The activities of this state company, called Chornomornaftogaz, and its patron, deputy prime minister Yuriy Boyko, are being investigated in Latvia, a member of the European Union.
The criminal investigation, which is taking place in Latvia, deals with the purchase of an offshore drilling rig, which has now made history under the nickname of “Boyko tower.” The reason for Latvia to investigate the case is because this is the nation where false owners of the fictitious firm Highway Investments Processing LLP live and work (but actually, they are homeless bums, according to various investigations).
This is the very company which sold the rig to Chornomornaftogaz, making an impressive $150 million on the deal. And the money received in this unorthodox manner was allegedly laundered through the Latvian Trasta Komercbanka.
The state purchased the Singapore-made rig in 2011 for $400 million through the shady intermediary, while identical ones from the supplier, Keppel Corporation, sold for only $250 million each. Boyko, however, has denied any wrongdoing and has told journalists that the remaining $150 million went for extra equipment.
It was Ukraine’s opposition who alerted the Latvian law enforcers to the schemes that involved both Ukrainians and Latvians. We have been working for more than a year to probe this case.
When the first news of the drilling rig scam came out, I was asked by imprisoned ex-Prime Minister Yulia Tymoshenko to take charge of the investigation in this case. We received copies of contracts between Chornomornaftogaz and Highway Investments Processing LLP, as well as all accompanying agreements, payment orders, packets of documents from the participants of a staged tender, and so on.
These papers raised a number of awkward questions to a whole range of officials in the oil and gas sector, and a comparison of official information with the results of journalistic investigations allowed us to see the full picture, a very ugly and, we believe, criminal one.
Unfortunately, Ukraine’s general prosecutor’s office, where I had send my inquiry as a parliament deputy, failed to see any signs of criminal activities in this drilling rig deal. We had to turn to other law enforcers, whose sights are not quite so blurred.
Unfortunately, Ukraineâs general prosecutorâs office, where I had send my inquiry as a parliament deputy, failed to see any signs of criminal activities in this drilling rig deal. We had to turn to other law enforcers, whose sights are not quite so blurred.
Tymoshenko, along with deputy Serhiy Vlasenko and myself, appealed to Financial Action Task Force (FATF), an inter-governmental body developing and promoting policies to combat money laundering, as well as law enforcement agencies of the countries whose residents featured in this business deal. We have received several positive responses from agencies who are studying the case within their areas of competence.
Latvia was central in this scandal, thus the nation’s law enforcers have the most work to do. I have passed on our materials to the general prosecutor’s office of the republic. The key unit interested in this case is the Office for Prevention of Laundering of Proceeds Derived from Criminal Activity (the Control Service).
Its experts have studied all my documents carefully, and decided to give the green light to a formal investigation. The service sent the materials on to the interior ministry, the state police and the criminal police department to “decide on criminal proceedings under the Criminal Law section 195 part 3 (laundering of criminally acquired financial resources on large scale),” according to a letter sent to me by Head of the Control Service Viesturs Burkans in April.
Soon the criminal police department, which is a part of the state police in Latvia, started a criminal case and investigative procedures, in which I also took park. Also, the police arrested the account of Highway Investments Processing LLP in Trasta Komercbanka, where money for the drilling tower was transferred. This objective investigation is something I would like to thank the Latvian government, general prosecutor and control service for.
The connection between Trasta Komercbanka and the group here in Ukraine that is usually called the RosUkrEnergo group has been investigated by journalists in Ukraine. Boyko, who as energy minister oversaw Chornomornaftogaz, is a part of it.
Although the Latvian police has not released the names of the Ukrainians featuring in the investigation, it’s clear that top managers of the energy ministry, state company Naftogaz Ukrainy and its daughter company Chornomornaftogas are a part of it.
According to an agreement between Ukraine and Latvia on legal assistance, these people will soon have to be questioned by the Latvian investigators, and Ukraine’s general prosecutor’s office has to ensure that it happens, despite its potential unwillingness to do it.
The question now is whether the government and its pet prosecutors will ignore the laws and all international obligations. But they have too long ignored internal laws, the ruling of European Court for Human Rights, and the opinion of the international community (the Tymoshenko jailing is the case in point).
The probability of such a development increases now, when the government loses out on the European integration front and increasingly looks towards the east. And, in any case, my communication with Latvian investigators has given me enough evidence that Ukraine’s prosecutors are not exactly rushing to cooperate.
Of course, having no opportunity to question the high ranking Ukrainian participants, the investigators will be limited in what they can do. However, even in those circumstances the Latvians will be able to follow up on some leads, in particular, follow the trail of money from the arrested account of Highway Investments Processing LLP.
However, in any case, the prospects of Ukraine’s conmen are not so bright. Even if our own prosecutors fail to cooperate, these people will end up under a sort of a house arrest: as soon as any one of them attempts to leave the country (particularly going west), they will be called in for questioning with local prosecutors, who will be more willing to cooperate with the Latvian colleagues.
So, even now we can assume that the group of Ukrainian officials involved in the scam with the Boyko towers, will be restricted in their ability to travel to the European Union.
Another important aspect of the story with the arrest of the account is the prospects of returning to Ukraine more than half the money, or more than $80 million, which is 20 percent of the contracted cost of the drilling equipment.
The pre-payment of 80 percent was transferred earlier, which is proved by the copies of payment orders that I have. The rest, according to the contract and the additional agreement, would have to be paid by Chornomornaftogaz after the signing of the acceptance protocol for the rig. But before that happened, the account of Highway Investments Processing LLP was arrested.
That’s why the Ukrainian government and law enforcers, as well as the president, who happens to be the head of the National Committee for Fighting Corruption, should be developing a mechanism for returning the arrested money to the state budget of Ukraine.
When launching an investigation into the deal involving Chornomornaftogaz, we meant to not only expose it, but return to Ukraine at least a little of what was taken. I have to say that we remain optimistic about this goal after communicating with the Latvian side.
The textbook case of the Boyko tower, will hopefully end with the victory of good over evil. This will happen because in the modern world bank transfers do not just vanish from records without a trace, and because no political regime remains forever.
Ostap Semerak is a former parliament deputy and a member of the United Opposition Batkivshchyna bloc.
