What the Pandora Papers tell about Zelenskyy, his offshore companies, and his favorite oligarch

The film is based on the recently published Pandora Papers, which made publicly available millions of files from registrars of island firms, exposing the dirty business of top politicians and businessmen from throughout the world. In particular, Ukraine’s President Zelenskyy and his business partners from Kvartal 95 who own offshore firms and luxury real estate abroad. The documents also allowed establishing a multi-million dollars-worth connection between Zelenskyy and Ukrainian oligarch Kolomoiskyi.

“These findings force us to look differently at the Ukrainian President, who came to power speculating on the film image of an honest and modest president of common people,” stated the creators of the film.

Artem Vakaliuk, a researcher in the cinema and television market, calls Kvartal 95 a “family business” because everyone there is friends. He explains they were in the company not just to earn money but to build there, so to say, a part of their own business. Kvartal 95 brought the owners wild popularity and millions of fortunes. Among the persons named in the documents of offshore registrars that became known thanks to Pandora Papers, journalists feature the names of Ukraine’s state leadership, such as Ivan Bakanov, Head of Security Service of Ukraine, Serhii Shefir, First Assistant to the President, and President Zelenskyy. They also discovered that around a dozen persons in Zelenskyy’s near circle have offshore companies. Offshore registrar Fidelity and Ukrainian lawyer Yurii Azarov helped create the network. According to the journalists, offshore business helped the owners of Kvartal 95 buy three luxury apartments in London. Slidstvo.Info took a look at how Ukraine’s President and his partners’ business evolved. Soon after its launch, Kvartal 95 was bought by 1+1 TV channel owned by Ihor Kolomoiskyi which gave the company good terms of cooperation and higher prices. Kolomoiskyi started to support Zelenskyy and Kvartal as comedians and now keeps backing them as politicians. Since Kvartal 95 started to cooperate with the oligarch, its members registered a number of companies in distant isles. It is very difficult to find out who owns or controls offshore companies, or “sunny places for shady people,” says Graham Barrow, an expert in financial crime, corruption, and money laundering. Since 2012, Kvartal-95-related companies registered in the British Virgin Islands, Belize, and Cyprus have seen changes of de jure owners and transfers of shares. These alterations deserve special attention. At the heart of Kvartal’s companies network, stands Maltex Multicapital Corporation equally divided among the firms of Zelenskyy, Shefir brothers, and Andrii Yakovliev, Maltex’s nominal owner. The trust declaration governs relations between real and nominal owners of Maltex in order to conceal the identity of its real owner. As Mr. Barrow explains, the first reason for this is to keep information from business rivals, and another one is not to pay local taxes by moving profit outside of the jurisdiction of the country where it was generated. The Pandora Papers disclosed that since 2012, an offshore company affiliated to Kolomoiskyi’s 1+1 group at least once paid more than $1 billion to Zelenskyy’s offshore firm SVT from the British Virgin Islands, for the popular TV show “Make a Comedian Laugh” created by Kvartal 95. And Maltext owns half of SVT. According to Slidstvo.Info's data, Zelenskyy’s and Kolomoiskyi’s companies made a transaction worth $40 million in 2012. Under the documents, this was “contribution to capital,” or investment, paid by the oligarch to the now-president. Having traced the origin of this money, the journalists concluded that the companies that gave these $40 million are suspected of laundering huge sums from Privatbank. That is, Zelenskyy’s company could as well be involved in the dirty operation conducted via the Cyrpus branch of the Kolomoiskyi-owned Privatbank. Zelenskyy made an attempt to clear his name. On 13 March 2019, amid Ukraine's presidential race, a transfer of shares in Maltex was equally divided among the offshore leaders of Kvartal 95. That is when the firm of Serhii Shefir, a future First Assistant to the President, received a quarter of Maltex’s ownership from Zelensky’s firm in Belize. Financial crime consultant Martin Woods analyzed the share certificate related to the said transfer. He says no money was paid by the receiving party. Yet, ownership rights were transferred from one name to another. This means that the shares were not sold. They were just given to another party. A few weeks later, on 25 April 2019, another document was signed providing that Maltex undertook to pay dividends to Zelenskyy’s offshore firm despite that the company did not have a share in Maltex. In fact, it is not possible to receive dividends after leaving the company. Slidstvo.Info journalists call this scheme Zelenskyy’s attempt to remove his name from Maltex on the eve of the 2019 presidential election. One of the factors to have brought Zelensky victory in the 2019 presidential run is the Kvartal 95-produced series “Servant of the People” starring Zelenskyy in the role of Ukrainian teacher Holoborodko, who became the president. The show saw its first season premiere in 2015 on Kolomoiskyi’s 1+1 channel. Ironizing the domestic problems of the country, the project featured high in ratings. The third season of “Servant of the People” was shown in the spring of 2019, at the height of the presidential race between Volodymyr Zelenskyy and Petro Poroshenko. The difference between Holoborodko and Zelenskyy is that the former was an outspoken fighter against corruption, while Ukraine’s current president together with his friends are receiving profit from their offshore business. Thanks to the Pandora Papers, we now know of the activities of a web of companies hitherto shrouded in mystery. In fact, they could have been involved in laundering funds from Privatbank. In particular, the $40 million was used by the President’s right-hand man to purchase real estate in the heart of the UK. In 2016, Mr. Shefir bought an apartment in Clarence Gate, once home for famous British poets, composers, and writers, for £1,575,000. At the moment, the UK, USA, and Ukraine are investigating cases of money laundering from Privatbank involving Kolomoiskyi.

Related:

• Parliament votes for crucial “anti-Kolomoiskyi” bill, opening door for IMF support
• Ukrainian parliament approves at first reading bill against oligarch Kolomoiskyi to receive IMF loan
• Ex-National Bank director’s house burns as deal suspected between Zelenskyy and top Ukrainian oligarch
• What Ihor Kolomoiskyi hopes for in the last battle of Ukrainian oligarchs
• Oligarchic shadow of Ukraine’s 2019 elections
• In Ukraine, oligarchs set the election agenda using their TV
• Russian oligarchs in Europe: soccer, churches, and working for the Kremlin