Jim Armitage: In Ukraine, business and politics mix quite a lot

Outlook For proof of the importance of Ukrainian and Russian politics to the City of London, look no further than FTSE 250 miner Ferrexpo.

Since its oligarch owner Konstantyn Zhevago floated it with the controversial investment banker Ian Hannam in 2007, it has been the subject of two major attempted power grabs by three fellow oligarchs – one of which continues to drag through the courts, bouncing around between London and Kiev.

Mr Zhevago, 40, was a big supporter and alleged financial backer of Yulia Tymoshenko before she was jailed, and served as an MP in her party.

In the way of such things in Ukraine, WikiLeaks cable traffic reveals that he was accused of all sorts of shenanigans by dubious sources such as the Ukrainian security services. He denies the claims.

Quite where he plans to hitch his mine wagon in the current power struggle is less than clear – political observers in Ukraine say he is "more oligarch than ideologue" and will be looking to back whichever politician is likely to win most power. He currently sits as an independent MP.

Why does all this politics matter? Because, as the company has itself claimed in the UK courts, Ukraine's legal system is inherently politically biased. In its annual financial figures yesterday, Ferrexpo admitted that the court case in Kiev could still result in its main mining asset, in central Ukraine, being awarded by a judge to a former shareholder, Alexander Babakov.

Arguably, the fact that Ms Tymoshenko's political opponent Victor Yanukovych is now out of the picture strengthens Mr Zhevago's hand in the Ukrainian courts. But with so little clarity on what the next government in Ukraine will look like, it is surely a prickly issue, even if Ferrexpo's filings declare that the chances of Mr Babakov succeeding are "remote".

Another peculiarity of the political situation in Ukraine: one of the oligarchs behind a separate attempt to seize control of Ferrexpo is a character called Ihor Kolomoyskyi. His tilt failed, but he was recently reported in Ukraine as being potentially interested in making another bid. Since the revolution, his star has risen to the extent that he was given a whole region to govern. Could this new-found power not embolden him further in his ambitions for a politically backed bid for Ferrexpo's Ukrainian assets?

The company, and its shareholders in London ranging from the Pru and Barclays to Royal London, don't seem too bothered.

Perhaps they're right not to be. Yesterday, Ferrexpo announced decent results and a handsome special dividend that will pay the thick end of $20m to Mr Zhevago. Production and shipping from its operations in Ukraine remain unaffected by the political unrest.

But you have to think, Ferrexpo must surely be a stock only for the brave.