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Kyiv Seven
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Kyiv Seven
The Kyiv Seven (Ukrainian: Київська сімка, romanized: Kyyivska simka), also referred to as the Magnificent Seven (Ukrainian: прекрасна сімка, romanized: prekrasna simka), and the Kyiv Clan (Ukrainian: Київський клан, romanized: Kyyivskyi klan) were two interrelated economic and political groups in Ukraine during the 1990s and early 2000s. The term "Kyiv Seven" refers to a group of Ukrainian oligarchs who wielded significant financial and political power in Ukraine during the late 1980s and 1990s. As the name suggests, it comprised seven members: Viktor Medvedchuk, Valentyn Zghursky, Hryhoriy and Ihor Surkis, Bohdan Hubskyi, Yuriy Karpenko, and Yuriy Liakh. The term "Kyiv Clan" more broadly refers to the groups which operated under the Seven's leadership. These groups were one of three large political clans in Ukraine during the presidency of Leonid Kuchma, alongside Kuchma's own Dnipropetrovsk Clan and the Donetsk Clan of Rinat Akhmetov and Viktor Yanukovych, among others.
The Kyiv Seven were brought together in 1989 under the leadership of Valentyn Zghursky, at the time head of the Kyiv city executive committee (a position equivalent to the modern-day mayor of Kyiv). The group bonded together over a common interest in association football and support for FC Dynamo Kyiv. Viktor Medvedchuk's link to the group remains unclear, though he has claimed that he met Hryhoriy Surkis while they were both employed by FC Dynamo Kyiv. Zghursky played a pivotal role in Hryhoriy's early business career, and was in turn given a prominent position among the latter's businesses after leaving the mayorship of Kyiv.
The business history of the Kyiv Seven began in 1992 with the establishment of offshore financial centres such as Burley and Newport Management. The same year, the Kyiv Seven entered the oil importing business, possibly with either the support of the government of Ukraine or the Ukrainian mafia. With hyperinflation affecting the Ukrainian karbovanets, the Seven imported oil to Ukrainian companies, who in turn provided energy to Ukrainian citizens at a raised price as part of a price fixing agreement.
By the end of 1992, the Kyiv Seven had founded the Ometa-21st Century National Investment Fund. Ometa-21st Century was legally founded by the Kyiv Seven-led B.I.M. International Law Firm, in addition to the Ben-Israel and Co. law firm, based in Haifa, Israel. Ometa-21st Century was made up of the subdivisions of Ometa-Trust, Ometa-Invest, Ometa-Inster, and Ometa-Private. Hryhoriy Surkis headed the Ometa-Inster board of directors, while Bohdan Hubskyi served as deputy head. Beginning in 1993, Ometa-21st Century began selling shares valued at 1,000 karbovantsiv, with advertised dividends as high as 1,000%. Share prices steadily rose, and by mid-1993, over 12,000 people had purchased 440 million karbovantsiv in shares. In March 1994, the company's shareholders were paid dividends, but it was announced in early 1995 that the remaining shares could not be paid back, in a Ponzi scheme compared by Ukrainska Pravda to the MMM scheme in neighbouring Russia.
Also in 1993, the Kyiv Seven took over FC Dynamo Kyiv in what was termed as the "Dynamo Revolution", firing president Viktor Bezverkhyi and installing Hryhoriy Surkis in his place. Leonid Kravchuk, then president of Ukraine, refused to get involved in the matter despite protests, and the matter was prevented from reaching courts by Medvedchuk's connections to the legal system. This event brought Surkis and Medvedchuk to the leadership of the Kyiv Seven.
In the aftermath of the "Dynamo Revolution" and the Ometa-21st Century scheme, the Seven returned to the energy sector, founding Slavutych Industrial-Financial Concern in early 1994. Hryhoriy Surkis served as president of the concern, while Hubskyi was head of the board of directors. Slavutych was primarily concerned with the energy import sector, as well as selling products created by others. According to Medvedchuk, Slavutych had taken over 10-12% of the petroleum processing industry in Ukraine by 1995–1996. According to Yuriy Buzduhan, leader of the Social Democratic Party of Ukraine (unrelated to SDPU(o)), asserted in 1998 that Slavutych was purchasing petroleum at ₴0.30–0.40 and selling it to collective farms at a rate of ₴1.20, or as high as ₴2.40 during harvests. With many farmers unable to pay the full price, they instead paid in sugar and other products, which was exported to Russia in return for oil, then refined and sent to Ukraine for sale. Slavutych made profits of up to 800% as a result of this barter cycle.
