David Zhvania
He was once one of the most influential oligarchs in Ukraine, but today he cannot protect the remains of his business from his own political associates, who consider it superfluous and useless. But his way of doing business is somewhat specific: if the ancient Greek king Midas turned everything into gold with his magical hands, then David Zhvania turns enterprises into bankrupt ruins. This is more typical not of a pragmatic businessman, but of an infiltrated saboteur, which sometimes raised the question: is David Zhvania the person he claims to be?
Soviet major
David Vazhaevich Zhvania is a person who, from childhood, had everything he wanted. After all, he belongs to the generation of children of the late Soviet Communist Party elite – or, as they are also called, Soviet majors. He was born on July 20, 1967 in Tbilisi, in the family of the dean of Tbilisi University Vazha Zhvania. Today, the grateful son claims that his venerable father was a “physicist-philosopher” and even defended his doctoral dissertation on the theory of relativity, after which he was invited to the Central Committee of the Communist Party of Georgia “to write texts for party functionaries.” However, there is other information: that Vazha Zhvania specialized in crossing theoretical physics with the fundamentals of Marxism-Leninism, and at the same time was a party organizer at the university – from where he then moved to the position of head of the department of ideology and propaganda of the Central Committee of the Communist Party of Georgia. According to the Soviet table of party ranks, this place corresponded to the title of second or third secretary of the Central Committee, deputy chairman (vice-speaker) of the Supreme Council or deputy chairman of the Council of Ministers (vice-premier) of the republic – that is, Vazha Zhvania was one of the ten top officials of Soviet Georgia.
David Zhvania with grandmother Evgenia
When David Zhvania later became a “prominent entrepreneur” and went into politics as a “democrat,” he, like other oligarchs who emerged from the Soviet party-Komsomol elite, had to change his colors and become a ruthless critic of the “totalitarian past.” At the same time, he tried to edit his father’s biography so that no one would know that Vazha Zhvania himself was the “totalitarian past” that led David’s son to wealth and power. However, it is impossible to hide the past of such big people; these are not some small scammers from vegetable warehouses.
In 1973-84 David Zhvania studied at Tbilisi secondary school No. 61, and then entered the university where his father once worked. Having chosen the faculty not of Marxism-Leninism, but of the more promising “national economic planning”, preparing the future heads of the State Planning Committee of the republic. However, even with such a high-ranking father, he was unable to avoid the army, and in 1986, David Zhvania was “shaved” for two years. However, he served literally at home: at the headquarters of the border troops of the KGB of the USSR right in Tbilisi, having the opportunity to appear in the barracks only for verification. However, David did not use his position in vain: instead of spending time at home on the couch or in a cafe with girls, he was actively involved in business.
Later, Zhvania will claim that from the age of 13 he worked as a simple worker for the “guild workers” who made jewelry – and so, they say, he earned his first capital. But with the same success he could tell that he started out by selling washed apples! Where exactly David Zhvania got the money for his first business remains unknown. Perhaps from his good friend Badri Patarkatsishvili, the future Georgian and Russian oligarch, business partner and ally of Boris Berezovsky, who started as a Komsomol functionary, and already in the 80s became specifically involved in “shadow production”. Also, since childhood, David Zhvania has been close to the Ioseliani family, an influential and numerous family that has given the world a number of famous people: film director Otar Ioseliani, head of the Georgian special services Avtandil Ioseliani, leading crime boss Jabu Ioseliani, as well as Zhvania’s cousin and future business partner Alexander Ioseliani. In addition, he had another promising cousin (or second cousin) – Zurab Zhvania, who later became the Chairman of Parliament and Prime Minister of Georgia (died under strange circumstances in 2008). Also, at the level of rumors, they said that Zhvania borrowed money from fellow majors or even from Georgian “thieves in law”.
Zurab Zhvania
However, his father, Vazha Zhvania, did not encourage David’s vigorous activity – he was probably afraid that it could be used against him as compromising evidence. And he mercilessly beat his foolish son. However, David Zhvania opened his first cooperative “Homli” exactly at the time when he himself was listed as an employee in the border troops – accordingly, he spent most of his time there.
