War has tamed Ukraine’s oligarchs, creating space for democratic change

Ukraine may have the opportunity to rebuild a postwar society that is more democratic, less corrupt and more economically diversified

An official looks at damage from Russian missile attacks at a coal-fired power plant in Burshtyn, Ukraine, owned by Rinat Akhmetov, the country's wealthiest person. (Ed Ram for The Washington Post)
22 min

BURSHTYN, Ukraine — Over two days in October, eight Russian cruise missiles screamed out of the sky and obliterated tens of millions of dollars’ worth of critical machinery at this city’s hulking coal-fired power plant.

The attacks were designed to leave Ukraine cold and dark this winter. But they also deepened a financial crisis for the plant’s owner, Rinat Akhmetov, the country’s richest man.

Akhmetov’s wealth has dived from $7.6 billion to $4.3 billion since Russia invaded Ukraine in February, according to Forbes. In 2012, before Russia annexed Crimea and backed separatists in Ukraine’s east, locations where Akhmetov also had numerous assets, the magazine estimated his wealth at $16 billion.

The losses are largely from Russia’s destruction and confiscation of his vast networks of power and steel plants, coal mines and agricultural operations. Most notable were his two huge steel plants in the port city of Mariupol, including Azovstal, where Ukrainian fighters staged a defiant last stand against Russian forces earlier this year. Akhmetov is suing Russia for up to $20 billion in the European Court of Human Rights.

One billionaire becoming less of a billionaire isn’t breaking hearts in a country fighting a war for its very existence. But it provides some insight into how the Russian invasion is affecting Ukraine’s oligarchs, a group of fewer than 20 fantastically wealthy people who have wielded outsize — and often, anti-corruption activists contend, malign — influence over Ukraine’s politics, economy and society since the country’s independence in 1991.

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In interviews with more than two dozen current and former Ukrainian and U.S. officials, analysts and others, nearly all agreed that the dominant power of oligarchs in Ukrainian life has been diminished. They cited vast losses from the war, growing government pressure and a newly energized population no longer willing to tolerate the politics of the past. They said that could give Ukraine the opportunity to rebuild a postwar society that is more democratic, less corrupt and more economically diversified.

“This is the end of an epoch, the end of a political culture,” said Viktor Andrusiv, a former adviser to Andriy Yermak, President Volodymyr Zelensky’s top aide, who has written extensively about Ukraine’s oligarchs and is now fighting on the front lines in the Ukrainian army.

Akhmetov, in exchanges with The Washington Post over WhatsApp, also said he supports economic diversification. Asked about his vision of Ukraine after the war, he called for a “new Marshall Plan” of hundreds of billions of dollars in investment and a country remade in the image of the West, not Russia.

“The goal is to build a new, strong, and European Ukraine, a member of the [European Union], with strong institutions, the rule of law, clear anti-corruption rules, a democratic political system, and fair treatment of citizens,” said Akhmetov, who declined an in-person interview but answered written questions.

Pressure on oligarchs had already been building before Russia’s invasion, with a “de-oligarchization” law promoted by Zelensky that took effect this year. The law places limits on the political activity of super-rich individuals who meet certain criteria, including those who have major holdings in television and other media to press their financial interests and political agenda. The Zelensky government is also crafting antitrust measures to crack down on monopolies controlled by oligarchs in areas from coal mining to electricity to railroads.

“The system was so strong and well institutionalized that it was quite difficult to break, but we will do everything we can to make sure it never recovers,” said Rostyslav Shurma, a close economic aide to Zelensky who previously worked for many years as a top executive in Akhmetov’s steel company, Metinvest.

Many cautioned that the country’s wealthiest people are still incredibly rich and influential.

“They are not disappearing,” Andrusiv said. “The key thing is to end their monopolies, which were produced by their political connections. Now they will have to act more like big businessmen.”

Akhmetov and other critics have warned that Zelensky’s attack on oligarchs could be a power grab dressed up as reform.

“Relations with business should be regulated in a civilized way followed by all developed countries, rather than through populist laws,” Akhmetov told The Post. “Neither the United States nor the E.U. has a law on ‘oligarchs’ that would allow making unlawful lists of undesirables through extrajudicial procedures. Instead, they have a law on lobbying in place.”

