New high profile arrest is a test for Ukraine’s anti-corruption agencies

The fight against corruption in Ukraine finally starts to reach the system's core. On April 20, Mykola Martynenko, an MP who stands at the origins of Ukraine's politics at the time of its independence, was arrested. He is accused of the embezzlement of more than $17.2 mn from the state enterprise "Eastern Mining and Processing Plant" (SkhidGZK), an allegation he denies. Martynenko is a key figure in Ukrainian politics who preferred to stay in the shadows. He is also the main player of Ukraine’s uranium market. Therefore, his arrest will have a large influence on the alignment of forces in politics and the energy market of the country. However, how the case will be developed next is most important – whether Martynenko will be exposed or will avoid justice, being protected by the old system. First, let’s take a look at his leverage on Ukrainian politics.

Political influence

Martynenko's business origins go way back to the birth of the Ukrainian oligarchic system which was created in the times of the presidency of Leonid Kuchma, circa 1994. However, his political career started a bit earlier, as during Soviet times he used to be among the managers of the Kyiv Komsomol (All-Union Lenin Communist Youth League). After Ukraine's independence, he went into business and became the chief player in the nuclear energy field. Martynenko had a big influence on the city of Kovel, in Volyn Oblast. In 1998, he was elected as an MP in this county. Coming to the Parliament, he was immediately supported by then President Kuchma - a special economic zone with preferential tax treatment was created in Kovel. Since that time and until 2015, Martynenko stayed in Parliament. He had been an independent MP at the beginning and later used to be a member of several political parties – Nasha Ukrayina (the party of the president Viktor Yushchenko), Front Zmin (of Arseniy Yatseniuk), Batkivshchyna (Yulia Tymoshenko) and Narodnyi Front (Yatseniuk). All the years being an MP Matynenko used to work in the committee of the Parliament on the fuel and energy complex, nuclear policy and nuclear safety. Thus, he was able to secure his business interests in energy by himself. In 2015 Martynenko voluntarily gave up his mandate of the MP due to the scandal caused by the investigation of corruption against him initiated by the National Anti-Corruption Bureau. Martynenko wasn’t only just a member of political forces, but also their main sponsor. Back in 2005, during the presidency of Viktor Yushchenko, Martynenko was one of the figurants of the big corruption scandal and had been accused of having a big influence on the president. In 2007 he joined the team of Yatseniuk, whose political force Front Zmin united with Tymoshenko's Batkivshchyna at the time. During the presidency of Viktor Yanukovych, ousted in 2014 by the Euromaidan revolution, Martynenko was considered to be the main sponsor of Ukraine’s opposition. After the Euromaidan revolution, he was one of the founders of Yatseniuk's Narodnyi Front. Martynenko is also known as an old friend of the President Petro Poroshenko.

The case

The first discussions on Martynenko's involvement in significant corruption schemes appeared in 2015. The scandals around him make him give up his MP's mandate. Back then he said that is ready to prove his innocence. The National Anticorruption Bureau of Ukraine (NABU) says the reason for Martynenko’s recent detention is related to the embezzlement of funds of the state enterprise SkhidGZK. The investigation was launched been started in April 2015. SkhidGZK is among the top ten uranium mining companies in the world. According to NABU, in 2014-2016 it purchased uranium concentrate at prices $17.2 mn higher than the producer in Kazakhstan via the Austrian company STEUERMANN. STEUERMANN transferred the extra $17.2 mn to the offshore companies WARGRAVE TRADING LLP and DALLAS FUEL SA. Martynenko was related to all the named companies. Apart from Martynenko, there are another 5 suspects in the case. The Specialized Anti-corruption Prosecutor's Office (SAP) required the court arrest Martynenko for two months with a possibility to be released on the bail of UAH 300 mn ($11.3 mn). However, the court decided to release the suspect on bail right away. All the 21 guarantors are representatives of Narodnyi Front. They include 3 ministers, a deputy head of the Central Election Commission, and 17 MPs. The SAP is aiming to appeal the court's decision.