After demobilization and reinstatement at Tbilisi University in 1988, David Zhvania paid no more attention to his studies than before to defending his homeland. He enters a new stage of business: with his major friends and influential relatives he opens the joint venture Unipharm, which is engaged in almost criminal business: the import of unlicensed imported medications into the USSR. Organizing the import itself without the necessary connections at customs and law enforcement agencies was very problematic, but they also created a system for selling them throughout the Union – of course, for a lot of money. According to David Zhvania himself, this is how he became rich – and not only in “wooden” rubles.
Well, savings in hard currency were very useful to David Zhvania when in 1990 he had to urgently flee Georgia and the USSR in general. According to one version, he got involved in a very large criminal case on an all-Union scale, from which his familiar Georgian officials could not get him out of it; according to another, he owed a large sum to Georgian thieves. He himself claimed that he was fleeing political repression: power in Georgia had passed to Zviad Gamsakhurdia, an anti-communist dissident and radical nationalist who declared war on the old Soviet elite. But Vazha Zhvania safely survived Gamsakhurdia and left Georgia only in 1995 to move to Kyiv, so there can be no talk of any repressions. However, David Zhvania had to urgently leave his homeland – he didn’t even finish his studies at his university, but then he was eventually issued a diploma (for 1991), fortunately, acquiring the necessary “credentials” in Georgia was never a problem. And not just a diploma or a driver’s license.
Atomic thrower
The period from 1991 to 1997 was strangely omitted from the “life” of David Zhvania: it is only known that he lived in Slovenia and Austria, and then moved to Ukraine. At the same time, it was reported that he “materialized” in Kyiv as the holder of several passports, and the Georgian one turned out to be… fake. It was a very strange story that came to light much later! And so, in 1994, David Zhvania filed an application to the court of the Soviet district of Kyiv (now Shevchenkovsky) to establish continuous residence in Ukraine. At the same time, he attached passport XIX-TI No. 500353, allegedly issued in his name on August 15, 1990 in Tbilisi. Allegedly, since in 2008, during an official request from the Ukrainian side (the head of the Presidential Secretariat), an official response was received from the Georgian Ministry of Justice that information about the issuance of this passport does not exist in the database. At the same time, the passport form XIX-TI No. 500353 was real, but simply could not be officially used: the issuance of passports of this series ceased in 1994 at number 500325, after which all others were written off during the transition to Georgian passports of a new type. Thus, the following happened: in 1994, David Zhvania was retroactively (1990) given a Georgian passport on a decommissioned old-style form, with which he showed up for “naturalization” at the Kyiv district court. More than a strange story! Someone even had a suspicion: is this David Zhvania at all?!
However, in the same year of 1994, David Zhvania registered his first enterprise in Ukraine, presenting a Cypriot passport. Afterwards he tried to deny it, saying that he had only been to the island once on vacation! But for some reason he carefully hides how exactly David Zhvania earned and lived during that period. However, there is very fragmentary information about his involvement in the “family business” in Georgia during the period of the local unrest of 1991-94, when many eminent Georgians close to Shevardnadze made good money by supplying various types of goods to the conflict-ridden republic, including number of weapons. At the same time, money was also obtained to purchase it and generally support the ruling coalition: this is how a large Georgian business of international level was created.
And in 1996, David Zhvania, together with his cousin Alexander Ioseliani, registered the offshore company Brinkford Cons ltd in Cyprus, which was a structural division of Brinkford Limited registered in Ireland. And in 1997, Brinkford Ukraine Limited (later Brinkford CJSC) began its activities in Ukraine, which jumped out like a jack-in-the-box and immediately got its hands on such a unique business as intermediary in the supply of Russian fuel rods for Ukrainian nuclear power plants (NAK ” Energoatom”). And here you need to understand that all operations related to the circulation of radioactive materials are under strict control not only of the Russian and Ukrainian authorities, but also of international structures. This is not for you to trade oil, or even weapons! It was possible to get the go-ahead for such a business only if there were huge connections in the very top echelons of power, as well as in the intelligence services of both countries. Thus, David Zhvania was not just a successful businessman of the 90s, he was a protégé of some very influential circles.
