Privat Group

In 1990, the graduates of the Dnipropetrovsk universities, Gennadiy Bogolyubov, Ihor Kolomoyskyi and Oleksiy Martynov, created the first joint business: Bogolyubov and Kolomoisky bought the office equipment in Moscow, and Martynov was engaged in its marketing in Dnipro. After the collapse of the USSR, friends returned to Dnepropetrovsk and began to import various goods - from sneakers and sportswear to telephones. At this stage, they had a fourth partner, the son of a major Soviet entrepreneur, Leonid Miloslavsky. Each of the partners owned 25% in the total business.[3] To pay for imported goods, the partners set up the export of steel products, Kolomoisky was in charge of this. Soon they realized that it was more profitable to trade the metal, and then they started to import oil products and began to buy the premises for their storage and transportation. They also took up the ferroalloy direction: the group supplied fuel to the Pokrovsky (Ordzhonikidzevsky) GOK, receiving in return manganese ore and sending it for export; Martynov was responsible for this direction.[3]

In 1992, Serhiy Tihipko, the former head of the Dnepropetrovsk Komsomol Party, suggested to Miloslavsky to set up a bank. Kolomoisky initially opposed this idea, but eventually agreed [2]. In March 1992, four companies — Vist LLC, Sentosa LLC, Som LLC, and Privat-Intertreyding CJSC — established Privatbank CJSC.[4] Tigipko became chairman of the board, and Miloslavsky headed the supervisory board. Unlike state-owned banks, Privat willingly served private entrepreneurs. 1995 became the crucial year for the Privatbank Group business when the bank have joined voucher privatization.[3]

Having accumulated 1.2 million certificates (2.3% of their total number), the bank began to purchase the shares of the metallurgical enterprises. The first company whose shares Privat received in exchange for certificates was the Dnepropetrovsk hardware plant. With the help of vouchers, Privat entered the capital and established operational control over the Nikopol Ferroalloy Plant, Pokrovsky (Ordzhonikidze) and Marganets GOKs.[3]

Gennady Bogolyubov later admitted that Privat had to negotiate with the governor of the Dnipropetrovsk region Pavlo Lazarenko. So, in 1996, to the Lazarenko’s driver, Leonid Gadyatsky, were rewritten 16.7% of the Privat key company - Sentosa Ltd, 14% of the Solm company, which owned the third part of the Privatbank, and at minimum 1% of the Privat intertrading".[3]

In 1997, Lazarenko, who had already become the prime minister, was dismissed, and Miloslavsky died of a heart attack while on holiday in Austria. The share of Miloslavsky was inherited by his daughter Marianna, who was just finishing the school.[3]

In 1999–2003, Privat's structure bought about 40% of Ukrnafta shares on the open market, the controlling stake remained with the government. Thanks to Kolomoisky’s acquaintance with the brothers Hryhoriy and Ihor Surkis and Viktor Medvedchuk, the company’s chairman was dismissed and replaced by Kolomoisky’s appointee.[3]

In 2000, with the help of Hennadiy Korban, Privat was able to establish control over the Kalinin coke-chemical plant, the owner of which did not cooperate with the group. Korban, whose company kept the register of shareholders of the coke, through the courts canceled the transaction, which allowed his owner to collect a controlling stake.[3]

In the late 1990s, Igor Kolomoisky and Victor Pinchuk, who owned large stakes in the NZF, Pokrovsky (Ordzhonikidze) GOK and MGOK, agreed to work together in the ferroalloy market, but soon they quarreled. In 2003, Pinchuk acquired a controlling stake in the NFP during the auction, to which no one else was allowed. After the change of power, in 2006, Pinchuk ceded control over the NFP and received in return 25% in the Privat ferroalloy business.[3]

At the end of 2007, Kolomoisky sold to Evraz the controlling stakes of the six metallurgical enterprises. Privat received $1 billion and 9.72% of Evraz shares. However, two years later, Bogolyubov was removed from the board of directors of Evraz.[3]

The businesses of Privat Group are not formally included in a corporation, and its top managers sometimes state that there is no such group at all.[7] However, either PrivatBank or "Privat-Intertrading" company indirectly own all companies regarded as parts of the group. Typically, industrial companies are controlled through a complicated chain of offshore companies. Despite this, the Ukrainian public has a clear understanding of what exactly belongs to the group. To describe such relations, the media use the wording “company X is controlled by the Privat Group" or "the business of the X company is being organized by the PrivatBank". The group never denies such statements.

Privat Group is involved in a permanent and fierce business conflict with Ukrainian oligarch Viktor Pinchuk and his Interpipe Group. The groups are based in Dnipropetrovsk Oblast, sharing a long and complicated history of relations. Presently, the conflict focuses on the bilaterally owned Nikopol Ferroalloys Plant (Interpipe now controls the plant’s business). Both sides apply full-scale legal, public relations and political methods in the conflict. Ihor Kolomoyskyi (the main owner of Privat Group) and Pinchuk sometimes insult each other in their interviews.

Henadiy Korban, one of Privat Group's top managers, survived serious assassination attempts in Dnipro in March 2006, and again in September 2010.[13]

Before the Orange Revolution, Privat Group had been widely regarded as relatively uninvolved in politics, but loyal to the Leonid Kuchma regime. After the government change, the group's owners, according to media, became close allies of Yulia Tymoshenko (although she publicly denies this). Analysts agree that some of Tymoshenko's decisions as the Prime Minister of Ukraine supported Privat side in conflicts.

Some sources state that Privat Group provided significant financial support for Viktor Yuschenko during his presidential campaign and subsequent Orange Revolution.

• Economy of Ukraine

Inline

General

• "Privat Group's dossier entry" (in Russian). proUA.com. Archived from the original on May 15, 2006. Retrieved April 5, 2006.
• "Igor Kolomoisky: "I told Pinchuk, 'Life is a supermarket. You can take whatever you like, but the cash desk is at the end'"" (in Russian). Zerkalo Nedeli. August 20–26, 2005.
• (in Russian and Ukrainian)"PRIVATization of oil assets". Zerkalo Nedeli. July 24–30, 2004. in Russian, in Ukrainian

• Official Website of Privatbank (in English)