Akhmetov also disputed being called an oligarch.

“I am not an oligarch,” he told The Post. “I have never been and am not going to be an oligarch. I am the biggest private investor, employer, and taxpayer in Ukraine.”

Since the Russian invasion began on Feb. 24, Akhmetov said he has not left Ukraine and has been living in Kyiv, which has been his home since 2014. He has also become Ukraine’s largest private individual donor to the war. He has given more than $100 million worth of military and humanitarian aid — everything from drones to food. Most other oligarchs have also been loud and public with their patriotic support of Ukraine and Zelensky.

Some critics have said Akhmetov is trying to atone for his actions in 2014, when he appeared to be initially unclear about his allegiance after Russia annexed Crimea and backed separatists in the east. He eventually supported Ukraine.

“I will start respecting him after he starts selling all his mansions in Switzerland, France and Great Britain and creates a fund to support the army in Ukraine,” said Daria Kaleniuk, executive director of the Anti-Corruption Action Center, and one of the nation’s leading advocates of reform.

Asked about criticism that he should be doing even more, Akhmetov said, “My business has suffered the most. Maybe it’s not quite modest of me to say it, but I do help a lot more than anyone else, and I’m not going to stop.”

Ukraine has been gripped by oligarchs since the chaotic days after the fall of the Soviet Union in the 1990s, when a small number of individuals acquired on the cheap massive state-owned assets, including mines, factories, railroads and agricultural enterprises that were hastily privatized.

Those new capitalists amassed huge fortunes and protected their new empires by building — and sometimes buying — influence in media, key government agencies and, critically, parliament.

Akhmetov, for instance, ran for the Verkhovna Rada, or national parliament, and was elected in 2006 as a member of the Party of Regions, which was seen as close to Moscow. He was an early and enthusiastic supporter of Viktor Yanukovych who became Ukraine’s president in 2010. Yanukovych fled to Russia during Ukraine’s 2014 “Revolution of Dignity,” which was set off by his insistence on closer ties with Moscow after he reversed an earlier promise to move the country toward the European Union.

Ukraine’s oligarchs have also been able to wield greater political power than their counterparts in Russia partly because Ukraine has never produced an authoritarian leader like Vladimir Putin with the power to crush or co-opt them.

The result of oligarch influence has been a nation long weighed down by weak institutions, analysts said. That has left Ukraine “stuck in the transition between communism and capitalism,” said Vladyslav Rashkovan, a former deputy governor of the Ukrainian Central Bank who now represents the country on the International Monetary Fund’s executive board.

In a study of the oligarch system last year, before Russia’s full-scale invasion, Rashkovan noted that Ukraine had a greater per capita gross domestic product than Poland in 1990. But Poland, which embraced a much more open market economy, eventually leading to membership in the European Union, grew its per capita GDP to more than triple Ukraine’s. And Ukraine’s hope of E.U. membership, despite being an official candidate, remains a distant dream.

“Ukraine was actually a relatively wealthy country,” said Marie Yovanovitch, a former U.S. ambassador in Kyiv. “And if that money had been going back into the country to reinvest, rather than into people’s pockets and sent abroad, Ukraine would have been in a much better place. This was the fundamentally corrupt system that the oligarchs personified.”

Rashkovan’s study noted that the list of the top 20 richest people in Ukraine varies slightly each year. But only seven people have been on the list every year since 2007. And one of them has never budged from the top spot: Rinat Akhmetov.

Fabulous wealth

Born in 1966, Akhmetov was raised the son of a coal miner in Donetsk, the eastern region that, along with Luhansk, makes up Donbas, which borders Russia and has been a key focus of President Vladimir Putin’s aggression since 2014.

“I was born in a poor family that hardly met its end needs,” said Akhmetov. “We had a house of 20 square meters where the four of us lived and slept on the floor. There was a coal stove that we used in the morning, and the toilet was outdoor.”

Akhmetov said those childhood hardships shaped him: “My life philosophy is the philosophy of my business: I hate poverty and suffering of people. I want success for myself and for others. I want to see people happy.”