The partner of David Zhvania and Ioseliani in this case was JSC “Trading House”, whose owner was Nikolai Martynenko (Read more about him in the article by Nikolai Martynenko. Why is the “nuclear oligarch” being actively dumped?) former secretary of the Kyiv city committee of the LKSMU, who entered big business already in 1991. The joint business of Zhvania and Martynenko began back in 1994: then David Vazhaevich began to be listed as the manager of the Trading House, and from 1995 he became its director for economics – but what exactly he did remained unknown. And in 1996, Martynenko became a co-founder and co-owner of Brinkford Ukraine Limited, created as a Ukrainian subsidiary of Brinkford ltd.
Nikolay Martynenko
And in 1997, the partners began their first big business. First, in Kyiv, in a strange way, the money allocated to Ukraine as compensation for abandoning nuclear weapons and intended to pay for the supply of Russian fuel rods “ran out.” They “ended” immediately after Brinkford began working as an intermediary in these deliveries. The company “earned” about $200 million from this in 1997-2000. This was achieved by monstrous markups and insurance premiums, tax evasion with the help of Cypriot offshore companies and front Ukrainian companies registered in the name of disabled people and WWII veterans, as well as the banal disappearance of multimillion-dollar sums and short deliveries of fuel rods.
Russia (*country sponsor of terrorism) began to demand advance payment for fuel rods, and Ukrainian nuclear scientists sounded the alarm – they say that soon there will be nothing to load the reactors with! It should be taken into account that even then Zhvania and Martynenko took control of the management of NJSC Energoatom (or a share). And at the end of 1997, JSC “Trading House” appeared in an appeal to the Pustovoitenko government with a proposal to help the state: supposedly patriotic businessmen agreed with Russia (*country sponsor of terrorism) that the advance payment for fuel rods would be made with bonds of the State External Loan of Ukraine issued in 1995. Then Martynenko received the right to operate with bonds, which, as a result of an intricate scam, migrated from the Ministry of Finance of Ukraine to the National Bank of Ukraine (then headed by Viktor Yushchenko), and in this operation the power lost another 23 million dollars, which ended up in the accounts of offshore “THU AG” and the bank “ Glomain Holding ltd”, owned by David Zhvania.
There was an outright scam, but neither David Zhvania, nor his companions Martynenko and Ioseliani, nor Prime Minister Pustovoitenko and the head of the National Bank Yushchenko (and especially President Kuchma) involved in it were under suspicion of corruption and embezzlement of public funds. Moreover, there was no wave of scandalous revelations in parliament or the media. Everyone pretended as if nothing like this had happened – and this at a time when the whole of Ukraine was making noise, discussing in every possible way the case of ex-Prime Minister Pavel Lazarenko.
Empire “Brinkford”
The profit received from the “nuclear business” had to be invested somewhere, and David Zhvania and his companions began privatizing Ukrainian industry. The first acquisition of Brinkford Ukraine was the Zaporozhye Abrasive Plant: in December 1998, the company acquired from the State Property Fund 51% of the shares of the enterprise, which had previously been converted into an OJSC through privatization by the workforce. However, the enterprise did not receive the promised investments from the new “effective owner”: instead of 90 million hryvnia, only 47.1 million were transferred to the plant’s accounts – which immediately went to the accounts of Zhvania’s offshore companies. At the same time, the “debt” for the JSC remained: according to the agreement, the investments had to be reimbursed with profits. It’s just that the Zaporozhye Abrasive Plant’s profits have become very poor, which ultimately allowed Brinkford to buy out another part of the company’s assets from other shareholders, bringing its stake to 64.94%.
But it didn’t seem enough for Zhvani to ruin his own enterprise. During 1999-2004, 500 thousand tons of bauxite that belonged to the State Reserve and were stored there in accordance with the agreement disappeared from the territory of the Zaporozhye Abrasive Plant. This became known in 2005, but by that time Viktor Yushchenko, David Zhvania’s friend, godfather and partner in transactions with State Loan bonds, had become president, and Zhvania himself was appointed head of the Ministry of Emergency Situations, so the matter did not even come to an investigation.
