To understand why Zelensky did not stay in the field of entertainment content production but won the presidential election, one must start with the story of Pavlo Lazarenko – the Prime Minister of Ukraine in 1996-1997 and arguably the most scandalous politician of that era. He never met the main character of our book, but Lazarenko’s activities indirectly influenced the events that, ultimately, led Volodymyr Zelensky to power.
In 1990, the former agronomist, then the second secretary of the Communist Party of the Novomoskovsk district of the Dnipropetrovsk region, unexpectedly rose high in the local hierarchy. At the age of 37, Pavlo Lazarenko was elected head of the Dnipropetrovsk Regional Council. Two years after the USSR collapsed, the young official of independent Ukraine became the full-fledged master of an entire region – President Leonid Kravchuk appointed him his representative in Dnipropetrovsk.
Unlike many other regional leaders, whose criminal abilities did not go beyond customary bribery, Pavlo Lazarenko quickly realized the opportunities capitalism combined with a state position could bring him. Almost immediately after being appointed as the president’s representative, he created a cunning scheme whereby every major business in the region he was entrusted with had to pay a certain amount into Lazarenko’s personal fund.
What about law enforcement agencies? That’s the point, law enforcement agencies were subordinate to the head of the region, and not a single prosecutor dared to initiate and investigate such a case. As for Kyiv, firstly, the capital was far away, and secondly, large sums of money have a remarkable way of turning a blind eye, even in Kyiv.
In one interview, after ending his tumultuous career, Pavlo Lazarenko boasted that he was the one who paved the way for future oligarchs and politicians from Dnipropetrovsk: Pinchuk, Kolomoisky, Tymoshenko, and Tigipko. There might be some truth to this, especially regarding Yulia Tymoshenko. But was Lazarenko the “godfather” of Kolomoisky or Pinchuk?
There are big doubts about that. Both future oligarchs were not part of the governor’s mafia structure. They just submitted to him and played by his rules. At that time, Lazarenko was the powerful head of Ukraine’s largest region, while Pinchuk and Kolomoisky were just two local businessmen who had to pay the regional master for the right to make money on his territory.
Pinchuk and Kolomoisky not only paid certain sums into the head of the regional state administration’s fund but also agreed to give him a share of their business. According to the Ukrainian version of Forbes magazine, in 1996, Lazarenko ordered Kolomoisky and his business partner Boholiubov to transfer 16.7% of the oil company “Sentosa Ltd” to his driver, Leonid Hadiachuk, and give away 14% of the shares of the company “Solm,” which owned a third of PrivatBank. It should be noted that after receiving a share in someone else’s business, as a decent racketeer, Pavlo Lazarenko in every way facilitated the development of PrivatBank.
In 1995, the young official from Dnipropetrovsk moved up, relocated to the capital, and became the first Vice Prime Minister of Ukraine. A year later, he took the highest post after the president as the head of the government. By that time, Pavlo Ivanovych Lazarenko was only 43 years old.
Why did Kuchma agree to appoint him as Prime Minister? Several factors contributed to this. Lazarenko already had his own “Unity” faction in the parliament. The moment for adopting a new Constitution was approaching, so the president needed additional votes from deputies. Moreover, Leonid Kuchma did not really like the previous Prime Minister – former KGB general Yevhen Marchuk. He saw him as a potential competitor in the upcoming presidential elections, whereas Lazarenko assured Kuchma of his loyalty. And, of course, the governor of the Dnipropetrovsk region impressed as an effective manager who could quickly restore order. Firmness, cunning, endurance – that was his element.
It is believed that Lazarenko invented the corrupt practice of buying deputies of the Verkhovna Rada. The term “buying” implies luring formally independent MPs elected in single-member district and deputies from other factions into his faction.
Kuchma and Lazarenko worked together for just over a year. The young talent from Dnipropetrovsk did not show any special breakthroughs in the economy. However, the shadow scale of Pavlo Lazarenko’s activities troubled Kuchma. The president was indifferent to corruption – he knew perfectly well what the Prime Minister was doing and for some time, it suited him. But Lazarenko concentrated large financial resources in his hands, and there were just over two years left until the elections. Kuchma planned to be re-elected for a second term, so any Prime Minister who was shown daily to the whole country on television was a priori a potential competitor for him.
On July 2, 1997, Pavlo Lazarenko was dismissed from the position of the head of the government allegedly “due to health reasons.” It seemed that after this, he should fade into obscurity. Having lost political protection from prosecution by law enforcement agencies, the former Prime Minister, at a minimum, should have been cautious about Kuchma, since the president controlled the Prosecutor General’s Office, the Ministry of Internal Affairs, and the SBU (Security Service of Ukraine, Sluzhba Bezpeky Ukrainy). However, Lazarenko so believed in his own fortunate fate that he decided to become the leader of the opposition and return to power. Later it turned out to be his biggest mistake.
Here it’s worth adding a few words about where the former agronomist got such huge financial resources, by the standards of the time. Regular levies from Kolomoisky, Pinchuk, and other Dnipropetrovsk businessmen were just the tip of the iceberg. Pavlo Lazarenko earned even more on the gas market as an unofficial co-owner of the company “EESU.”
In the early 90s, Lazarenko became close to the local businesswoman Yulia Tymoshenko, who once started with a video rental shop and then moved on to trading oil products and gas. For a while, Tymoshenko’s business partners were Viktor Pinchuk and Serhiy Tigipko.
Thanks to cooperation with the president’s representative, Tymoshenko’s company “United Energy Systems of Ukraine” (EESU) became the main supplier of gas to the enterprises of the Dnipropetrovsk region. In 1996, when Pavlo Lazarenko became Prime Minister, Tymoshenko moved to a national level and also relocated to Kyiv.