His friend Serhiy Taruta, another of Ukraine’s wealthiest business executives and a member of parliament, said Akhmetov’s first real success was at the card table. “He was one of the five or six best card players in the Soviet Union and he traveled to competitions,” Taruta said.

Akhmetov said that overstated things. But he said in his early 20s he did play a popular Russian card game called “Podkidnoy Durak,” which he said translates as “Giveaway Fool.”

“I’ll tell you honestly, I earned my first capital by playing cards,” he said. “And this is what I’ve learned: Cards are about tactics and strategy, an analytical mind-set, a practice-oriented approach, and an ability to win.”

Akhmetov was 24 when Ukraine declared its independence in 1991. It was a messy time, especially in Donbas, a rugged industrial landscape of mines and factories. The region was riven with power struggles and violence as the country lurched from a collapsing Soviet command economy to something completely new.

“The entire economy, still run by the government, came almost to a halt,” said Akhmetov. “I decided to invest in industry.”

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In 1992, Akhmetov said he and two partners started a company called ARS, which processed coal into coke — a key material in producing steel. “I remember we were very happy when we made our first $25,000,” he said.

One of Akhmetov’s partners was Akhat Bragin, who was also known as “Alik the Greek” and widely considered one of the most powerful crime bosses in Donetsk. Akhmetov said Bragin left ARS in 1993, but they remained close friends.

Akhmetov’s association with Bragin has led, at times, to media speculation about his potential ties to criminal networks. Akhmetov has successfully taken legal action against a number of media outlets that reported he had a criminal past.

“I have never been involved with any criminal organizations, I have never been prosecuted and no criminal charges were pressed against me,” he told The Post.

Taruta, who is also from Donetsk, said Akhmetov was simply a smart, tough kid who grew up in a rough place. “He was not a member of a criminal group, but he knew and he was friends with people who were,” Taruta said.

Bragin also owned FC Shakhtar Donetsk, a soccer team whose name means “Donetsk miner” in Ukrainian. In October 1995, he was killed by a bomb that detonated at the team’s stadium as he arrived for a match. The assassination was widely seen as a power play among Donetsk criminal gangs.

Eight years later, in 2003, a man from a rival crime gang was convicted of being involved in the killing and sentenced to life in prison. His sentence was upheld by Ukraine’s Supreme Court.

But at the time of the murder, suspicion immediately fell on Akhmetov.

“This is a lie, and this kind of lie gives me much pain,” Akhmetov told The Post. On the day of the bombing, he said, “Akhat and I were 5 minutes late for the match, and he rushed out of the car to the stadium without waiting for me. The gap was like 5 seconds, no more than that. The explosion happened as soon as I opened the door of my car.”

He said speculation that he was involved compounded the tragedy. “When your best friend dies before your eyes, you realize that death is 5 seconds late for you, and after that you are accused of something, it really hurts and is unfair.”

Akhmetov continued building his business empire as Ukraine’s second post-independence president, Leonid Kuchma, in office from 1994 to 2005, eagerly promoted the privatization of state industrial and agricultural businesses.

Many critics and historians argue that Kuchma presided over sweetheart deals that helped give rise to the oligarch system.

In 2004, for instance, Akhmetov and Viktor Pinchuk, a business tycoon who had married Kuchma’s daughter two years earlier, paid $800 million to buy Kryvorizhstal, a state-owned company that produced about 20 percent of Ukraine’s steel output.

The purchase price was laughably below market value, analysts said. Viktor Yushchenko, elected president following Kuchma on a reformist platform, said the plant was “stolen” and canceled the sale. “The transaction was clearly corrupt,” Yushchenko said by text in response to questions from The Post in November.

The government then auctioned the company on live television and it sold for $4.8 billion — six times the previous sale price — to Netherlands-based Mittal Steel, then the world’s largest steel producer.

“It was important to hold a public auction so that Ukrainian society and foreign investors saw it as transparent and fair,” Yushchenko texted. “And to build trust in the privatization of government assets.”

Akhmetov defends Kuchma and said he deserves credit for helping to modernize Ukraine’s economy.

“State-run property was in a complete decline. The government was the worst and most corrupt manager,” he said. “Then the country started a large-scale privatization. Of course, it was not perfect. But was there any other way to develop the economy, except for moving from state ownership to private ownership and from a command economy to a market economy? No, there was not.”

