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Wednesday, 3 December 2014

Ukrainian Billionaire, Wanted by U.S., Builds Ties in Britain - WSJ

Ukrainian Billionaire, Wanted by U.S., Builds Ties in Britain - WSJ:

Dmytro Firtash, Who Faces U.S. Bribery Charges, Advised U.K. Government on Ukraine Crisis

Dmytro Firtash, Ukrainian billionaire, during an interview at the Group DF offices in Vienna, Austria, in May this year.ENLARGE
Dmytro Firtash, Ukrainian billionaire, during an interview at the Group DF offices in Vienna, Austria, in May this year. Simon Dawson/Bloomberg News
LONDON—When the U.K. government wanted advice early in the Ukraine crisis, it turned to a tycoon from the former Soviet republic, who was also a close associate of a British lord and a major donor to the University of Cambridge.
Billionaire Dmytro Firtash met in February with British diplomats at the U.K. Foreign and Commonwealth Office’s London headquarters. They discussed Ukrainian politics and economics.
At the same time, American authorities wanted to speak to Mr. Firtash about a different matter: federal criminal charges accusing him of conspiring to bribe Indian officials.
Three weeks after the meeting in London, Austrian police jailed Mr. Firtash on an American arrest warrant. He’s now out on €125 million ($156 million) bail, but not allowed to leave Austria amid U.S. efforts to extradite him.
The charges against Mr. Firtash, filed in the U.S. District Court in Chicago, accuse him of conspiring with others to pay $18.5 million in bribes, starting in 2006, to Indian officials. Prosecutors allege the bribes were an attempt to win approval for companies controlled by Group DF, his holding company, to launch an Indian titanium project.
Mr. Firtash, 49 years old with a slight gray goatee, said in an interview in Vienna this spring, after posting bail, that the charges were “completely fabricated.” He accused the U.S. of trying to remove him from the political scene in Ukraine, where he was allied with the country’s recently ousted pro-Moscow president.
His journey from the halls of the British establishment to a Vienna jail cell opens a window onto a yearslong effort by Mr. Firtash to use cash and friendships inside some of Britain’s most elite circles to try to rehabilitate his reputation in the West.
In the interview, Mr. Firtash said he has sought to forge ties in the U.K. to improve Ukraine’s standing in the West—as well as to burnish his own reputation. That had been dented over the years in part by a U.S. probe into possible ties to organized crime, which he also denies.
“Are we trying to improve our reputation? Of course we’re trying, because it harms our business,” he said. “I can’t just be the place where people throw darts.”
Mr. Firtash’s empire spans chemicals, banking and media in Ukraine and other parts of Eastern Europe. But he and his associates and groups affiliated with him have also spent considerable money on pillars of British influence. That includes a big contribution to the University of Cambridge, political donations, and business dealings with parliamentarians, sometimes via companies registered offshore requiring limited disclosure, according to Mr. Firtash, his associates and corporate and political records.
One of his chief allies is Raymond Asquith, a British noble and a former spy known in the secret service for spiriting a KGB double agent out of Russia in the trunk of his car in 1985. Mr. Asquith holds the title, the Earl of Oxford, and is also a member of the upper house of Britain’s parliament, the House of Lords.
ENLARGE
He is a business partner of Mr. Firtash and sits on the supervisory board of his holding company, Group DF. Richard Spring, another member of the House of Lords, says he arranged Mr. Firtash’s February meeting with the U.K. Foreign and Commonwealth Office.
Mr. Firtash was born in the village of Synkiv on Ukraine’s western border, where he helped his parents grow vegetables for extra cash, according to his personal website. He trained as a locomotive driver, and when the Soviet economy began to open up in the late 1980s, became a businessman.
In the early 1990s, after the collapse of the Soviet Union, he moved to Moscow and jumped into the natural gas-trading business between Central Asia and Ukraine. He and his partners netted millions, he said in a 2006 interview with The Wall Street Journal, by arranging to supply food and other goods to Turkmenistan, a former Soviet republic, in exchange for gas he could sell to Ukraine.
