Who is behind the attack on reformers, how is the "bonuses case" moving through the High Anti-Corruption Court, and what is there in common among criminal prosecutions of Andriy Pyvovarskyi (the former Minister of Infrastructure), his successor Volodymyr Omelyan and Andriy Kobolyev? — interview with the former CEO of Naftogaz covers it all. Per Kobolyev, what’s happening now is not a mistake or malicious prosecution. It’s a masterminded operation designed not even to ultimately dismantle the Corporate Governance Reform but to strike a heaviest possible blow at the reputation of the Specialized Anti-Corruption Prosecutor’s Office (SAPO) and the National Anti-Corruption Bureau of Ukraine (NABU). Ideally — to further demolish SAPO, NABU and possibly the High Anti-Corruption Court, and to scrap the anti-corruption reform.
"Someone very devious is discreetly puppeteering this"
The case against you was opened back in 2018 based on a claim filed by an MP from the Opposition Platform — For Life [a pro-Russian party — ]. Any idea why its prosecution is gaining momentum now and what was the catalyst?
I have no insights as to what exactly became the catalyst. But now we can observe a clear trend pertaining to several criminal cases.
Do you mean the "cases of the reformers"?
Yes. Figuratively speaking, artillery never hits the same spot twice — this is a clear trend. And it has three common aspects.
The first one is the time span, overlap of cases in time.
The second aspect is that all these people fall into the category of those who, from an impartial perspective, have done a lot of good to their country. Lack of logic and even absurdity of the charges (hardly falling into criminal offence category since the latter must have the body and all, with no exception, elements of a crime available); no bribery evidence, — all these prosecution failures trigger a lot of questions like "what priorities SAPO and NABU really pursue and why they were created". And it’s all against the backdrop of hundreds of billions of hryvnyas that vanished from the accounts of state-run companies, which never triggered a subpoena.
Going back to our trend, the third aspect is the method. It’s rather standard and is called the State Audit Service of Ukraine.
The former Audit Office of Ukraine?
Yes. They have no penal or prosecution powers. They gather facts and sometimes interpret them. The State Audit Service has always been a highly leveraged office. It’s common knowledge among all who ever held a position with the Cabinet of Ministers or in public sector. And it is this very Service that is shovelling materials for criminal cases into the "furnace of anti-corruption agencies".
But SAPO and NABU are now running cases with even weaker legal grounds than in your case, — Pyvovarskyi’s case being an example.
I don’t find it strange. It’s unfortunate that the Ukrainian society’s economic and legal awareness is comparatively low, which is a known fact.
"No offense, but if you ask out ten random people in the streets what they would do to make a cow eat less fodder and produce more milk, nine out of ten will say "feed the cow less and milk it more ».
Civic activists have been arguing that special, best people were selected into SAPO. Unfortunately it’s not the case. It’s a cross-section of the same society. Moreover, those people were never tested in the basics of corporate law or economics, — there’s no such thing as tests like these. I repeat: this means that when it comes to basic economic freedoms, the majority of these people will favour the "feed less and milk more" approach.
By the way, we have an ideal test to reflect the quality of the selection. And it’s not my case but the contest for the position of NABU Head. We all had an opportunity to hear the interviews with the contest finalists. One of them, for example, brazenly claimed that their assets had been accumulated through savings either from the petty cash given by their parents for breakfasts at school or carolling.
It’s a disgrace.
I have a different word for this. Although my wife doesn’t approve of obscene language I would call it f**k-up. The person saying that on camera… And while some activists claim that the "contest was hacked," I dissgree, — no, it wasn’t.
Do you mean negative selection?
In part. We created a utopian island for the staffers of these agencies to operate for eight years, telling them they were special and nobody could touch or inspect them, — so we pushed them towards degradation. This often happens when you excessively care for someone. It’s often the case with kids of rich parents, — it’s a classic example.
