Interior Minister Arsen Avakov has faced accusations of tax evasion and illegally managing a business over the past week.
Avakov and his ally Arseniy Yatsenyuk, the prime minister, have been accused of corruption by lawmaker Serhiy Leshchenko, Odesa Oblast Governor Mikheil Saakashvili and investigative journalists. The accusations come as pressure is growing on Yatsenyuk and Avakov to resign.
Avakov and Yatsenyuk deny the accusations.
The most recent allegations came on Jan. 29, when Leshchenko, a member of the Bloc of President Petro Poroshenko, published a document according to which Avakov is identified as Italian company Avltalia’s president as of April 30, 2015.
Ukrainian law bans ministers from simultaneously working as business executives.
According to Avakov’s property declaration, the minister owns 100 percent in Avltalia.
In response to Leshchenko’s accusations, Avakov accused him of being paid for his criticism by Russian businessman Konstantin Grigorishin, a Poroshenko ally.
“I don’t hide my income,” he wrote on Twitter on Jan. 28. “I pay taxes and include (income) in my declaration.”
Another accusation, made in an investigation by the Novoye Vremya magazine on Jan. 23, is that natural gas producers linked to Avakov allegedly participated in tax evasion schemes.
The firms are suspected of selling gas at dumping prices in an effort to minimize tax payments.
“I believe this is tax evasion,” Victoria Voytsitska, member of parliament with the Samopomich faction, told the Kyiv Post, adding that the allegations should be investigated.
As part of such schemes, which are widespread in Ukraine, traders affiliated with gas producers buy their gas and get “astronomical profits,” Voytsitska said.
Such traders usually pay much smaller taxes than gas producers, and some of them are fly-by-night companies, she added.
The State Fiscal Service did not immediately reply to a request for comment.
Investor, a group controlled by Avakov’s wife Inna Avakova, operates the Denisivske gas field in Kharkiv Oblast. In 2014, 171.8 million cubic meters of gas from the field were sold at Hr 1,800 per cubic meter, compared with the average market price of about Hr 4,000, according to Novoye Vremya.
The magazine estimated that the budget lost Hr 82.5 million as a result of below-market prices.
Gravelit-21, a trader that buys gas from the Denisivske field, was founded by Anna Murashova, who features in photos posted on Facebook as an acquaintance of Avakov’s son Oleksandr and his business partner Igor Kotvitsky. Her father is an aide to Kotvitsky.
Avakov’s spokeswoman Natalia Stativko reacted to the report by telling the Kyiv Post that “it’s up to the philologists to comment on fiction” without elaborating further.
Meanwhile, Kotvitsky co-owns Sakhalinske, another gas producer in Kharkiv Oblast, according to the government’s official register.
Sakhalinske sold 35.9 million cubic meters of gas at a price of Hr 2,000 per cubic meter in 2014, Novoye Vremya said, citing a paid corporate database. As a result, the budget lost Hr 15.7 million, according to Novoye Vremya.
But Kotvitsky provided different figures, sending to the Kyiv Post a scanned copy of a sheet of paper according to which Sakhalinske sold gas at an average price of Hr 5,119 and paid taxes worth Hr 111.424 million in 2014.
The origin of the sheet of paper was unclear.
“There’s nothing to comment on,” Kotvitsky told the Kyiv Post. “The company that’s operating the Sakhalinske gas field paid all the taxes. The magazine article is a dirty smear job! Avakov has had nothing to do with the gas industry for a long time!”
The alleged budget losses from the Denisivske and Sakhalinske gas fields amounted to about $37 million, which is close to the amount transferred by Kotvitsky to a Panamanian firm in 2015, Voytsitska said.
Last October Leshchenko published documents proving that Kotvitsky, whom he calls “Avakov’s wallet,” had transferred $40 million to a Swiss bank account of a Panamanian company without declaring the money and included it only after the deadline for declarations expired.
Avakov’s Interior Ministry is currently investigating an abuse of power and money laundering case into the transfer. Leshchenko believes it constitutes a conflict of interest.
Kyiv Post staff writer Oleg Sukhov can be reached at [email protected].
