Ukrainian Oligarch Seethed About ‘Overlord’ Biden for Years
Indicted Ukrainian gas oligarch Dmytro Firtash spent more than $1 million hiring key figures in Republican efforts to investigate the Biden family.
His lawyers—who often go on Fox News to defend President Trump—say they needed the dirt on former Vice President Joe Biden to demonstrate that Firtash’s prosecution was politically motivated.
But the two men have a history. Two Ukrainian gas industry experts say the gas-market reforms pushed by Biden and others in 2014 and 2015 hit Firtash in the wallet, and badly. One knowledgeable outside observer estimated that the 2014 and 2015 gas reforms and legislation cost him hundreds of millions of dollars.
On Dec. 9, 2015, Biden gave a speech to Ukraine’s parliament. He praised the protesters who forced out Ukraine’s Russia-friendly president, he recited Ukrainian poetry, and he called for reforms to Ukraine’s gas market, too.
“The energy sector needs to be competitive, ruled by market principles—not sweetheart deals,” he said, basking in the audience’s repeated applause.
Firtash, who built his fortune in part through a rather sweet gas-trading deal, hated it. Earlier this year—more than three and a half years after the talk—he was still seething. Firtash told The Daily Beast that the Ukrainian parliamentarians in the audience were humiliatingly subservient to Biden.
“He was the overlord,” Firtash said. “I was ashamed to look at this. I was repulsed.”
Now people linked to Firtash are at the heart of Republicans’ efforts to find dirt on Biden, and a document Trump’s personal attorney Rudy Giuliani has said is key to his theory of Biden World malfeasance was produced for Firtash’s legal team. The reporter who published that document, The Hill’s John Solomon, is a client of Firtash’s new lawyers, Victoria Toensing and Joe DiGenova. Over the summer, Trump pressured Ukraine’s president to cooperate with Giuliani’s efforts. That pressure stunned many Republicans and gave House Democratic leadership the impetus they had long sought to announce an impeachment inquiry.
And two Giuliani associates reportedly brought up Firtash’s name when talking about their plans for Ukraine’s energy sector. Those two associates also worked with Giuliani to find dirt on Biden, and they’ve both been charged with financial crimes. On top of that, Firtash’s lawyers say one of them, Lev Parnas, has worked as a translator for his legal team.
Firtash’s blunt assessment of Biden’s speech at the parliament and influence on Ukraine—shared earlier this year with The Daily Beast and published here in full for the first time—highlights how a battle over the future of Ukraine bled into the highest levels of American politics.
Firtash’s company did not respond to requests for comment. Biden’s campaign called Firtash “a Kremlin-friendly Ukrainian oligarch who’s been wanted on bribery and racketeering charges in the U.S. since 2014.”
Gas Man
Firtash was born in Ukraine and—like many other up-and-coming oligarchs—grew rich in the rubble of the Soviet Union. After spending some time in Moscow, he started trading gas from Central Asia to Ukraine. His renown as a gas trader grew, and he made deals with Russia’s state-owned giant Gazprom to move Russia’s abundant gas to energy-hungry Ukraine.
With Gazprom’s blessing, he got deals widely characterized as of the sweetheart variety: Firtash bought cheap gas from Russia, sold it for a lot more in Ukraine, and profited. He then bankrolled Russia-friendly politicians in Ukraine. One such politician was Viktor Yanukovych, who hired Paul Manafort. American diplomats at the time saw Firtash as a vector of Russian influence—part of the connective tissue between the Kremlin and Kyiv.
And American law enforcement saw him as a crook. On April 2, 2014, the Justice Department announced that he had been indicted for authorizing $18.5 million in bribes to Indian government officials. The case involved efforts to mine for titanium that would be used in Boeing planes.
Austrian authorities arrested Firtash a few weeks before the DOJ’s announcement. He posted about $174 million in bail and has since been living in Vienna, fighting extradition from his palatial corporate offices there. And while the allegation isn’t part of the DOJ’s indictment of Firtash, U.S. government lawyers have said in court that he’s an “upper echelon” associate of a Russian criminal organization. Firtash says the claim is baseless.
In June of this year, an Austrian judge greenlit his extradition to the U.S. But his high-powered legal team is still fighting. And this July, that team got some new oomph: DiGenova and Toensing, a husband-and-wife duo who have worked on a host of contentious fights and have deep ties in Washington’s tight-knit conservative legal community. They even reportedly secured a meeting about Firtash’s case with Attorney General Bill Barr—a sit-down many criminal defense lawyers would kill for.
Firtash’s team has long argued he’s the victim of a political prosecution and that the U.S. government only targeted him to blunt his influence in Ukraine. That’s where Biden comes in.
Direct Hit
In 2014, hundreds of thousands of Ukrainians took to the streets in protest. After Yanukovych’s government killed dozens of protesters, he was forced out and fled to Russia. He left behind a $20 billion hole in Ukraine’s economy, and the country teetered on the brink of fiscal collapse.
Enter Biden. The vice president helmed America’s Ukraine policy, traveled to the country multiple times while in office, and said he spoke to the country’s president and prime minister “probably on average once a week if you average it out over the last year.” Kyiv was desperate for billions in support from the International Monetary Fund (IMF), where the U.S. holds sway. The Americans and the IMF pushed Ukraine to roll out a host of reforms to get the cash.
"The Obama administration, and Vice President Biden in particular, led the international community to help advance gas sector reforms in Ukraine,” said a former State Department official with knowledge of the dynamics. “The thinking of the United States was that establishing an open, transparent gas sector would be vital to Ukraine’s fight against entrenched oligarchic corruption and would shore up the country’s strategic stability in the face of Russian aggression.”
“Mr. Firtash’s control of RosUkrEnergo, which exerted monopolistic control over regional gas distribution, would have been threatened by these reforms,” the official added.