ARS continued to succeed and within a couple of years Akhmetov said he used the profits to start the Donetsk City Bank, “which became my gateway to financial resources.”

Rashkovan, of the IMF, said Akhmetov approached business differently from other oligarchs, who established banks simply to siphon off money.

“Akhmetov’s bank was never used as a pocketbook; his bank was a bank,” he said. “He was smart. He structured his business the way a Western business would be.”

Akhmetov said he started buying other industrial assets, mainly in the coal mining and steel industries, which at the time were “dying industrial enterprises no one cared about.”

“I bought most of my assets in the secondary market, i.e. after their privatization,” he said. “We upgraded steel production and started conquering global markets in a highly competitive environment.”

In 2000, he created System Capital Management, a holding company for the multiple businesses he was purchasing and developing, which blossomed into a colossus.

By the mid-2000s, Akhmetov dominated the steel and energy sectors, along with major holdings in agriculture, transportation and other areas — including a growing empire of television channels and other media.

He even bought the Shakhtar Donetsk soccer team and turned it into a national powerhouse that has been successful in top European competitions. And he built his hometown a sparkling $400 million soccer stadium, which opened in 2009 with a concert by Beyoncé.

Fabulous wealth brought Akhmetov a $220 million apartment in London, reportedly the most expensive flat in the United Kingdom when he bought it in 2011. Eight years later, shortly after Zelensky took office, Akhmetov paid $221 million for a 19th-century villa in the south of France that had once been owned by King Leopold II of Belgium.

He also reportedly owns a home in the French Alps ski resort of Courchevel and bought his son a $60 million home on Lake Geneva in Switzerland.

Akhmetov had everything, including the one thing he didn’t want: the label of oligarch, with all its negative connotations.

Defining an oligarch

Zelensky’s relationship with oligarchs has been fraught from the start, especially with the one who was perhaps his most influential backer during his presidential campaign.

Ihor Kolomoisky made his fortune in the 1990s and 2000s on energy companies, banking, airlines and media. Kolomoisky’s 1+1 TV station was home to “Servant of the People,” the comedy show that made Zelensky a household name in Ukraine. Zelensky played a teacher who was elected president after a student posted a viral video of him denouncing corrupt oligarchs.

Still, when Zelensky decided to run for president in real life, he got a huge boost from an oligarch when Kolomoisky promoted him lavishly on his television station.

Rashkovan, of the IMF, recalled that on the day before the 2019 election, when television networks were prohibited by law from running political programming, Kolomoisky’s network was all Zelensky, all day.

It showed “Servant of the People” and a documentary about actor-turned-politician Ronald Reagan, for which Zelensky had done the Ukrainian-language voice-over. It wasn’t overtly political, but the intent was clear.

Despite the lift he got from Kolomoisky, Zelensky campaigned on a promise to attack corruption, and in 2021 he introduced the “de-oligarchization” bill in parliament.

Going after the country’s widely despised oligarchs was a politically shrewd move for a president whose approval ratings were flagging and who was under attack on the television stations owned by the oligarchs. Zelensky was very popular when he took office, but he was increasingly seen as ineffective as his term wore on — until the war made him an international icon.

“Zelensky is a super ambitious person who understands that if he doesn’t break the skeleton of this system, this system will destroy him,” said Serhiy Leshchenko, a Zelensky aide. “They decided to fight with him. And one day Zelensky decided, ‘Okay, you decided to challenge me? I accept the challenge.’ ”

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Parliament quickly passed the anti-oligarch law, and when Zelensky signed it into law in November 2021, he vowed: “If someone is used to buying politicians to allow them to circumvent the law, then even the richest will have to say goodbye to this habit … There can be no other option but to dismantle the oligarchic system. Without this, it is simply impossible to overcome poverty in Ukraine and fully join the European Community.”

The new law defines an “oligarch” as anyone who meets at least three of four criteria: influence in politics, media holdings, economic monopolies and minimum total assets of around $100 million.

The law requires oligarchs to declare all their assets and bars them from taking part in privatizations or financing political parties. It also requires government officials to report interactions they have with oligarchs or their representatives.