In 2004, he forged a lucrative joint venture with Russian giant OAO Gazprom to sell gas to Ukraine and central Europe. In 2006, the Journal reported the trade had drawn interest from the U.S. Department of Justice, which began investigating it in the mid-2000s for possible links to Semyon Mogilevich. The Justice Department declined to comment about the status of that probe.
Mr. Mogilevich is wanted separately by the Federal Bureau of Investigation for his alleged participation in a multimillion-dollar scheme to defraud investors in the stock of YBM Magnex International, a Pennsylvania-based company. In an FBI statement adding him to its most-wanted list in 2009, the agency describes Mr. Mogilevich as the head of an “extensive international criminal network.”
According to a U.S. diplomatic cable published by WikiLeaks, at a meeting with U.S. diplomats in 2008, Mr. Firtash “argued that he was forced into dealing with organized-crime members including Mogilevich, or he would never have been able to build a business.”
Dmytro Firtash, right, and former Ukrainian President Viktor Yanukovych at an opening ceremony of a new sulfuric acid production complex in Crimea in April 2012.ENLARGE
Dmytro Firtash, right, and former Ukrainian President Viktor Yanukovych at an opening ceremony of a new sulfuric acid production complex in Crimea in April 2012. Reuters
Mr. Firtash denies any connection to Mr. Mogilevich, or having any connections to organized crime. The U.S. has declined to comment on the cables released by WikiLeaks.
“Given this matter [Mr. Firtash’s extradition’s request] is currently pending, we will decline to comment beyond the court documents filed in the case,” said a spokesman for the U.S. Justice Department.
Through lawyers, Mr. Mogilevich has denied the FBI’s allegations and that he had business ties to Mr. Firtash.
Around the time the U.S. was investigating the gas trading, Mr. Firtash dispatched Mr. Asquith and Robert Shetler-Jones, a businessman and son of a British foreign-office employee, to Washington. They met Justice Department officials on his behalf, according to Messrs. Firtash, Asquith and Shetler-Jones. The two men said they told the officials that Mr. Firtash was a partner in a gas-trading venture with Gazprom, but had no ties to Mr. Mogilevich.
Soon after, Mr. Firtash turned to the same two men to help cultivate ties to the U.K. “We could have chosen Germany or France. But I decided England would be best,” Mr. Firtash said in his spring interview. “It is the No. 1 financial center. It has powerful roots.”
When Mr. Shetler-Jones was living in Kiev in the 2000s, he became friendly with Mr. Firtash. He introduced Mr. Firtash to Mr. Asquith, the earl and former spy who is also the great-grandson of a former British prime minister.
Around 2005, Mr. Firtash invested $1 million and received a 25% stake in an environmental company set up by Mr. Asquith, according to corporate records. The next year, Mr. Shetler-Jones merged his Ukrainian businesses with those of Mr. Firtash. He currently serves as deputy chairman of Group DF’s supervisory board.
Now, Mr. Firtash describes Mr. Shetler-Jones as “my minister of foreign affairs,” someone who “understands and knows how I think, what I think.”
We could have chosen Germany or France. But I decided England would be best.
—Dmytro Firtash
In 2007, the three men founded the British Ukrainian Society, which Mr. Firtash says aims to forge ties between politicians from the two countries and to promote Ukrainian business and culture in the U.K. Improving his reputation, Mr. Firtash said in the interview earlier this year, was also an aim.
Mr. Spring, a Conservative member of the House of Lords who is known as Lord Risby, was appointed chairman of the organization. Separately, he receives advisory fees from a Cyprus company called Spadi Trading Ltd., according to a register of interests of British parliamentarians. That company is owned by a British Virgin Islands entity called Interbeam Ltd., which is controlled by Mr. Shetler-Jones.
In an interview, Mr. Spring said Mr. Asquith was his point of contact for the offshore entity, and he didn’t realize it was controlled by Mr. Shetler-Jones, the deputy chairman of the supervisory board of Mr. Firtash’s holding company. Mr. Firtash “doesn't tell me what to do,” Mr. Spring said of his role at the British Ukrainian Society.
Another director of the British Ukrainian Society is John Whittingdale, a Conservative member of the House of Commons, the lower house of Britain’s parliament. He was private secretary toMargaret Thatcher when she was prime minister.