A similar attitude towards his enterprises and state property distinguishes David Zhvania: over many years, he has gained a reputation in Ukraine as an oligarch who buys up enterprises as if to then let them go to waste. A typical example of this was the “Lugansk Cartridge Plant”, which was divided during the reorganization into three enterprises: SE “Lugansk Cartridge Plant”, PJSC “Lugansk Cartridge Plant” and PA “Lugansk Machine Tool Plant”. Zhvania companies became investors in these dying enterprises, the demise of which only accelerated after that. As a result, only PJSC Luhansk Cartridge Plant remained not disassembled for scrap metal, which, however, practically stopped producing products and ended each year with enormous losses. Meanwhile, the Ukrainian arsenals were melting and needed new cartridges, which were not available. This continued until 2014, when the plant passed into the hands of the separatists – and, lo and behold, it was immediately launched and is now producing ammunition for LPR militants. In this case, the enterprise legally remains in the possession of the following companies:
- Verhalt Holdings Ltd. — 24.99%
- Perinhar Holdings Ltd. — 24.98%
- Triestford Enterprises Ltd. — 24.97%
- Laraik Holdings Ltd. — 10%
All of the listed companies are offshore branches of Brinkford Cons ltd, through which it manages Ukrainian enterprises. Their complete list is as follows:
- Carnic Development Corp is the owner of KSD PJSC
- Triestford Enterprises is a co-owner of the Lugansk Cartridge Plant
- Verhalt Holdings is a co-owner of the Lugansk Cartridge Plant
- Pernhar Holdings Limited is a co-owner of the Lugansk Cartridge Plant
- Erentele Enterprises Limited – co-owner of Zaporozhye Abrasive Plant CJSC (17.3%)
- Tarewood Industries Limited – co-owner of Zaporozhye Abrasive Plant CJSC (17.3%)
- THU AG is a co-owner of Interport-Kovel CJSC and Integration CJSC
- Forter Holdings Limited is a co-owner of Plast CJSC (24%) and KRK Invest LLC
- Schtoerman Investitions und Handelsgesellschaft MBH – co-owner of Plast CJSC (66.2%) and owner of Neftegaztekhnologiya LLC
- Westferry Industries Limited – owner of Techno-Invest LLC
- Energolink Investments Limited – owns the Lugansk Machine Tool Plant
- Goldfield Resources Limited – owner of Diamantbank
- Laraik Holdings Limited is a co-owner of the Lugansk Cartridge Plant
- BH Cement Industries is a co-owner of Zaporozhye Abrasive Plant CJSC (19.5%)
- Medeston Trading Limited – co-owner of Stroyindustriya, PJSC Bakhchisaray Plant
- Balasco Holdings Limited – co-owner of Stroyindustriya, PJSC Bakhchisaray Plant
- Darmon Holdings Limited – co-owner of Stroyindustriya, PJSC Bakhchisaray Plant
- Darill Holding Limited – owner of Inter-Vent LLC –
- Menwa Trading Company – owner of Mena-Trading LLC
In addition to the above, David Zhvania is a co-owner (with Nikolai Martynenko, Alexander Ioseliani and Igor Kerez) of such enterprises as: MT-Bank, Warrant LLC, Polessky Granit LLC, Integration CJSC, Kovel CJSC , DP “Alfa-Impex”, lawyer association “Kerez, Shchukin and Sotkilava” and condominium associations “Edelweiss”, Cyprus bank “Glomain Holding ltd”. He also owned 54% of the shares of OJSC Kerch Shipbuilding Plant Zaliv, which also experienced all the delights of David Zhvania’s “effective management”: by 2005, he was driven to bankruptcy, and his workers went without wages for months. The result was the resale of this strategic enterprise to the oligarch Konstantin Zhevago (Read more about it in the article KONSTANTIN ZHEVAGO. THE RISES AND FALLS OF A DOLLAR BILLIONAIREA).
The Rise and Fall of the Orange Oligarch
Having become close to Viktor Yushchenko over fraud with State Loan bonds, David Zhvania made him his first political bet. The idea to become a deputy was given to him by Nikolai Martynenko, who sat in the Rada in 1998 and even managed to head the parliamentary Committee on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety for three convocations. Thanks to this, the Brinkford Ukraine company continued to single-handedly rip off Energoatom like a stick. Sometimes the impression was created that Zhvania was given the task of bringing Ukraine’s nuclear energy industry to bankruptcy and closure.
