Ukraine’s Richest Man Mobilizes Private ‘Army’ After Assets Threatened

– Ukraine’s Richest Man Mobilizes Private ‘Army’ After Assets Threatened (ZeroHedge, May 16, 2014):

Rinat Akhmetov – Ukraine’s richest man with an estimated worth of $11.4 billion – has, as Reuters reports, acquired almost feudal status in the industrial hub of Donetsk in the past 20 years – but the separatist rebellions there have altered the dynamics of power. This is not acceptable to the billionaire and so he has demanded his miners and metalworkers join police on patrol on Mariupol. As pro-Russian rebels declaring independence seized public buildings across the steel and coal belt which is the basis of his colossal fortune, he issued repeated written statements in support of a united Ukraine… but the media-shy 47-year-old, who has a workforce of 300,000 people on his payroll in the Donbass, has to tread carefully around local sensitivities and has avoided specifically condemning the action of the separatists.

Bloomberg summarizes his wealth…

The majority of Akhmetov’s wealth is derived from his stake in System Capital Management (SCM), a holding company that owns several Ukraine-based businesses. The most valuable are Metinvest, Ukraine’s largest steel manufacturer, and DTEK, a coal and energy business. SCM reported $32 billion in group assets and $23.5 billion in revenue in 2012.

The value of Metinvest fell 44 percent in fiscal year 2012, based on SCM financial results that were released in August 2013, a reflection of the declines seen across the steel industry. DTEK revenue increased 108 percent to $10.3 billion in 2012, following the company’s purchase of former state energy assets in 2011 and 2012 for $600 million. DTEK added almost $1.4 billion in net debt in 2012, which it intends to use to fund plant upgrades.

Akhmetov holds agricultural land through HarvEast and Ukrainian commercial real estate through ESTA Group. SCM has about $400 million invested in Ukrainian telecommunications (Vega Telecom and Astelit), banking (First Ukrainian International Bank) and heavy machinery (Mining Machines Company). It acquired a 92.79 percent stake in publicly traded Ukrtelecom, the largest fixed-line operator in Ukraine, in June 2013.

He also controls a number of closely held Ukrainian industrial assets, including Lemtrans, its largest private railway company, Portinvest, one of the country’s largest private stevedoring companies, Ukrainian Retail, which operates 99 stores under the brand name “Brusnichka”, Parallel-M, a network of 117 gas stations, Bank Renaissance Capital, ASKA and ASKA-Life insurance companies, Media Group Ukraine and Segodnya Multimedia, and United Mineral group, a clay extracting company.

As Reuters reports,in their overalls and hard hats, the latest additions to the heady mix of security forces in Ukraine are the first tangible sign the rebel east’s richest son is entering the fray.

Multi-billionaire Rinat Akhmetov’s miners and metalworkers joined police on patrol on Mariupol on Wednesday, cleared barricades of tires and pallets with diggers and heavy loaders and swept the debris from the gutted City Hall, ending the turmoil unleashed by the armed takeover of much of the region.

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Though largely symbolic, the scene showed the extent to which the crisis has come to threaten the interests of Ukraine’s richest man and the lengths he will go to protect them.

Akhmetov, whose fortune is estimated by Forbes magazine at $11.4 billion, has acquired almost feudal status in the industrial hub of Donetsk in the past 20 years – but the separatist rebellions there have altered the dynamics of power.

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But the media-shy 47-year-old Akhmetov, who has a workforce of 300,000 people on his payroll in the Donbass, has to tread carefully around local sensitivities and has avoided specifically condemning the action of the separatists.

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 “That’s more 300,000 employees and their families – that’s a huge army.”

It is an army both the pro-Russian rebels and the government in Kiev would be rash to ignore.

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“He has understood that his tactic of passive neutrality no longer works. He will have to become an active intermediary between separatists and the government,” Fesenko said.

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“At the beginning he tried to influence events to try to get it under control to strengthen his position, but then he lost all control.”

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“We favor a united, whole Ukraine, a strong Ukraine with Donetsk in it. Everyone agrees power needs to be decentralized. But I repeat, that must be within a united state.”

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Yet Fesenko wondered if Akhmetov has missed his moment.

“He has become more active. For the first time he has spoken out more concretely in the past few days. But the question is: Is it too late?” the analyst said.

“It will be difficult for him to influence the situation given what has happened in the past two weeks.”