Buying gas in Turkmenistan for $36 per 1000 cubic meters, Tymoshenko’s company almost immediately sold it in Ukraine for $80. In just a few years, both partners: Tymoshenko and Lazarenko earned at least $300 million. In the 90s, this was a fantastic amount.
The scale of cooperation between the two partners is evidenced by the testimony for the FBI, which on May 17, 2000, was given by Pavlo Lazarenko’s former friend and ally – Petro Kirichenko. According to him, Pavlo Lazarenko paid Prime Minister Marchuk $7 million for allowing Tymoshenko’s company to enter the gas trade market. The money was transferred to Marchuk’s account at Union Bank of Switzerland.
As for cooperation with Kuchma, according to the same Kirichenko, in a private conversation, after his dismissal as Prime Minister, Lazarenko told him that he owed Kuchma $50 million, but he would rather spend that money to remove him from office than return them to the president. Why Lazarenko owed Kuchma $50 million remained a mystery. Kirichenko also stated in his testimony to the FBI that, while serving as the head of the government, Lazarenko transferred $3 million to a company controlled by the president’s assistant, Olexandr Volkov.
None of Kuchma’s entourage, including Pinchuk and Kolomoisky, ever testified against Lazarenko for American law enforcement. Although publicly, President Kuchma regularly called the former Prime Minister the main corrupt official and the cause of all the troubles of Ukrainians.
Yulia Tymoshenko’s fate turned out to be even more interesting. Having moved to Kyiv, the former video rental shop owner made a dizzying political career. After Lazarenko’s downfall, she quickly shed him as a toxic asset, left his “Hromada” party, and created her own political project “Batkivshchyna.” She became Prime Minister twice, was in opposition to Presidents Kuchma and Yanukovych, and was twice imprisoned on trumped-up charges. Eventually, Yulia Tymoshenko’s highest achievement was participating in the presidential elections in 2010 and 2014, where she twice came in second, losing first to Viktor Yanukovych and then to Petro Poroshenko.
But let’s return to 1997. After resigning, Lazarenko automatically acquired the status of a member of parliament (at that time, the Verkhovna Rada had a norm that allowed combining deputy activity and work in the government). Setting himself the goal of becoming Prime Minister again, and possibly even President, he began actively encouraging other MPs to switch to his banner. The price tag: $30,000 for joining Lazarenko’s faction and $7,000 monthly.
Buying deputies within the parliament, like a cancerous tumor, quickly spread to other parties. This phenomenon reached its greatest extent under President Yanukovych. In 2012, joining the pro-government faction of the Party of Regions paid between $500,000 to $2 million plus a monthly “salary” of $30,000-50,000. Some deputies were offered up to $5 million to join.
Around the same time, another illegal practice spread among Ukrainian parties: selling places in parliament. A large businessman could easily become a Rada deputy for just $5-10 million. Typically, even now, at least 10% of the seats in parliamentary factions are occupied by those who bought their deputy seat in exchange for financial support before the elections.
Nearly 30 years have passed since Lazarenko’s time. And although luring deputies in parliament is now banned, unofficial salaries are still paid. According to several deputies who scandalously left the “Servant of the People” faction, each of its members receives “in an envelope” from the President’s Office from $20,000 to $50,000 monthly. The maximum amount ($50,000) is paid to the head of the Verkhovna Rada committee. The deputy chairman of the committee receives $30,000 each month. Meanwhile, the official salary of a people’s deputy is about 48,000 hryvnias ($1,200).
It should be noted that political corruption is widespread even in opposition factions. There, too, salaries are paid “in envelopes.” In the Ukrainian parliament, financial motivation is the best guarantee that a MP will vote in unison with the party leader.
In civilized countries, such manipulations are considered a criminal offense. Firstly, monthly cash gifts or cryptocurrency are not declared for tax purposes. That is, at the very least, tax evasion. Secondly, it’s bribery. Thirdly, the sources of these funds are highly questionable. For example, in 2023, the “Servant of the People” faction had about 200 deputies. Even by the minimum calculation, Zelensky annually spent $50 million just to ensure that deputies did not act too independently and disciplinedly voted for the necessary bills.
Undoubtedly, these $50 million are not personally paid by Zelensky or Yermak out of their pockets. Obviously, there is a black fund filled from corrupt sources: primarily, from the infrastructure program “Big Construction.”
Pavlo Lazarenko is interesting for our story in that he was the first to show that big money in Ukraine could be made in politics. And his downfall became a lesson and an example for the new oligarchs who bulked up during Kuchma’s second presidential term: Kolomoisky, Pinchuk, and Akhmetov.
Lazarenko’s mistake was that he overestimated his capabilities and did not take into account the power of the media. Without media support (except for a few newspapers), Lazarenko went against the all-powerful President Kuchma. And just a year and a half later, due to the threat of arrest, he had to flee abroad. On February 14, 1999, Pavlo Lazarenko flew to Greece and then to New York, where he was detained at the airport with a Panamanian passport.
In America, Lazarenko was charged with money laundering. A year before being detained at JFK terminal, he bought a large house near San Francisco for $6.7 million, where Hollywood actor Eddie Murphy once lived. Since Lazarenko could not explain the legal origin of such a significant sum, this fact became one of the list of charges in an American court. Then, to money laundering, were added fraud and racketeering. The main witness against the former Prime Minister was his ally Petro Kirichenko. As it turned out later, Pavlo Lazarenko forced him to give up a share in the business too.
After several years of court hearings, Lazarenko received 12 years in prison. Having been released in 2012, he stayed in California and decided to live like an ordinary American in a middle-class suburb. Lazarenko showed no desire to return to Ukraine, despite the entourage of Yanukovych offering him a guarantee of safe return in exchange for testimony against Tymoshenko.
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