By the late 1990s, the Seven had shifted its focuses to achieving total monopolisation of the Ukrainian energy industry, an endeavour supported by Prime Minister Valeriy Pustovoitenko (deputy owner of FC Dynamo Kyiv under Surkis). In 1998, Pustovoitenko signed an act transferring 25% of government shares in energy companies in the Kirovohrad, Ternopil, and Kherson Oblasts to Ukrainian Credit Bank, owned by Surkis. By 1999, the Seven effectively controlled the energy sector of western Ukraine, as well as Sumy and Chernihiv Oblasts. They additionally held substantial shares in the energy companies of Kirovohrad, Kherson, and Poltava Oblasts. Oblast power companies were privatised at minimal prices, and involved in the Seven's barter process. The privatisation of these companies and their purchase by associates of FC Dynamo Kyiv drew the attention of the Security Service of Ukraine and the Prosecutor General, with the latter ordering the privatisations cancelled. In spite of this, however, the Seven set their sights on power companies in Dnipropetrovsk, Kyiv, and Zaporizhzhia Oblasts, particularly the Zaporizhzhia Nuclear Power Plant, responsible for producing one-fifth of Ukrainian energy production and 47% of Ukrainian nuclear power.
At this time, the Seven also began to branch out into various other ventures. The Black Sea ports of Mykolaiv, Odesa, and Kherson were monopolised by the group, which lobbied for the establishment of free economic zones throughout southern Ukraine. In Zakarpattia Oblast, Slavutych engaged in forestry, leading to protests from local environmental activists who accused the concern of driving local tree species to the brink of extinction through mass felling. By this time, the Kyiv Seven also effectively controlled the cardboard and metal industries, and held sway over the food and alcohol industries of the country. According to members of the Kyiv City Council, Surkis even expressed a desire to sell the Saint Sophia Cathedral in Kyiv.
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Kyiv Seven
The Kyiv Seven (Ukrainian: Київська сімка, romanized: Kyyivska simka), also referred to as the Magnificent Seven (Ukrainian: прекрасна сімка, romanized: prekrasna simka), and the Kyiv Clan (Ukrainian: Київський клан, romanized: Kyyivskyi klan) were two interrelated economic and political groups in Ukraine during the 1990s and early 2000s. The term "Kyiv Seven" refers to a group of Ukrainian oligarchs who wielded significant financial and political power in Ukraine during the late 1980s and 1990s. As the name suggests, it comprised seven members: Viktor Medvedchuk, Valentyn Zghursky, Hryhoriy and Ihor Surkis, Bohdan Hubskyi, Yuriy Karpenko, and Yuriy Liakh. The term "Kyiv Clan" more broadly refers to the groups which operated under the Seven's leadership. These groups were one of three large political clans in Ukraine during the presidency of Leonid Kuchma, alongside Kuchma's own Dnipropetrovsk Clan and the Donetsk Clan of Rinat Akhmetov and Viktor Yanukovych, among others.
The Kyiv Seven were brought together in 1989 under the leadership of Valentyn Zghursky, at the time head of the Kyiv city executive committee (a position equivalent to the modern-day mayor of Kyiv). The group bonded together over a common interest in association football and support for FC Dynamo Kyiv. Viktor Medvedchuk's link to the group remains unclear, though he has claimed that he met Hryhoriy Surkis while they were both employed by FC Dynamo Kyiv. Zghursky played a pivotal role in Hryhoriy's early business career, and was in turn given a prominent position among the latter's businesses after leaving the mayorship of Kyiv.
The business history of the Kyiv Seven began in 1992 with the establishment of offshore financial centres such as Burley and Newport Management. The same year, the Kyiv Seven entered the oil importing business, possibly with either the support of the government of Ukraine or the Ukrainian mafia. With hyperinflation affecting the Ukrainian karbovanets, the Seven imported oil to Ukrainian companies, who in turn provided energy to Ukrainian citizens at a raised price as part of a price fixing agreement.
