On Saturday, December 6, under the cover of darkness, the supervisory board of PJSC Centerenergo appointed a new general director. Unexpectedly, it was entrepreneur Igor Balabanov from Donetsk, unknown to the general Ukrainian public, but quite well known in his small homeland.
Such a dubious personnel decision immediately raised many questions. Firstly, why Balabanov? The Donetsk millionaire cannot in any way be classified as a Maidan sympathizer – on the contrary, he is a classic “Donetsk” who has close ties with the local elites, and this in no way corresponds to the promises of “Living in a New Way.” Secondly, why late at night? Thirdly, an appointment of this kind should have taken place in agreement with the Cabinet of Ministers, but this was not done. There was an impression that Balabanov’s appointment was shrouded in some mystery. And this is not surprising, given the past of the Donetsk millionaire.
In 2011, Focus magazine included Balabanov in its ranking of the 200 richest people in Ukraine. The publication estimated the businessman’s fortune at $10 million. The magazine named the millionaire as a co-owner of the financial and industrial company BIS-Holding, and his main areas of activity are furniture trading and the production of small boats.
In fact, the list of interests of Igor Balabanov is much wider. In the 2000s, he owned the Asta furniture factory in Yasinovataya, the Margo furniture hypermarket (named after the businessman’s daughter), the Druzhba hotel and the Weeping Willow restaurant in Donetsk, as well as a line for the production of plastic windows, several large land plots in Donetsk and Svyatogorsk, financial companies Donfinservice LLC, Donfincom LLC, Asset Management Company Fininvest Group LLC, construction company Svyatogorsk-Investbud, Water Sports Center Navigator LLC and other assets.
It is especially worth emphasizing that Balabanov’s area of activity also included energy trading. Donbassuglesbyt LLC, which belonged to him, was engaged in the supply of electricity to industrial enterprises in Ukraine, as well as the supply of fuel and equipment to power plants, in fact being an intermediary between energy generating enterprises and industrial facilities. Probably, connections in this area helped Igor Balabanov get into Centrenergo.
Such an appointment, however, can hardly be called useful for the state. For many years, Igor Fedorovich was on the secret list of Donetsk raiders and was famous for his rather tough temperament in the business environment. He successfully carried out his activities under the patronage of high-ranking officials. In particular, two vice-governors of the Donetsk region – “regionals” Sergei Dergunov and Boris Adamov. Dergunov, before becoming deputy governor, worked as Balabanov’s top manager and headed the same BIS-Holding in 2003-2005, from where he was delegated to power. After his departure, Adamov’s son-in-law, Kirill Garshin, became the president of the holding.
Hotel “Druzhba”
In 2007, BIS-Holding and its high-ranking patron Sergei Dergunov first became involved in a raider scandal. Balabanov’s company, which owned most of the premises of the Druzhba Hotel (the main office of the holding occupied its entire top floor), began to drive its other co-owners out of the hotel and force them to sell their premises to Balabanov at a price that was clearly reduced at that time.
At that time, “Druzhba” was one of the most famous Donetsk hotels. It was located in the very center of the city at 48 Universitetskaya and was quite a tasty morsel. Later, in 2011, it was acquired from Igor Balabanov by Alexander Yanukovych’s MAKO company. Currently, “Friendship” no longer exists – it was demolished with a scandal in the summer of 2011, after which another Yanukovych skyscraper rose in its place.
But at the beginning of 2007, the Druzhba Hotel still belonged to several co-owners. In addition to BIS-Holding, the building was also owned by Restaurant Druzhba LLC, Intours-Donetsk, KP hairdressing salon Druzhba and entrepreneur Tatyana Golembovskaya. After these organizations refused to voluntarily sell their shares in the hotel, a harsh attack began on the entrepreneurs.
An open letter from the victims of Balabanov’s raider attack to the mayor of Donetsk, Alexander Lukyanchenko, was preserved online, in which they described what was happening:
“Dear Alexander Alekseevich! The owners of allocated non-residential premises with an area of 808 m2 on the ground floor of the Druzhba Hotel, located at Donetsk, Universitetskaya St., 48, are turning to you for help. From January 27, 2007, as soon as the CJSC financial and industrial company Bis Holding in person Balabanov I.F. acquired 83% of the premises in the hotel building, all co-owners began to have problems related to the legal use of their private property. Through raider schemes to seize, intimidate and destroy our property, CJSC FPC Bis Holding intends to take away our right to our property.
Through fraudulent actions, deception and threats, he has already seized the premises of the Druzhba Hotel LLC and the hairdressing salon of the Druzhba Communal Enterprise. However, despite our repeated appeals to the Voroshilovsky District Department of Internal Affairs, the Voroshilovsky District and City Prosecutor’s Office, law enforcement officers did not find elements of a crime in the actions of the leaders of Bis Holding and allowed Balabanov I.F. continue to commit outrages and destroy our property,” said the letter from entrepreneurs Kaliushko, Sobolev and Golembovskaya.
The methods used by the raiders were classic for such situations. The authors of the letter also described them in detail.
“Without any reason or warning, in a barbaric manner on 07/17/07. at 5.30 in the morning, information stands and billboards belonging to Inturs-Donetsk LLC and Druzhba Restaurant LLC were placed in the hotel premises and on the facade of the building.
