The second president of Ukraine Leonid Kuchma came to power thanks to the collusion of the red directors, which were the basis of the Donetsk and Dnepropetrovsk clans. The first three years (from March 1994 to November 1996) Kuchma spent to weaken and to suppress the political ambitions of the Donetsk clan. Leonid Kuchma made some efforts to ensure himself against the new leaders of the Donetsk clan, Rinat Akhmetov and Viktor Yanukovych, which not only thought about the presidential ambitions, but also unequivocally supported his power. The second Kuchma’s step in politics was to weaken of competitors from his own environment. Let list the most influential surnames of Ukrainian politicians from the Dnepropetrovsk clan:
1. Pavlo Lazarenko – Prime Minister of Ukraine from May 1996 to July 1997;
2. Yulia Tymoshenko – Prime Minister of Ukraine, from February to September 2005 and from December 2007 to March 2010;
3. Serhiy Tihipko – former Vice–Prime Minister and Minister of social policy of Ukraine (2010 – 2012), he ran unsuccessfully for President of Ukraine in the 2010 presidential election and participated in the 2014 presidential election;
4. Valery Pustovoitenko – Prime Minister from July 16, 1997 to December 22, 1999;
5. Oleksandr Turchynov – Chairman of the Ukrainian Parliament from February 22 to November 27, 2014, a former acting President of Ukraine from the removal from power of President Viktor Yanukovych from February 23 to June 7, 2014).
Ukrainian oligarchs from the Dnepropetrovsk clan:
1. Ihor Kolomoyskyi – a multibillionaire, he is rated as the second richest person in Ukraine with the capital of 3.645 billion dollars (data from 2013);
2. Henadiy Boholyubov – is rated as the third richest person in Ukraine with the capital of 1.3 billion dollars (data from 2015);
3. Victor Pinchuk – a son-in-law of former Ukrainian President Leonid Kuchma. In 2013, is rated as the 6th richest person in Ukraine with the capital of 2.150 billion dollars, and others.
Since 1995, Leonid Kuchma had a particularly trusting relationship with Pavlo Lazarenko. Lazarenko was 15 years younger than Kuchma. He made a successful career in the Dnepropetrovsk region as an industrial manager, so when Leonid Kuchma was elected the president of Ukraine, first he assigned Lazarenko to the post of the Head of the Dnepropetrovsk region (in fact, he made him the head of the Dnepropetrovsk clan), and later he transferred him to another position in Kyiv. From the end of 1995 Pavlo Lazarenko – First Vice–Prime Minister of Ukraine, and from May 28, 1996 to July 2, 1997 he was a Prime Minister of Ukraine. At 43, Pavlo Lazarenko was the second influential man in the state after Leonid Kuchma. With the help of Lazarenko, Kuchma eliminated his external competitors from the Donetsk clan (all investigations led to Lazarenko and Tymoshenko) and put in place some close associates, thanks to which he won the presidential election in 1994. For example, Yevhen Marchuk was a Prime Minister of Ukraine from June 1995 to May 1996, presidential candidate, secretary of the National Security and Defense Council from November 1991 to July 1994, and Defense Minister of Ukraine Marchuk was too independent in his decisions, so Kuchma eliminated a competitor from the power through Lazarenko.
Experts positively evaluate the organizational and managerial skills of Pavlo Lazarenko. For example, Ivan Kyrylenko, the leader of the Yulia Tymoshenko Bloc in the Verkhovna Rada, ten years after Pavel Lazarenko’s premiership in the interview called him “a powerful organizer and a good economic manager” [Kyrylenko, 2008]. In 1996 – 1997 Lazarenko’s status became so significant across the country that his candidacy was considered by not only the Dnepropetrovsk clan, but also representatives of other regions of Ukraine, as an alternative to Kuchma in the forthcoming election of 1999. Kuchma as any authoritarian leader did not treat the competitors very well. Having learnt about the ambitions of his protégé, Lazarenko was not only removed from power, but also as an example to others, he was punished severely.
In Ukraine there is a proverb: “Beat the dog before the lion”. Pavlo Lazarenko clearly overestimated his opportunities. The presidential ambitions of Pavlo Lazarenko were first awakened by Yulia Tymoshenko, with which Lazarenko had not only close partnerships in business, but also a close personal relationship. Tamara Lazarenko (Lazarenko’s first wife) confirmed that they had been having quite a stormy affair [Kolyada, 2013]. Law enforcement authorities regulated by Kuchma in 1997 after the appropriate command from the president, accused Lazarenko in major embezzlement of public funds, theft and corruption. In July 1997, President Kuchma dismissed Lazarenko. February 9, 1999 the Prosecutor General of Ukraine asked the Verkhovna Rada to strip Lazarenko of his parliamentary immunity. February 15, 1999 Lazarenko forced to leave Ukraine. February 20, 1999 he was detained in New York at JFK airport on suspicion of illegally entering the United States. In 2000, in the United States, Lazarenko was put on trial for money-laundering, corruption, and fraud. The total amount of money, which Lazarenko transferred from Ukraine to the USA, was estimated at 114.000.000 million dollars. According to an official count by the United Nations, approximately $200.000.000 or 0.4 % of the gross domestic product was looted by Lazarenko during 1996–1997 from the government of Ukraine. In 2006 477 million dollars on Lazarenko’s accounts were frozen by the US court (but not confiscated).
Thanks to American justice, who made available information on the investigation of the crimes of Lazarenko in Ukraine, we can confidently say that by 1996 the Ukrainian authorities had been entirely covered by corruption. It was from Kyiv, from high-ranking government officials, the corrupt schemes, which moved down to the regions and pulled in a vicious circle of business representatives and low-ranking officials. At the head of the corruption pyramid there was Leonid Kuchma, like an octopus with the help of the network of corruption schemes, he tried to entangle Ukrainian society.
The true dimension of corruption in the Ukrainian authorities of that time we can only guess. If one man as Lazarenko could steal about half a billion dollars in cash (but much larger sums were invested by Lazarenko in real estate and other assets in Ukraine) for two years of profitable work with Kuchma. A question therefore arises as to how much President Kuchma and his associates had stolen from the Ukrainian people for his 12 years reign?!
According to Ukrainian unofficial sources, before escaping from Ukraine, his estate contained 5 billion dollars! He had a share of energy sector, trade sector and many others [Melnyk, 2004].
From the monograph: “Corruption in Ukraine: Rulers’ Mentality and the Destiny of the Nation. Geophilosophy of Ukraine.”