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St Paul in retirement

He made his billions using methods that he's now ashamed of. Now at least this oligarch from the Ukraine wants to spend his money wisely. He sponsors culture, drives the EU entry campaign - and earns respect for himself.

From Andrzej Rybak in Kiev

From the museum rooftop your glaze sweeps over the squiggly facades and joyful rooftops of affluent Kiev. A hundred years ago rich traders put their mark on the Bess Arabian quarter in the centre of the Ukrainian capital. Inside the museum it's all modern: clear lines and cool designs, white and black, steel and wood. An exhibition is in preparation, photos and installations from various artists such as Jeff Koons whose provocative content brought him dubious fame.

"This will go a bomb," says the owner, Victor Pinchuk, the second richest oligarch in the Ukraine who opened the "Pinchuk Art Center" a year ago. In the meantime his house has become the most visited in the Ukrainian capital - not least because entry is free. "We didn't reckon to get such a stream of visitors, "says Pinchuk with pleasure, "people in the Ukraine are not used to modern art".

In saying this the oligarch, who is well known for his straight talking and is sometimes feared for this, is selling himself short. The Art Center is the only modern art museum worth mentioning between the Black Sea and the Carpatians. Pinchuk is putting millions into the house and philosophises saying, "Modern art is a universal language that is spoken across the whole world." He wants his fellow Ukrainians to learn the language too. "Young people must free themselves from the old Soviet models and behaviour patterns. We need to modernise society, new thinking, especially in politics".

Just a month from the parliamentary elections his words are surprising. Pinchuk was for a time himself part of the post-Soviet establishement. He is a winner from the shady privatisations of the nineties in which he built his billionaire's fortune. And he is the son-in-law of former President Leonid Kuchma and he makes no secret about the fact that two and a half years ago he did not vote for Victor Jushchenko's Orange Revolution.

Even so the Orange period has also changed the oligarch. Even at the time of confrontation, when a half a million people were demonstrating for days on end on Kiev's Independence Square, he came across as a man of surprising integrity. Pinchuk's media were among the first to point the finger at the election fraud of their own favourites.

Ever since then Pinchuk has shown a new face. The steel magnate is hailed as a benefactor and patron of the arts: he is putting millions into running the Kiev Business School, sponsors the battle against Aids and is active in promoting the entry of his country into Europe. In 2006 Pinchuk wrapped up his charity activities into the Victor Pinchuk Foundation.
Today it works together with other well known foundations such as that of the musician Elton John or the former US President Bill Clinton. In June Sir Elton John gave an anti-Aids concert on Kiev's Independence Square which attracted almost as many people as came out during the Orange Revolution. Pinchuk also finances George Soros's Open Society Foundation, which supported the 2004 people's protests.

Many people are distrustful of Mr Pinchuk's metamorphosis. Opponents argue that he merely wants to buy himself a new image so the new powers-that-be do not get their hands on his fortune. Among those people are many who lost out during the changes.
Pinchuk waves this aside: he was already a patron at the time Kuchma was in power. And he founded the Yalta European Strategy (YES) discussion forum, that is aimed at driving the Ukraine's entry into Europe, long before the Orange Revolution.

"There's so much rubbish being talked," he says rather annoyed as his sharp black eyes stare at his interviewer. Even the political split into pro-Russian and pro-West is nonsense. "We are all pro-Ukrainian". The oligarch understood early on that too strong a Russian grasp on the country would harm business. And no one - except the communists - are against the country joining Europe.

His own love for Europe has pragmatic roots. At the end of the nineties the billionaire understood that the Ukraine needed laws to protect his own property. "It was clear to me that overnight I could lose everything I had built up". Then later came the realisation that Europe could also be useful for expansion and increasing profits.

Pinchuk's career is astounding. In the eighties as an engineer he developed processes for manufacturing pipes cheaper. In 1990 he set up a company and became rich out of the patents. As the Soviet Union collapsed this hit the steel industry hard. The foundries couldn't produce any steel because there was no iron ore and the mines couldn't deliver any iron ore because not enough machines could be produced because of the steel shortage. A vicious circle. And a stroke of luck for Pinchuk. The man with lots of contacts and a fat wallet became the decision maker in the industry. "I organised supplies, he says, and made a lot of money". After that he benefited from privatisations.

