http://www.forbes.com/sites/katyasoldak/2014/03/03/ukraines-victor-pinchuk-the-oligarch-in-the-middle-of-the-crisis/
Forbes
24Mar2014
Ukraine's Victor Pinchuk: The Oligarch In The Middle Of The Crisis
(Photo: SERGEI SUPINSKY/AFP/Getty Images)
If you’re standing at the charred wreck that Kiev’s Independence Square now resembles, getting to Victor Pinchuk’s house takes about 40 minutes, through the winding streets of Old Town, past the drab Soviet high-rises and elevated highways and into the woods. Two security agents in military uniforms, fully armed and equipped with radios, make sure you’re an invited guest. And then onto the 280-acre spread you go.
It’s from this gilded perch, complete with 6-acre Japanese garden, sculptures from Jeff Koons and Damien Hirst and a glass entertainment pavilion designed by the same team who built the famous “Bird’s Nest” Olympic Stadium in Beijing, that Pinchuk watched his country’s astonishing revolution unfold live on television.
Ukraine’s second-richest man, worth an estimated $3.2 billion, saw the swelling crowds move from rock-throwing to song-singing; he saw the snipers shooting unarmed protesters; he saw a tyrant fall, a new government struggle. And he’s still watching, as Russian troops pour into Crimea and his country flirts with national schism. “We were in shock,” says Pinchuk, 53. “To see death as it happens, live on the air, is horrible.” He wasn’t just a passive spectator. “We were on the phone constantly–with businessmen, with politicians, with our Western and Eastern friends, discussing what all of us could do.” His team ferried medical supplies to the wounded in the Maidan, as the central square is known. “My thoughts were with them all the time,” he now says.
(Photo: Yuriy Chichkov for Forbes)
But he wasn’t there with them in body. Not quite. In fairness, many of his fellow Ukrainian tycoons fled the country entirely, sitting out the revolution in places like London. But at least one, the chocolate-mogul-turned-politician, Petro Poroshenko, threw his full support behind the protesters at a time when that looked like risky folly. Pinchuk stayed somewhere in the middle. “The goal of a businessman is to do everything to avoid bloodshed and to bring about peace and compromise,” he told me during one of our conversations as the deadly three-month thriller in the square played out.
That thinking reflects a view he has held for some time: “It’s not necessary to be a member of the European Union,” he told me a year ago. “But European values”–meaning civil society, the rule of law, human rights, freedom of speech–”will solve a great number of Ukraine’s problems.” Yet he added: “Ukraine cannot be successful without Russia.”
Such equivocating stemmed from a harsh reality: Pinchuk’s fortune is tied to trade with Russia. Lest he forget that, Vladimir Putin’s regime recently imposed crippling tariffs on his core asset, the steel tube company Interpipe. His father-in-law is former Ukrainian president Leonid Kuchma, the onetime patron of Victor Yanukovych, the Moscow-backed president who just fled his own country and reportedly spirited off billions of dollars. Every logical fiber in Pinchuk’s formidably logical head dictated that he defend the status quo.
Leonid Kuchma (Photo: REUTERS/Konstantin Chernichkin)
As oligarchs go, though, Pinchuk is a unique flavor. One of his side trips away from Ukraine during the tumult was in January, during the World Economic Forum in Davos, where he hosts an annual gathering on philanthropy, attended by the likes of Bill Gates and Richard Branson. “He’s built up an amazing network of people throughout the world,” says Tony Blair, whose education foundation in Ukraine received $500,000 from Pinchuk in 2012. Pinchuk was, in fact, the first eastern European to take the Giving Pledge, the Gates-and-Buffett-driven promise to give away at least half his wealth.
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For anyone above a certain age in eastern Europe–say, 40–rational decisions center reflexively on a single thing: survival. That’s especially true of someone like Pinchuk, whose parents’ Jewish heritage had made them a target for the Soviets, who shut down synagogues and barred Jews from many universities. Both engineers, they had masked their background. Soon after Pinchuk was born in Kiev, in 1960, the family moved east, and Pinchuk was burrowed further into the minority, spending his childhood as a Ukrainian in the industrial, Russian-speaking town Dnepropetrovsk, a place best known in the U.S. for two teenage serial killers.