I believe NABU and SAPO are spoiled kids who have been shielded from reality and the Criminal Procedural Code for too long.
But that was not all, — a fully fledged war started against Ukraine. As far as I know, a great many super-motivated and super-quality people went to war, to fight on the frontline. And even before that, many had left NABU harbouring resentment at their jobs.
These are the preconditions for all this trash. But who "triggered" them, so to speak?
Someone very devious is discretely puppeteering this flock. Someone dangling a carrot before them urging them to go, say, after Kobolyev who enjoyed high salaries, — so that everybody would hate him. But they have no brains to ponder, for instance, over their own high salaries that are significantly higher than those in other law enforcement agencies, — thus arousing similar negative attitudes in the people whose senses they are going to appeal to.
And vice versa.
The people who backed the creation of NABU and SAPO are the people who back market salaries in the corporate segment. In other words, SAPO and NABU have turned against their own base audience.
It happened late last year. My case and Pyvovarskyi's case had taken long to investigate, but at the end of 2022 everything started gaining momentum.
The person who pushed SAPO and NABU for it made a truly genius tactical move. Whoever has manipulated NABU and SAPO people, having started this attack, is in a win-win situation in game theory. Should one party win, — we shall wack the other party. Should the other party win, — we shall wack this one. And, should both parties lose, an ideal bingo-combo scenario shall ensue where both the anti-corruption and the corporate reforms shall cease to exist. And all "old school guys" shall be thrilled.
Who is that person?
This puzzles me too. By no means can I endow those classical players, theoretically capable of managing all this, with qualifying intellectual potential. The person fuelling this trend should be at least a very strong tactician.
"The system is overloaded with cases like this"
Going back to the State Audit Service: Did SAPO and NABU make a direct use of its materials?
The materials in my case reference the conclusions of SASU, which is actually a very dangerous thing, — even the judge who determined a high bail amount for me said that the conclusions regarding applicability or non-applicability of certain legal norms were irrelevant for the court, since it was for the court to determine it.
Respectively, NABU and SAPO teams should have looked into the matter themselves, which they failed to do. They just got the paperwork from SASU and said, "Look, people here claim that bonuses are a bad thing."
By the way, it’s a very short-sighted approach for NABU itself. Why? — If you take the logic applied in my case and apply it to NABU and SAPO, it will render these agencies unconstitutional. You can likewise question the salaries of NABU people, — why should they differ from those of other law enforcement officers? The logic governing NABU and SAPO is in conflict with the foundations of their mere existence.
Whoever pushed them in this direction has made a very interesting tactical move. It’s even ingenious.
Low quality cases against reformers, usage of SASU conclusions, discrepancies, stretching , — are all these negative selection effects, in your opinion?
Not only that. My court hearings are regularly attended by SAPO Deputy Head and Prosecutor who are more or less versed in the matter. But even they screw it up from time to time when they contradict the pieces of evidence they bring to court themselves. Here is an example: during the latest hearing they alleged: Kobolyev had concealed the existence of that unfortunate Decree [Decree of the Cabinet of Ministers No. 859 dated 1999 on salaries of CEOs of state-owned companies — ] from the Supervisory Board. And then they fish a letter, with my signature on it, out of the materials in the case, where I informed the Supervisory Board of that very Decree. I ask them: so did I conceal it or did I inform them officially? — They keep silent in response.
That wouldn’t have happened had they read that piece of evidence before the hearing.
Why is this happening? They have limited institutional capacity. The system is overloaded with cases like this, they are difficult because they are very high-profile. Public interest being intense, they will have to better prep themselves next time not to screw it up again. Which, in turn, will leave them no time for cases of real corruption i. e. bribery.
They also fail to understand that they’re overloading their scope of efficiency with cases that are certainly not their priority. Even those who used to support them start thinking now: we’ve taken a wrong turn somewhere. And I believe we are going to see this debate unfold in a more formal register. The issue of external audit is back on the agenda.
That would be good.