Messrs. Spring and Whittingdale both visited Ukraine on trips paid for by the society, according to parliamentary records.
Mr. Whittingdale said the British Ukrainian Society paid for his trips to a conference in Ukraine and said the society gave him access to all sides of the country’s political spectrum. Mr. Spring said his trips to Ukraine were paid by the society, but said Mr. Firtash isn’t involved in its running. “We engage with the government and the opposition in Ukraine,” he said.
Another company owned by Mr. Shetler-Jones, Scythian Ltd., derives the majority of its income from providing services to Mr. Firtash and his companies, including managing his personal offices. Scythian donated at least £62,500 (about $98,000) to the Conservative Party and one of its members, Robert Halfon, from 2006 to 2013, according to U.K. electoral-commission records.
Mr. Shetler-Jones says the donations were a personal choice, not made on behalf of Mr. Firtash. Mr. Halfon, a member of the House of Commons, confirmed receiving the donations, but said he “never had any contact or involvement, either directly or indirectly, with Mr. Firtash, or undertaken any political, economic or business activity in relation to Ukraine and Russia.”
In 2008, with public funds tight, the University of Cambridge was seeking private money to expand its teaching on Ukraine, said Simon Franklin, professor of Slavonic studies at Cambridge, whose department has received money from Mr. Firtash. Through his DF Foundation, Mr. Firtash funded a trial program, then donated £4.3 million ($6.7 million) to endow a fully fledged program in 2010.
Mr. Firtash says he fell in love with the university’s atmosphere and wanted to spread knowledge about Ukraine. Prof. Franklin said the donation was vetted and approved by a university committee independent of his department. A spokesman for Cambridge said “the benefaction from the DF Foundation is used solely for educational purposes and the Foundation has no influence over its allocation.”
The next year, back in Ukraine, a dispute with the Russian and Ukrainian government over gas deliveries led Kiev to seize a large volume of Mr. Firtash’s company’s gas and to oust it from the gas trade.
In 2010, Mr. Firtash supported Ukraine’s winning presidential candidate, Viktor Yanukovych, who pledged friendly ties with Russia. The new president installed in key administration jobs two men whom Mr. Firtash calls friends.
After a ruling from an international arbitration panel, the new government returned the gas it had seized in 2009 and paid penalties. Mr. Firtash went on a shopping spree, buying up three chemicals plants in Ukraine.
As his fortunes improved at home, his philanthropic profile was growing in the U.K. The Queen’s husband Prince Philip, who was chancellor of the University of Cambridge at the time, inducted Mr. Firtash into an exclusive group of benefactors in a pomp-filled ceremony in 2011.
In October 2013, Mr. Firtash’s company’s charitable fund bankrolled a weeklong festival in London to showcase Ukrainian culture. Mr. Firtash rang the opening bell at the London Stock Exchange that month.
Just a few months earlier, however, in June, a U.S. grand jury had indicted Mr. Firtash under seal, alleging the India-related bribery charges in the U.S. District Court for the Northern District of Illinois.
Then in February of this year, Ukraine’s pro-Moscow President Viktor Yanukovych—to whom Mr. Firtash was close—fled Kiev as antigovernment protests intensified. He was replaced in May by pro-Western tycoon Petro Poroshenko.
Despite those setbacks, Mr. Firtash’s currency didn’t suffer in London. British foreign-ministry officials asked Mr. Spring for help meeting Ukrainian businessmen, according to Mr. Spring. He arranged a Feb. 24 meeting with Mr. Firtash.
The diplomats asked about his views on the situation in Kiev and his contacts with Russia, Mr. Spring said. A spokeswoman for the Foreign and Commonwealth Office described the meeting as “part of a wider approach by the FCO to understand better the situation in Ukraine by seeking information and views from a wide range of contacts, including senior business figures.”
After a skiing trip in the French Alps, Mr. Firtash flew to Vienna. On March 13, an elite Austrian police unit detained him on a U.S. arrest warrant.
— Bradley Hope in New York and Nicholas Winning in London contributed to this article.
Write to Benoît Faucon at benoit.faucon@wsj.com and James Marson at james.marson@wsj.com