The young Pinchuk, teachers noted, adapted well within the system. Brilliant at school and a skilled networker, he was active in the Young Communist League and thrived in the Soviet version of the Boy Scouts (Young Pioneers). He earned a B.A. and Ph.D. from Ukraine’s Metallurgical Institute.
His timing was fortuitous. Pinchuk patented a new process for making seamless pipes just before the Berlin Wall fell. He founded Interpipe Corp. to manufacture the parts, and his contacts from the university and the Young Communist League helped him sell his wares to the predecessor companies of Russian giants Gazprom and Rosneft. Racking up his first million dollars in 1992, Pinchuk was on his way to making a lot of money– and enemies.
As Ukraine and Russia emerged from the Soviet Union as separate nations, ambitious, connected young men like Pinchuk were well positioned for the chaotic privatization of big state enterprises. He followed the classic oligarch playbook, opening a bank and taking control of two industrial companies in Dnepropetrovsk by buying up shares from company employees more interested in short-term bread than long-term equity. “He was a big innovator, and he knew the pipemaking business,” recalls Alfred Kozlovsky, who knew Pinchuk during his college years and ran his first privatized plant.
Rivals emerged, including Yulia Tymoshenko, the former prime minister (and likely future presidential candidate) who was just freed from prison among much fanfare. Back then Tymoshenko controlled the largest gas company in Ukraine. Danger lurked. Those who succeeded needed more than friends and brains. They needed survival skills. On a snowy winter day in 1996 people he’d never seen before grabbed and handcuffed him, put a gun to his head and pulled a hat over his face. The ordeal took place around the time of his mother’s 60th birthday; his captors brought him snacks and vodka to toast her health.
Even today Pinchuk refuses to provide more detail about the episode–or the people he negotiated with to pay the $2 million ransom, after gaining his freedom two days later. “I still can’t talk about this,” he says. “I stayed alive.”
While eating breakfast with Pinchuk at his estate– syrniki , pancakes served with sour cream and fresh berries–the most fateful connection of this connected man, his wife, Elena, a striking 43-year-old blonde dressed in a black-and-white T-shirt and jeans, strolls into the dining area. “We share the same viewpoints on many things,” she says–art, books and music. It’s a marriage with an important political dimension, too.
Elena Pinchuk (Photo: Sergii Kharchenko/Demotix/Corbis)
Like many oligarchs of the 1990s, who saw government as a safe haven, a chance to plunder or both, Pinchuk ran for office, serving between 1998 and 2006 as a member of parliament. Given his sprawling business concerns, which expanded into natural gas and steel during this period, conflict of interest, or at least the appearance of it, quickly followed.
“It’s very hard to be in politics and, at the same time, in business,” says former heavyweight champion Vitali Klitschko, one of the heroes of Independence Square, who now intends to run for president.
And marriage to Elena quickly made things more complicated. She was the daughter of Leonid Kuchma, who served as president of Ukraine from 1994 to 2005, a reign scarred by scandal and crackdowns on free speech. (Those conditions, plus a fraudulent presidential election in 2004, led to Ukraine’s original Orange Revolution.) When they met in 1996 at a children’s play he was sponsoring, each was married to other people. “I didn’t know who he was,” Elena recalls. “Almost right away we discovered we had a lot in common.” They wed in 2002. One of the nation’s richest men now called the nation’s president “Dad.”
And almost immediately, Pinchuk was accused of getting special access to deals unavailable to others. “This is absolutely not true,” says Kuchma. “He already owned two landmark enterprises in Dnepropetrovsk.”
Technically correct. But he quickly privatized a few other industrial companies, including steel producer Krivorozhstal, which Pinchuk bought for $800 million with Rinat Akhmetov, Ukraine’s richest man (net worth: $12.5 billion) and others.
The new government instantly pounced on the deal. His old rival, gas titan Tymoshenko, was now the prime minister, and she publicly decried the Krivorozhstal purchase as a “theft” because the auction hadn’t opened the bidding to foreign investors. Claiming that national interest had been violated, she voided the deal, and quickly proved that Pinchuk and his partner had received a way-below-market price: She sold it to Indian steel magnate Lakshmi Mittal, for $4.8 billion.
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