No institution should go unaudited. And NABU does need an audit. For instance, I am aware of a bunch of litigation cases where Naftogaz employees have been summoned to court for six years, — despite zero evidence of any potential offense committed.
The same is true in my case: the prosecution allege in their speculations that I would have somehow managed to manipulate six independent members of the Supervisory Board, three Ukrainian government and three non-government representatives so that they would have left their senses. Even though one of the members of the Supervisory Board had approved , while in his Ministerial Office, the Decree referenced by SAPO and NABU, — he had co-authored the said Decree, made a bunch of comments and propositions. It was all documented on paper, furthermore the Decree is in public records.
Moreover, NABU and SAPO’s charges contain no description of how I would have perpetrated it, which bewilders me. They don’t know it yet, they haven’t fantasised it yet. In their imagination, "He (Kobolyev) would have crafted something and everyone, — bam, cast their vote of approval!" Such is their construct, and on top of that — their sheer and manifest refusal to establish the true circumstances of the case.
If all their competences are reduced to producing hypotheses, then why not hire five creative guys, authorise their LSD use, — and they would fantasise stories NABU and SAPO could not even dare to fancy.
It would cost less for the budget.
Yes, it would be cost-effective and hilarious, and we would have some fun at least.
"The individual given bail by court is guilty by default — that is the perception they are forcing on Ukrainian society"
Yuriy Vitrenko was awarded a slightly smaller bonus, — yet no charges against him. Is it because he didn’t sign any relevant documents?
I’d rather not comment on individual amounts, it would be inappropriate.
It would be up to SAPO and NABU to start a prosecution, so such comparison would be improper.
Vitrenko is a hardly relevant character here, just like anyone else.
Let me tell you this: all Naftogaz team members rightfully deserved their bonuses. If necessary, I shall explain and prove it.
I have a more interesting question related to potential investigation by NABU: the notorious Stockholm arbitration trial of Naftogaz vs RosUkrEnergo where Naftogaz was awarded a loss of 12.1 billion cubic meters of gas. International litigators had been hired, with promising perspectives, — and it all went down the drain in a couple of years... Has it triggered a criminal case or an investigation, or anything of that sort yet?
Have any claims been filed to open an investigation into that case?
I definitely know the person who filed one. I know the person who initiated that case and filed respective claims.
In what year?
In 2014, in 2015 and in 2016. By the way, Gazprom owns RosUkrEnergo by one- half, which means that 6 billion cubic meters of gas were awarded to "moskali", Gazprom in particular. I can name many more legal cases that don’t bother NABU and SAPO.
Any idea why?
On the one hand, some government agencies have restricted the access to the information in those cases, hiding it as much as they can. On the other hand, the law enforcement officers lack competence and perspective that would enable them to discern big cases. That’s it.
How many times have they summoned you for questioning since 2018 when the case was opened?
I was questioned once, and it was pointless.
When was it?
In 2018. A lot of Naftogaz employees, over 50 in total, were summoned for questioning at that time, and it was actively discussed within the company. Notably, people were discussing the weird questions the investigators had been asking, like whether I had solicited any bribe from any of the employees in compensation for the bonus they had been paid. That was the investigators’ working hypothesis.
By the way, speaking of the trends in the reformers’ legal cases, — they all have one feature in common: no bribery charges. Not a single bribery charge in any of the cases.
In this context, I believe, NABU and SAPO must build up not only their own institutional credibility but also that of the polity that serves justice. Nowadays a lot of people in Ukraine no longer enjoy that sense of justice that they had expected to get from NABU and SAPO efforts.
How many Supervisory Board Members have been interviewed in your case?
I’m not allowed to disclose details of the pre-trial investigation without the detectives' permission. However, I can give you a very interesting table with 13 names.
It is nine members of the Supervisory Boards from two convocations plus four other people who directly participated (or attended the meeting) in decisioning the bonuses.
