See a related story here.
Interior Minister Arsen Avakov, with his passion for luxury and love of Italy, has a lifestyle little in keeping with a state official whose government salary in 2017 was a mere Hr 710,000 ($27,300).
His declaration is an extravagant assortment of paintings, watches and wines, including some bottles worth more than $10,000 each. Avakov explains his wealth by the diverse business activities he has been carrying out despite having been in politics for more than 15 years.
At the same time, Avakov’s career has been plagued with corruption scandals ever since he entered politics in 2002, when he became a member of Kharkiv City Council’s executive committee.
When he was an opposition politician under President Viktor Yanukovych, he escaped corruption charges by fleeing to Italy, saying that the 2012 case against him was politically motivated.
But ever since the EuroMaidan Revolution brought Avakov to power in February 2014, he has had to use his political clout to fend off numerous accusations of graft. Arguably the second most powerful person in Ukraine as top cop in charge of 225,000 law enforcement officials, he has kept his job and escaped prosecution, despite growing evidence of corruption.
Avakov, who has always denied all accusations of corruption, did not respond to a request for an interview.
Extravagant wealth
Avakov’s asset declaration exposes his taste for luxury.
The minister flaunts a collection of 2,652 Ukrainian, Russian, Austro-Hungarian and Roman copper, bronze, silver and gold coins from periods ranging from the 2nd century B.C. to the 21st century, as well as 24 European and American gold coins from the 18th to 21st centuries.
Avakov also boasts a collection of 754 French, Italian, German, Austrian, Ukrainian, Spanish, American and Chilean wines, including a bottle of 1945 Chateau Mouton-Rothschild. A three-liter bottle of it was sold at a Christie’s auction for over $114,000 in 1997, The Telegraph reported.
Avakov also owns a Pablo Picasso lithograph and photogravure, a collection of paintings by Ukrainian artists, and Rolex Daytona, Vacheron Constantin and Jaeger LeCoultre watches.
In 2017, Avakov also purchased a 26-room 566-square-meter villa with a swimming pool on the Mediterranean Sea coast in Italy for $900,000, saying it was for his wife’s tourism business.
Avakov lives in a spacious mansion surrounded by a 3-meter fence and surveillance cameras in a large Interior Ministry compound near Kyiv called the Fortress, according to a 2016 investigation by the Radio Liberty’s Schemes investigative unit. He has not included it in his asset declaration, claiming that he lives in a 78-square-meter hotel room.
Interior Minister Arsen Avakov’s mansion in the ministry’s Fortress compound near Kyiv. (Copyright © 2017 RFE/RL, Inc.)
He has denied accusations of wrongdoing, saying that he rents part of the mansion legally.
Business empire
Avakov, an ethnic Armenian born in Baku, Azerbaijan, started off as a businessman in Kharkiv in the violent 1990s, a period of messy and chaotic business conflicts.
Avakov and his business partners Oleksandr Konovalov, Igor Kotvitsky, Gennady Gaevoi and Igor Morkotonov built a business empire that comprised Investor Group, Bazis Bank, natural gas fields, the Vostorg supermarket chain, the Akhmad tea factory, ATN television, the Saltove bread factory and a mozzarella plant near Rome.
Gennady Gaevoi, a business partner of Interior Minister Arsen Avakov and vice president of Avakov’s Investor Group. Along with Avakov, he was put on Interpol’s wanted list and arrested in Italy as part of a case into allegedly illegal land privatization in 2012. (Ukrafoto)
Konovalov was initially the main partner, but he was killed in 1992. Businessman Leonid Roitman and Avakov’s ally-turned-opponent Gennady Kernes, now mayor of Kharkiv, have publicly accused Avakov of killing Konovalov to take over his assets — a claim denied by Avakov. He was investigated in the case but it has seen no progress.
In the 1990s and 2000s, natural gas embezzlement and tax evasion cases were opened against some of Avakov’s firms. They were closed after the 2004 Orange Revolution, when Avakov allied himself with Viktor Yushchenko, who became president.
Bank fraud?
When Yushchenko appointed Avakov as governor of Kharkiv Oblast in 2005, numerous regional state firms and agencies started depositing their funds at Avakov’s Bazis Bank, triggering new accusations of corruption.
After Yanukovych, a political enemy of Avakov, came to power in 2010, Avakov fled to Italy in 2011. Bazis Bank declared bankruptcy and started the process of liquidation in 2012. However, its depositors did not receive any money and are still suing the bank. The Prosecutor General’s Office has opened an investigation into the case.
In 2014 the courts returned Bazis Bank to Avakov’s family. But in 2015 the bank was transferred to Yevhen Pylypenko, who appointed a supervisory board that comprised his son Yuriy, a former security guard at Bazis Bank; Yana Yelantyeva, a previously unemployed person, and Kyrylo Anokhin, a student without any previous work experience, according to an investigation by the Slidstvo.info show.
Bazis Bank then started selling off its assets, including to offshore firms, while the depositors still received no money.
Land schemes
In 2012 the Prosecutor General’s Office charged Avakov with abuse of power by illegally privatizing 55 hectares of government land worth more than Hr 5.5 million and illegally changing the registered purpose of the land. The land, near the town of Pesochyn near Kharkiv, was privatized without Cabinet authorization, the Prosecutor General’s Office said.
Oleksandr Nechyporenko, head of the Kharkiv District, said he had been pressured to privatize the land and refused, while Yuriy Olekseyenko, who headed the state land agency’s branch in Kharkiv Oblast, said his signature on the privatization documents had been forged.
