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The Globe and Mail’s interview with Dmitry Firtash in Vienna included a bodyguard, lawyer and various PR officials. (HERWIG PRAMMER FOR THE GLOBE AND MAIL)
The Globe and Mail’s interview with Dmitry Firtash in Vienna included a bodyguard, lawyer and various PR officials. (HERWIG PRAMMER FOR THE GLOBE AND MAIL)

The rise and fall of Ukrainian oligarch Dmitry Firtash Add to ...

At about 8 p.m. on March 12, Ukrainian oligarch Dmitry Firtash left the offices of his family holding company in central Vienna with several colleagues and his usual small army of beefy security guards. Only moments later, he would become, in his view, an instant “victim” of the power struggle in Ukraine between the United States and Russia.

As he stepped onto the street, Mr. Firtash was arrested by Austrian police at the request of the FBI. In an indictment sealed in 2013 and unsealed on April 2, he had been charged with corruption and involvement in a criminal enterprise by a U.S. grand jury.

Without putting up a fuss, he was hauled into a police station and, two hours later, delivered to a detention centre. His release came nine days later, when he posted bail of €125-million ($190-million) by wire transfer – an Austrian judicial system record. Now he cannot leave Austria.

“The reason for my detention was without foundation as I believe strongly that the motivation was purely political,” he said a few days after his arrest.

The arrest marked a grim reversal for Mr. Firtash, who was, until only a couple of months ago, one of the most powerful men in Ukraine and an ally of former president Viktor Yanukovych. Mr. Firtash made his fortune trading natural gas and was a big player in Mr. Yanukovych’s political party, known as the Party of Regions. When Mr. Yanukovych fled in February after months of often violent protests, Mr. Firtash and other oligarchs became personae non gratae in Kiev. The interim government alleged that some of them siphoned billions of dollars from the country. Mr. Firtash said he did no such thing.

The American allegations against Mr. Firtash and five co-defendants apparently had little to do with Ukraine – the case centres on $18.5-million (U.S) in bribes allegedly paid in India to try to secure the rights to a mining project. But commentators were quick to speculate that the timing of the arrest could not be entirely coincidental. He had been nabbed four days before the pro-Russia referendum in Crimea, a move that triggered U.S. and European Union sanctions against some 30 individual Russians and pro-Russian Ukrainians for what was described as their role in threatening the security and borders of Ukraine.

Mr. Firtash, a natural gas trader reportedly worth anywhere between $500-million and $10-billion or more, was not on the sanctions list. But he had been close to both Russian natural gas giant Gazprom, whose gas contract dispute with Ukraine has turned ugly and threatens to impoverish the country, and to Mr. Yanukovych, who fled to Russia in February after protests in Kiev turned into a bloodbath, killing at least 79 and injuring more than 500 (the interim Ukrainian government has accused Mr. Yanukovych of mass murder).

Timothy Ash, a Standard Bank analyst, called the arrest of Mr. Firtash a “seismic event” that could have repercussions for the oligarchs who are close to Russian President Vladimir Putin and his cronies at the Kremlin. “I think this sends a strong message to former Soviet Union oligarchs that … if they are to do business in or with the West, they need to comply with some basic Western values,” he said. “ I also think that it sends a strong message to Russia that the West is willing to go down the financial sanctions route, unless it backtracks over Crimea and over broader policy towards Ukraine.”

Mr. Putin did not backtrack on Crimea and Mr. Firtash faces extradition to the United States, which, inconveniently for Mr. Firtash, has an extradition treaty with Austria. Since his arrest, he has been busy proclaiming his innocence, protecting his businesses in Ukraine, where he claims to be the biggest private employer, with 100,000 workers, arguing that his entrepreneurial leadership is essential to Ukraine’s economic recovery and trying to distance himself from the hated Mr. Yanukovych.

He has also been ramping up his war of words with Yulia Tymoshenko, the former Ukrainian prime minister who is running in the presidential race scheduled for May 25. Mr. Firtash blames her for much of his woes, insisting that she is bent on destroying him, to the point he suspects she had some influence in the timing of his arrest. “Tymoshenko became a serious opponent towards independent gas traders in Ukraine and started a very big war against me, telling people I was a middleman, that I wanted to harm Ukraine,” Mr. Firtash said in an interview with The Globe and Mail in Vienna on Monday.

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