Guess how many protocols of the interviewed Board Members, out of those provided by NABU and SAPO, are accessible to my Defense attorneys in court? One out of 13. No, I don’t think they failed to interrogate all other people. I believe they’re hiding those protocols because they pursue a different tactic.
Their current goal is to persuade the court to get me incarcerated in a pre-trial detention center where they would later "offer" me some kind of a settlement. And again, it proves that they are not smart enough, otherwise they would have inquired about my past experiences. I had worked in Naftogaz for seven years prior to becoming its CEO. I knew Y. Boyko (ex- Energy Minister/ ex Deputy Prime Minister), Y. Bakulin (ex CEO of Naftogaz), O. Ivchenko (Deputy Energy Minister), I. Kolomoiskyi (billionaire businessman), Firtash (oligarch), — I had to deal with quite a few people in power and had to engage in hard talks with them from time to time. That’s why it’s counterproductive to intimidate me with incarceration. If they want to reinforce my enthusiasm — then it’s the perfect method.
Will those testimonies throw the case?
Most likely. Moreover, that testimony, obtained from the same sole person [out of 13 — ], that made it to court, contains questions like: "Had you known it, what would you have done?" Ask any investigator, and they will tell you that any interview (interrogation) is meant to establish objective circumstances. Questions like "What would have happened if …" don’t fall into the category of those meant to establish objective circumstances: not in a single legal case, not in reference to anyone, nowhere, never. No doubt that other interviews are similar.
What do you think they count on?
They count on the following: a) my detention; b) their prospects to seize my cash bail and then put the case on hold — "let it linger for years, we’ll be extending detention terms indefinitely".
As I see it, some NABU/SAPO people have completely lost the sense of purpose of their creation. They believe that the amount of cash bail pledged is their КРІ. I heard a few of them name the following indicators: the number of subpoenas written and the amount of cash bail pledged. There is no mention of presumed innocence at all. The individual given bail by court is guilty by default, — that is the perception they are forcing on Ukrainian society.
Pyvovarskyi’s case had it’s "highlight": since the approval of the document had led to no enrichment of the state, it was corruption. Was there anything like that in your case?
A lot. And we are going to focus on it.
But I'm saving these delicacies for later.
"The worst-case scenario, 12 year sentence, — is what the prosecutor repeats in each hearing"
Have you considered the worst-case, the best-case and the most probable scenarios of your case trial?
I’d rather not talk about the best-case or the most probable scenarios because it’s my first experience with the Ukrainian justice system and with the High Anti-Corruption Court. It’s not that I know but won’t tell you, — I just don’t know.
The worst-case scenario is what the prosecutor pronounces in each hearing — 12 years term with no probation option. They pronounce it frequently and very clearly.
And yet, who could be the "ultimate beneficiary" in your case — for instance, could it be any of the infamous names you mentioned?
I doubt it, frankly speaking. I suspected them, but least of all. The primary beneficiaries of our similar stories — of all the reformers — would be those interested in killing the anti-corruption reform. Not even the corporate reform, but the anti-corruption reform, — convictions against reformers would one hundred percent kill the reputation of these agencies with western countries, with no official statements made. Certain things don’t get coverage. Not everyone has brains to grasp it. The primary beneficiaries would be those who would use these cases to finish off NABU and SAPO.
If you look into the matter of WHO attempted to annihilate SAPO and NABU you will immediately find well-known names — they are just a few. I would say around three names.
Portnov’s "old guards"? [Andriy Portnov, a Ukrainian lawyer, was adviser to ex-President V. Yanukovych — ]
Since it’s not an interrogation I have this question: what would you have or have not done in 2018 had you known about the 2023 events? And a broader question: would you have gone to work for Naftogaz ten years ago if you had had this knowledge?
Yes, I would have gone for sure. I’ve asked myself about it. To be honest, there’s nothing I would have done differently. Everything would have been done the same way. Maybe not exactly in every detail — for instance, I would have done some things more bulgingly, so to speak.
