A top financial investigator from Liechtenstein has denied that the assets of former Ukrainian President Viktor Yanukovych had been detected or frozen in his country. The denial illustrates the cautiousness of international investigators working to recover funds allegedly stolen from the Ukrainian state budget during the Yanukovych administration, a process many experts think will take years.
Liechtenstein’s denial came after Oleh Makhnitsky, the former prosecutor general of Ukraine, on June 18 reported that Liechtenstein sent Ukraine official information regarding the blocking of financial assets of twenty individuals in the so-called Yanukovych family – a network of close associates now facing a criminal corruption investigations in Ukraine. Mikhnitsky said some $1.3 billion in assets were frozen. Among the names he implicated were Viktor Yanukovych, his son Oleksandr Yanukovych and former Prime Minister Mykola Azarov. Ukraine’s former president was overthrown by the EuroMaidan Revolution on Feb. 22.
“It is correct that Liechtenstein, in the same way as all EU countries and Switzerland, have provisionally frozen all potential assets of 20 individuals, including the former president,” said Daniel Thelesklaf, director of Liechtenstein’s Financial Intelligence Unit, said by email. “However, this is a purely provisional measure and it does not say that there are any assets of these individuals in Liechtenstein. We deny that any assets of the former president have been detected or frozen in Liechtenstein.”
The discrepancy between official positions may mean the Ukrainian side is sharing information still not public in Liechtenstein, according to Daria Kaleniuk, executive director of the Anticorruption Action Center and an expert in anti-money laundering and financial services law.
“The Financial Intelligence Unit in Liechtenstein is empowered to collect secret information, but it’s not allowed to come forward with this information until an official criminal investigation is launched in the country,” said Kaleniuk. “Liechtenstein must cooperate with Ukraine’s investigation when the authorities here connect the assets to corruption. But they haven’t made that move yet. Much depends on the Ukrainian side, on how they build this case.”
If Makhnitsky’s information is correct, the $1.3 billion that Liechtenstein preliminarily froze significantly outweighs the $193.3 million frozen following probes in Switzerland, according to the Swissinfo news agency. The same agency cited an expert at the Basel Institute on Governance watchdog group, who speculated that more Ukrainian money was likely “in less cooperative jurisdictions, particularly in the Middle East.”
The Principality of Liechtenstein itself has long battled its reputation as a haven for tax-evasion and money laundering. In 2008, faced with growing international pressure, Liechtenstein began cleaning up its act, removing banking secrecy laws and signing bilateral tax information exchange agreements with twelve countries, including Germany, France and the United States.
Liechtenstein has openly cooperated with the Ukrainian side following the ousting of Yanukovych. On April 28, it sent a delegation to the Ukraine Forum on Asset Recovery, an international law enforcement conference convened “to recover stolen assets for the people of Ukraine,” according to its website.
But there are still reasons why the Yanukovych family may have banked in Liechtenstein. Kaleniuk explains that Liechtenstein’s regulations concerning trusts make it especially difficult to discern a fund’s true beneficiary. A second reason Kaleniuk suspects Yanukovych may have banked in Liechtenstein is the hand of lawyer Reinhard Proksch, an Austrian attorney born in Liechtenstein and familiar with financial regulation in the Alpine region.
Allegations detailed on the website www.Yanukovych.info assert that Proksch was the link between several shell companies involved with laundering Yanukovych family money.
Proksch could not be reached for comment, although in a previous interview with Reuters, he denied any link, saying that he never met Yanukovych and is cooperating with U.S. law enforcement.
William Schreiber is a Coca-Cola World Fund Fellow at Yale University. He can be reached on Twitter at @geschreiben.
