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Pinchuk: giving away fortune can help to build a fair Ukraine

How hard is it for a multi-billionaire to donate half of his fortune to charity? Most of us will never know.

But if more rich people took this step, the world could become a “fairer” place, according to Victor Pinchuk (pictured). The billionaire businessman this week became the first Ukrainian to join the Giving Pledge launched by US billionaires Bill Gates and Warren Buffett – and promise to give away at least half his money.

In an interview on Tuesday on the 26th floor of an office tower in central Kiev, the 53-year old Pinchuk spoke enthusiastically about his decision to share a massive fortune. “Giving is no less rewarding than making a profit,” he said.

With a fortune estimated by Forbes to be more than $4bn, Pinchuk is one of a dozen billionaires from across the globe that this week signed on to the Giving Pledge. His business spans from steel pipes, ferroalloys, ore mining, television and banking.

Since Gates and Warren Buffet launched their initiative in 2010, 105 pledgers have so far promised to donate at least half of their fortunes to philanthropic initiatives, mostly from the US. But the grouping is trying to make a bigger impact globally by encouraging non-US billionaires to join.

If they succeed, the movement’s impact could increase substantially, not least in poorer countries. Some of these states are impoverished due to lack of natural resources, others are captive to a culture of kleptocracy, cronyism and corruption that has turned a few into billionaires, leaving the rest scrapping to survive.

Ukraine falls squarely into the latter camp. As a big exporter of grain, steel, chemicals and ore, it is inherently rich. But the nation’s riches have not, as Pinchuk admits, been spread out evenly. Pinchuk told beyondbrics: “We need to create a country that is more fair.”

He added: “I feel a special responsibility to give back to my country and society. The post-Soviet transformation process was very painful for Ukraine and other countries in the region. A small group of us had the chance to use the opportunities that arose to make our fortunes. It is time to give back, so that as many citizens as possible can benefit.”

During the years of crony capitalism that followed the USSR’s collapse, many of Ukraine’s lucrative industrial assets fell into the hands of a small group of oligarchs. Often, rock-bottom prices were paid for prized assets in uncompetitive privatizations, robbing state coffers of badly needed revenue. As the son-in-law of former president Leonid Kuchma, who ruled the country from 1994 to 2005, Pinchuk was well-placed to benefit.

He was not alone. Rinat Akhmetov, Ukraine’s richest man with an estimated fortune of $16bn, amassed much of his wealth while his political ally, Viktor Yanukovich, rose from regional governor, to prime minister and later president. Today, Akhmetov controls nearly half of Ukraine’s steel, coal, ore and thermoelectric generation business.

Dmitry Firtash, another backer of Yanukovich, runs much of Ukraine’s chemical, gas and titanium business sectors.

“We estimate that companies controlled by Ukraine’s top 20 businessmen generate about 20 per cent of Ukraine’s GDP and account for over 50 per cent of exports,” said Andrey Bespyatov, head of research at Kiev-based investment bank Dragon Capital.

Meanwhile, hospitals that serve the rest of Ukraine’s 46 million citizens remain dilapidated. Education is crumbling. Monthly pensions are low, often in the $100-200 range.

Social mobility is limited. Small- and medium-sized businesses are choked by widespread corruption and bureaucracy. Analysts say the oligarchs control much of domestic politics. Politicians, in turn, fail to solve pressing problems, using their influence instead to increase the personal wealth of their patrons.

Pinchuk, a former lawmaker, claims to have left politics years ago. He claims to have already spent “hundreds of millions” on philanthropy, but declined to reveal how much would be donated in future years. He described his decision to join the Giving Pledge as a lifetime-and-beyond commitment. He said his efforts would focus on improving chances for Ukraine’s youth, education, healthcare, reforms, the arts, social mobility and promoting the country worldwide.

But Ukrainians should not expect revolutionary changes in Ukraine from Pinchuk’s initiative alone, even if he gave up all of his wealth. After all, it would not end the entrenched kleptocracy or revitalise public finances dependent on International Monetary Fund bailouts.

But even though Pinchuk’s offer alone will not undo the wrongs of the past, it might convince other wealthy Ukrainians to follow suit.

Pinchuk said: “As you know, this initiative of Mr Buffet and Mr Gates started in the US, but is now spreading globally. And it is here, in countries like Ukraine, where it can have the greatest of impacts. I will speak with the rest of Ukraine’s business leaders, explaining to them my reasoning for doing this, why it’s important, the benefits … perhaps they will make the decision to do the same.”

Beyondbrics emailed representatives of both Firtash and Akhmetov. But by the time of publication we had not received a reply…

[Add] Akhmetov’s spokesperson later said that Akhmetov “respected” the Giving Pledge initiative, was committed to philanthropy and had given “well over $400m” to charitable causes by the end of last year.


Author: Roman Olearchyk

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