Ukrainian Billionaires & Small Business Loans

Villas, grand jury investigations, and free money

Photo by Didier Weemaels on Unsplash

The Covid-19 pandemic has made everything more difficult. Small mom-and-pop shops and restaurants have been hit the hardest, and though the US Senate is still sitting on a relief package to help the millions of Americans who lost their jobs, there is a program to ease the financial strain on businesses created by the pandemic. But small businesses were far from the only ones receiving the aid packages.

The Paycheck Protection Program (PPP) was designed by the United States government to help small businesses stay afloat and to pay their employees during the long months of Covid-19. The “size standard” as deemed by the US Small Business Administration (SBA) varies on what constitutes a small business but is usually determined by a dollar amount or the number of employees a company has. For instance, most agricultural businesses with an annual income under $1 million can apply for a small business loan. For the oil and gas industry, the biggest determining factor is employee size, with 1,000 employees being the average benchmark. Anything under that number and the company or business can apply for a loan.

Common sense right? Help small businesses that are vital to local economies and communities keep running during the pandemic.

However, small businesses frequently failed to receive approval for those loans being overshadowed by large corporations.

Enter the Ukrainian oligarchs.

If you listened closely to Donald Trump’s impeachment hearings, you might have heard of a man named Rinat Akhmetov. Akhmetov had ties to Paul Manafort, Trump’s former campaign chairman who was being investigated by Special Investigator Robert Mueller for possible interference in the 2016 Presidential Election. Because Akhmetov had political ties to Russia through his economic endeavors, Manafort had allegedly asked for the Ukrainian businessman to receive polling data and then give it to Russia which may have helped target their disinformation campaign. Akhmetov denied the accusations.

A Project on Government Oversight investigation found that the Ukrainian billionaire, Akhmetov, owner of the Ukrainian soccer team Shakhtar Donetsk as well as a number of other businesses in Ukraine and the United States received $21 million worth of PPP loans from the US government, which Akhmetov’s company disclosed. In 2019, Akhmetov’s company United Coal Company, as well as its subsidiaries had generated $1.5 billion in revenue — far from the struggling small businesses we would consider more in need of loans. Akhmetov himself is thought to be worth over $3 billion. In January of 2020, he bought a $240 million villa on the French Riviera to add to his $140 million apartments in London’s Hyde Park.

United Coal Company also accrued 14,030 violations of health and safety standards costing over $13 million in civil penalties, a number which fell under the amount of loans that that company and its subsidiaries received. Despite the company having 66,000 total employees across multiple countries, the loan was approved because the US-based employees met the required threshold for the loans to be given.

PPP does not require recipients to be US citizens as long as the company is US-based and employs US citizens.

But Akhmetov wasn’t the only powerful Ukrainian billionaire to receive business loans.

Ihor Kolomoisky, the Ukrainian businessman estimated to be worth over $1 billion, is an interesting character. He played an important role in the early stages of the Ukraine-Russia conflict while he was the governor of the Dnipropetrovsk Oblast, funding volunteer battalions to fight alongside Ukrainian forces against the pro-Russian separatists. He is also the owner of the Ukrainian soccer club FC Dnipro. In 2014, his assets in Crimea were seized by Russian forces after the annexation of Crimea because of his support for the Ukrainian forces, and in 2017, he had to flee Ukraine after the bank was nationalized.

In 2020, Kolomoisky was being investigated by a US federal grand jury for laundering millions of dollars in the US real estate market, as well as defrauding Ukraine’s largest bank, PrivatBank, costing the government $5.6 billion. Five American companies owned by Kolomoisky were approved for over $13 million in Covid relief loans. The loans were given to his companies despite him being investigated by the US Justice Department. The Project on Government Oversight investigation states, “It appears to have been within the bounds of the Paycheck Protection Program for these companies, which are the subjects of a federal money-laundering lawsuit, to receive loans. Federal loan rules make those under criminal indictment ineligible, but the companies haven’t been indicted.”

On the US Treasury Department’s PPP Frequently Asked Questions site, one of the questions asks, “Do businesses owned by large companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan?”

The answer is yes, but, “Borrowers must make this certification in good faith, taking in account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations…”

This type of thing — big businesses receiving loans meant to help small businesses — has been relatively common. ProPublica found that 15 large organizations received over a half a billion dollars in loans. In theory, it wouldn’t be a problem that those large businesses owned by Ukrainian billionaires would receive loans, but it is a problem that they received loans in higher amounts and were sometimes approved in front of smaller businesses who vitally needed the influx of cash to stay afloat during the pandemic. But back in June, after public backlash, a number of large businesses that received PPP assistance had given the money back.

The “in good faith” is another matter for debate. Amanda Fischer, Policy Director of the Washington Center for Equitable Growth stated about large businesses receiving PPP, “It’s Congress’ fault. We should have helped everyone, or targeted the neediest businesses instead.”

Writer on current affairs & politics. I have a Masters degree in government from Johns Hopkins.

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