"Bulgingly" — what do you mean by that?
Well, when filing our law suits in Stockholm we had talks in a certain circle. I’m not naming those people but they held the biggest sway over both determining the fate of Naftogaz itself and articulating arbitration claims at that time.
We were sitting in an office, and it was December 2017. We had received a court ruling establishing our win in revising price parameters in the contract, in knocking off the price of gas unpaid in 2014 and supplied to Naftogaz before 2014. We were discussing the sum we could knock out of Gazprom to avoid cash payments and minimise payments for that gas.
They were telling me then: "Andriy, if you manage to break even, you’ll have a king’s ransom." They promised me anything — from the Hero of Ukraine decoration to the Prime Minister’s office.
I answered that the Hero of Ukraine decoration would be clearly inappropriate — heroes were those fighting at war and risking their lives. Prime Minister’s office had never attracted me, not in the least, because I knew what kind of office it is and what kind of package deal you get.
But I should have been more cynical in other matters. Bear in mind: nobody mentioned anything even close to 1% at that moment as other figures were bandied about: 10%, 5%, or 7.5% as a compromise...
I should have said, "Let's get a contract done right away." And we would have had an interesting situation. That must have been my mistake.
Your wins are: arbitration case in Stockholm (and not just one), reverse gas supply, transparent (almost) natural gas market and many other things. Which of your achievements do you consider No. 1 during your time in Naftogaz?
I have a ready answer. My No. 1 achievement is that since 2014 not a single Ukrainian President or Prime Minister has ever had to go to Moscow to fall down on their knees for gas. Not a single one.
That is No. 1, and if it’s not enough, I will add piles of monies earned by Naftogaz. Every sixth or seventh hryvnya received into the Ukrainian national budget came from Naftogaz, every sixth or seventh bullet for our military was paid with the monies earned by Naftogaz. This is No. 2.
And No. 3, I believe, is the respect we earned with our partners for our gas reform. It helped us open a lot of doors.
And there’s also a fourth thing. Naftogaz story was the magnetising show case for quality people to come to work for the government. It was very important.
You didn’t name your win in Stockholm among your major achievements. By the way, how much would have Ukraine had to pay in case of loss?
$50 plus billion.
It is practically sovereign default.
It would have been very painful had we lost.
And yet you don’t rate that win as your biggest accomplishment as Naftogaz CEO?
Frankly speaking, no.
What are your plans in a negative, realistic and positive scenario: say, do you see yourself holding any public office in Ukraine?
I don’t see myself holding a public office, although all my PR advisers are telling me: "Andriy, serve your term a bit and then we’ll go do politics" (a chuckle).
But I don’t want to go into politics and have never wanted to. Certainly, Naftogaz impacts politics. What I am doing now also has some political aspects. But in no case do I wish to get the status of a government official. By the way, I have never held it.
How about a CEO in the state-owned sector?
No again. I want to do business in private sector. I’ve dreamt about it for a long time and wanted to go back to it.
I love it for a number of reasons that are actually unrelated to money or bonuses. That’s why I very much hope to avoid that fate.
Does it hurt to see what is happening to Naftogaz now?
I believe that was to be expected. Once they took down the Supervisory Board, I could see all things through. Of course I am curious to see the company’s further trajectory because Naftogaz has once again turned into a "black hole." In fact, it happened before the war, so all that attributing it to the war is wrong, — it was already the case before the war.
September or October 2021 is actually the period when Naftogaz took a nosedive.
Can it still be fixed?
Everything can be fixed if you have the will and an answer to the question: What for?
In fact, I now favour the idea that natural gas trading and production segments should definitely be privatized.
They should be bundled in bulk, big buyers should be invited to bid, as was the case of Kryvorizhstal steel plant privatisation of 2005. A similar bidding should be arranged. Bundle it all, bid it out, make the information maximum open, invite big international companies and offer them to buy. That’s it.