Magic Wand Billionaire Says Putin Secrets Safe From U.S.

Photographer: Simon Dawson/Bloomberg

Dmitry Firtash, a Ukrainian billionaire, is followed by a member of his security team as he leaves the Group DF offices in Vienna, Austria, on May 10, 2014. Close

Dmitry Firtash, a Ukrainian billionaire, is followed by a member of his security team... Read More

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Photographer: Simon Dawson/Bloomberg

Dmitry Firtash, a Ukrainian billionaire, is followed by a member of his security team as he leaves the Group DF offices in Vienna, Austria, on May 10, 2014.

Ukrainian billionaire Dmitry Firtash, facing U.S. bribery charges, said there’s nothing prosecutors can offer that would entice him to divulge what he knows about how Russia moves its gas revenue around.

“Having a house in Florida is not my concept of life,” Firtash, 49, said in an interview in Vienna, where he’s been awaiting his extradition hearing since paying an Austrian record 125 million-euro ($172 million) bail in April. “I’ll defend myself to the bitter end.”

Firtash, who made his fortune as a middleman for Russian gas-export monopoly OAO Gazprom (GAZP) and owns television stations and fertilizer plants in Ukraine, denies the U.S. charges relating to a $500 million titanium project in India. Firtash, a former ally of Viktor Yanukovych, the ousted leader who fled to Russia amid bloody protests, said the U.S. is trying to nullify his political influence before Ukraine’s May 25 presidential vote.

“I am a magic wand for Gazprom,” Firtash said at the headquarters of his holding company, DF Group, in the Austrian capital on May 10. “They know I have many years of experience, that I’m able to negotiate with Ukraine.”

U.S. Indictment

RosUkrenergo, a Swiss company Firtash set up with Gazprombank, emerged as Ukraine’s sole gas importer in 2006-2009, between two Gazprom shutoffs that led to shortages across Europe, where Russia has 30 percent of the market. Gazprom is threatening to halt deliveries to Ukraine on June 3 unless it pays in advance and said today it presented a bill for next month for about $1.7 billion.

The indictment, sealed for almost a year, was announced by U.S. Attorney Zachary Fardon’s Chicago office in April. It was just weeks after Putin responded to what he called the “coup” against Yanukovych by annexing Crimea on the Black Sea, sparking the biggest standoff with the U.S. since the Cold War.

Fardon’s office has denied any link between the Firtash case and the crisis in Ukraine and declined to comment further, according to a spokesman, Randall Samborn.

Still, with the U.S. seeking more ways to punish Putin and his inner circle for the escalating violence, Firtash is a prime target because he knows the details of money movements, according to Mark Galeotti, a Russian organized crime expert at New York University who advises regulators on money laundering.

‘Putin’s Gang’

Firtash said the U.S. wants to get rid of him because he’s a “powerful player” in Ukraine’s political struggle.

President Barack Obama, who has already imposed sanctions on 19 entities and 45 people, including Firtash’s billionaire ally Arkady Rotenberg, signed a law allowing the U.S. to seize assets of Russians or Ukrainians deemed guilty of corruption.

“He knows all the parties involved and that’s why you have to think there’s some extra motivation for the Americans to try to eliminate him from the process,” said Tim Bell, a public relations adviser to Firtash. “And the reason for that is they think he’s one of Putin’s gang,” Bell, who helped former U.K. Prime Minister Margaret Thatcher win three general elections, said by phone from London.

Firtash said close ties to Gazprom and its affiliate Gazprombank, put him in a unique position to help broker a resolution to the Ukraine conflict. He also said he’s friends with Rotenberg, the Russian leader’s former judo partner.

Presidential Hopefuls

Russian billionaire Vasily Anisimov, a business partner of Rotenberg, lent the money for the bail at an annual interest rate of 12 percent, secured by real estate assets in Ukraine, according to one of Firtash’s U.S. lawyers, Lanny Davis. Anisimov’s Moscow office didn’t respond to e-mailed and phone requests for comment.

Gazprom, Gazprombank and Rotenberg all declined to comment through their press services in Moscow.

