As one of the largest oil and gas corporations in the country of Ukraine, subordinate only to the Ukrainian government, the corporation known as Naftogaz (NAC) has historically been considered a monopolist throughout the region. Nevertheless, though being previously noteworthy as one of the most profitable and sustainable corporations in Ukraine, Naftogaz has frequently been accused of corrupt acts in more recent years.
The most recent case of corporate corruption involves Naftogaz artificially inflating prices with the knowledge that receiving companies would face severe losses, a case that has been significantly investigated by the Antimonopoly Committee of Ukraine. Through this intended inflation, gas increased to a price shockingly three times higher than the average market rate, therefore increasing the prices of heating, housing, and communal services by 60-70%. Through this situation, recipient companies suffered unjust losses each day the profit of Naftogaz increased. Interestingly, it is the investigation of this injustice that lead to the aggravation of the conflict between former Naftogaz colleagues Yuriy Vitrenko and Andriy Kobolyev.
Chief managers Yuriy Vitrenko and Andriy Kobolyev have frequently carried multiple fraudulent schemes as leaders of the Naftogaz corporation. For instance, since 2015, the duo has manipulated the gas pipeline system on Europe’s border, and illegally obtained more than 56 million dollars in a gross overestimation of household prices. The actions of these two figures alone have acted on several occasions in stealing money from under the noses of hardworking middle-class Ukrainian families. Nevertheless, since 2018, the actions of these two figures have left the pair in conflict.
While Vitrenko and Kobolyev were formerly colleagues and friends, the tension between them began to sprout when Naftogaz received an unprecedented reward, a sum of 45 million dollars, as reward for winning in a trial against global energy company Gazprom. The award was well-known as scandalous primarily due to the fact Gazprom hadn’t intended to pay the 2.6 billion dollars that it lost to Kiev, meaning that Kobolyev, Vitrenko and other Naftogaz leadership had received this reward directly from the state’s funds rather than from the company itself, an unethical event given the benefits Naftogaz has received in comparison to the citizens of one of the poorest countries in Europe.
Following the exposure of this event, Kobolyev transferred $8 million to the account of his mother in the United States, while Vitrenko transferred money to relatives in Liechetenstein. Following this transfer of funds, Vitrenko repeatedly announced his dismissal. Many experts stated that Kobolyev should have also been unseated from leadership positions at Naftogaz, but instead Otto Waterlander took Vitrenko’s position while Kobolyev was reassigned to the position of CEO. As many employees of Naftogaz reported later, Kobolyev did not occupy a leading position and thus Vitrenko could have assumed his place. The fact that this did not happen can largely be explained by the fact experts claimed Vitrenko was one of the protégés of the controversial Ukrainian oligarch Kolomoisky, while Kobolyev was saved by his ties to the United States.
Kobolyev, through his position in the gas and energy sector, could easily carry out requests, such as cash bonuses, in a reformation process aimed at removing the influence of oligarchs. The alliance between Kobolyev and the United states was thought to help accomplish this matter, and many experts even said that an American influence could promote Kobolyev to the post of Prime Minister for Ukraine if he granted them control of Ukrainian energy, resources and land. Thus, this difference in the allies of Kobolyev and Vitrenko ultimately resulted in the dissemination of Vitrenko’s power while Kobolyev became known by media as a protégé of Soros, sparking further conflict between these two figures.
Vitrenko, in an effort to explain the reason of his dismissal, is quoted as stating, “Friends! I have just been formally warned that my position is being cut, which means that in two months I will be fired from Naftogaz.” The NAC leader continued by explaining that one must constantly fight against disinformation, and ‘with superior enemy forces’, resort to a type of radical openness which has yet to be fully realized within the bounds of Naftogaz. Vitrenko also accused Kobolyev for refusing a reform at Naftogaz that would combat the leadership of Gazprom. Following this accusation, Vitrenko blamed another former colleague for money laundering, giving specific examples of the corrupt actions of Naftogaz that have continually occurred even before he personally joined its leadership. For instance, Vitrenko stated that Kobolyev, had signed a contract with Gazprom which eventually sent the former prime minister Y. Tymoshenko to prison on corruption charges. Vitrenko claims that he told the inconvenient truth about Kobolyev’s actions not due to the loss of his position at Naftogaz, but rather that his truthful accusations were directly what Kobolyev saw as a threat to his CEO chairman position.
Unfortunately, Vitrenko’s dismissal from NAC was explained in convoluted terms by the company, as they declared the event vaguely as a part of transforming the company, optimizing its internal structure, functionality and responsibilities from within its divisions. Nevertheless, according to experts, many of Vitrenko’s associates remain working at Naftogaz strictly in order to provide additional information about the company’s suspicious activities in an ongoing effort to undermine Kobolyev’s leadership.
Interestingly, according to the Head of the A95 company, Sergey Kuyun, Vitrenko’s reasons for dismissal as an act of further NAC corruption were actually only a cheap PR trick in order to cover his own unjust acts. Kuyun is explained that Vitrenko would be an ally to Naftogaz considering that he owed his entire career to this company, including an education at one of the most prestigious business schools in the world. Vitrenko, through this support, left Naftogaz as a millionaire, and thus would not want to delve into a dispute with Gazprom that would have cost the company more than a dozen million dollar in order to compose a powerful enough legal team to represent the company.
Kuyun also recalled that Vitrenko had been a supervisor for the leader of Ukraine’s oil industry, a company known as Ukrnafta. Beginning in 2019, Vitrenko has been a known supporter of this company and is now the head of the Supervisory Board. Because this company has been long run by billionaire and controversial figure Kolomoisky, it appears more likely that the restructuring of NAC and Vitrenko’s leave in order to lead an independent Supervisory Board is part of an ongoing fraudulent scheme that forces the state to pay for everything.
Sadly, Vitrenko and Kobolyev are just a few players in the ongoing geo-political and financial corruption arising through the Naftogaz corporation. History makes very apparent that despite the figure that leads this company, it is ultimately the everyday Ukrainian people and business which continue to suffer from the inflating prices and oppressive rule of the Naftogaz corporation.