Ukraine is looking to next year’s Global Asset Recovery Forum as a major opportunity to make progress in reclaiming up to $40 billion it says was stolen from the state when former President Viktor Yanukovych was in office.
So far, Ukraine has recovered next to nothing since Yanukovych fled power on Feb. 22, 2014.
The accounts of Yanukovych and a number of his associates are currently frozen under European Union sanctions. But experts say if Ukrainian investigators do not move more quickly to substantiate their accusations, Yanukovych and others could be removed from the 28-nation bloc’s blacklist.
Stronger cooperation
The Global Asset Recovery Forum is a joint American-British project, set to be held in spring in Washington, D.C.
It was announced in May by the United Kingdom’s then-Prime Minister David Cameron. The initiative, with support from the United Nations and World Bank, specifically seeks to help Ukraine, Nigeria, Sri Lanka and Tunisia recover money embezzled by corrupt officials.
In a press release, the U.K. government said the forum will “strengthen cooperation between the countries that have had assets stolen and the countries where those assets are hidden, and help ensure law enforcement on both sides drive forward vital work to return illicit funds.”
Concrete details on what will be offered to Ukraine at the meeting remain sparse, but experts agree it represents an important chance for the country to win more Western assistance in its quest to bring former officials to justice.
According to the latest estimates compiled by the Ukrainian Ministry of Justice, during the four years of Yanukovych’s presidency, from February 2010 to February 2014, between $20 billion and $30 billion went missing from state funds. However, Prosecutor General Yuriy Lutsenko says the figure is $40 billion.
Justice Minister Pavlo Petrenko told lawmakers on Sept. 15 the thefts could be seen “from direct evidence” as well as from irregularities which appeared at the beginning of 2014, when money recorded in the state budget and on the books of local authorities “was, in fact, not there.”
But according to observers, if international partners are to get more involved in the effort to return stolen funds, Ukraine must show that it is serious about bringing suspects to trial.
“There are very good people at the Prosecutor General’s Office who know how to investigate and could do the job properly, if they would be allowed to,” said Daria Kaleniuk, executive director of the Anti-Corruption Action Center in Kyiv. “At the very top level of the Prosecutor General’s Office, there are officials who are not interested in getting these cases into court and prosecuting the ‘big fish’ of the former regime.”
Trust deficit
This lack of will to bring past officeholders to court is exacerbating the deficit of trust that has long characterized relations between Ukrainian prosecutors and their Western counterparts.
The independence of Ukrainian investigative officials has before now come into question, as has the credibility of the justice system as a whole. As a result, even if Ukrainian courts convict the fugitive Yanukovych and his exiled associates, it is far from certain that these convictions will be accepted in Brussels and Washington, D.C.
But there is a big precedent for collaboration.
Pavlo Lazarenko, a former prime minister, is wanted in Ukraine on charges of stealing hundreds of millions of dollars from the state. He fled to the United States in 1999 and almost immediately became embroiled in legal proceedings. In 2000, he was convicted by a U.S. court of money laundering and, between 2009 and 2012, served his sentence in federal prison.
But U.S. officials are still working to seize assets they believe he has hidden offshore, and a court case to recover that money is not expected to go to trial before 2018. Ukraine, meanwhile, has yet to receive any of the money Lazarenko is accused of embezzling, and there are no assurances that it ever will.
Anti-graft measures
Still, such examples of cross-border investigations are the exception rather than the rule. For many critics, rich countries are as much a part of the problem as they are of the solution. They point to financial centers like London and Frankfurt, where stories are rife of banks and estate agents ready to ask too few questions about the sources of funds.
The Global Forum for Asset Recovery appears to be part of the response to these accusations. At the same meeting earlier this year where that summit was announced, the UK also said it would introduce a number of new anti-graft measures, including requiring foreign companies to reveal their ultimate beneficial owners before they can purchase property.
Such steps are essential, according to experts, if countries like Ukraine are to have any chance of retaking cash believed to have been stolen by corrupt officials. At next year’s Global Forum, it is hoped more similar initiatives will be announced and international cooperation will be stepped up to close loopholes exploited by embezzlers.
“If our officials in Ukraine acquire money illegally, if there were sufficient checks in place abroad, in other jurisdictions, that money will stay in Ukraine,” says Yevhen Cherniak, a senior analyst at NGO Transparency International.
Need for progress
In the case of Yanukovych, as long as asset freezes remain in place there is still a chance of recovering money before it is moved outside the EU. But lawyers for the former president say they intend to continue challenging the sanctions.
They have some grounds to believe they will be successful, having recently won a judgement from the European Court of Justice (ECJ) which stated the inclusion of their client on the bloc’s blacklist from March 2014 to March 2015 was unjustified because it was based on a lack of evidence.
Yanukovych is set to remain on the asset-freeze list until March 2017, however, as European governments have already agreed to extend the measures against him.
But in order for those sanctions to stay in place, Ukraine is likely to need to show progress in its investigations. This means opening up to cooperation with money laundering experts from abroad, something which prosecutors have so far been unable, or unwilling, to do.
Some would like to see the West take a harder line and perhaps even use aid money as an incentive. “Our international donors the IMF and the EU should ask the Ukrainian government to push forward investigations into asset recovery,” says Yevhen. “We ask for international assistance but we do nothing to get our money from abroad.”
Hope for change
For many, the truth is that recovering anything from Yanukovych and his associates will remain impossible while the Prosecutor General’s Office remains in charge of the cases. Worse still, from the point of view of anti-corruption activists, is that if the former president wins further judgements at the ECJ, there is a chance he could one day successfully sue Ukraine for damages.
If there is hope for change, it comes in the form of the National Anti-Corruption Bureau, a new agency operational for barely one year. Its relative youth means it still has a chance to prove to the West that it is a credible and trustworthy institution. That may be of little consequence as far as past offenders are concerned, but does provide for the possibility of establishing the rule of law going forward.
“I have hope that the new agencies like the National Anti-corruption Bureau will be able to prosecute properly, to collect evidence to prove the illicit origin of funds,” says Kaleniuk of the Anti-corruption Action Center.
“This is unlikely to happen regarding the former regime cases being investigated by the Prosecutor General’s Office, but it might happen with cases involving current officials.
