Ukrainian oligarch: Sure I talked to that mob boss

Apart from the BP oil spill last spring, no global energy story has eclipsed the perennial Ukraine-Russia natural gas spat in terms of global attention, drama, nasty accusations, and pure impact — the relegation of a dozen European countries into the dark and cold. But there has also been mystery, as in, Why does this keep happening?  Russia’s Vladimir Putin told us it was all a very simple matter of unpaid gas bills, but experts pointed to the role of personal gain and a little-known intermediary company called Rosukrenergo. This company, putatively controlled by a Ukrainian oligarch named Dmitry Firtash, had somehow positioned itself smack in the middle of the natural gas deal, and appeared to be earning some $4 billion a year for the privilege. But what was Rosurkenergo, and who was Dmitry Firtash to get such a deal? Politicians linked them to an alleged organized crime boss, and suspicious experts and journalists resorted to phrases like "shady" and "secretive" to describe this apparent sweetheart deal.

So it was that William Taylor, the U.S. ambassador to Ukraine, was surprised when, uninvited, Firtash elected to walk into the mission on Dec. 8, 2008, and explained himself, according to a cable filed two days later by Taylor and released by WikiLeaks. Provided this incredible opportunity, Taylor came right out with the main question on everyone’s mind: What was his relationship with Semyon Mogilevich, an alleged Russian mob boss wanted by the Federal Bureau of Investigation, and now under arrest in Russia?  

As the Financial Times and the Wall Street Journal report, the answer to the question provides fascinating firsthand insight into the way business is really done in Ukraine and the region as a whole. In a nutshell, Mogilevich had indeed given his blessing to Firtash’s foray into Ukrainian business, but that did not mean they were business partners, Firtash said. Instead, he went on, he was simply observing "the law of the streets." From the cable:

Firtash answered that many Westerners do not understand what Ukraine was like after the break up of the Soviet Union, adding that when a government cannot rule effectively, the country is ruled by ‘the laws of the streets.’ He noted that it was impossible to approach a government official for any reason without also meeting with an organized crime member at the same time. Firtash acknowledged that he needed, and received, permission from Mogilevich when he established various businesses, but he denied any close relationship to him.

Firtash’s bottom line was that he did not deny having links to those associated with organized crime. Instead, he argued that he was forced into dealing with organized crime members including Mogilevich or he would never have been able to build a business. If he needed a permit from the government, for example, he would invariably need permission from the appropriate ‘businessman’ who worked with the government official who issued that particular permit. He also claimed that although he knows several businessmen who are linked to organized crime, including members of the Solntsevo Brotherhood, he was not implicated in their alleged illegal dealings. He maintained that the era of the ‘law of the street’ had passed and businesses could now be run legitimately in Ukraine.

Firtash was just warming up. He stayed in Taylor’s office for two and a half hours. Much of the time, he was pouring scorn on Yulia Timoshenko, the former Ukrainian prime minister. But he also seemed intent on polishing up his own image.