Yanukovych’s cronies still free, possessing stolen millions

Disgraced Ukrainian president Yanukovych (left) stands next to Mykola Azarov (right) at the 13th congress of the Party of Regions

Disgraced Ukrainian president Yanukovych (left) stands next to Mykola Azarov (right) at the 13th congress of the Party of Regions 

2016/02/22 • Analysis & Opinion, Euromaidan 2 years, Featured, Politics

Two years after tragic events at Euromaidan and the escape of disgraced president Victor Yanukovych, Ukraine is changing, but it is also facing big challenges – the war with Russia, the occupation of Crimea, and disappointment with the ineffective fight against corruption and other old domestic problems. Two years ago society clearly stated that it does not want to continue to endure the old rules, the old faces, and the old criminal regime that once ruled Ukraine. However, the cronies who led the country into deep crisis and against whom the Euromaidan activists protested, are today not only unpunished, they live comfortable lives due to the millions they stole from Ukraine. Some of them have settled in Russia, some in Europe and some have stayed in Ukraine and even work in Verkhovna Rada (Parliament).

Of course, Yanukovych himself is the most corrupt of the former members of the regime. However, there are tens of others who did not forget about their own interests while serving the former president’s “family”. Many of them were working in the government, so there are many corruption “entrepreneurs” among them besides Yanukovych and the former prime minister Mykola Azarov. Let’s look at some of the others –  what have they done and where they are now.

Olena Lukash, bailed out by an oligarch in Ukraine, still on EU sanctions list

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Olena Lukash, former Minister of Justice

The story of Olena Lukash has a lot of twists and turns, but with the same result as for every other former member of the old regime – she is free and “innocent.” Olena Lukash worked as a Minister of Justice from 2013-2014. Immediately after Euromaidan she was charged with abuse of power and organizing a false tender for implementing a national program on adapting Ukrainian legislation to a European system that in fact embezzled UAH 2,5 mn (almost $93,000). Lukash was arrested only in the Autumn of 2015 in Kyiv. The Ukrainian Security Service (SBU) boasted about conducting a great special operation. However, Lukash herself stated that she lived openly in Kyiv before her arrest and has been collaborating with SBU on her case. The SBU denied this, but anyway Lukash has not spent a long time in prison. She was arrested but was released on a bail of UAH 5.1 mn (about USD $186,000). It is good to have good friends. Her bail was paid by oligarch Vadym Novynsky, a former member of the “Party of Regions” (the party of Viktor Yanukovych) and now a member of its successor party the “Opposition Bloc.”

The Ex-minister’s defense counsel insisted that a bail of UAH 5.1 mn is unnecessary because Lukash did not leave Kyiv and was not hiding from the investigators. The General Prosecutor’s Office in its turn insisted that the amount is justified as the ex-minister did not show up for interrogations. In the end, the Kyiv Appeal Court reduced the amount of the bond to UAH 2.5 mn ($93,000).

Lukash said that the accusations of General Prosecutor’s office are “total bulshit” and that there are no facts proving them:

“This case was investigated by the General Prosecutor’s Office and the team of more than 20 investigators during more than one and a half years. Nobody found anything, it collected dust on the shelves. In March of this year [2015] the European Commission demanded from the General Prosecutor’s Office to confirm previously given information about my involvement in the withdrawal of funds abroad. As these facts have not been established, there was no criminal trials on the assignment of resources against me in Ukraine, so that General Prosecutor’s Office had to beg the European Commission to extend the sanctions against me. A new formulation related to theft, embezzlement, and other economic crimes was proposed”.

Since Lukash was arrested, the General Prosecutor’s Office complained about lack of help from the Ministry of Justice. Representatives of the General Prosecutor’s Office are now saying that the work on comparing Ukrainian and European laws (for which Lukash was responsible) is nothing else but a mix of student papers of no practical use. However, in the Ministry of Justice they were told that there are no specialists who can make decisions about the case.

The result of this “collaboration” between the General Prosecutor’s Office and the Ministry came in the end of 2015. The Kyiv Court refused to extend the restrictive measures against the former Minister of Justice. Lukash will get her documents back (including international passport) and her electronic tracking bracelet will be removed.

