President Petro Poroshenko’s allies, including his financial adviser and investment bank ICU’s co-founder Makar Paseniuk and lawmakers from the People’s Front party, have numerous ties to associates of ex-President Viktor Yanukovych implicated in corruption schemes.
The evidence has been piling up since Al Jazeera in January published a secret court ruling on the confiscation of funds linked to Yanukovych and a shady contract linked to the funds.
Poroshenko, his allies and the People’s Front have denied all accusations of wrongdoing.
The Prosecutor General’s Office, which had previously denied accusations of sabotage in relation to the confiscation case, did not respond to a request for comment.
Broker role
In March Kramatorsk City Court concluded a plea bargain with Arkady Kashkin, the nominal owner of a firm allegedly linked to Yanukovych associate Serhiy Kurchenko. The plea bargain allowed the court to confiscate money and state bonds linked to Kurchenko’s firms.
According to the classified court ruling that was leaked to Al Jazeera, ICU, which provides services to Poroshenko, served as a broker for Kurchenko’s companies under Yanukovych. The company denies any wrongdoing, saying that it just brokered for the companies and did not know of any criminal activities.
Anti-corruption activists have been saying that the involvement of ICU could have been the real reason for making the court ruling classified.
ICU is headed by the president’s financial adviser Paseniuk who’s been doing work for Poroshenko since at least 2009. Several people from ICU hold or used to hold top government jobs: Valeria Gontareva, the former head of the National Bank of Ukraine, ex-Energy Minister Volodymyr Demchyshyn, Dmytro Vovk, the head of Ukraine’s energy regulator, and Oleksandr Zhyvotovsky, head of the telecommunications regulator.
The Kramatorsk court ruling has been lambasted by lawyers because they believe it contains no evidence of any links between the suspect and the alleged corruption schemes.
Sergii Gorbatuk, head of the in absentia cases unit at the Prosecutor General’s Office, told the Kyiv Post that ICU employees should have been investigated in connection with possible complicity in money laundering and tax evasion and document forgery. However, none of them has been investigated.
Yanukovych ties
Apart from serving as broker for Kurchenko’s firms’ dealings, Paseniuk also has personal connections to the regime of Yanukovych.
In 2015, Vera Ulyanchenko, Paseniuk’s mother-in-law and ex-President Viktor Yushchenko’s ex-chief of staff, was charged with unlawfully transferring the Sukholuchya residence in Kyiv Oblast to Yanukovych. Gorbatuk told the Novoye Vremya magazine that Deputy Prosecutor General Yuriy Stolyarchuk had been pressuring him to halt the prosecution of Ulyanchenko due to her links to Paseniuk. Under Yanukovych, Paseniuk’s father-in-law Viktor Ivchenko, Ulyanchenko’s husband, headed the supervisory board of state-owned Ukrgazbank, which traded bonds through ICU.
Meanwhile, Paseniuk’s uncle Oleksandr Paseniuk headed the High Administrative Court in 2004 to 2011. According to the alleged black ledger of Yanukovych’s Party of Regions partially published in 2016, the party gave bribes worth $15 million to judges of the High Administrative Court. One of the entries says “Paseniuk, security” — $55,000.”
However, the black ledger case has also seen little progress, and Chief Anti-Corruption Prosecutor Nazar Kholodnytsky has been accused of blocking it, which he denies.
Shady deals
Many questions rise from the Kramatorsk court decision to seize assets. One of them is: is it Kurchenko himself, or other people who currently control the companies whose assets were seized by the Kramatorsk court?
According to a contract published by Al Jazeera on Jan. 7, Ukrainian lawmaker Oleksandr Onyshchenko and Russian-Ukrainian oligarch Pavel Fuks bought Quickspace Limited from Kurchenko for $30 million in 2015. The company held $160 million worth of bonds and cash that were frozen and were later confiscated by the Kramatorsk court.
According to the contract, the buyers would cooperate to unfreeze assets held by Quickpace Limited. For this, they would need to persuade Ukrainian courts, which are notoriously corrupt and often controlled by the executive branch.
Onyshchenko told the Kyiv Post the purchase of Quickpace Limited had been initiated in the interests of Poroshenko. He denied completing the deal. A source who spoke on conditions of anonymity told the Kyiv Post that the money had been used to finance Onyshchenko’s political projects linked to Poroshenko.
“I am not corrupt,” he told Al Jazeera. “I just do what the president says. In my country, there is no other way.”
Onyshchenko has previously claimed that he was an intermediary in Poroshenko’s financial schemes and alleged efforts to bribe lawmakers, and paid bribes to Poroshenko allies for lucrative contracts with state firms. The president denied the accusations.
Fuks, the other alleged buyer of Quickpace, was filmed meeting with lawmaker Oleksandr Hranovsky, a top ally of Poroshenko, and visiting the Presidential Administration and the Interior Ministry in December. Journalist Oleksandr Dubinsky claimed in May that Fuks acted as an intermediary in Poroshenko’s financial schemes.
Meanwhile, Poroshenko’s investment bank ICU brokered for the alleged purchase of Quickpace by Onyshchenko and Fuks. ICU denied any wrongdoing.