After calling the police, the actions of the employees of JSC FPK Bis-Holding became even more barbaric; on the orders of Balabanov I.F. turned off electricity to Inturs-Donetsk LLC, entrepreneur T.V. Golembovskaya All locks on the entrance doors to the office were filled with epoxy glue. All this time Balabanov I.F. threatened that he would take away our premises if we did not give them up voluntarily, and continued to destroy our property.
So on August 3, 2007, despite repeated appeals to the police about the protection of our property and about impending pogroms, Balabanov I.F. gave the command to his workers to cut off part of the ventilation duct of the exhaust unit belonging to the Druzhba restaurant and weld it with metal grilles.”
The appeals did not yield any results, and ultimately the entrepreneurs were thrown out of Druzhba, and BIS-Holding completely established control over it. The well-known Donetsk journalist and author of numerous journalistic investigations, Artem Furmanyuk, in his publication named Deputy Governor Sergei Dergunov as an accomplice in the raider takeover.
Attack on the Donbasstransstroy trust
But Balabanov’s cooperation with another vice-governor, Boris Adamov, turned out to be much more “fruitful”. Together in 2007, they carried out a raider takeover of Donbasstransstroy CJSC, at that time one of the largest enterprises in Ukraine for the construction and repair of railways.
The reason for the attack was a number of very attractive assets of the enterprise. The trust included both completely uninteresting and unnecessary construction and installation trains and a dead plant for reinforced concrete structures in Krasnoarmeysk, as well as quite profitable subsidiaries – an operating sand quarry in Krasny Liman and the Artyomovsk wall materials plant, which produces bricks. It was no coincidence that these objects interested Adamov. Boris Adamov’s son Alexander is the owner of a large construction company “Direction of Administrative Buildings”, which over the years has built a number of facilities in the center of Donetsk.
The trust also had another remarkable asset – an office building located in the very center of Donetsk at 15 Teatralny Ave. In the pre-crisis year of 2007, when real estate prices in Ukraine reached their maximum values, the cost of the premises was several million dollars.
Because of him, Adamov and Balabanov set their sights on the Donbasstransstroy trust, and ultimately the deputy head of the Regional State Administration got what he wanted. After the trust was captured, its office turned into expensive boutiques.
JSC Donbasstransstroy was an excellent target. The company’s shares were distributed among 5 thousand shareholders – mainly its employees and members of their families. The company was in crisis and did not pay dividends to shareholders. The purchase of his shares was organized through Igor Balabanov’s financial company Donfinservice LLC, which was part of BIS-Holding, headed by Boris Adamov’s son-in-law.
By law, only a company that has a special license for this can engage in the purchase of securities.
In the spring of 2007, Donfinservice bought the register of shareholders from the registrar of shares of CJSC Donbasstransstroy. Such information is usually classified, and it is with its purchase that a raider takeover traditionally begins. Mobile groups of share buyers, who worked in Artemovsk, Krasnoarmeysk, Debaltsevo, Yasinovataya, Krasny Liman and Volnovakha, where the company’s branches were located, went to the shareholders’ addresses. The price offered was many times lower than the real value, but for lack of an alternative, the shareholders easily parted with the certificates.
The management of the trust learned about the purchase of shares quite quickly. Letters were sent from the office to the addresses of shareholders urging them not to sell shares to Donfinservice, but Balabanov’s company had already managed to buy 10% of the shares by that time and continued to operate. The customer for the purchase of shares was formally Donbassbudinvest-Holding LLC, created by Adamov’s structures, registered in Cyprus. The shares of the trust became its property, and thus the raiders soon declared themselves holders of a blocking stake. By the fall, Adamov’s representatives managed to buy about 40% of Donbasstransstroy and hold a meeting of shareholders in Khartsyzsk, at which the management of the trust was removed. True, not a single shareholder, except Adam’s Donbassbudinvest-Holding, was allowed to attend the meeting. So the trust was actually devoured by the new owner.
Article about the seizure in the newspaper
The management of Donbasstransstroy even tried to complain about the father and son Adamov to Yanukovych, but an open letter in which the company’s staff scolded the “mafia family” that dared to hide behind the “holy name” of Viktor Fedorovich remained unanswered.
It is interesting that a year later the fate of the trust was repeated by another similar enterprise – JSC Agrospetsmontazh, which was also acquired by Adamov’s company with the help of the services of Igor Balabanov’s company. True, this time they managed to conclude an agreement with the leadership, and there were no scandals or rallies following the attack.
Considering all this background, the appointment of Igor Balabanov as head of Centrenergo looks, to put it mildly, scary. It is quite obvious that there is clearly no need to talk about the fight against corruption schemes under such a leader.
The deplorable situation in the Ukrainian energy sector and the catastrophic lack of funds in the state, it would seem, should have at least temporarily blocked the possibility of such personnel decisions. But as you can see, even the real prospect of bankruptcy of the state and social explosion does not block the path for representatives of the “old guard” to positions of profit.
“Donetsk” feel quite comfortable in Ukraine even without Donetsk.
Denis Kazansky, LB