The State Auditing Committee has leveled a Hr 1.44 billion ($700 million) fine against the opposition-affiliated company United Energy Systems of Ukraine (UESU), the news agency Infobank reported.
According to the auditors, the Dnipropetrovsk-based company transferred more than $690 million in hard currency to its British-registered affiliate in 1996 and 1997 without completing the documentation required by Ukrainian law.
UESU officials say the payments in question were made by its customers – enterprises in the Dnipropetrovsk region that consumed the Russian natural gas – and thus any fines should be levelled against those firms.
However, the auditors say the transaction in question is between UESU and UESU’s British-registered affiliate, United Energy International.
UESU bought the gas from Gazprom, but United Energy International collected the money for its sale. That implies an international transaction between UESU and its British affiliate, the auditors argue, and obligated UESU to record the transaction as such.
The auditors also accused the company of unlawfully clearing shipments of Russian natural gas through the Dnipropetrovsk customs office.
The massive fine was seen by most observers as the latest salvo in President Leonid Kuchma’s feud with his former ally, Pavlo Lazarenko.
Although Lazarenko has denied he has a stake in UESU, the company consistently won hugely profitable state tenders to distribute natural gas during his term as prime minister in 1996-1997.
Since Lazarenko’s split with Kuchma in July 1997, the government has systematically excluded UESU from the gas market in favor of other companies. Government plans for new pipelines that involved UESU-controlled steel companies have also been nixed.
Prior to parliamentary elections in March, Lazarenko and former UESU president Yulia Tymoshenko took over the political party Hromada, turning it into a vehicle for the interests of their informal clan of politicians and businessmen.
Although Hromada’s political ideology is indistinguishable from that of the Kuchma administration, the party is Kuchma’s fiercest opponent in the new parliament. While even the Communist Party has signaled a willingness to work with Kuchma’s current prime minister, Valery Pustovoitenko, Hromada has consistently called on deputies to sack the government and impeach Kuchma.
Hromada has also sided with the Communist Party, Socialist Party and Peasant Party in the ongoing deadlock in parliament over choosing a speaker.
Meanwhile, Kuchma has instructed his bureaucrats to dig up dirt on Lazarenko, UESU, and newspapers connected to them, such as Pravda Ukrainy, which was shut down shortly before the parliamentary elections for an obscure technical violation.
Some of the most interesting angles for investigation connected to the competition for gas-distribution profits, however, continue to be ignored.
In March 1996, a burst of automatic gun fire in the center of Kyiv killed Oleksandr Shvedchenko, director of ITERA-Ukraine, a company often described as the ‘right arm’ of Russia’s Gazprom.
In May of the same year, in a Donetsk residential courtyard, six bullets were pumped into Oleksandr Momot, director of the non-profit Industrial Union of the Donbas and a former deputy governor of the Donetsk region.
And finally in November, on the tarmac of the Donetsk airport, machine gun fire mowed down Evhen Scherban, along with his wife and a host of body guards.
Shvedchenko’s company was UESU’s main rival in the gas-distribution business until 1996; since UESU fell out of government favor it has retaken the leading position in that market.
Momot’s organization had recently been tasked by Donetsk regional governor Volodymyr Scherban with obtaining the lowest possible prices for natural gas for enterprises in the Donetsk oblast.
Although unrelated, Evhen Scherban and Volodymyr Scherban were close allies in business and politics, and were often described as the leaders of the ‘Donetsk clan.’
All three assassinations remain unsolved. An apparent assassination attempt on Lazarenko in June 1997 – which many have assumed was retaliation for Yevhen Scherban’s killing – also remains unsolved.
In an interview published by the newspaper Den on June 20, Tymoshenko said she was not aware of any killings connected with the distribution of gas.
