Dmitry Firtash, the Ukrainian billionaire who made his fortune importing Russian natural-gas, was arrested in Vienna days ahead of a Crimean vote that may trigger financial penalties aimed at Russia.
Firtash, 48, was taken into custody yesterday by the organized-crime unit of the Austrian police on a warrant issued by the U.S. Federal Bureau of Investigation, according to a statement by the country’s Interior Ministry today.
He is alleged to have paid bribes and formed a criminal organization, according to the warrant, issued after an FBI investigation that began in 2006, the ministry said. His lawyers and spokesmen didn’t immediately respond to phone calls.
This is “an absolutely seismic development on so many different levels,” wrote London-based Standard Bank Plc chief economist Timothy Ash in a note. “It sends a strong message to Russia that the West is willing to go down the financial sanctions route -- unless it backtracks over Crimea and over broader policy towards Ukraine.”
Russian officials and businessmen are said to be bracing for sanctions that may target Russian foreign reserves, banking assets and company lending. Citizens of the Black Sea Crimean peninsula, where Russia operates a navy port, are scheduled to vote on whether to secede from Ukraine on March 16. Many Russians see their country’s annexation of the Ukrainian territory as inevitable.
“Historically, he had close ties to Russia via the energy sector, and perhaps even to Putin,” Ash said. “Firtash is probably in the top two of Ukrainian oligarchs in terms of wealth/influence across borders.”
Firtash is a co-owner of RosUkrEnergo AG, once Ukraine’s sole importer of Russian natural gas. He controls his assets through Group DF, which employs 100,000 people in Ukraine.
He also owns eight television stations and last year paid $2.5 billion for InterMedia Group Ltd., which operates the country’s biggest TV channel. While Forbes estimates his fortune at $673 million, a 2008 secret U.S. cable said he was previously worth $5 billion and “had low-balled his true worth.”
Firtash’s Group DF agreed to buy Intesa Sanpaolo SpA’s Ukrainian unit Pravex Bank Jan. 23, adding to its acquisition of Nadra Bank in 2011, according to Group DF’s website. The purchase hasn’t been completed yet, pending regulatory and antitrust approvals in Ukraine.
“The arrest took place without incident,” the ministry said in the statement.
Vienna’s criminal court will decide whether Firtash will stay in custody and eventually face extradition proceedings, Nina Bussek, a spokeswoman for the Vienna prosecutors, said via telephone, adding that the U.S. filed an extradition request.
The billionaire’s detention is linked to an investment from 2006, Group DF said on its website.
Firtash’s RosUkrEnergo did business with Austria’s Raiffeisen Bank International as far back as 2006. Austria’s company register shows Firtash was involved in three companies near the Vienna district where he was arrested.
Ukraine’s businessmen should engage in dialog with their Russian counterparts to resolve the conflict between the two countries over the southern region of Crimea, Group DF said March 9 in a statement on its website.