, and a Mr. Overin when Makarov told Firtash he would regain his gas business as easily as Firtash had taken it away. Firtash walked away from the meeting alive, and credited his ability to keep his life and his gas business to his good reputation among Central Asian leaders.

¶15. (C) According to Firtash, by 2002, ETG was the sole transporter of Turkmen gas to Ukraine. (Note: According to media reports, by 2005 Firtash had already created a gas trading empire that allowed him to easily transition into RUE. In addition, Firtash owns majority shares in companies in Ukraine, Estonia, Russia, Germany, Switzerland, Italy, Tajikistan, and Austria all under the umbrella of the Group DF which he formed in 2007 (Ref B). He also owns 61% of the Ukrainian Inter Media Group which owns or co-owns 7 television channels and the Ukrainian News Agency. By 2006, Firtash’s estimated worth was over $5 billion, but most experts believe that Firtash had low-balled his true worth and estimated it was in the tens of billions. In his conversation with the Ambassador, Firtash gave no indication of the scope of his wealth. End note).

The Future of RosUkrEnergo (RUE)
--------------------------------

¶16. (C) When asked about Tymoshenko’s promise to rid Ukraine of RUE, Firtash responded by making a link between Tymoshenko and Russia. He argued that the Prime Minister was seeking Russian support to get rid of RUE, and was making concessions to Russia to accomplish this goal. He specifically cited what he said was her silence on the August events in Georgia, her avoidance of a stand on the Holodomor and the issue of the Black Sea Fleet in Crimea, as examples of the political concessions she was making to Moscow. Firtash acknowledged that he was having more and more problems with Russia. He alleged that the Russians had already excused a $600 million debt that she owed from her previous gas business that could be used as pressure to get concessions from her. If Moscow really wanted to get rid of RUE, Firtash added, it could do so as long as Tymoshenko was at the helm.

¶17. (C) Responding to the Ambassador’s question, Firtash said Ukraine’s current gas debt to RUE was near $3 billion, adding that the debt was owed directly to RUE and not to Gazprom. In his view, Ukraine could only clear the debt to RUE in gas since it didn’t have enough cash to pay outright. He added that according to the RUE charter with Gazprom, any shipments or supplies of gas to RUE must be confirmed by two signatures on a gas transfer document -- one signature from Gazprom -- the other from RUE (Firtash). Firtash argued that if he does not sign the gas transfer document, then legally there is no proof that gas has been supplied to RUE or Ukraine, so Gazprom forfeits its ability to demand payment from RUE, thus keeping RUE in the gas arrangement for some time. He estimated that Ukraine would have to pay RUE 12 billion cubic meters (bcm) of gas to settle the debt. This could be done by transferring Ukrainian gas already in storage to RUE, bringing RUE’s reserves in storage in Ukraine up to 23.5 bcm, since RUE already has 11.5 bcm in storage (Ukraine’s maximum storage capacity is 34 bcm). The gas would normally be exported to Europe at market prices, which despite falling world gas prices would still be very profitable. Firtash hinted that if RUE was removed with Russian approval, Ukraine would most likely attempt to take or steal all of RUE’s gas in storage.

Ties to Russian Organized Crime
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¶18. (S) The Ambassador asked Firtash to address his alleged ties to Russian organized crime bosses like Semyon Mogilievich. Firtash answered that many Westerners do not understand what Ukraine was like after the break up of the Soviet Union, adding that when a government cannot rule effectively, the country is ruled by “the laws of the streets.” He noted that it was impossible to approach a government official for any reason without also meeting with an organized crime member at the same time. Firtash acknowledged that he needed, and received, permission from Mogilievich when he established various businesses, but he denied any close relationship to him.

¶19. (S) Firtash’s bottom line was that he did not deny having links to those associated with organized crime. Instead, he argued that he was forced into dealing with organized crime members including Mogilevich or he would never have been able to build a business. If he needed a permit from the government, for example, he would invariably need permission from the appropriate “businessman” who worked with the government official who issued that particular permit. He also claimed that although he knows several businessmen who are linked to organized crime, including members of the Solntsevo Brotherhood, he was not implicated in their alleged illegal dealings. He maintained that the era of the “law of the street” had passed and businesses could now be run legitimately in Ukraine. He underscored the importance of unifying Ukraine politically in order to reduce the influence of Russian organized crime bosses on Ukrainian businesses.
TAYLOR

WikLeaks about Ukraine. FIRTASH USES CRISIS TO EXPAND INTO BANKING. Full text.