“I’m ready to act as a negotiator between Russia and Ukraine,” said Firtash in response to a question from Bloomberg about his potential role as mediator, adding that he met with Gazprombank executives recently in Vienna. “I know what to do. If Ukrainian politicians are impotent, I have to step in.”

Within days of posting bail, Firtash organized a meeting in Vienna between then-presidential hopeful Vitali Klitschko, a former world boxing champion, and billionaire Petro Poroshenko to persuade them to unite behind a single candidate, according to three people familiar with the meeting, who asked not to be identified because it was private.

Poroshenko, Tymoshenko

Two days later, Klitschko announced his support for Poroshenko, who’s now leading in the polls over Firtash’s longtime nemesis, former Prime Minister Yulia Tymoshenko. Klitschko’s press service in Kiev declined to comment on the meeting arranged by Firtash, saying only that he was in Vienna in March and that he has met Poroshenko on several occasions, including in the Austrian capital. Poroshenko’s press service today confirmed that the Vienna meeting took place.

“I am supporting Poroshenko, I don’t have any other choice,” Firtash said. “I’ll support anyone other than Tymoshenko.”

Skirmishes this month between Ukrainian forces and pro-Russian separatists who have seized government buildings in eastern towns and cities have left dozens dead. Voters in Donetsk and Luhansk overwhelmingly backed independence in referendums on May 11, according to Russian state-run media.

Ukraine’s Regions

The government in Kiev must cede more authority to the regions, Firtash said. Ukraine is facing demands for decentralization of power by mainly Russian-speaking regions in the eastern and southeastern parts of the country.

“We have to give the regions the chance to run their own affairs,” Firtash said. “Only 15 percent of taxes stay in the regions and 85 percent goes to the center, compared to 50-50 in Austria and 80-20 in Germany. That’s why I support federalism.”

Firtash, worth $2.3 billion according to Kiev-based Korrespondent magazine, is heavily protected by bodyguards at his Vienna office.

“I was in shock, I never expected such a thing,” he said, describing how police officers cordoned off his office and detained him as he left the building late March 12. “Then when they took away my phone, watch and belt, I understood that they were taking me to prison and I got really frightened.”

‘Costing Millions’

Firtash has assembled a team of 20 lawyers for the extradition hearing and possible trial in the U.S., including Davis, who was former President Bill Clinton’s special counsel during the Monica Lewinsky affair, and the Swiss attorney who successfully defended Sergei Mikhailov against charges of being a Russian mafia boss.

“This isn’t a cheap game,” Firtash said. “It’s costing me millions of dollars, but I don’t have any choice.”

The billionaire isn’t just fighting for his freedom. He’s also fighting for his fortune.

“I’ve invested billions of dollars in Ukraine and if the country ceases to exist, I’ll be bankrupt,” Firtash said. “I’m in Vienna because I can’t go anywhere, but I’m fully involved. I am working on this every day and will continue to do so night and day.”

Firtash’s offer to help resolve the crisis in Ukraine could help him to avoid extradition to the U.S., according to Timothy Ash, head of emerging markets research at Standard Bank Group Ltd. in London.

Lost Faith

“For years he adopted a very low profile in Ukraine but is now selling himself as a key arbiter of events in Ukraine, and enlisting many in the Western establishment to help his cause,” Ash said by e-mail.

Speaking of his relationship with Yanukovych, Firtash said that while the two men were once close, he lost faith in him. “We had a different view of the country. He ran it like a family clan, putting his people everywhere, which led to his ruin.”

Shortly before his arrest in Vienna, when Russia was laying the groundwork for its annexation of Crimea, Firtash said he met in London with U.K. Foreign Office officials who were keen to hear his views on how to deal with Putin.

“I tried to convince them that imposing sanctions against Russia was a bad idea,” Firtash said. “It’s better not to pressure him because that will only make things worse. America provoked Putin into this situation.”

To contact the reporters on this story: Irina Reznik in Vienna at ireznik@bloomberg.net; Henry Meyer in Moscow at hmeyer4@bloomberg.net

To contact the editors responsible for this story: Torrey Clark at tclark8@bloomberg.net; Balazs Penz at bpenz@bloomberg.net Brad Cook

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