So if European courts uphold the implicated offshore firms’ lawsuits against the Ukrainian government to recover the confiscated money, some of the money could end up in the accounts of firms controlled not only by Yanukovych but also by incumbent authorities, Vitaly Tytych, a lawyer for the families of slain EuroMaidan protesters, told the Kyiv Post. Meanwhile, opposition politician and ex-Georgian President Mikheil Saakashvili has accused Poroshenko and Paseniuk of intending to steal some of the funds confiscated by the Prosecutor General’s Office by having those funds returned to the accounts of offshore firms that they now control. They denied the accusations.
Meanwhile, Paseniuk has admitted that he took part in Onyshchenko’s negotiations to buy Channel 112 in 2015. Onyshchenko and Viktor Zubritsky, the channel’s ex-creative producer, say that the lawmaker had been planning to buy it on behalf of Poroshenko.
In 2015 Zubritsky published video footage in which Paseniuk asked him to limit Radical Party leader Oleh Lyashko’s access to Channel 112 because he criticized Poroshenko.
Cash or bonds?
The Kramatorsk court ruling is also controversial because it was not clear how much of the confiscated money was held in bonds and in cash, and whether any of the money was actually transferred to the budget.
Government representatives have been very unclear regarding the amounts of cash and bonds frozen and confiscated. In June 2014, the Prosecutor General’s Office said it had frozen bonds worth $1.8 billion and Hr 1.2 billion linked to Yanukovych’s allies. Then in September 2015, the Prosecutor General’s Office said it had frozen bonds worth $1 billion and Hr 1.5 billion.
Olena Tyshchenko, the former head of the Interior Ministry’s department for asset recovery, wrote in April 2017 that bonds worth $1.5 billion had been confiscated. She said that $500 million from state-owned oil and gas firm Naftogaz had also been initially frozen but had “disappeared” somewhere.
But Prosecutor General Yuriy Lutsenko claimed at the same time that $1.5 billion in cash had been confiscated.
However, the leaked Kramatorsk ruling says bonds worth $1 billion and cash worth $1.16 billion were confiscated.
Lawyer Oleksandr Ruzhansky told the Kyiv Post that these discrepancies could be evidence of a large-scale scam. He says that it’s possible that no actual confiscated money was transferred to the budget, and the money was just printed by the National Bank of Ukraine. Ruzhansky has initiated a criminal case against Lutsenko, accusing him of abusing power by confiscating the funds.
Meanwhile, in November the National Anti-Corruption Bureau of Ukraine said $157 million that belonged to Onyshchenko’s Quickpace had been stolen from Oshchadbank’s accounts and opened another criminal case. Oshchadbank’s management, which is aligned with the People’s Front party, has been investigated in connection with the case.
Second confiscation
Other court rulings on the confiscation of funds linked to Yanukovych are also controversial.
In November, the Prosecutor General’s Office said Hr 800 million ($32 million) had been confiscated as part of a corrupt oil product supply scheme run by Kurchenko.
People’s Front lawmaker Serhiy Pashynsky and his associate Serhiy Tyshchenko have been investigated over the alleged theft of the oil products when they were frozen. However, the case against Pashynsky and Tyshchenko, who deny the accusations, has seen no progress, and they have faced no charges.
Since much of the money was stolen, only Hr 102 million ($4 million) remained and was transferred to Fortuna Bank, said Daria Kaleniuk, executive director of the Anti-Corruption Action Center. But the bank is undergoing bankruptcy proceedings, and the government is highly unlikely to get the money, she added.
Another problem is that, like the Kramatorsk confiscation ruling, the court decision on oil products does not contain any evidence that the suspects are linked to the oil product scheme, Kaleniuk and Tytych said. Those convicted were lower-level managers, who were sentenced to five-year suspended prison terms and fines of just Hr 4,500 ($160).
In October Empson Limited, one of the Cypriot firms whose assets were seized, filed a lawsuit against Ukrainian authorities, saying its property had been illegally expropriated.
UMH deal
Another scheme involves Boris Lozhkin, a close associate of Poroshenko and his former chief of staff. In 2013, Lozhkin sold his UMH media group to Kurchenko for $400 million.
Lozhkin was fired as an advisor to Poroshenko on Feb. 7 hours after Al Jazeera contacted him over a document obtained by the news agency that allegedly shows that the money paid for UMH came from a loan secured with stolen assets.
Some analysts believe the sale price was far more than the real value of UMH, and that is why suspect that money laundering and a kickback were involved. Lozhkin denies all accusations of wrongdoing.
According to the Forbes magazine, UMH’s price was 80 percent to 300 percent more than foreign media groups with similar financials, including Poland’s Agora and Western European media groups. Ex-Infrastructure Minister Andriy Pivovarsky said in 2013 UMH was estimated to be worth $120 million to $150 million in 2012. Austria opened a money laundering case into UMH’s sale, but it has seen no progress due to a lack of cooperation from Ukrainian law enforcers. Moreover, Kurchenko said no taxes had been paid on the sale in Ukraine, which prompted accusations of tax evasion.
Poroshenko has always claimed he had sold his 3 percent stake in UMH in the months prior to the deal. However, an analysis of Cyprus company records by Al Jazeera indicates that, on the day of the sale, he still held the shares via a company in the British Virgin Islands.
Unless he divested himself of the BVI company beforehand, at the point of sale, Poroshenko stood to receive $15 million, tripling his initial investment, Al Jazeera reported. A spokesman for Poroshenko said he did not own, directly or indirectly, any shareholding in United Media Holdings on Oct. 28, 2013.
If he took part in the deal, it is not clear if Poroshenko paid the appropriate tax on the deal, given that it was executed in offshore tax havens.