C O N F I D E N T I A L KYIV 002294

SENSITIVE
SIPDIS

DEPT FOR EUR, EUR/UMB, EEB/OMA
TREASURY PASS TO TTORGERSON

EO 12958 DECL: 11/21/2018
TAGS EFIN, EREL, ETRD, PGOV, PREL, XH, UP
SUBJECT: UKRAINE: FIRTASH USES CRISIS TO EXPAND INTO BANKING
REF: A. A) KYIV 02080 B. B) KYIV 02207

Classified By: Acting Economic Counselor William Klein for reasons 1.4 (b) and (d)

¶1. (C) Summary. Dmitry Firtash, one of Ukraine’s most wealthy and notorious oligarchs, plans to buy a controlling stake in Nadra Bank, Ukraine’s seventh largest bank. The acquisition of Nadra, which will join Firtash’s international holding company (Group DF) when the deal is final, would be Firtash’s first foray into Ukraine’s banking sector. The purchase of Nadra Bank continues a recent trend on Firtash’s part to diversify his asset base beyond Ukraine’s politically risky energy sector. He may also hope to use Nadra to service Group DF subsidiaries, or he may simply see the bank as a financial investment, bought on the cheap in a time of crisis, that can be sold once economic conditions improve. Before establishing himself as a billionaire gas trader in the late 1990s, Firtash managed a failing food processing company. He later broke into the gas trade and established himself as an intermediary through connections to key Ukrainian officials and reportedly to Russian organized crime figure Semyon Mogilevich. As co-owner of gas intermediary RosUkrEnergo (RUE), Firtash is widely believed to be serving as a front man for far broader interests. In the case of Nadra, Firtash is sufficiently cash-rich to finance the purchase on his own, but the suspicion remains that in his major business dealings he remains at least politically indebted to the forces that helped him rise so quickly. End Summary.

Despite Crisis, Firtash Moves Into Banking
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¶2. (C) Firtash’s international holding company Group Dmitry Firtash, or Group DF, in early November announced intentions to acquire a controlling stake in Nadra Bank, marking Firtash’s first bank acquisition. The National Bank of Ukraine (NBU) propped up Nadra with a UAH 3.6 billion ($609 million) loan after a run on its deposits ostensibly caused a liquidity crisis at the bank. Various explanations as to the cause of Nadra’s problems have circulated in the media, but an Embassy contact told us on November 17 that Nadra Bank did not actually have any liquidity problems until its competitors began spreading rumors about Nadra’s financial stability. In any case, a liquidity crunch at Nadra ensued and the NBU pressured Nadra to sell a controlling stake of its shares. No final terms of the Group DF deal have been concluded -- it is scheduled to be completed within the next few weeks -- but Group DF reportedly could pay as little as $50 million for an 86.7 percent stake in Nadra. According to one Nadra Bank stakeholder, Nadra Bank could have been sold for UAH 21.3 billion ($4.23 billion) before Ukraine’s recent financial problems began.

¶3. (SBU) Nadra is the second Ukrainian bank after Prominvestbank (Ref B) to change hands in the weeks since the financial crisis erupted in Ukraine. In both cases, stakeholders in the banks and many other market participants claim that the runs on the banks were orchestrated. In addition, in both cases cash-rich Ukrainian business interests with no significant banking holders got the NBU nod to take a controlling stake in the bank (brothers and Party of Regions deputies Sergei and Andriy Kluyev are universally assumed to have bought Prominvestbank, although they have yet to openly acknowledge the purchase.) While many market commentators question whether such investors are ideally suited to introduce the management and banking know-how that the banks need to restructure in difficult times, it is acknowledged that the NBU did not have much choice if it wanted to sell the banks quickly. Other banks, both foreign and domestic, are struggling with their own problems, and foreign banks in particular would have needed far more time to conduct a thorough due diligence. Many of our banking contacts also criticize what they say is the non-transparant manner in which the NBU sold off the two banks.

¶4. (SBU) Group DF’s CEO, Robert Shelter-Jones, has said that Nadra Bank complements Group DF’s strategy to diversify its asset base and that Group DF’s businesses probably will become important Nadra Bank customers. Nadra Bank could also help Firtash develop his Ukrainian businesses. Although Nadra mainly is geared toward retail business, it could be restructured to service corporate clients, such as Group DF’s current subsidiaries, according to some experts. Others, however, contend that because Nadra specializes in servicing small clients, Group DF is unlikely to use Nadra for Group DF subsidiaries. It is also possible that Firtash sees Nadra Bank as a pure financial investment, bought on the cheap at a time of crisis in the hope of reselling it once conditions in Ukraine’s banking sector improve.

What Exactly is Group DF?
-------------------------

¶5. (C) Established in June 2007, Group DF is an international holding company comprising energy, chemicals, real estate, and construction firms in Eastern and Central Europe. Combined revenues of Group DF’s subsidiaries in 2006 totaled $4.6 billion. The most infamous of Group DF’s assets is RosUkrEnergo (RUE), the non-transparent natural gas intermediary that handles gas transactions for Russia and Ukraine. Gas intermediaries, such as RUE and its predecessors EuralTransGas (ETG) and Itera, have benefited well-connected businessmen such as Firtash and have not always served an obvious economic purpose. (Note: In 2002, ETG was established with four employees in a Hungarian village. ETG that same year replaced Itera and secured exclusive rights to supply Turkmen gas to Ukraine, reportedly clearing $760 million in profits in 2003; Firtash later claimed to be ETG’s founder. RUE replaced ETG and reportedly generated more than $7 billion in 2006. End note.)
¶6. (C) Gazprom owns 50 percent of RUE, while Firtash and fellow Ukrainian businessman Ivan Fursin -- through Group DF company Centragas Holding AG -- control 45 and 5 percent stakes, respectively. Ukrainian media have reported, however, that Semyon Mogilevich, a Russian organized crime (ROC) figure wanted by the FBI and currently in custody in Russia, has long been linked to Firtash’s business activities.

