President Petro Poroshenko’s Ukrainian company is alleged to have transferred money to a Cypriot offshore firm despite there being a National Bank of Ukraine ban on such transactions, according to an investigation aired on Ukrainian television late on May 18.
The report follows scandals over Poroshenko’s failure to declare British Virgin Islands-registered Prime Asset Partners Ltd. and revelations about offshore companies owned by Poroshenko’s political allies. Documents on the offshore firms were released as part of the Panama Papers, a massive leak of information about offshore companies worldwide.
Poroshenko has so far failed to provide a convincing explanation on why he did not declare Prime Asset Partners Ltd. He has also been accused of establishing the firm to evade taxes, which he denies.
The Verkhovna Rada is currently considering creating a commission to investigate offshore schemes and top officials’ corruption. The Poroshenko Bloc has been accused of dragging its feet on setting up the body.
Cash or shares?
According to Slidstvo’s investigation, Ukraine’s Prime Asset Capital, which is indirectly controlled by Poroshenko, on March 25 acquired 18,000 shares of Cyprus-registered CEE Confectionary Investments Ltd. worth 3.9 million euros. Before the transaction, CEE Confectionary Investments Ltd. was owned by Poroshenko’s Prime Asset Partners Ltd.
The wording of the document is ambiguous, since it says the payment for the shares was made “in cash/in kind.”
Though some interpreted the phrase as “either in cash or in kind,” one Cypriot lawyer told the Organized Crime and Corruption Reporting Project, a Kyiv Post partner, that only cash had been used. Another Cypriot lawyer told the OCCRP that the transaction involved both cash and shares at the same time, based on the wording of the document. If that was the case, the exact breakdown of cash and share payments was not clear.
The details of the OCCRP investigation are expected to be published on May 20.
The payment could have violated Ukrainian law, as the National Bank of Ukraine on March 3 issued a regulation banning investments made in foreign currency abroad if they exceed $50,000 per month.
Investment Bank ICU, which represents Poroshenko’s interests, says that Prime Asset Capital had swapped its stake in Ukraine’s Central European Confectionary Company for shares of CEE Confectionary Investments Ltd. ICU argues that no cash was paid for the shares.
Poroshenko said in April that CEE Confectionary Investments Ltd “does not have an open bank account, nor does it have a single penny or kopeck.”
According to Poroshenko’s representatives, the share swap was part of his efforts to transfer his assets to a blind trust.
Blind trust claims
But Poroshenko’s claims that he has transferred his assets to a blind trust are also controversial.
Poroshenko first claimed in November that the trust had been set up. But on April 10 he contradicted himself by saying that a blind trust agreement with Rothschild Trust had been signed on Jan. 14, while the transfer of his assets to the trust had been completed in late March to early April.
The second claim is at odds with the Cypriot share register, according to which CEE Confectionary Investments Ltd. was transferred to Rothschild Trust as late as April 27, Slidstvo reported. For an unknown reason, the change was not reflected in Ukrainian registers.
Poroshenko said on April 10 that independent executives would be appointed by Rothschild Trust to run CEE Confectionary Investments.
Instead, Serhiy Zaitsev, a classmate and business partner of Poroshenko, became a director of the company on April 25, according to the Cypriot register.
Offshore empire
Meanwhile, Deutsche Welle on May 18 published an investigation on a German starch plant linked to Poroshenko’s business empire. According to ICU, the plant is owned by Zaitsev and operated by Poroshenko’s companies.
However, the ultimate beneficiary of the British Virgin Islands-based Euro Business Investments Ltd., which owns the plant, has not been disclosed, Deutsche Welle reported.
Earlier in May documents were also leaked according to which Zaitsev and two other allies of Poroshenko – Oleh Gladkovsky and Viacheslav Moskalevsky – own several offshore companies.
Zaitsev’s Intraco Management Ltd. is especially controversial.
Last October British journalist Graham Stack and ex-State Security Service Chief Valentyn Nalyvaichenko accused Poroshenko’s “grey cardinal” Ihor Kononenko of laundering money through Intraco. According to payment orders published by Stack, Kononenko’s daughter Darya received money from the company.
Kononenko denies the accusations.
Another associate of Poroshenko, National Bank of Ukraine Chief Valeria Hontareva, was also involved in the scandal around the Panama Papers. The offshore leak revealed that she had business ties to top executives from Russia’s VTB Bank before she became the central bank’s head. Critics say this could imply a conflict of interest, while she denies the accusations.
Kyiv Post staff writer Oleg Sukhov can be reached at [email protected]
