A secret court ruling leaked to Al Jazeera and published on Jan. 10 has exposed the involvement of allies of President Petro Poroshenko in an alleged $1.5 billion corruption scheme run by his predecessor Viktor Yanukovych.
The document reveals the secret behind Ukrainian authorities’ most-touted alleged success of the past year: The confiscation of $1.5 billion in assets linked to Yanukovych.
While Prosecutor General Yuriy Lutsenko boasted about the confiscation many times, no details were revealed at all. The court ruling that allowed it — issued by the Kramatorsk City Court in March — was classified as secret.
Now that this ruling was leaked to Al Jazeera, it offers a look into why it could have been made secret: It reveals that an investment bank associated with Poroshenko helped Yanukovych’s allies launder the money stolen through corrupt schemes.
Deputy Prosecutor General Eugene Enin said he could neither confirm nor deny the authenticity of the leaked ruling. The Presidential Administration did not comment on the issue.
Meanwhile, in November Kyiv’s Pechersk Court allowed prosecutors Oleksandr Hovorushchak, Kostyantyn Kulik and Yaroslav Dombrovsky to seize the original of the Kramatorsk court ruling. Lawyer Oleksandr Ruzhansky thinks this is an attempt to destroy the original of the ruling as evidence of what he believes to be the prosecutors’ criminal activities.
Very special bank
According to the court ruling, Ukrainian investment bank ICU, which provides services to Poroshenko, served as a financial broker for several offshore companies that belonged to Serhiy Kurchenko, a now-exiled oligarch who was dubbed “Yanukovych’s wallet.”
ICU helped Kurchenko’s offshore companies invest the money into Ukrainian state bonds in late 2013, just months before Yanukovych and Kurchenko had to flee the country in the wake of the EuroMaidan Revolution.
Part of Yanukovych’s confiscated $1.5 billion were held in state bonds, while some of it was kept as cash in the state-owned Oshchadbank. ICU was co-founded by Makar Paseniuk, who is known to manage Poroshenko’s finances. The other co-founder was Valeria Gontareva, whom Poroshenko appointed governor of the National Bank in 2014.
When allegations against ICU were made, Gontareva said that she and ICU “saw nothing suspicious” about transactions it handled for Kurchenko’s firms, while ICU said its role was limited to that of an agent.
Even though the court ruling describes a money laundering scheme where embezzled funds were invested using ICU, the bank’s alleged role in the scheme has not been investigated, based on the ruling.
Among others things, the confiscated funds were spent on Poroshenko’s ally and tycoon Yuriy Kosyuk, who got 42 percent of all agricultural subsidies allocated by the government from January to June.
Lawyers and anti-corruption activists have argued that the ruling about confiscation does not contain any evidence or legal grounds for the confiscation and may result in Ukrainian authorities returning the confiscated funds to the offshore firms that held them.
“Prosecutors couldn’t get a different verdict due to the absence of evidence of the illegal origin of funds,” Daria Kaleniuk, executive director of the Anti-Corruption Action Center, said on Facebook on Dec. 11. “To collect such evidence, they would have to investigate the role of very influential top officials of the former and incumbent governments, including ICU and its ex-chief Valeria Gontareva, a Poroshenko ally. Unfortunately the prosecutors failed to do that.”
Kaleniuk and member of parliament Sergii Leshchenko called for the resignation of Prosecutor General Lutsenko due to the scandal. Kaleniuk also said that the Anti-Corruption Action Center would initiate a criminal case against Lutsenko and everyone involved in efforts to help Yanukovych associates escape punishment.
On March 28, the 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 worth $1.5 billion linked to Kurchenko’s firms.
Both the investigation and the trial were conducted in secret and in just two weeks — an impossibly short time for the Ukrainian judiciary.
Lawyer Vitaly Tytych, who studied Yanukovych’s corruption, says he believes it is illegal to make court rulings secret.
The court ruling is unusually vague in general. In most episodes of the alleged $1.5 billion scheme, the text does not explain how the funds were embezzled, who was behind the corrupt cash flows and what financial transactions were carried out. Moreover, there are no court verdicts against any organizers of this scheme, which would provide legal grounds for the confiscation.
The confiscation ruling can be challenged based on the fact that it used the plea bargain with Kashkin, who was proved to be only the nominal owner of one of the numerous businesses involved in embezzlement, to order the confiscation. The passport of Kashkin, an impoverished Ukrainian citizen, was used to register Kurchenko’s gas trader GazUkraina-2020 in exchange for money.