Firtash’s Ascent, the Mogilevich Connection
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¶7. (C) The Ukrainian media have reported widely on how Firtash got his start in energy through a network of personal connections to some of the biggest players in Ukraine’s gas sector. These included Ihor Bakay, founder and former Chairman of Naftohaz Ukrainy, Yuriy Boyko, the Party of Regions deputy and former Fuel and Energy Minister, and Oleksandr Volkov, a former Prime Minister and Kuchma advisor. Before entering the gas trade business Firtash with his spouse reportedly owned a canned food company called KMIL. By the end of the 1990s KMIL was in deep financial trouble. Firtash subsequently broke into the gas trade business as “food for gas” barter schemes between Ukraine and Turkmenistan increased when Ukraine did not have sufficient foreign exchange to pay for its gas imports. Firtash’s firms delivered food products to Central Asian suppliers and received gas in return. They subsequently sold the gas on Ukraine’s domestic market for domestic currency, or through other, often complex barter schemes.

¶8. (SBU) This barter business established Firtash as a gas trader, and the subsequent growth in the business brought to light his reported ties with Mogilevich. The two have been linked through ostensible joint holdings in off-shore vehicles, and through mutual personal relationships. In May 2000, for example, Firtash’s KMIL received a license to sell natural gas at unregulated prices. A company called Highrock Holding Ltd was registered in Cyprus in 2001 to facilitate this business. Firtash and his spouse together reportedly owned 33 percent of Highrock. About 34 percent of Highrock was owned by a firm called Agatheas Trading Ltd. Semyon Mogilevich’s ex-wife, Galina Telesh, reportedly was the director of Agatheas Trading from 2001 to 2003. Firtash in 2003 became the director of Agatheas Trading. In addition, Firtash and Mogilevich also have shared the same lawyer, Zeev Gordon, also known as Vladimir Averbukh, to represent their business and personal interests. Moreover, Ukrainian media report that former Hungarian Minister of Culture Andras Knopp XXXXXXXXXXXX became business partners with the Firtashs when Dmitry Firtash periodically resided in Germany during the 1990s. Knopp reportedly is the managing director of EuralTransGas.

Group DF’s Assets, Besides RUE
------------------------------

¶9. (C) After establishing a presence in Ukraine’s non-transparent gas trade, Firtash and his associates began acquiring assets outside of Ukraine’s energy sector. Group DF probably recognized that while the gas intermediary business is very lucrative, the need for diversification in Ukraine is key, given that the political risks involved are very high. Prime Minister Yuliya Tymoshenko, for example, has called for the elimination of all gas middlemen and Gazprom Press Secretary Sergei Kuprianov on November 17 said that Gazprom next year would supply gas to Ukraine directly, suggesting gas intermediaries could be on their way out.

¶10. (C) In Ukraine’s chemicals sector, Group DF subsidiary OstChem Holding AG owns a little less than half of Crimean Titan, one of Europe’s largest titanium dioxide producers that has distributors throughout the world, including Iran, Russia, Belarus, Kazakhstan, and the U.S. OstChem this year has struggled with the Ukrainian State Property Fund -- the owner of the controlling stake in Crimean Titan -- for management control. In August, however, OstChem on Crimean Titan’s behalf successfully secured a 31 million euro ($45.7 million) loan from Commerzbank (with a guarantee from the German state export insurance agency) to build a new sulfuric acid plant. Firtash also reportedly owns the Kyiv Basketball Club and television channels K1, K2, and Megasport; his real estate assets in central Kyiv alone include the Arena business complex and the Mandarin shopping center, both high-end commercial objects in prime locations.

¶11. (C) Comment. Like other Ukrainian oligarchs, Firtash’s holdings are doubtless suffering from the severe economic downturn. The purchase of Nadra Bank, however, indicates that he remains sufficiently cash rich to expand in spite of Ukraine’s economic and financial troubles. The extent to which Kyiv powerbrokers or underworld figures benefit from Firtash’s business empire is unclear, but Embassy interlocutors have told us that Party of Regions recently has turned to close Firtash associates, instead of Ukrainian oligarch and Regions deputy Rinat Akhmetov, to finance Regions’ political campaigns (Ref A). Given Firtash’s swift ascent from failing canned foods company manager to multi-billionaire dollar gas magnate, he might still be beholden to the forces that helped him rise so quickly. End comment. TAYLOR