Viktor Yushchenko (top)
Katerina Yushchenko and David Zhvania (below)
In 2002, David Zhvania was elected to the Verkhovna Rada on the list of “Our Ukraine” (No. 33), and immediately began to hide behind his status as an oppositionist when his enterprises were subjected to various inspections. At the same time, Zhvania became one of the main financiers of Yushchenko’s future presidential company – at least Ukrainian financiers. However, not all of this money was his. In 2005, Boris Berezovsky stated that in 2003-2004. met with David Zhvania several times in London (they were brought together by a mutual acquaintance Badri Patarkatsishvili) and that Zhvania persuaded him to allocate more than 40 million dollars for the “development of civil society in Ukraine” – which went to sponsor organizations and movements that supported Yushchenko. However, in response to this revelation, Zhvania rudely declared, “Buying Berezovsky’s stinker in London is inexpensive,” and promised that if Berezovsky came to Ukraine, he would hand him over to Putin (*criminal).
David Zhvania with his family
In 2005, David Zhvania reached the pinnacle of his political power – in the Tymoshenko government, he headed the Ministry of Emergency Situations of Ukraine, which, in particular, deals with issues of nuclear power plant safety and the removal of spent nuclear fuel. This allowed Zhvania, together with his companion Nikolai Martynenok, who headed the Committee on Fuel and Energy Complex, Nuclear Policy and Nuclear Safety, to earn money by providing Energoatom with a mass of commercial servants, putting the nuclear energy industry of Ukraine on the brink of ruin. Then sources reported that Ukrainian nuclear power plants were saved only by the lack of money for their shutdown and mothballing. His closeness to the president (he also became Taras Yushchenko’s godfather) made him unpunished, and he clearly abused it and generally did strange things. Thus, they wrote that it was David Zhvania who gave the president’s son Andrei Yushchenko a BMW M6, which caused a scandal and called into question the “transparency” of the new government. Moreover, this story was very strange: after all, someone specially sent the paparazzi immediately after presenting the president’s son with an expensive gift.
And in 2006, Zhvania suddenly began to rapidly lose her position. He falls out of the ranks of Yushchenko’s “favorite friends”, and in the 2006 elections he received only 66th place in Our Ukraine. After the creation of the PR-KPU-SPU coalition, Zhvania leaves the ranks of Our Ukraine, but, also being in conflict with Tymoshenko, does not join BYuT, but becomes closer to Yuriy Lutsenko (Read more about him in the article Yuriy Lutsenko. “Terminator” of Ukrainian politics) and his “Self-Defense”. As part of which he was elected in 2007 on the list of “Our Ukraine – People’s Self-Defense”. However, his gap with Yushchenko only widened: in 2008, David Zhvania became a defendant in the “dioxin case” about the poisoning of Viktor Andreevich in the fall of 2004. It turned out that he was the organizer of the meeting between Yushchenko and the SBU generals, who agreed on the terms of support for the “people’s candidate.” At the same time, during the check of Zhvania, it was discovered that his passport was fake. Zhvania’s retaliatory attack was the statement that Yushchenko’s poisoning was a political fiction.
The result of such a massive attack on the part of the presidential team, and then Prime Minister Tymoshenko, was the loss of Zhvania’s access to a number of “streams,” and his “nuclear business” was preserved solely thanks to Nikolai Martynenko. Therefore, it is not surprising that in 2010 Zhvania tried to find a place for himself in the new government team (or to spoil it too) by joining the parliamentary coalition “Stability and Reforms” (Party of Regions and Lytvyn Bloc). Then David Zhvania became one of the most frequently mentioned “defector carcasses.” His financial situation has improved significantly: in 2011, Focus magazine included David Zhvania among the two hundred richest Ukrainians with a net worth of $110 million. And after the 2012 elections (Zhvania won in single-mandate district No. 140 in Odessa), he joined the Party of Regions faction and even headed the Committee on State Construction and Local Self-Government, which was responsible for the then-hot topic of federalization of Ukraine.