Ukraine’s National Security and Defense Council, which Zelensky heads, will decide who qualifies as an oligarch and will place their names on a national register.

“The requirements of this law do not apply to me: I quit politics in 2012, long before the law entered into force, and I do not plan to come back into politics,” Akhmetov told The Post.

Shortly after the law took effect, Akhmetov announced that he was giving up the licenses to his media empire, including two major national TV channels.

“There is only one reason behind this decision: A discriminative law on oligarchs has entered into force,” he told The Post. “This is a hard and involuntary decision, which I made with a heavy heart.”

Shortly after Russia invaded in February, Zelensky placed all national television channels on a wartime footing, decreeing a “unified information policy” of identical news coverage. The policy was devastating to the channels’ bottom lines — no entertainment programming or more provocative news shows meant no lucrative advertising.

Zelensky has been undeterred by criticism that he is overreaching, placing billionaire former president Petro Poroshenko under investigation for alleged treason over controversial government purchases of coal from mines controlled by Russia-backed militants in eastern Ukraine, while he was in office. Poroshenko has denied any wrongdoing.

The Ukrainian government froze the assets of Viktor Medvedchuk, an oligarch and close friend of Putin. Medvedchuk was arrested earlier this year as he attempted to flee Ukraine disguised in a Ukrainian army uniform, then he was later included in a prisoner swap with Russia.

Zelensky also reportedly stripped Ukrainian citizenship from his old ally Kolomoisky, enforcing a little-enforced law barring dual citizenship.

Analysts said it was an effort to rein in Kolomoisky, who had been placed under sanctions by Washington over what Treasury officials called “significant corruption.” U.S. authorities are also pursuing a civil case alleging that he stole billions of dollars from a Ukrainian bank he once owned.

Kolomoisky could not be reached for comment. He has denied the allegations against him. Michael J. Sullivan, a lawyer for Kolomoisky, told The Post in 2020: “Mr. Kolomoisky emphatically denies the allegations in the complaints filed by the Department of Justice.”

Late last year, Zelensky also made a remarkable statement about Akhmetov. He claimed, without providing evidence, that Akhmetov was being recruited to join a coup against Zelensky’s government.

The allegation infuriated Akhmetov, who dismissed the allegation as “utterly absurd.”

On Feb. 22, two days before the Russian invasion, Zelensky addressed the nation calling for “economic patriotism” and saying, “Business should protect our economy.” That day Akhmetov announced that SCM, his holding company, would prepay about $34 million in taxes to “strengthen the country.”

The next evening, as U.S. and European officials warned of an imminent Russian invasion, Zelensky called Akhmetov and about 50 other top business leaders to his office to ask for their support. A few hours later, Akhmetov told The Post, he was in bed when “My assistant stormed in saying, ‘Wake up, the war has broken out.’ ”

More lawyers

Those interviewed said Ukraine’s focus at the moment is on the war, not on what comes after. But Tymofiy Mylovanov, president of the Kyiv School of Economics and a former government economic development minister, said the war has clarified for almost all Ukrainians that their economic future will follow a European or U.S. model, not a Russian one.

“It will be more civil, more Western,” he said. “It will be more lawyers and less bribers.”

Competition, he said, “is the real vaccine against oligarchs.”

Shurma, the Zelensky economic adviser, said there will still be room in the economy for major companies that dominate key sectors, including steel production. He said that model already exists in the United States and Europe, and makes sense for the industry.

“It is absolutely critical that we have strong businessmen, we have national champions, global champions,” he said. “But they should not interfere in politics.”

Akhmetov said he supported Ukraine joining the E.U. and becoming a more open and competitive economy: “Competition in economy means the market economy. Competition in politics means democracy … concentration of power leads to authoritarianism and economic decline.”

Yurii Nikolov, a journalist at the Our Money website in Ukraine, said Akhmetov has a chance to rebuild Dtek, his energy business, after the war. But he said increased competition is likely to mean the end of his near-monopoly — from controlling 90 percent of coal mining to the rail lines that carry the raw coal, to the power plants that burn it to produce electricity, to the power lines that distribute it.

“I hope that businessman Akhmetov will remain with us,” he said, “and oligarch Akhmetov will not be reborn.”