Consequences

NABU informed that they have evidence of Martynenko's influence on the judges. Photo: politeka.net

Taking into consideration the influence of Martynenko in Ukraine, the consequences of the development of his case will be significant for several areas. Energy. As Martynenko is a key figure in Ukraine's energy sector, especially nuclear power, the field will be affected. His colleagues from Narodnyi Front ascribe to him the merits of leading Ukraine towards energy independence from Russia. “It is because of his principled position that Russia lost huge contracts on nuclear power. And we see that the interest of the Russian Federation in [Martynenko’s] prosecution became principally important,” said Andriy Teteruk, first deputy head of Narodnyi Front. Just after the detention of Martynenko, the runaway oligarch Onyshchenko released a recording in which he allegedly spoke to Martynenko. Their meeting happened in Spain. In the tape, Martynenko accuses the President Poroshenko in attempting to change the rules on the energy market in partnership with the Russian-Ukrainian businessmen Kostiantyn Hryhoryshyn. Because of it, the interests of Martynenko and the richest oligarch of Ukraine Rinat Akhmetov (also the main figure in Ukraine's energy field) are suffering. Martynenko himself confirmed the fact of meeting Onyshchenko in Spain. Politics. Sponsored by Martynenko, the party Narodnyi Front belongs to the coalition in Ukrainian Parliament together with the presidential Petro Poroshenko's Bloc. The detention of the politician might worsen the relationships between the two parties. Despite the fact that NABU is considered to be the only independent anti-corruption institution in Ukraine Narodnyi Front stated that its case against Martynenko is forged. The way how Poroshenko will react to the case – whether he supports Martynenko or not - will define future relationships between the two parties. Some experts even suggest that the Martynenko's case might be the catalyst which would break down the coalition. NABU. Martynenko is the third acting politician against whom the institution initiated proceedings. The first was abovementioned MP and oligarch Oleksandr Onyshchenko who fled away from the country, hiding from justice. The second one, Roman Nasirov, the Chief of the Fiscal Service of Ukraine who was released from prison on the pledge of UAH 100 mn ($3.7 mn). The media consider the case against Martynenko a test for NABU. On the one hand, his detention showed that there are no untouchable politicians in Ukraine. On the other hand, this time the institution has no right for a mistake, as if the case will have no significant progress, public trust in anti-corruption institutions will be undermined. The fact that the institution is supported by international partners gives hope for the positive scenario:

"With the help of international partners, the US and the FBI, NABU was built as an independent structure. Yes, so far there are claims that the bureau is not working efficiently, but there are also objective reasons for it – for example, Romania was preparing its arrests over three years. NABU lacks professionalism - it's a disaster, but the bureau acts and tries to gain prestige in society. There are already attempts to level the effect of their actions, for example, from the side of the General Prosecutor's Office. This is the fight of the institutions,” said political analyst Valentin Krasnoperov.

"I do not think that this is the order of Poroshenko's group against Yatseniuk's group. Most likely, Americans who were the ‘mom’ and ‘dad’ for NABU - defended and financed it, became irritated by their behavior. I suspect that the new US administration has officially or unofficially sent a message, saying 'Guys, show us your real work, not an imitation of it, or we we'll take it away.' According to unconfirmed rumors, our president also received a message from the US that its patience has run out and that he needs to show his effectiveness or retire. In this regard, it is visible that Poroshenko is nervous and is trying to show his activity,” said lawyer and public figure Hennadiy Druzenko.

Judiciary. However, the development of the case depends not only on NABU. The decision of the court to release Martynenko on bail, again and again, brings to the agenda the question of reforms in the judiciary. Moreover, NABU informed that they have evidence of Martynenko's influence on judges – the e-mails to Martynenko with requests for giving orders to prosecutor's office investigators and judges in solving certain questions. "Considering the suspect’s connections, including in the High Council of Justice (one of its members is the brother of the former wife of the suspect), and the nature of his e-mails, National Anti-Corruption Bureau sees a risk of further pressure on the judges from his side in the matter of appeal of his detention, and during subsequent court proceedings," stated NABU. So far out of the 3 large suspects of NABU, 1 could have run away and for 2 doubts exist whether they will be ever punished. As for the cases at lower levels, many of them are stuck in some stage of the court proceedings.