In February 2016, Lukash filed a lawsuit against the General Prosecutor’s Office defending her honour and dignity.

The name of Olena Lukash is still on the EU sanction list.

Yuriy Boiko, who stole $180 mn from the Ukrainian budget

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Yuriy Boiko, fomer Minister of Energy

Olena Lukash’s $93,000 bail is nothing compared to the corruption scheme which was successfully implemented while Yuriy Boiko worked as the Minister of Energy. In 2011, the state company Chornomornaftogaz bought two deepwater drilling platforms for $400,000 mn each.

The transactions were conducted through intermediaries and this indicated potential corruption. In 2013, the Norwegian company Ferncliff reported that in 2012 it sold the drilling equipment directly to Chornomornaftogaz’s parent company “Naftogaz” for $220 mn. However, people in Naftogaz stated they bought it through the Riga Shipyard for $400 mn. As Yuriy Boiko was a Minister that time the drilling platforms were called “Boiko’s derricks”. Moreover, there are other indications that there was corruption related to this purchase.

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The drilling platforms were called “Boiko’s derricks” after energy minister Yuriy Boyko

During this time the opposition (elements of which are now in power) was complaining that the General Prosecutor’s Office didn’t investigate this shady deal. Today many of those who were in the opposition have the power to investigate these deals, but do not.

Boiko and his subordinates were also accused of complicity in the illegal sale of liquefied natural gas as part of a scheme from 2010, together with the young billionaire Serhiy Kurchenko. Boiko was certainly “lucky” as no court has not accused him of corruption despite his involvement in two very questionable deals. Moreover, he still is considered as an influential figure in business and his political career is also not over. In the first round of the Ukrainian Presidential election in the Spring 2014 he ran for the presidency. He did not even manage to pass 1% threshold. However, in Autumn of the same year he headed the political party Opposition Bloc (the successor of the Party of Regions) which won 9,43% of votes in the Early Parliamentary Election.

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The journalist Krystyna Berdynskykh received a threat via SMS

In the spring of 2014, the General Prosecutor’s Office prepared the sanction list for EU with 22 people from the inner circle of Yanukovych, but Yuriy Boiko was not in it.

A few days ago Yuriy Boiko figured in another scandal story. In a recent article in Novoe Vremya (Russian extract here) journalist Krysyina Berdynskykh reported on Yuriy Boiko’s control over the gas supply company Kyivgaz and named Boyko’s brother-in-low Sergey Gorovoy as Yuriy Boiko’s man in the company. The journalist received a threat via SMS.

The threat said that if she continues to write such things about Kyivgaz, her gravestone will be placed near the gravestone of Georgiy Gongadze [a Ukrainian journalist who was killed in 2000.] Krystyna Berdynskykh has already contacted the police.

Yuriy Boyko has also already reacted to the case. He demanded from the Ministry of Internal Affairs and General Prosecutor’s Office to investigate the fact of threats to the journalist and said that such acts are unacceptable in a democratic society. Hromadske journalists tried to receive comments from Yuriy Boyko on the article of Krystyna Berdynskykh and asked whether he has read it. The answer of MP was not clear, in the end he said that he has read parts of it and that the accusations are “total bulshit”.

Oleksandr Klymenko, the entrepreneur from the Tax Ministry

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Oleksandr Klymenko with Russian Patriarch Kirill

It seems that the position of the Minister of Income Taxes and Fees became a huge temptation for Oleksandr Klymenko. The General Prosecutor’s Office suspects him of draining the budget of Ukraine by more than UAH 6 bn, or about USD $222,5 mn. According to the General Prosecutor’s Office, he managed to do it through organizing a real estate tax evasion scheme. The scheme involved giving companies the opportunity to use the services of Klymenko to reduce their tax burden, probably in exchange for a price.

Klymenko also organized enterprises in Odesa, Kyiv, Donetsk, and Kharkov oblasts that facilitated the customs clearance of imported goods for significantly lowered prices. This scam worked by minimizing taxes and fees by reducing the actual weight of the load with fake documents and therefore reducing its cost.

According to General Prosecutor’s, as soon as Klymenko returns to Ukraine, he will be detained.

