"Black Friday" for Pyshnyi and ICU: political scientist on how Yermak's resignation destroyed their immunity

28 November will be remembered by many as 'Black Friday' due to the dismissal of Andriy Yermak. For external observers, the event is unremarkable, but inside Ukraine it is a real game changer. The searches of Yermak's house and his immediate resignation from the post of head of the Presidential Office disrupted the plans of many people in his vertical chain of command – MPs, ministers and others.

Yermak wasn’t referred to as the first person in the country, but he wasn’t the second either. Andriy Borysovych [Yermak] made decisions on behalf of Volodymyr Zelensky and the entire mono-power. One of the privileges was immunity. A person/company protected by Yermak was "no longer seen" not only by the traditional security and law enforcement forces, but even by the NABU and SAPO (Specialised Anti-Corruption Prosecutor’s Office) (no matter what legends they had compiled about themselves).

A good example is not only Myndych's imaginary group, but also quite real characters such as the governor of the National Bank, Andriy Pyshnyi, and investment bankers from the Investment Capital Ukraine (ICU) group. Now both players stand to lose everything, having lost their reliable cover.

Pyshnyi is openly Yermak's godfather, and ICU appears to be covertly managing the money of Yermak's entourage. Both were part of his power. Even the conflict between them did not change this rule. In January 2024, the National Bank removed Makar Paseniuk and Kostiantyn Stetsenko from the management of Avangard Bank. But the story was quickly hushed up. As in other situations, ICU has escaped without consequences, and is now (with the permission of the NBU governor) solving its problem. Yermak, as expected, ensured immunity for both of them until ‘Black Friday’.

Now they are in a risky position. Pyshnyi managed to make many enemies who could not reach him because of Yermak. And ICU has accumulated a good dozen episodes for which the company could be literally torn apart by the security forces of several countries.

They also have a "joint project". After the full-scale invasion, Ukraine liquidated the Ukrainian subsidiary of Sberbank of Russia. Among other assets, it held UAH 9 billion worth of Ukrainian government bonds. Coincidentally, these bonds were "hanging" on the accounts of ICU and Avangard Bank. At the end of 2022, the Ministry of Finance repaid them, and Avangard's accounts (controlled by ICU) ended up with UAH 9 billion. They had to be transferred to the budget. But ICU went to court and blocked the write-off for a year. The National Bank "didn't notice" and even allowed the guys to continue earning money, which is significant in itself.

Paseniuk and Stetsenko invested in NBU certificates of deposit, which allowed them to earn up to 25% per annum. Things were going well, and in just one year, ICU earned about UAH 1 billion on Sberbank of Russia bonds. What happened next followed the logic well described in the cartoon "Prostokvashino": the cow is state-owned, but the milk is ours. Paseniuk and Stetsenko decided to return 9 billion to the state and keep the interest for themselves. In particular, they paid themselves bonuses worth UAH 580 million, and siphoned them off by transferring abroad, bypassing the NBU's ban.

I don't know who Paseniuk and Stetsenko shared it with. But I suspect they forgot to thank Pyshny. He does not forgive such things. The NBU conducted inspections, "saw" the violations and removed Paseniuk and Stetsenko from the management of Avangard Bank. At the NBU's instigation, a scandal erupted, and the Cabinet of Ministers sued ICU, demanding that they return UAH 2.1 billion to the state.

Paseniuk and Stetsenko tried to get the money and the bank back through the courts. However, they lost.

The most interesting part came next. When everyone had forgotten about the public flogging, Paseniuk and Stetsenko were given a unique opportunity by Pyshnyi. For several months now, they have been going around the market offering to buy Avangard from them. This seems to be a good way out of a situation where the state can look good and the ICU owners can walk away with the money.

The mere fact of such a sale is already toxic to the reputation of the NBU governor. After all, the latter is playing behind the back of the Cabinet of Ministers, helping ICU to get rid of a valuable asset in secret. Most likely, Paseniuk and Stetsenko would never have been given back the right to manage Avangard, and the bank would have had to be liquidated. Therefore, while everyone had forgotten about the scandal, the NBU allowed the bank to be sold.

But that's not all. According to my sources, the National Bank (read Pyshnyi) has already extended the deadline for the sale of the bank several times. This already raises suspicions of corruption.

Even this is not all. It turned out that no one was interested in Avangard by itself. The bank was valuable only as an appendage to the ICU group, allowing it to save on commissions and keep its transactions secret. However, it is not a classic bank. It has no customer base, no loans and no card business. In fact, all the bank has is a licence and securities portfolios. If someone wants a bank, there are more attractive offers on the market. In particular, Lviv and Poltava banks are being sold, and the privatisation of state-owned Sense and Ukrgas is on the horizon. Against their background, no one is interested in Avangard.

Therefore, it is highly likely that ICU will conduct a fictitious transaction. In order not to lose Avangard completely, it will sell the bank to a shell company for a nominal sum. And then ICU will either continue to work with it or sell it later. Perhaps, to make this deal marketable, ICU involved Altius Capital, which recently completed a deal to buy a golf club for Tymofiy Mylovanov. Please note that Mylovanov is also part of Yermak's entourage. Although, as of last Friday, it is correct to say that he "used to be in Yermak’s entourage".

And of course, such a fictitious transaction would be impossible without the NBU's permission. However, the likelihood of such a service has fallen sharply since ‘Black Friday’.

If the version of the fictitious deal is true, it will be extremely toxic for both Pyshnyi and ICU. Especially given that Yermak is no longer heading the President's Office, and they are essentially left without a patron in power.

In general, after Yermak's resignation, the chair under Pyshnyi will probably shake. The NBU governor has accumulated so many enemies that he really should look around. Trouble could now come from any direction.

Even at the height of ‘Myndych-gate’, anonymous channels on Telegram started promising a sequel. It has long been said that the current government has seriously expanded the gambling business by making state-owned banks part of the money collection system. Only the lazy did not know that Timur Myndych had appointed a person to "watch over" Sense Bank, and his (Myndych’s) main interest was servicing financial flows from the gambling business. Of course, all this could not have happened without Pyshnyi.

Pyshnyi also has other reasons for concern. Being Yermak’s crony until now guaranteed him personal immunity in old cases. For example, he was not touched in the case of the Gulliver shopping centre, the scheme with deposit certificates and numerous other episodes.

One can hardly envy the ICU Group either. Since Yanukovych's time, they have accumulated numerous episodes that could lead to the deprivation of the right to work in the Ukrainian market. Criminal cases for cooperation with sanctioned persons are also possible. It is likely that ICU is still servicing the money of Poroshenko and Hryhoryshyn (both under sanctions), and has agreements with Russia's VTB (which is under international sanctions).

But the main danger facing the group is publicity. For example, there is a strong suspicion that ICU is "sitting" on the infamous Yaresko warrants. This is indirectly evidenced by the fact that Cleary Gottlieb is both the current legal advisor to ICU and the advisor to the warrant holders. It is quite possible that Yermak's entourage was also "sitting" there.

The disclosure of these and many other episodes could result in the group's licence being revoked in London and an investigation by the FCA (the UK's financial regulator).

All of these risks were waiting to happen while Yermak was heading the Presidential Office. Now, quite unexpectedly, they have exploded. Yesterday, the masters of fate turned into the persecuted. ‘Black Friday’ indeed. Life has a sense of humour.

Author Oleg Posternak