Biden has touted his leverage over Kyiv, including successfully pushing for the ouster of the country’s then-chief prosecutor, Viktor Shokin. Biden wasn’t the only one pushing for Shokin to leave as part of Ukraine’s anti-corruption efforts. The prosecutor had put in anemic performance charging powerful and well-connected kleptocrats while in office and the IMF, the European Union, and Ukrainian anti-corruption activists all urged his ouster.
Shokin had also scrutinized a gas company whose board included Biden’s son Hunter Biden, a fact that Trump and his allies have cited as evidence of corruption. They note that Shokin’s replacement wasn’t much better. But the reporter who broke the Hunter Biden story years ago reported that Joe Biden’s overall anti-corruption push in Ukraine likely endangered the company his son was linked to.
The Americans and the IMF also pushed for a series of reforms to Ukraine’s energy sector, including the gas industry. In 2014 and 2015, the Ukrainians unveiled a variety of changes: Kyiv changed the corporate governance of its state-owned gas company, Naftogaz; it passed its “Natural Gas Market” law, which the prime minister touted as having “de-oligarchized and de-monopolized” the gas market; and it rolled out a basket of regulatory changes to its gas sector—with Biden cheerleading along the way.
In a July 2015 speech, Biden praised Ukraine for “closing the space for corrupt middlemen who rip off the Ukrainian people.”
“Middleman” was an epithet often aimed at oligarchs like Firtash, whose gas business had raked in millions by acting as a broker between Ukraine’s state-owned gas company and Russia’s Gazprom.
“There is one of the biggest state-owned enterprises, which is Ukrainian Naftogaz, a gas company, that had very shadowy and non-transparent deals with middlemen and with the Russian Federation,” Arseniy Yatseniuk, the country’s prime minister at the time, said in a speech just two days after Biden’s. “So last year we eliminated this middleman. His name is Mr. Firtash. He is under FBI investigation and expected to be extradited to the United States.”
Oleksandr Kharchenko, the director of the Center for Energy Industry Research Center in Kyiv, said the changes damaged Firtash’s business interests.
“It hit him directly,” he said.
Yessed to Death
Firtash, for his part, saw in Biden a swaggering politician overstepping his bounds—and a Ukrainian audience embarrassingly enchanted with what they saw.
“When Biden came to Ukraine and he spoke in parliament, I was reminded of an old story from the Soviet Union when the first secretary of the ObKom [the regional committee of the Communist Party] came, and on the one side all the komsomoltsi [youth members of the Communist Party] lined up, and on the other the communists, and they all took loyalty oaths. You understand? That’s how approximately it was with Biden,” Firtash told The Daily Beast in February.
Biden’s influence in Ukraine, he added, was “enormous.”
Firtash saw Yatseniuk, the prime minister at the time, as a pawn of Biden and other Americans.
“Who appointed whom, and who actually governed the country?” he said.
Firtash has also sparred with Andriy Kobolyev, who became CEO of Naftogaz under Yatseniuk. Lev Parnas and Igor Fruman—the indicted Giuliani associates—reportedly discussed an effort to oust Kobolyev earlier this year. Reuters has reported that Firtash financed their work.
Firtash’s lawyers say scrutiny of Biden’s role is necessary for his criminal defense.
“The U.S. and Austrian legal teams have always been focused on Dmitry Firtash’s innocence,” a spokesperson for DiGenova and Toensing said in a statement provided to The Daily Beast. “The U.S. Justice Department has submitted false and misleading statements about Mr. Firtash and the evidence in his case to the Austrian courts. In the context of reopening the extradition case, the Austrian legal team sought former Prosecutor General Viktor Shokin’s sworn statement as one of numerous statements and other evidence submitted to the Austrian court. The former Vice President’s role in Mr. Firtash’s extradition is materially relevant to the Austrian lawyers’ argument that the prosecution is political.”
The 2015 reforms appear to have cost Firtash a lot of money. It’s difficult to estimate how much, as the oligarch’s finances are quite opaque. Victoria Voytsitska was a member of the eighth convocation of the Ukrainian parliament and a member of its committee on Fuel Energy, Nuclear Policies, and Security. She told The Daily Beast that the gas market reforms have likely cost Firtash about $215 million to $400 million a year since their 2015 rollout.
“Firtash really was pushed out of Naftogaz’s financial flow,” Kharchenko said.
That said, many caution against overestimating the significance of the reforms Ukraine implemented. Firtash remains immensely wealthy and powerful, and controls Ukrainian gas distribution networks, known as oblgazes. And in the wake of the Maidan Revolution, he kept control of his assets in Ukraine. Oligarchs still dominate Ukraine’s energy sector, which is far from a bastion of transparency.
Ed Chow, an energy expert at the Center for Strategic and International Studies, said Biden and the U.S. didn’t push hard enough for major, structural changes.
“To be fair, Biden was the most senior U.S. official interested in Ukraine,” he said. “Without Biden, even less would have happened in terms of the U.S. government pressuring Ukraine. Ukrainians would have moved forward even less on reform. I would give the U.S. government a mixed grade.”
An American political consultant who’s worked in Ukraine for years and spoke anonymously because of client sensitivities said Kyiv has honed its ability to satisfy Westerners without upending the status quo.
“The Ukrainians, if you look at their history, they’ve always been at the edge of one empire or another,” the consultant said. “They were used to dealing with viceroys, representatives of the sultan, representatives of the Lithuanian empire, the Polish empire, the Russian and Soviet empires. They’re masters at paying lip service to the guy who comes to town for a week. They will yes him to death, and then the minute he leaves, it’s business as usual.”
But business changed for Firtash after 2015. And Biden stayed on his mind.
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