However, in Autumn 2015, Klymenko dared to say that he is coming back to Ukraine and return to politics, and that he wants to “talk to Ukrainians”. He swears that he had no businesses and that he does not even own a house.

“It is easy for me to maintain this business, because it is not real. There was a business of the family, my brother had a business, but I was not involved with it. Everybody was looking for the house of Mr. Klymenko, but there was none. It is easy to maintain something, if I do not have it”, said ex-minister.

The name of Oleksandr Kymenko is listed in the Western sanction lists.

Nevertheless, when Oleksandr Klymenko says that he wants to talk to Ukrainians, it is not groundless. He is also known as an owner of the Vesti holding company, which includes a daily newspaper, Vesti radio, and the Reporter magazine which now exists only online. The newspaper is known for slanting its coverage in favor of the separatists in  Ukraine.

Ukraine owes former Head of National Bank over $1 bn

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Serhiy Arbuzov, former Head of the National Bank

Ukraine owes Serhiy Arbuzov $1 bn and UAH 1.5 bn (almost $56 mn) based on the bonds he possesses. Is he a high profile international investor in government debt? No, he is the ex-deputy prime minister of Ukraine and former Head of the National Bank

“General Prosecutor’s Office of Ukraine has identified and frozen the accounts of the non-resident companies of Ukraine affiliated with Arbuzov in national banking institutions for a total amount of $49.51 mn, along with bonds of internal state loans with a values of $1.021 bn and of UAH 1.495 bn,” the General Prosecutor’s Office said in a statement.

General Prosecutor’s Office explained that it can only confiscate the property after a conviction in court and entry into force of a court ruling on confiscation. Also the General Prosecutor’s Office made assurances that they are taking measures to hamper the removal of seized assets from the country, however it seems that they are not so successful yet:

“The facts of the removal of funds and the seizure of valuables by the ex officials from the country have not been established”, stated in GP Office.

At the end of January 2016, the European Court of Justice in Luxembourg cancelled the asset freezes of several cronies of Yanukovych. Arbuzov was among them. He said that in 2014 EU countries implemented sanctions against him based on documents given by new Ukrainian government. “As it later turned out, the documents were empty and declarative, and often fraudulent. The officials who are involved in the falsification will be punishment according to the law,” said Arbuzov. Nevertheless, the EU sanctions on 2015-2016 against the ex-head of the National Bank are still active.

In February 2016, after almost a year of delay the General Prosecutor’s Office started an investigation against Arbuzov because of his embezzlement of property in extremely large amounts during his work as the Head of National Bank.

Victor Pshonka, the General Prosecutor and the Master Builder

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Ex-General Prosecutor Viktor Pshonka

When ex-General Prosecutor Viktor Pshonka fled the country, his luxurious private residence was revealed to public. His bad taste and the amount of diamonds, pictures, statues, and gilded baubles in the house could be compared only to residence of disgraced president Viktor Yanukovych. The residence of the ex-General Prosecutor was seized and also became a desirable target for looters.

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The private residence of Viktor Pshonka

However, the luxury house was not Viktor Pshonka’s only asset. According to the Ministry of Internal Affairs, he has already become a citizen of the Russian Federation. In Ukraine he is wanted for abuse of power. He is suspected in the protection of illegal construction projects. Moreover, the media revealed a corruption scheme involving the withdrawal of money from Pshonka’s bank. This scam becomes even more interesting when one notes that the stolen money was originally allocated as a loan by European investment bank.

Journalists from the Ukrainian TV channel ZIK investigated the withdrawal of money from BG Bank ( Bank ‘Pershiy’), which has been linked to Viktor Pshonka. The fact that about UAH 65 mn from the European investment bank loan disappeared was reported by the Ukrainian Security Service.

BG Bank was closed in November 2014. This closure happened after National Bank of Ukraine found an illegal deal with public debt securities for the loan from the European Investment Bank.

BG Bank bought the bonds of domestic government loans in the amount of about UAH 61 mn (almost $222,000), then resold them for less than UAH 9,000 ($330). “There was an operation that was masked by the bank, but the National Bank has revealed it and then announced that the bank is insolvent,” said a representative of the National Bank.