In 2015, Kashkin had already concluded another plea bargain in exactly the same alleged corruption scheme. He was acknowledged to be only the nominal face of the operation and not a participant of the theft and money laundering scheme, and was fined Hr 51,000. He could not pay the fine and was sentenced to community service instead. The 2017 ruling contradicts the 2015 verdict.
Moreover, according to a 2017 court ruling against another suspect in the scheme, Kashkin refused to take part in money laundering schemes, and his signatures were forged.
The only link between Kashkin and the alleged money-laundering scheme is the assumption of Kostyantyn Kulik, a top prosecutor who led the case, Sergii Gorbatuk, head of the Special Investigative Unit at the Prosecutor General’s Office, told the Kyiv Post.
“It’s not clear which crimes (Kashkin) committed as part of the money-laundering and organized-crime scheme,” he added. The ruling also fails to explain how the money allegedly stolen by Kurchenko was channeled to Oshchadbank accounts, Gorbatuk said.
Oil rig deal
The court ruling has incorrect data where it describes the embezzlement during procurement of oil rigs by Naftogaz Ukraine in 2011.
Yuriy Nikolov, a journalist at the Nashi Hroshi anti-corruption watchdog, pointed out that the ruling attributed this famous corruption scheme to Kurchenko, despite the fact that multiple reports found its links to then-Energy Minister and current lawmaker Yuriy Boyko and no links to Kurchenko. Boyko has been investigated in the oil rig scheme, but has faced no charges so far. According to the ruling, prosecutors estimated the scheme was worth $621 million, while in reality only $350 million was stolen, Nikolov said, arguing that the extra money was artificially added to justify the confiscation of $1.5 billion.
There is also confusion in the ruling on whether the money belongs to Yanukovych, Kurchenko or Yanukovych’s Deputy Prime Minister Serhiy Arbuzov, Nikolov added.
Seven of the 10 offshore firms that owned the confiscated $1.5 billion are suing Ukrainian authorities to get it back. As a result, the confiscated money might have to be returned to the offshore companies by European courts, Kaleniuk said.
One of the firms through which the funds were allegedly laundered with ICU’s participation is Cypriot company Quickpace Limited.
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 as part of the $1.5 billion scheme.
Onyshchenko denied completing the deal and promised to sue Al Jazeera.
Quickpace is linked to Foxtron Networks, a company implicated in an alleged $230 million money laundering scheme discovered by Russian lawyer Sergei Magnitsky, who was killed in a Russian prison in 2009.
Onyshchenko has been charged by the NABU with embezzlement worth $64 million in a separate case and fled Ukraine in 2016.
He has claimed that he was an intermediary in Poroshenko’s alleged efforts to bribe lawmakers, and paid bribes to Poroshenko allies for lucrative contracts with state firms. The president denied the accusations.
Onyshchenko admitted having previously been a tool of Poroshenko in an interview with Al Jazeera. However, he denied charges of corruption, saying he had merely done what Poroshenko instructed him to do.
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 an investigation. The amount is part of the $1.5 billion confiscated by the Kramatorsk court.
Fuks, the other alleged buyer of Quickpace, was filmed as 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.
Prosecutor Kostyantyn Kulik, who led the case to confiscate the $1.5 billion, has himself been accused of having had ties to Kurchenko.
He used to work with Kashkin at the Kharkiv prosecutor’s office, and has admitted having previously been friends with pro-Russian separatist Yevgeny Zhilin, who is closely associated with Kurchenko.
The NABU has charged Kulik, a deputy head of the Prosecutor General’s Office’s department for international legal cooperation, with unlawful enrichment of Hr 2 million ($80,000).
Other deal’s trace
Poroshenko and his allies may have had other dealings with Kurchenko.
In 2013, Ukrainian media magnate Boris Lozhkin sold his UMH media group to Kurchenko. Poroshenko used to co-own UMH but sold his share to Lozhkin before the deal with Kurchenko. Lozhkin later became Poroshenko’s chief of staff.
However, in December Kurchenko said he had bought UMH from Poroshenko, not Lozhkin, and claimed that no taxes were paid on the sale in Ukraine. Austria opened a money laundering case into the sale, while Poroshenko and Lozhkin denied allegations of wrongdoing.