It gets on Pinchuk's nerves when papers write that he owes his rise to his marriage with the daughter of President Leonid Kuchma. "Firstly, I had made my fortune before I married Jelena," says the oligarch, "Secondly, Kuchma would never have done me any favours anyway."

Pinchuk does not try to come across as an innocent flower. "The creation of my fortune was not without blemishes", he admits. "We did things that were not right and I am not proud of it. But whoever is totally innocent in life is not thinking of the rules of the game. And at the time there were no recognised rules". The major Ukrainian fortune was all built up when there were virtually no laws. "When there were no tax laws reflecting the new reality, we exploited the situation."

Pinchuk became a member of parliament in 1998. Some 100 corporate bosses were elected to parliament at the time. "We wanted to shake things up, bring in reforms", he says. But the ‘romantic period', as he refers to this time, soon came to an end. In its place corruption soon spread in the parliament. Business lobbyed for laws that benefited their businesses. Even Pinchuk admits "It is not possible to take a decision for the state when it threatens your business." In 2005, he withdrew from politics.

When the Orange politicians first arrived, he appeared to lose out. Prime Minister Julia Timoshenko, the standard bearer of the revolution, declared war against the oligarch. She wanted to make an example and cancelled numerous privatizations that were deemed to be dubious. Indeed she managed to have the sale of the largest Ukrainian steel producer declared void and, in a new auction, to sell it for € 4 billion to the Indian Lakshmi Mittal. Viktor Pinchuk's investor consortium had paid just € 800,000 in 2004 for it. Pinchuk describes the decision as a mistake saying: "Although the government received money in the short term, it missed the chance to turn the Ukraine into a global player. The steel industry was one of the few sectors where we could have held our own on the international stage."

During this period he displayed persistence. Anyone else would have left the country. "Of-course I thought about it", he recalls, "but it was not an option. While I may enjoy holidays in Sardinia and like to eat out in Paris, I want to live in the Ukraine." But the experience of the period has changed Pinchuk. He is no longer looking just to "increase his fortune, but also to spend it wisely."

Of-course he remains a businessman. He is considering to consolidate his media activities in a holding company and his looking for international partnerships. He is investing to modernize his steel production and wants to grow internationally. But he has found pleasure in life as a philanthropist enjoying the company of the leading figures of the world. At the end of June he hosted Bill Clinton in Yalta. "He was the first President since Harry Trueman to visit the place" he proudly announces.

The YES forum in Yalta shows how well connected Pinchuk is. Every year he invites politicians to the Crimea in order to have Ukraine join the EU by 2020. "If the EU wants to compete with China and USA, they will have no choice but to let us join", exclaims Pinchuk. As the host in the Crimea he cuts a fine figure: quiet, calm and in control, self confident and not as pretentious as many of the early oligarchs.
In the mean time, his appearance has brought the criticised oligarch considerable respect in his home country. The famous people from politics and show business like to accept his invitations such as to the premiere of the documentary film "Spell your Name" - a Steven Spielberg production about the German massacre of Ukrainian Jews in Babi Yar. Viktor Pinchuk provided the entire finance for the film. Whether friend or enemy, almost everyone came to see it, and applauded.

Father of a family: Viktor Pinchuk was born in Kiev in 1960. He was graduated from the High School for Metallurgy in Dnyepropetrovsk. He married Jelena Frantshuk in 2002, the daughter of the then president Leonid Kuchma and has a daughter with her.

Philanthropist: He sponsors educational, health and cultural projects, and finances the Museum of Modern Art in Kiev. The YES forum is pushing for Ukraine to join the EU. He has teamed up with Bill Clinton and Elton John in the battle against AIDS.

Steel businessman: The Interpipe holding company owns four steel foundries and factories. In 2006, the company produced 14 million tonnes of steel generating $1.6 billion in revenues. It has 16,000 employees. Interpipe is the world number 1 in railway track.

Media baron and banker: The oligarch controls some 30% of the Ukrainian TV market. He owns the largest newspaper in the country and several magazines. In July he sold his bank, Ukrotsbank for €2.1 billion to Italian-based Unicredito.


Source: FT Deutschland
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