BY
Having written about Viktor Pinchuk in the previous entry, this post concentrates on another Dnipro Clan
oligarch and long time acquaintance, Sergei Tigipko, who has been spending
money recently.
Mr Tigipko it has to be said is an interesting soul
whose business activities are somewhat difficult to keep an all-seeing eye
upon.
Perhaps he is fated to
be that way, for ever since birth Mr Tigipko has not been what he appears to
be. Mr Tigipko was actually born on 13th February 1960 – officially, but
in fact he was born in the early hours of 14th February. Due to a
bureaucratic mix up between medical night shift and morning shift workers the
wrong date was officially recorded. It is claimed, similar to Queen
Elizabeth II, he therefore has two birthdays, an official one and a real one.
Fair enough – surely all
oligarchs can afford to have two birthdays.
In the late 1970’s the
family moved from Moldova to Odessa and Mr Tigipko then headed to Dnepropetrovsk
and the Metallurgy Institute where (perhaps with the help of a well placed
step-father) he became a member of the Komsomol Committee. In true
Marxist-Leninist adherence he busied himself with organising discos and
supplying the evils of western decadence – Pepsi. It appears that a
disco-loving Ihor Kolomoisky was a regular and that they became good friends.
(As an aside Mr Tigipko,
or more precisely Mrs Tigipko, retain their interest in Odessa in an act
philanthropy annually organising and sponsoring the Odessa International Film
Festival – which is actually a very good event.)
Indeed Mr Tigipko has
had good fortune in meeting business acquaintances, whilst suffering an equally
poor fortune in the world of politics.
A few years of
questionable military service and teaching intervene before Mr Tigipko lands
the role of chief of psyops/reflexive control when he became the Second
Secretary of the (Communist) party and Komsomol committees in Dnipro.
Propaganda and agitation commonly being the role of the Second Secretary
– a role he was destined to fail at with the date being 1989 and the implosion
of the Soviet system only 2 years away.
Nevertheless, having
already forged a friendship with Ihor Kolomoisky, it is within the regional
Komsomol committee he also meets Olexandr Turchynov (the current head of the
Ukrainian national security apparatus and once upon a time, an ardent
Tymoshenko ally).
When the Soviet nonsense
all eventually crashed, Mr Tigipko had become First Secretary and in charge of
the regional Komsomol cash box. He was also by then known to Gennady
Tymoshenko who was head of ideological manipulation for the Kirov District.
Gennady is the father of Alexander Tymoshenko – the unfortunate husband
of Yulia. Indeed it is rumoured that Mr Tigipko played a role in funding
Ms Tymoshenko’s video empire back in the day – presumably with Komsomol cash.
Controlling that cash, he also came to the attention of Dnepro Regional
Council Chairman, the infamous Pavel Lazerenko. He had also made direct
acquaintance with (soon to be President) Leonid Kuchma and Viktor Pinchuk.
A reader can now
literally see the Dnipro Clan forming.
As the Komsomol system
was collapsing Mr Tigipko was swiftly given a senior position within Dnipro
Bank – no doubt moving to the position along with the Komsomol regional cash.
(There is no reason to believe that events in Dnipro would be any
different than those elsewhere in Ukraine at the time when it comes to moving
regional Komsomol cash).
Within a year the bank
owners were far from getting along well and Mr Tigipko set up PrivatBank with
Ihor Kolomoisky, Gennady Bogolyubov, the late Leonid Miloslavsky and Alexie
Martynov. From 1992 – 97 Mr Tigipko was Chairman of the Board of
PrivatBank – although what share holding he had will probably never been known.
What is known is that the initial shareholding was not equal. How
much Komsomol/Dnipro Bank cash was used in the creation of Privat is somewhat
unclear – and will undoubtedly remain that way.
Meanwhile Mr Kuchma
became President Kuchma and Pavel Lazarenko became Prime Minister – leading to
a split within the Dnipro Clan and President Kuchma using Mr Tigipko to keep an
eye on the out-sized and out of control criminal appetites of Pavel Lazarenko.
He becomes Vice Prime Minister for Economic Reforms in order to carry out
that task.
(This move obviously
ruffled feathers and PrivatBank came under scrutiny for laundering money via
its Riga branch. Some things don’t change.)
Whilst in post, Mr
Tigipko acted as “roof” for the French cement company Lafarge who then had a
few issues with assets in Ukraine. As Bernadette Chirac (wife of Jacques)
then sat on the Lafarge board it is perhaps no surprise that Mr Tigipko was
awarded French honours personally by Mrs Chirac in 1997.
By 2000 Mr Tigipko
wisely quit as the conflict of interests of those around him in the Kuchma
government were in all probability intractable at best and very bad for the
health at worst.
By 2001 whatever shares
in Privat he had were sold for a figure unknown, and he set up on his own with
the TAS brand containing banking, insurance, and numerous other interests held
under the usual Cypriot holding company – which today is a beast of many
tentacles – and is in fact the reason for this entry. (Indeed Mr Tigipko
sold one of his banks to Swedbank pre 2008 crisis for $735 million via TAS
Overseas Investments (Cyprus)).
If business has been
good, politics has not been.
Politically Mr Tigipko
did not fare well under Viktor Yushenko and Yulia Tymoshenko. Having
chosen the Kuchma side of the Dnipro Clan split, thus backing Yanukovych in
2004/5 elections, that clearly did not sit well with the new “Orange”
president, nor a Prime Minister that chose the Lazarenko side of the Dnipro
Clan split.
Further when Yanukovych
eventually became president in 2010, despite initially welcoming him into the
fold, he very clearly and publicly shafted by Mr Tigipko politically.
Lo, tax avoidance aside,
it clearly pays in a business sense to hold your assets offshore and in a
different legal jurisdiction in a predatory political environment like Ukraine.
It is simply far easier to defend and retain your assets.
Under the current
president Mr Tigipko has kept his head down making no discernible political
moves and very few business moves.
However, in the past few
months Mr Tigipko appears to be going on a spending spree domestically.
Having recently bought another insurance company and rolled it into his
TAS insurance entities, it appears he is now entering the hotel business too.
Not only is he entering
the hotel business his seems to be doing getting good deals. For a mere
$10 million Mr
Tigipko has bought the Radisson Hotel in Kyiv from the Russian owners who for a long time have
desperate to sell.
Now a reader may think
that the hotel business in Ukraine is not one where returns will be swift – and
they’d be right too. There are no swift returns with anything to do with
hotels in Ukraine. That said, the price paid for this asset being so low,
it is possible he will see a 7 year ROI.
However, it may also be
that Mr Tigipko has some insider knowledge regarding the return of licensed
gambling in Ukraine and any amended parameters regarding what premises can host
casinos – and which can’t. It may well be that the
absolute nonsense proposed a year ago for the return of gambling has now had a more sensible
eye cast upon it – or is about to have a more sensible eye take a look.
If so, then the Radisson
in Kyiv would have additional potential – and a far swifter ROI. As Mr
Tigipko has a knack for good business and poor politics, then who would be
surprised if that will ultimately prove to be the case?
More generally, does Mr
Tigipko now think that the bottom has now been reached and that the small
economic bounce is likely to continue in an upward trend, so now is the time to
buy?
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