Total trouble
David Zhvania left the ranks of the regionals immediately after the new Maidan gathered in Kyiv: in early December, together with Inna Bogoslovskaya (Read more about her in the article Inna Bogoslovskaya: a woman without complexes and a politician without principles) and other “prudent” deputies, he left the PR faction, condemned the “use of force” and declared that Viktor Yanukovych usurped power in 2010. He did not explain why Zhvania was silent about this usurpation for three whole years, and began to actively look for new allies on the Maidan. And he found them in the person of his companion Mykola Martynenko, who at that time was a deputy of the “Batkivshchyna” – freed from Yulia Tymoshenko and headed by Turchynov (Read more about him in the article by Alexander Turchinov. Skeletons in the closet of the “bloody pastor” of Ukraine) and Yatsenyuk. It was on them that Zhvania made his next political bet. However, just a few months later, he broke up with them, running under the wing of his longtime friend Petro Poroshenko, who was elected to the presidency and began creating his own bloc for the 2014 parliamentary elections.
David Zhvania was not included in the list of the “Poroshenko Bloc” then, although he was part of the leadership of the bloc’s headquarters, and this cost him his mandate. An attempt to be elected again in the single-mandate 140th district ended in defeat, and it was accompanied by a scandal about falsifications in favor of Zhvania – so the chairman of the district commission simply ran away. As the parties to the conflict specified for SKELET-infothe case was not promoted only because the candidate was from their presidential bloc. However, as a consolation prize, David Zhvania received control of the State Enterprise Ukrkhimtransammiak, the monopoly owner of Ukrainian ammonia pipelines. And Zhvania began to do to him what he had done earlier with Energoatom: entangle him with his companies and ruin him. Over the year (from March 2014 to March 2015), the profit of Ukrkhimtransammiak decreased from 64 to 2.6 million hryvnia (in dollars it looked even worse), the company acquired loans ($42 million) from Alfa-Bank (Russian oligarch Mikhail Fridman) under state guarantees, fraud with tenders was exposed. This has led to the fact that the government has now removed the management of the State Enterprise Ukrkhimtransammiak and is conducting an internal investigation.
Zhvania had no luck at all with the new prime minister. Troubles began at the end of 2015, when, during the war between the BPP and the Popular Front, the latter decided to sacrifice Nikolai Martynenko, who was accused of corruption, embezzlement, and embezzlement – in general, forced to resign his mandate and was completely wiped out of the ” Energoatom”. Moreover, then an official investigation was also launched there, after Sergei Leshchenko (BPP) uncovered schemes for the financial enrichment of Martynenko and his companions (Zhvania, Ioseliani, Kerez) using enriched uranium ore. It was purchased by the Ukrainian state-owned enterprise Eastern Mining and Processing Plant at excessively inflated prices from the Austrian company Steuermann Investitions und Handelsgesellschaft mbH, registered in the name of an old grandfather (an Austrian born in 1945), but founded and owned by Martynenko and Zhvania’s entourage. At the same time, the calculations were carried out through Diamantbank, owned by Zhvania, Martynenko and Kerezy, which has its roots in a Cypriot offshore.
And this is not the only current problem of Zhvania’s shaky business empire. Back in the spring of 2016, his Diamantbank was raided by bailiffs who arrested the accounts of Donbass Mine Management LLC. According to case No. 757/39821/15-k, this enterprise was engaged in the sale in Ukraine of coal mined illegally in the separatist-occupied territories of Donbass, and the proceeds from its sale through Diamantbank and subsequent cunning schemes were withdrawn in an unknown direction. According to the SBU, which initiated this investigation, they were “financing terrorism.” This story aggravated the crisis of Diamantbank, which suffered a loss of 528 million hryvnia in 2016
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What’s going on? There is an opinion that David Zhvania’s attempt to fit in under the new government surrounded by Poroshenko ran into the ambitions of the president’s closest associates: Kononenko (Read more about him in the article by Igor Kononenko. The President’s Army Buddy) and Groysman (Read more about him in the article by Vladimir Groysman. Dark spots in the biography of the Speaker of the Verkhovna Rada). They decided that it would be more profitable to throw Zhvania and Martynenko out of the energy business and take their niche there than to share power with outdated “dinosaurs” – who, moreover, were never known for their political reliability. Times have now become tough for business in Ukraine, due to the reduction in resources for enrichment. Having taken what they can from their opponents, the strongest now plunder their least valuable allies.
Sergey Varis, for SKELET-info
