In Ukraine, being an oligarch is a bipartisan sport

A Yanukovych ally, Dmitry Firtash, was arrested Thursday in Austria at the request of the US. But corrupt and powerful oligarchs can be found in all camps.

By , Staff writer

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    Dmitry Firtash, one of Ukraine's richest men, is seen in Kiev May 18, 2010. Firtash was arrested Thursday in Austria at the request of the US, which has been investigating the oligarch's business operations since 2006.
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Russia has been having its way in Crimea, with an independence referendum scheduled for Sunday designed to firmly place the peninsula within Moscow's orbit.

The crisis, and Moscow's troop movements, have led to speculation that President Vladimir Putin may not stop at Crimea. NATO is drawing up contingency plans, responding to requests for assistance from eastern members like Poland. Furious diplomacy is under way as well between the European Union and the United States, which very much favor the interim government in Kiev, and Moscow, which has labeled that government illegitimate.

But it's worth remembering the crucial fact behind the roiling crowds on Kiev's Maidan that forced President Viktor Yanukovych to flee to Moscow last month. Yes, there was anger that Mr. Yanukovych had broken a campaign promise to develop closer ties with the EU and was instead tilting toward Russia. But underpinning that anger was the fact that Ukraine has become one of the world's great kleptocracies since the collapse of the Soviet Union.

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Whether the politicians in charge of the place have been "pro-Western" or "pro-Russian" (and many have toggled between the two), they have always been cozy with corrupt and powerful oligarchs who have limited the job prospects and wages of average Ukraines while building elaborate fortunes for themselves. That is, when they weren't oligarchs themselves, like Mr. Yanukovych.

Capitalism's most predatory aspects have been front and center in Ukraine, whether in the wake of the so-called Orange Revolution a decade ago, when Yanukovych came to power in 2010, or today.

How bad is it? Transparency International's 2013 corruption perception index, an annual survey, ranked Ukraine as the 144th most corrupt place in the world to do business, tied with Papua New Guinea and Nigeria. No country in Europe is ranked lower (Russia is the closest, at 127th; the lowest-ranked country in the EU is Greece, which is tied for 80th with China).

Yanukovych and his circle were tails up, snouts in on the looting of the country in recent years. A close associate, Dmitry Firtash, was arrested Thursday in Austria at the request of the US, which has been investigating the oligarch's business operations since 2006. (The timing of the arrest, which one Standard Bank analyst called "an absolutely seismic development," according to the Financial Times, was widely viewed as warning Putin to take the threat of sanctions seriously.)

But Yulia Tymoshenko, the Orange Revolution leader and former prime minister who was released from jail after Yanukovych fled, has also been dogged by charges of corruption. Her party is now neck deep in the Ukrainian government, and is being amply supported by the US and some EU states.

Tymoshenko amassed a vast fortune in the 1990s thanks to sweetheart gas deals with Russia's Gazprom, and then-Ukrainian Prime Minister Pavlo Lazarenko, who received lavish kickbacks for his support. None of this should come as a surprise to the US government since Mr. Lazarenko was prosecuted by the US and sentenced to nine years in jail in 2006 for fraud and extortion. Ms. Tymoshenko was named in the indictment against her former patron.

And yet the US seems unconcerned. Earlier this week, US Ambassador to Ukraine Geoffrey Pyatt said America is devoting substantial investigatory resources to helping Ukraine's current leaders prosecute Yanukovych and friends.

He said the FBI, Justice, and Treasury departments “are working with their Ukrainian counterparts to support the Ukrainian investigation … to uncover the financial crimes that were committed by the previous regime and to see what can be done to recuperate some of those assets.”

Yanukovych was particularly clownish in his corruption, a sort of eastern European Ferdinand Marcos. But the current crowd in charge in Kiev is full of bad apples, and oligarchs retain vast financial and political power. 

The interim government, for instance, has promoted billionaires as governors since taking power. And when the dust settles over Crimea and Russia's hostile moves toward Ukraine, the corrupt business elite and politicians who led so many people to demand change on Kiev's Maidan are likely to remain in place.

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