Member of parliament Serhiy Leshchenko says Serhiy Lyovochkin, a lawmaker and ex-President Viktor Yanukovych’s former chief of staff, is tied to the $1.3 billion privatization of state-owned Ukrtelecom.
Lyovochkin, a member of the Opposition Bloc that includes many former allies of Yanukovych, denied involvement “in the privatization of Ukrtelecom,” in an emailed comment to the Kyiv Post.
However, Leshchenko, a former investigative journalist, said the former powerbroker is tied to a Cyprus-registered company whose Ukraine-registered firm ESU bought the fixed-line operator in June 2011 using money from state-owned Oschadbank.
“I did not receive any loans from any kind of banks for the above-mentioned purpose,” Lyovochkin said.
Oschadbank spokeswoman Yaroslava Titova cited bank secrecy when asked whether the financial institution had enabled ESU to purchase Ukrtelecom.
Ukrtelecom case
Prosecutors temporarily got Yanukovych placed on Interpol’s wanted list last year and a Kyiv court in December to revoke his $677 monthly state pension over crimes related to the sale of the telecommunications giant in March 2011.
Authorities say that Yanukovych colluded with his prime minister, Mykola Azarov, former Finance Minister Yuriy Kolobov, as well as company officials in state-run companies to deprive the state of Hr 220 million in 2010-2013.
According to the privatization terms, ESU was supposed to build a communications network for the State Service of Special Communication and Information Protection. Instead, the Security Service of Ukraine, or SBU, says that Yanukovych conspired with his subordinates for the state to finance the project, saving ESU money.
Prosecutors also got Azarov’s state pension annulled and authorities in Spain to detain Kolobov over the Ukrtelecom case.
Leshchenko, at a Jan. 14 news conference in Kyiv, said Lyovochkin had a hand in ESU.
Findings
Based on what he said was a six-month investigation, Leshchenko identified a network of the same or closely interrelated nominal company officers who hold positions in companies that either are owned by or affiliated with Lyovochkin.
They are listed as directors or secretaries in firms tied to Lyovochkin and a €40 million French villa that he allegedly owns. They include a company shareholder in the bank owned by his sister Yulia Lyovochkina in which the older brother had more than Hr 19 million deposited, according to his 2014 income declaration. The network of nominal company officers also leads to Cyprus-registered Oskaro Investments Ltd, owned by Lyovochkin based on his income report and in which he owns more than Hr 236 million worth of shares.
A search in company registers such as OpenCorporates and Companies House, however, shows that four of the nominal directors or secretaries that Leshchenko mentioned as being part of the network, also appear as directors, secretaries or shareholders in a number of other companies registered in the United Kingdom.
Leshchenko first accused Lyovochkin of having a hand in the state-owned asset in July. He published an excerpt from a prosecutorial case file that alleges Lyovochkin, as well as Yanukovych ally and billionaire Rinat Akhmetov, tycoon Dmytro Firtash and others were possibly connected to the company that first bought the enterprise.
Investigators have sent foreign law enforcement agencies inquiries to uncover the ultimate owners of ESU.
Akhmetov, whose SCM conglomerate later bought Ukrtelecom in June 2013 from Cyprus-registered Epic Telecom Invest Ltd., called the accusations “completely unfounded,” in a statement released last summer. “SCM did not bid to privatize Ukretelecom and bought it subsequently from the legal owner,” SCM spokesman Jock Mendoza-Wilson told the Kyiv Post on Jan. 21. Epic Telecom Invest Ltd., subsequently renamed Raga Establishment Ltd, is the firm that privatized the operator.
Exiled Ukrainian tycoon Dmytro Firtash. (Ukrafoto)
Firtash, who lives outside Ukraine, didn’t respond to a Kyiv Post request for comment through his spokesman Yevhen Smaglyuk. Yanukovych, who presumably lives in exile in Russia, could not be reached.
Shady privatization
ESU was the only bidder for the operator, which, as a near-monopoly on the fixed-line market owned the nation’s only 3G mobile internet license at the time.
Bids for the operator started in October 2010, just 10 months into Yanukovych’s presidency. Six potential buyers, including ESU, officially reviewed the privatization terms. Former State Property Fund head and opposition lawmaker at the time Oleksandr Bondar said the criteria to qualify as a buyer were rigged.
He told Ukrainian media that one clause disqualified foreign bidders like Deutsche Telekom because it forbade buyers to have a 25 percent stake or greater in state-run companies. Another clause disqualified local competitors because the future owner of Ukrtelecom couldn’t have occupied more than 25 percent of the telecommunications market. Mobile operators Kyivstar and MTS Ukraine at the time each had a greater share.
The sale went through on March 2011. Seventeen days before submitting the sole bid, ESU underwent an ownership change on Dec. 3, 2010, with all its shares ending up in Cyprus-registered Epic Telecom Invest Ltd., which was established just two weeks prior.
Akhmetov’s SCM would buy Ukrtelecom in 2013 after the operator posted revenues of $1 billion and a net profit of $45 million the previous year.
When formulating the phraseology of its purchase announcement, SCM mulled several versions, according to company documents published by Leshchenko.
“We will not comment on the authenticity or otherwise of the document you refer to,” Mendoza-Wilson of SCM told the Kyiv Post.
Kingmaker
Lyovochkin is a second-term lawmaker first elected to parliament in 2007 on the former ruling Party of Regions ticket to which Yanukovych, Azarov and Akhmetov belonged.
He owns 100 shares in Ukrtelecom worth a nominal value of Hr 25, according to his 2014 income declaration. He also headed the fixed-line operator’s supervisory board when he was appointed a member of its privatization commission with Azarov on June 23, 2004, during Yanukovych’s first stint as prime minister.
He got a favorable court ruling in 2006 against former Bloc of Yulia Tymoshenko lawmaker Mykhailo Brodsky for disseminating false information the previous year when he accused Lyovochkin of trying to privatize Ukrtelecom at a “low price.”
Lyovochkin was listed as Ukraine’s third most influential person when serving as Yanukovych’s chief of staff by Korrespondent magazine. He also was officially listed as consultant, adviser or aide to ex-President Leonid Kuchma in 1999-2005. Kuchma is godfather to Lyovochkin’s only daughter Olena Lyovochkina, he told Leshchenko in an interview published on Ukrainska Pravda’s website on April 28, 2006.
Lyovochkin also advised Yanukovych for a period when he was governor of his native Donetsk Oblast prior to being appointed prime minister in November 2002 by Kuchma.