Avakov was put on Interpol’s wanted list when he fled to Europe in 2011. An Italian court arrested Avakov in 2012 but refused Ukraine’s extradition request.
Avakov said the case was a political vendetta by Yanukovych.
According to a ruling by Kharkiv’s Kievsky District Court, 700 hectares of land were acquired by fraud using fake documents in Kharkiv Oblast. Kharkiv Oblast police said then the ultimate buyer of the land was Avakov’s Investor Group.
After Avakov became interior minister in February 2014, the case was closed, and the police investigators looking into it were fired.
The High Commercial Court also ruled in 2011 that Avakov’s Investor Group had illegally acquired 18 hectares of forestland in Kharkiv Oblast’s Dergachi District in the early 2000s. The court confiscated the land.
After Avakov became interior minister, High Commercial Court judges Malvina Danilova and Tetiana Danilova from Kharkiv canceled the 2011 decision in May 2014 and transferred the land back to Investor group, which transferred it to Lisova Halyavyna, a firm owned by Avakov’s wife Inna.
The Public Integrity Council, a civil-society watchdog, vetoed Malvina Danilova as a Supreme Court candidate in 2017 because it said that she had consistently ruled in favor of Avakov to protect his business and political interests. She denies the accusations.
In June 2016 Kyiv’s Pechersk District Court ordered prosecutors to open a case into the acquisition of the land by Avakov’s family at the Anti-Corruption Action Center’s request. In August the National Anti-Corruption Bureau of Ukraine opened an investigation into the acquisition.
Video footage
In October 2017, Avakov’s son Oleksandr and Avakov’s ex-deputy Serhiy Chebotar were arrested and charged by the NABU with embezzling Hr 14 million in a case related to the supply of overpriced backpacks to the Interior Ministry. However, Oleksandr Avakov was released without bail due to what critics believe his father’s influence.
Interior Minister Arsen Avakov’s son Oleksandr (R) sits at a hearing on his arrest on Nov. 1 at Kyiv’s Solomyansky Court. He has been charged with embezzling Hr 14 million in a case related to the supply of overpriced backpacks to the Interior Ministry. However, he was released without bail. (Volodymyr Petrov)
Video footage has been published on the Internet in which Oleksandr Avakov and Chebotar discuss in Chebotar’s office in 2014 a corrupt scheme to supply backpacks to the National Guard.
Meanwhile, in another video published on the Internet, Chebotar, the Interior Ministry’s State Secretary Oleksiy Takhtai and state firm Spetsvervis CEO Vasyl Petrivsky, an ex-aide to Avakov, in Chebotar’s office negotiate a corrupt deal to sell sand at a rigged auction.
In the video, Chebotar implicates the minister himself in the deal, saying that Avakov is also aware of the scheme and is worried that the sand has not been sold yet.
Avakov claims the video is a fake.
However, Petrivsky has already pled guilty and has been convicted to a suspended prison term in a theft case for the sand sale scheme described in the video.
According to Ukraine’s court register, the video was recorded by the Security Service of Ukraine and has been recognized as genuine.
The Takhtai-Petrivsky video appears to be part of the same series of videos from Chebotar’s office as the one that is being investigated by the NABU in the backpack supply case.
In another video being investigated by the NABU, Avakov’s deputy Vadym Troyan and Chebotar discuss corrupt revenues from the traffic police and extorting money from businesspeople.
Troyan’s house was searched in July as part of a bribery case. The Security Service of Ukraine and prosecutors said that three associates of Troyan had been arrested for extorting a Hr 1.5 million bribe, while he had nothing to do with the bribery. The statement was seen by Troyan’s critics as an effort to let him escape punishment.
Deputy Interior Minister Vadym Troyan. (Volodymyr Petrov)
Money laundering?
Avakov’s top ally — People’s Front lawmaker Kotvitsky, referred to by Ukrainian media as “Avakov’s wallet” — is under investigation by the NABU over an undeclared transfer of $40 million to Panama in 2014.
Meanwhile, Avakov’s wife Inna sold her 40 percent stake in television channel Espresso TV to a firm owned by Ivan Zhevago, the son of Ukrainian oligarch and lawmaker Kostyantyn Zhevago, for $2 million at a 1,000 percent profit. Critics, including lawmaker Sergii Leshchenko, say they see evidence of money laundering in the unusual transaction and profit in what is an unprofitable industry.
Tax evasion?
Meanwhile, natural gas producers linked to Avakov allegedly participated in tax evasion schemes, according to an investigation published by the Novoye Vremya magazine in 2016. Avakov denies the accusations.
The firms are suspected of selling gas at dumping prices in an effort to minimize tax payments.
Investor Group operates the Denisivske gas field in Kharkiv Oblast. In 2014, 171.8 million cubic meters of gas from the field were sold at Hr 1,800 per cubic meter, compared with the average market price of about Hr 4,000, according to Novoye Vremya.
Interior Minister Arsen Avakov’s partner Ihor Kotvitsky. (Courtesy)
The magazine estimated that the budget lost Hr 82.5 million as a result of the below-market prices.
Gravelit‑21, a trader that buys gas from the Denisivske field, was founded by Anna Murashova, who features in photos posted on Facebook as an acquaintance of Avakov’s son Oleksandr and his business partner Kotvitsky. Her father is an aide to Kotvitsky.
