Editor’s Note: This is a text version of a story by journalist Anna Babinets that aired on Hromadske TV at 9 p.m. on April 3. The story is based on documents that were originally obtained by Sueddeutsche Zeitung, a German newspaper, from their sources and shared with Organized Crimes and Corruption Reporting Project, a Kyiv Post partner, and the International Consortium of Investigative Journalists.
The major findings of the Panama Papers project can be found here
As Ukraine was suffering its worst battlefield defeat in Russia’s war, President Petro Poroshenko was leading a secret war of his own in the summer of 2014: The billionaire was busy starting an offshore company to evade paying taxes to the struggling country he rules.
In August 2014, Poroshenko confidants started the registration process of an offshore company in the British Virgin Islands, according to documents and letters of Panamaniam law firm Mossack Fonseca & Co. that were shared with journalists of Hromadske TV.
The letters show that the aim was to move the assets of Poroshenko’s confectionary empire Roshen offshore, where it can be sold without paying any taxes to Ukraine’s government.
The video investigation “President’s Double Life” by Hromadske TV. (Ukrainian-language version)
The video investigation “President’s Double Life” by Hromadske TV. (English-language subtitles)
Poroshenko promised to sell Roshen when he ran for president in spring of 2014. But almost two years after election, he still hasn’t sold the company.
Several months after the election, Poroshenko said that Rothschild Group was handling the sale of Roshen.
Finally, in January, Poroshenko said that he passed his Roshen assets to a blind trust and has no control of the company.
The documents obtained by the journalists show that Poroshenko indeed intends to sell the company, but he plans to do so offshore so that no taxes are paid. In his official declarations in 2014 and 2015, Poroshenko said that he owned no stock in companies abroad.
When journalists of Hromadske TV asked Poroshenko’s office about the company in the British Virgin Islands, they were redirected to Avellum Partners, the law firm that provided a recommendation letter to register the company. In response, the law firm says that it has been working on creating a trust for the transfer of Poroshenko’s assets.
“The actual transfer of assets to a trust requires compliance with a large number of legal formalities. A legal advisor is ensuring the compliance with these formalities at the moment,” Avellum Partners said.
This contradicts statements of Poroshenko, who in January told journalists that he has already transferred his Roshen assets to a blind trust.
Offshore trail starts on Aug. 4, 2014
The trail of Poroshenko’s path offshore starts on Aug. 4, 2014, when George Ioanno, an employee of the Cyprus Company Dr. K. Chrysostomides & Co, sent a letter to Tortola, the largest of the British Virgin Islands. The letter was addressed to Mossack Fonseca & Co, a law firm that assists in registering offshore companies.
Ioannou asked for assistance in starting a new company in the British Virgin Islands. He mentioned that the owner of the company will be a person involved in politics.
Mossack Fonseca & Co said that it was ready to help.
A new firm with Ukrainian roots appeared in the records of the British Virgin Islands on Aug. 21, 2014.
Prime Asset Partners Limited
Its name was Prime Asset Partners Limited. Ukrainian national Petro Poroshenko was listed as the sole owner of the company. A copy of an international passport attached to the letters leaves no doubt that the owner is indeed Ukraine’s president.
A Cyprus national Olga Georgiou was appointed as CEO of Poroshenko’s company.
Battle of Ilovaisk
During the same time, one of the bloodiest defeats of Russia’s war against Ukraine was taking place in Donbas – the Battle of Ilovaisk. Ukrainian soldiers got surrounded by the Russian troops. Russian forces and their proxies agreed to let them out, but then violated the agreement, shooting at Ukrainian troops as they retreated.
It took Ukrainian authorities six months to publish the official toll of the Battle of Ilovaisk – 459 soldiers killed, 478 wounded and 180 captured.
Many people criticized Poroshenko for poor war-time leadership in first trying to seize Ilovaisk, a strategic railway hub in Donetsk Oblast, and then not heeding calls for reinforcemens as Ukrainian troops got surrounded and slaughtered by the Russian reinforcements.
The battle changed the course of the war, prompting a Ukrainian retreat and major compromises in the first peace agreement reached in Minsk, Belarus, in September 2014.
Business interests move ahead
The things were moving much faster on Poroshenko’s second, secret front.
After the company was registered, he needed to prove his trustworthiness to the registrars from the British Virgin Islands. This took two steps.
First, Ioannou in Cyprus sent to Mossack Fonseca on Oct. 2, 2014, a note from a law firm Avellum Partners, saying that the company has known Poroshenko since 2012 and is satisfied with their cooperation.
Two weeks later, a second note followed – from the International Investment Bank. It confirmed that Poroshenko has been the client of a bank since Feb. 25, 2009.
The bank that provided the note belongs to Poroshenko, according to the official records of the National Bank of Ukraine.
The documents were fine, and the process went on.
Late on Feb. 20, 2015, the first anniversary of the mass killing of the EuroMaidan protesters, Poroshenko gave a speech at the Maidan Nezalezhnosti square in Kyiv, talked to the relatives of the killed, and opened a memorial called the Rays of Dignity.
“I will do everything so that the big sacrifices which our nation suffered over the last year would not be for vain, God abide,” Poroshenko said. “I swear this to you.”
On the same day the employees of Mossack Fonseca decided to change the status of Poroshenko’s company Prime Asset Partners Limited “considering the high status of the company’s director.”
“In addition to the usual stuff we should check the situation in the country, whether there are any corruption scandals,” Josette Roquebert, a lawyer of Mossack Fonseca, wrote in a letter to Ioannou, Poroshenko’s confidant in Cyprus.
In his reply, Ioannu wrote that “Prime Asset services the holding of companies from Cyprus and the Ukrainian companies of Roshen Group, one of the largest confectionery producers in Europe.”
In December 2015, Ioannou asked his colleagues from Tortola to urgently collect all the papers and send them by courier to Switzerland. Martin Bustle of Rothschild Trust was mentioned as the recipient.
It was the last one of the letters obtained by the journalists.
