Can the New Rich Buy Respect? One Ukrainian Oligarch Is Trying
There comes a time in the life of an oligarch when spending money becomes more important than making it. And for Victor Pinchuk, the controversial oligarch and Ukraine’s second-richest man after Rinat Akhmetov...
There comes a time in the life of an oligarch when spending money becomes more important than making it. And for Victor Pinchuk, the controversial oligarch and Ukraine’s second-richest man after Rinat Akhmetov, that time is now.
At his invitation, Paul McCartney recently performed before 350,000 exultant Ukrainians in Independence Square in Kiev during a thundering rainstorm. “This is for Ukrainya,” Mr. Pinchuk yelled after the performance in June.
It may have been, but the concert, which cost Mr. Pinchuk more than $5 million, was also the latest, most lavish stage for his own uneven metamorphosis from grasping, post-Soviet oligarch to international mover and shaker. Now, he calls the likes of the financier George Soros and former President Bill Clinton friends.
The worldwide boom in commodities has created a growing number of billionaires in once destitute economies like Russia, India and Ukraine. At the same time, the global credit crisis has set back the ambitions of many a Western titan and opened the way for a new breed of the superrich, hungry for art, access and, ultimately, acceptance.
For Mr. Pinchuk, and many of his contemporaries in neighboring Russia, the prizes they extracted from the ashes of the Soviet Union were a function of brute political calculation and ruthless business practice.
But in an interconnected world, success is measured not only by the size of their fortunes but also by their ability to use their billions to achieve recognition and influence far beyond the grimy precincts of their industrial triumphs.
His detractors say that Mr. Pinchuk’s wealth would not have exploded had he not married the only daughter of Leonid D. Kuchma, Ukraine’s controversial former president.
He has been accused of securing sweet deals on privatizations, especially in the steel industry. One of his privatization deals has been revoked. Another, his purchase of Nikopol, one of the world’s largest iron alloy producers, resulted in a lawsuit that accused Mr. Pinchuk of paying bribes to officials and siphoning off $41 million in profits.
That case was settled in 2006, and Mr. Pinchuk brushes off the allegations. He also denies that he benefited from favoritism.
“My pipe business I created from scratch; my media assets and bank I bought from the secondary market,” he said. “The only gift I get from Kuchma is my wife. I am trying to be transparent but nobody likes rich people.”
But his critics are undaunted. “I wouldn’t mind getting paid what his P.R. people are getting paid to clean up his image,” said Bruce S. Marks, a lawyer who represented the rival Ukrainian businessman who filed the lawsuit against Mr. Pinchuk.
In Russia, billionaire oligarchs like Roman A. Abramovich and Oleg V. Deripaska have taken steps to present themselves as acceptable international figures. Mr. Abramovich has invested millions in art and soccer, while Mr. Deripaska met with Senator John McCain in 2006. But few, if any, have been as bluntly aggressive in using art, philanthropy, public policy and even rock ’n’ roll to advance their agendas as Mr. Pinchuk.
“What I am doing is not about image,” said Mr. Pinchuk, 47. “I just want to participate in the building of my country.”
He is engaged in a level of philanthropy unparalleled in Ukraine, mixed with supercharged celebrity hobnobbing. He is one of the larger non-American donors to the foundation established by Mr. Clinton, and has bankrolled a substantial AIDS awareness initiative in Ukraine. He is equally at home enjoying a night out with Elton John or a private showing of Jeff Koons’s latest sculptures.
To sustain his quixotic dream of securing Ukraine’s entry into the European Union, he has financed programs in Washington at the Brookings Institution and the Peterson Institute. And he lured George H. W. Bush, Mr. Clinton, Karl Rove and Tony Blair to give speeches in Yalta to support the cause.
None of this comes cheap. Such pursuits, along with his art purchases, have cost Mr. Pinchuk about $200 million over the last four years out of a fortune estimated at $5 billion to $10 billion.
But the investments are already reaping dividends. A Pinchuk luncheon at Davos drew 400 luminaries; he has attended Mr. Clinton’s 60th and Mr. Bush’s 80th birthday parties; and he can now call upon Damien Hirst, known for his shark in formaldehyde, to propose a color scheme for his new private jet. (The suggestion was blue.)
Mr. Pinchuk’s endorsers include Kofi Annan as well as Mr. Soros, whom he identified early on as a mentor. He has since become a large benefactor to foundations backed by Mr. Soros.
“He is behaving like an enlightened capitalist, and there are not many in that part of the world,” Mr. Soros said.
It is not a role he was born into. Mr. Pinchuk was raised in a two-room apartment in Dniepropetrovsk, a town south of Kiev.
As an engineer out of college, he had modest goals — an apartment, a TV, perhaps a dacha. “This was my dream,” he said. “Then perestroika started.”
Armed with a patent for a specialized form of pipe production, Mr. Pinchuk persuaded his manager to let him market his services to pipe factories. In 1990, he formed Interpipe as an engineering consulting firm and positioned himself as a middleman.
With companies cut off from Moscow and the old business relationships, and unschooled in the ways of marketing and entrepreneurship, Mr. Pinchuk recreated the industrial chain of manufacturing steel — converting coal to coke to pig iron to hot rolled coils to steel pipes — taking a cut at each stage.
When Ukraine began selling its assets in the 1990s, Mr. Pinchuk built up stakes for a few million dollars in two pipe companies, which are now worth billions.
His fortune has attracted attention in the West and Mr. Clinton’s attention in particular. Sharing a fondness for blending high policy with kitschy celebrity gatherings, the two men have bonded.
“Victor is motivated by the rare quality of inclusion and doing whatever he can to bring together those who can help with those in need,” Mr. Clinton said in a statement.
Mr. Pinchuk makes scant effort to cloak his wealth, whether it be a $23 million purchase of a Koons sculpture or the $160 million he recently paid for a London estate. But such displays are not so easily digested in Ukraine, a country ravaged by inflation, AIDS and an inchoate political process.
Prime Minister Yulia V. Tymoshenko, who, like Mr. Pinchuk, is young and glamorous, has advanced an anti-oligarch platform squarely focused on Mr. Pinchuk and his ties to Mr. Kuchma.
When asked about her, Mr. Pinchuk declines to comment, saying only that the country is in need of real leadership. “Politicians love power. I love freedom,” he said. “That is why I am not a politician.”
It is the day after the concert, and Mr. Pinchuk has invited select guests to his sprawling Japanese garden. To honor Mr. McCartney, a vegan, Mr. Pinchuk has flown in the Vienna Vegetable Orchestra. The orchestra is now entertaining his brunch party by performing a cacophony of pumpkin pounding and celery screeches.
Mr. McCartney shows up with his new girlfriend. William B. Taylor Jr., the United States ambassador to Ukraine, is in attendance, as is Viktor A. Yushchenko, the president of Ukraine; Mikheil Saakashvili, the president of Georgia; and Mr. Hirst, the artist, accompanied by Jay Jopling, the influential art dealer.
It is in many ways a coming-out party, with each guest representing a swatch of the gaudy tapestry of legitimacy that Mr. Pinchuk so badly craves. The presence of Ambassador Taylor brings the implicit approval of the United States; the Ukrainian and Georgian presidents attest to his local clout; and the mere presence of Mr. Hirst and Mr. Jopling underscores his weight in the world of modern art.
President Yushchenko, whose face still bears the scars that made him a symbol during Ukraine’s Orange Revolution, takes it all in — the shimmering garden, the rock star and, in the distance, a nine-hole golf course that Mr. Pinchuk (who has just taken up the game) is building.
“The world has given it all to Mr. Pinchuk,” he said. “Now it is time to give it back.”