It was a busy day for law enforcement in Odesa. On Nov. 22, prosecutors and officers of Ukraine’s Security Service (SBU) searched the city’s administration and seaport. The prosecution alleges three separate cases of embezzlement.
According to Prosecutor General Ruslan Riaboshapka, the series of searches was connected to three criminal investigations – theft of state funds by city council officials, corruption of Odesa Seaport officials and extortion of money and land in the popular resort town of Zatoka 60 kilometers west of Odesa.
According to the SBU, officials in the city administration embezzled Hr 100 million ($4 million) by inflating the debt of Odesa’s utility services. The city paid the debt to a company connected with the city’s administration, the SBU wrote in an official statement.
The scheme is centered on a city-owned heat supply company that owed over Hr 306 million ($12.6 million) to the now-defunct Nadra Bank, previously owned by Dmytro Firtash, a Ukrainian oligarch. Firtash stands accused in the United States of bribing Indian government officials for titanium mining permits. He is currently fighting extradition to the U.S. from Vienna, Austria.
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After Nadra Bank went bankrupt, the debt of Odesa’s heating company was bought out for Hr 89 million ($3.6 million) by Ug Capital, a low-profile financial company.
On July 16, 2018, the city administration agreed to pay Hr 194.5 million ($8 million) of the heating company’s debt to Ug Capital. Yet some members of the city council criticized the move, and said that the city overpaid by choosing to deal with the private company and not buy the initial debt directly from the bank, thereby saving Odesa Hr 100 million.
“The debt was artificial, and the company that bought the debt was affiliated with local officials,” Riaboshapka said during a press briefing in Kyiv.
On the same day, Nov. 22, the SBU conducted searches in the state-owned Odesa Seaport, where according to prosecutors, Hr 55 million ($2.2 million) was stolen by seaport officials. That case is unrelated to the one involving the city council.
The SBU wrote in an official statement that the embezzlement was carried out during the reconstruction of one of Odessa’s seaport quays, which the SBU says operated on a Hr 1 billion ($40 million) budget.
Both the city administration and the Odesa seaport did not comment by publication time.
The third case involved extortion of a bribe for the allocation of land plots in Odesa Oblast. According to Riaboshapka, a prosecutor of the Prosecutor General’s Office was implicated in the scheme.
Odesa has an infamous reputation for corruption. The city’s administration has long been accused of corrupt practices, and some regional journalists and activists have been attacked for calling them out. The local press has alleged that Hennady Trukhanov, the city’s mayor, and Vladimir Galanternik, an influential local businessman, were behind the attacks. Trukhanov has denied this, while Galanternik had not commented.
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