By the end of 1992, the Kyiv Seven had founded the Ometa-21st Century National Investment Fund. Ometa-21st Century was legally founded by the Kyiv Seven-led B.I.M. International Law Firm, in addition to the Ben-Israel and Co. law firm, based in Haifa, Israel. Ometa-21st Century was made up of the subdivisions of Ometa-Trust, Ometa-Invest, Ometa-Inster, and Ometa-Private. Hryhoriy Surkis headed the Ometa-Inster board of directors, while Bohdan Hubskyi served as deputy head. Beginning in 1993, Ometa-21st Century began selling shares valued at 1,000 karbovantsiv, with advertised dividends as high as 1,000%. Share prices steadily rose, and by mid-1993, over 12,000 people had purchased 440 million karbovantsiv in shares. In March 1994, the company's shareholders were paid dividends, but it was announced in early 1995 that the remaining shares could not be paid back, in a Ponzi scheme compared by Ukrainska Pravda to the MMM scheme in neighbouring Russia.
Also in 1993, the Kyiv Seven took over FC Dynamo Kyiv in what was termed as the "Dynamo Revolution", firing president Viktor Bezverkhyi and installing Hryhoriy Surkis in his place. Leonid Kravchuk, then president of Ukraine, refused to get involved in the matter despite protests, and the matter was prevented from reaching courts by Medvedchuk's connections to the legal system. This event brought Surkis and Medvedchuk to the leadership of the Kyiv Seven.
In the aftermath of the "Dynamo Revolution" and the Ometa-21st Century scheme, the Seven returned to the energy sector, founding Slavutych Industrial-Financial Concern in early 1994. Hryhoriy Surkis served as president of the concern, while Hubskyi was head of the board of directors. Slavutych was primarily concerned with the energy import sector, as well as selling products created by others. According to Medvedchuk, Slavutych had taken over 10-12% of the petroleum processing industry in Ukraine by 1995–1996. According to Yuriy Buzduhan, leader of the Social Democratic Party of Ukraine (unrelated to SDPU(o)), asserted in 1998 that Slavutych was purchasing petroleum at ₴0.30–0.40 and selling it to collective farms at a rate of ₴1.20, or as high as ₴2.40 during harvests. With many farmers unable to pay the full price, they instead paid in sugar and other products, which was exported to Russia in return for oil, then refined and sent to Ukraine for sale. Slavutych made profits of up to 800% as a result of this barter cycle.
By the late 1990s, the Seven had shifted its focuses to achieving total monopolisation of the Ukrainian energy industry, an endeavour supported by Prime Minister Valeriy Pustovoitenko (deputy owner of FC Dynamo Kyiv under Surkis). In 1998, Pustovoitenko signed an act transferring 25% of government shares in energy companies in the Kirovohrad, Ternopil, and Kherson Oblasts to Ukrainian Credit Bank, owned by Surkis. By 1999, the Seven effectively controlled the energy sector of western Ukraine, as well as Sumy and Chernihiv Oblasts. They additionally held substantial shares in the energy companies of Kirovohrad, Kherson, and Poltava Oblasts. Oblast power companies were privatised at minimal prices, and involved in the Seven's barter process. The privatisation of these companies and their purchase by associates of FC Dynamo Kyiv drew the attention of the Security Service of Ukraine and the Prosecutor General, with the latter ordering the privatisations cancelled. In spite of this, however, the Seven set their sights on power companies in Dnipropetrovsk, Kyiv, and Zaporizhzhia Oblasts, particularly the Zaporizhzhia Nuclear Power Plant, responsible for producing one-fifth of Ukrainian energy production and 47% of Ukrainian nuclear power.
At this time, the Seven also began to branch out into various other ventures. The Black Sea ports of Mykolaiv, Odesa, and Kherson were monopolised by the group, which lobbied for the establishment of free economic zones throughout southern Ukraine. In Zakarpattia Oblast, Slavutych engaged in forestry, leading to protests from local environmental activists who accused the concern of driving local tree species to the brink of extinction through mass felling. By this time, the Kyiv Seven also effectively controlled the cardboard and metal industries, and held sway over the food and alcohol industries of the country. According to members of the Kyiv City Council, Surkis even expressed a desire to sell the Saint Sophia Cathedral in Kyiv.
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