Authorities in Kyiv have made progress in tracing, identifying and freezing part of an estimated $100 billion in assets allegedly embezzled by fugitive ex-President Viktor Yanukovych and his associates.
Deputy Prosecutor General Vitaliy Kasko told the Kyiv Post that some $3 billion has been frozen involving 22 former high-level officials or their associates.
“The list of people continues to grow as more evidence is uncovered… when we get more, we pass it on to our (European and North American) partners to get assets frozen,” said Kasko.
On June 18, authorities further specified that $1.34 billion had been frozen in foreign bank accounts belonging to Yanukovych and his inner circle. Most money had been converted to domestic Ukrainian government bonds with an interest rate of 19 percent, Prime Minister Arseniy Yatsenyuk said in a Cabinet of Ministers meeting.
The government’s Financial Monitoring Service identified 42 companies tied to Yanukovych and his entourage in Cyprus, Seychelles, Panama, Belize and Great Britain. So far, the accounts of 19 companies have been frozen.
“Together with financial intelligence units of in U.S., Great Britain, Latvia, Cyprus and Panama, we uncovered these aforementioned offshore companies and the surnames of (former) high-level officials and their legally appointed company and money managers,” Yatsenyuk announced.
The same day, the prosecutor’s office said it uncovered a similar bond scheme worth $2 billion tied to ex-First Deputy Prime Minister Serhiy Arbuzov. Former Prosecutor General Oleh Makhnitsky said that the funds were illegally shifted offshore but were reinvested in Ukrainian government dollar-denominated bonds worth $1.8 billion and hryvnia bonds of Hr 1.2 billion at a 9 percent discount rate.
He added that nine court claims have been filed to cancel land-lease contracts totaling 281 hectares tied to ex-presidential chief of staff Andriy Klyuyev on which a solar energy farm allegedly is illegally situated. The former chief prosecutor said that investigators are also conducting an audit of documents tied to the alleged overpayment of $300 million for two offshore drilling platforms by state-owned Naftogaz when Yuriy Boiko was the energy minister. Boiko has maintained his innocence, saying the $300 million was used as part of a package purchase that included additional items and equipment.
Three court claims were submitted for the return of 159 hectares of residential and hunting land that Yanukovych and his proxies had allegedly embezzled from state ownership. Litigation also was started to re-claim 10 hectares that once belonged to Arbuzov.
Oligarch-in-chief
During a progress report that Makhnitsky gave on June 5, he said authorities are treating the $100 billion grand theft as one case, with Yanukovych as the head of an organized criminal group. From exile in Russia, the 63-year-old fugitive has denied charges of corruption and of giving orders to kill more than 100 EuroMaidan protesters.
While Makhnitsky told Reuters that $32 billion in cash had been taken to Russia in trucks and is now being used to finance separatist actions in eastern Ukraine, the amounts are mere estimates.
“Yanukovych and his inner circle preferred cash and not transfers to bank accounts where this money could be traced and found…but all these amounts are approximate, and because the investigation is ongoing, the ($100 billion) amount could grow higher,” Kasko said.
Thus, a total of 56 Ukrainians, many of whom are former government officials, have been sanctioned in the European Union, Switzerland, Luxembourg, Lichtenstein, Great Britain, Australia, Canada and the U.S where they face asset freezes. Some 20 are on a wanted list, with 12 having had their accounts and property frozen in Ukraine. Criminal investigations in Ukraine have been opened into 15 of the 56 sanctioned individuals. In addition, 50 companies, 17 banks and 33 individuals are suspected of direct ties to Yanukovych’s alleged illegal activity, including Serhiy Kurchenko, his purported front man.
As of June 3, Ukrainian authorities have opened criminal investigations against 15 of the 56 former high-level officials who have had their assets frozen in the European Union, Switzerland, Lichtenstein, Canada, the United States and United Kingdom. They are: (1st row, from left) ex-President Viktor Yanukovych, ex-Interior Minister Vitaliy Zakharchenko, ex-Prosecutor General Viktor Pshonka, ex-Prime Minister Mykola Azarov, ex-State Security chief Oleksandr Yakymenko; (2nd-row, from left) former presidential chief of staff Andriy Klyuyev, ex-Deputy Interior Minister Viktor Ratushnyak, Kharkiv Mayor Hennadiy Kernes, ex-Kharkiv Governor Mykhailo Dobkin, ex-Revenues and Duties Minister Oleksandr Klymenko; (3rd row, from left) ex-First Deputy Prime Minister Serhiy Arbuzov, ex-Justice Minister Olena Lukash, Oleksandr Yanukovych, ex-Agriculture Minister Mykola Prysiazhnyuk, ex-Energy and Coal Industry Minister Eduard Stavytsky.
Kasko said that the “vast majority of the 22 individuals are hiding out in Russia.” He said some of the officials concealed their assets well. “Here it is more difficult to uncover and arrest their assets, but nothing is impossible.”
Pilfering state assets
Money was siphoned in a variety of ways, authorities say. One fraudulent scheme involved using the former Revenues and Duties Ministry to squeeze $11 billion from coffers. The epicenter was the upper story of the ministry where a secret, sound-proof chamber with a clear plastic table and six matching transparent chairs were used to hatch illegal schemes, Tax Minister Ihor Bilous told the Associated Press. His predecessor, Oleksandr Klymenko, helped organize phantom firms in return for cash, the news agency reported. Klymenko denied the claims.
In the oil and gas sector, authorities say, tax evasion and other schemes were allegedly used by Kurchenko totaling $2.2 billion. Mahnitsky on June 5 said they had frozen $209 million of his personal and business-related assets.
The Education Ministry, for example, would purchase school buses and textbooks at inflated prices through “friendly companies,” according to Kasko. He added that a “similar scheme existed in every economic sector.”
Some of these companies still exist because of imperfect Ukrainian law and the difficulties in identifying end-beneficiaries, according to Daria Kaleniuk, executive director of watchdog Anticorruption Action Center.
Challenging asset freezes
Between April 29 and May 30, 11 Ukrainians, nine of whom were former government officials or current lawmakers, initiated litigation in the Eurpean Union’s’s General Court in Luxembourg to challenge the asset freezes. They are: ex-first deputy presidential chief of staff Andriy Portnov, ex-Prime Minister Mykola Azarov and his son, lawmaker Oleksiy Azarov, Kurchenko, Klyuyev and his younger brother, lawmaker Serhiy Klyuyev, Yanukovych Sr. and his sons, Oleksandr Yanukovych and lawmaker Viktor Yanukovych Jr., and ex-Prosecutor General Viktor Pshonka and his son, lawmaker Artem Pshonka.
According to Kaleniuk of the Anticorruption Action Center, former Security Service chief Oleksandr Yakymenko and ex-Interior Minister Vitaliy Zakharchenko are preparing asset freeze challenges in Luxembourg as well.