It is impossible to find the buyer of the government bonds, because the documents have simply disappeared.

So EUR 3.5 mn of EIB loan were entrusted to the bank. This money was supposed to be used by the state company Ukrenergo for the construction of a high-voltage line from the city of Zaporizhzhia to the substation Kakhovka. It is noteworthy that the money were transferred to the bank when the bank had been placed under a curator and when its financial problems were fully covered by media.

It seems that now neither Viktor Pshonka nor his son are worrying about accusations from Ukraine. However, previously both of them were active in denying all suspicions. The ex-general prosecutor whose name was listed in different sanctions lists wrote: “I have never have any assets abroad, I do not own accounts and bank safes and safety vaults.” This quotation was republished from Pshonka’s Facebook page by Radio Svoboda, however his post is not available anymore.

Vitalii Zakharchenko, the criminal ex-Minister of Internal Affairs

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Already three criminal proceedings are open against the ex Minister of Internal Affairs Vitalii Zakharchenko. So far he is suspected in abusing his office to enrich himself to the tune of UAH 1.2 mn ($44,500), but it is not only about money. The ex-minister also figures in the case of the killings at Euromaidan and stands accused of kidnapping Secretary Oleksandr Drabinko of the Ukrainian Orthodox Church (Moscow Patriarchate.)

The kidnapping of Drabinko was used to put pressure on that time Ukrainian Metropolitan of the Ukrainian Orthodox Church of the Moscow Patriarchate Volodymyr and to force him to step down.

One of the most traumatic experience of Ukrainians from Euromaidan is also linked to Zakharchenko. The General Prosecutor’s office accused him in choosing, financing and coordinating the state-sponsored gangs of thugs called titushky who attacked the Maidan protestors.

“In the end the authorities crossed all the lines and decided to arm titushky. It took place on 20 February 2014. 408 automatic weapons and 90,000 cartridges, (an enormous amount!) were given from the mobilization stockpile of the Ministry of Internal Affairs,” a representative of the GP Office told to media. These machine guns have never been returned.

Now, Zakharchenko himself has a citizenship of Russia and works in Russia, but has not renounced his Ukrainian citizenship. “I would like to come back to Ukraine, but it does not exist,” said ex-minister.

The ex-minister also does not care about being wanted in Ukraine, as his attitude to Ukrainian authorities is the same as “the attitude of Mr. Zhukov to Mr. Hitler, if the latter declared him wanted.”

Is Interpol still looking for them?

In the end of January 2016, media informed that the names of ex-Prime Minister Mykola Azarov, ex-Minister of Health care Raisa Bogatyriova, ex-Minister of Finances Yuriy Kolbov, a businessmen Serhiy Kurchenko and a former MP Yurii Ivanushenko have disappeared from the Interpol website. Later Ukrainian General Prosecutor’s office explained that the data have disappeared only from the public access.

“Blocking cards at the site of Interpol is caused only because of the fact that the defense of these people sent complaints to the Control Commission over Interpol’s Files. Filing this complaint does not stop Interpol investigative actions, but suspends access to a person’s file on the site,” said a GP Office representative.

Another bad sign came a bit later. The news that the European Court of Justice in Luxembourg has cancelled the asset freezes on ex-head of the Presidential Administration Andriy Kliuev, the ex-Prime Minister Mykola Azarov, the former Deputy Prime Minister Serhiy Arbuzov, and former Energy Minister Eduard Stavitskyi.

The European Court of Justice stated: “The Court has determined that the person can not be considered responsible for appropriation of funds only basing on the preliminary investigation which is conducted in a third country, without a clear understanding of the EU authorities the circumstances of this investigation…” The ex-officials were trying to appeal against the sanctions and they finally succeeded. The General Prosecutor’s Office offered a hurried explanation. The Court’s decision applies only to sanctions imposed in 2014-2015, but it does not matter much for applicants because almost all of them are listed in the sanction list for 2015-2016. The court will re-consider sanctions in March 2016.

Ukrainian experts are confident that if there continue to be only legal accusations but no legal progress in particular Ukrainian investigations, the European Court can halt sanctions against many Ukrainian bandits from the time of Yanukovych.

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