“Ali Baba and the 40 Thieves” could not have dreamed about loot as large as that allegedly left behind by Ukraine’s fugitive and corrupt former officials.
Just one police raid on March 21 on a property that belonged to former Energy Minister Eduard Stavitsky uncovered a fortune that cannot be explained by his $15,000 in earnings declared last year.
“One safe was completely stuffed with cash – about $5 million. Another safe was fully stuffed with gold and jewelry – 50 kilograms of gold bars, and jewelry made of various metals – gold, platinum and diamonds,” Prosecutor General Oleh Makhnitskiy said on March 22.
The previous day, Ukraine’s law enforcement agencies searched 32 different premises that belonged to Stavitsky and another former top official, Agriculture Minister Mykola Prysyazhnyuk. In his flat, he kept $300,000 and Hr 800,000 in cash, among other things. Both ministers were a part of overthrown President Viktor Yanukovych’s close circle. They could not be reached for comment.
The raids also yielded many title deeds to land, ownership documents of offshore and other companies and details of various bank accounts that would be enough to keep law enforcers busy for months, untangling webs of business deals and chasing stolen assets.
But there has barely been a day when the law enforcers did not get back home with an impressive catch, which has been both satisfying and extremely depressing for the nation, which is discovering just how much it has been looted from over the past few years.
Moreover, the job has turned into a truly international project as teams from the United Kingdom and the U.S. stepped in earlier this month to help trace international operations of Ukraine’s corrupt elite, many of whom already face travel and economic sanctions and asset freezes by the European Union, the U.S. and a few other countries.
Bounty hunters, the lawyers who specialize in asset recovery, are digging into company documents in exotic destinations anywhere from North Africa to Central America.
In the meantime, journalists at home continue combing through files found in presidential real estate Mezhyhirya and gluing back together shredded documents from the offices of Serhiy Kurchenko, a young former billionaire whose companies served as a front for the business activities of the president and his family.
Arsen Avakov, the nation’s top cop, earlier this month said that his investigators uncovered Kurchenko’s gas trading schemes that robbed the state treasury of $1 billion. To add insult to injury, prosecutors allege some of Kurchenko’s ill-gotten gains were used to suppress the EuroMaidan Revolution that toppled his patron Yanukovych on Feb. 22.
“A significant part of this illegally acquired money was spent on financing suppression of peaceful protests in Kyiv, and in particular to pay for the services of the so-called titushki (hired thugs),” the general prosecutor said in his statement.
Kurchenko’s close ally, former head of the supervisory board of Brokbiznesbank Denys Bugay, and head of Kurchenko’s Gaz Ukraine 2020 Anatoliy Kashkin, were arrested as part of that gang, but the prosecutor’s office said the group had some 20 members, including unnamed former ministers and high-ranking officials from the energy, economy, infrastructure, interior and tax ministries, as well as law enforcement agencies.
Borys Timonkin, the former top financial manager for Kurchenko’s holding, told Ukrainska Pravda internet portal on March 24 that the arrests “are a total farce.” He said those individuals, like himself, were hired to clean up the business.
The prosecutor’s office said the group’s aim was to “illegally assume the ownership of property and money of state institutions, including Naftogaz and daughter company Ukrgazvydobuvannya.”
The oil and gas industry, which has given birth to many billionaires over the past two decades, remained the center of corrupt deals under the previous government. Yuriy Prodan, the energy minister, told the Kyiv Post that Kurchenko’s companies acted as intermediaries in the gas industry, buying gas from national importer Naftogaz Ukraine, reselling to end consumers and failing to pay the state in the process.
“The gas was simply sold to a fake firm. The firm is no longer there, and the person who signed these agreements is also no longer there,” Prodan said.
He said other schemes were related to liquefied gas auctions, which is supposed to be supplied to households. “The gas did not go to supply the population, only a third of it went to supply the population. The gas was bought (at auctions) at Hr 2,000 at 1,000 cubic meters, and then was resold at gas stations and sold at Hr 10,000 for 1,000 cubic meters,” Prodan said. Similar schemes were used in the coal industry.
Naftogaz’s former chief, Yevhen Bakulin, was detained on March 21. Two days later, a local court in Kyiv ruled to arrest him or offer a bail of Hr 1.5 billion, reflecting the gravity of his alleged financial crimes.
Teimur Bagirov, a former member of Naftogaz’s board, said that, under Yanukovych, people who acted in his name did not bother covering up the schemes. “The Donetsk guys thought they came forever,” he says. Bagirov adds that the company was constructed specially for the purpose of siphoning off cash though various schemes, and each consecutive government has built on them.
There is a danger that Naftogaz will remain a black hole and cash cow for a small circle of people, Bagirov said, unless the newly appointed chief, 35-year-old Andriy Bobolev, takes up the job of cleaning up “these Aegean stables.”
Violations were rampant in the financial sector, as well.
This month, the central bank uncovered money laundering centers in 12 banks, which siphoned an estimated Hr 142 billion last year alone, National Bank Governor Stepan Kubiv said. He said that one of the banks had previously received $2 billion of bail money from the budget, and laundered $1 billion of that.
Kyiv Post deputy chief editor Katya Gorchinskaya can be reached at [email protected]
