A court could order Ukraine’s fuel and energy complex to pay others’ accounts

The Russian criminal lawsuit against Yuliya Tymoshenko for 450 million could well end up in a Ukrainian fuel and energy property forfeiture case. The Moscow Federal District Arbitration Court ordered last Wednesday to reexamine the suit of Russia’s deputy prosecutor general (filed on behalf of Russia in the person of the Russian Ministry of Defense) against the Bosfor trade house (Ukraine) for RUR 452 million as payment for gas. The suit also includes the United Energy Systems of Ukraine (UESU) industrial and financial corporation as a third party.

The court thus upheld the ministry of defense appeal against rulings of the Moscow inferior and appellate arbitration courts which had earlier denied the ministry the right to recover the debt by purchasing the Ukrainian fuel and energy property, Interfax-AFI reports from the courtroom. According to the press agency, Russia had supplied Ukraine with the gas which UESU (it will be recalled that this corporation was run at the time by Yuliya Tymoshenko, the current Fatherland Party leader) utilized in 1996- 1997 but did not fulfill its payment commitments.

The newspaper Sovershenno sekretno (Top Secret) thus describes the history of this deal dubbed “the 450-million affair” in the Russian press. Following a barter arrangement between the Russian ministries of finance and defense, the Gazprom joint-stock company, and the Unified Energy Systems of Ukraine, the latter failed to deliver $330 million in construction materials to the Ministry of Defense. The respective agreements were signed on November 28, 1996, and March 3, 1997. In 1998 the Russian Auditing Chamber spotted this shortage of building materials, pointing out that, as a result, thousands of Russian servicemen’s families could not move into new apartments. Moreover, it was found that UESU intended to supply the building materials at overcharged prices in violation of the hard-currency laws. After examining these circumstances, the Chief Military Prosecution Office of Russia opened a criminal case in late March 2000.

But the Bosfor trade house threw UESU a lifeline in 2000 (by an odd coincidence, when the Yushchenko-Tymoshenko government was in office): it stood bail and handed over to the Russian Defense Ministry the rights to claim the Ukrainian fuel and energy property worth RUR 452 million. But UESU let it down.

The corporation failing to meet its commitments, the Russian Ministry of Defense demands that the debt be recovered in its favor. The Russian side considers that Bosfor is illegally holding back the property, refusing to transfer it to Russia for a tender.

The new stage of the property-litigation war between the defense ministries of Russia and Ukraine has stirred up a keen interest in the Russian media. The latter, particularly, the site www.wremyamn.ru, have recently reported that the responsible Russian authorities have handed over this and other related cases to US investigators probing into the sources of Ukrainian millions laundered abroad by former Premier Pavlo Lazarenko.

It is expected, according to Martha Borsch, Northern California deputy district attorney, that the trial of Lazarenko will start in San Francisco on June 30, 2002. The overseas sleuths investigate without undue haste the Ukrainian former premier connections, increasingly suspect that Ms. Tymoshenko was a link between Mr. Lazarenko, now awaiting trial, and the Russian Gazprom.

A similar version is also being examined in the US. Matthew Brzezinski, the nephew of a very well-known political scientist, writes in the chapter “An 11-Billion Lady” (about Ms. Tymoshenko) of his book Casino Moscow: A Tale of Greed and Adventure on Capitalism’s Wildest Frontier, “... she would ship goods to Siberia which was short of everything but oil, repeating this cycle for several years. On the way, she formed an alliance with the Dnipropetrovsk oblast governor and former collective farm manager named Pavlo Lazarenko (the Lazarenko who ended up in a San Francisco jail on a charge of wide money laundering and receiving $72 million direct from Tymoshenko. Both deny these charges). Lazarenko granted Tymoshenko an energy concession in the oblast, which made her the de facto boss of the hundreds of state businesses... Tymoshenko’s situation changed when Lazarenko was appointed prime minister of Ukraine... and handed over to Tymoshenko the national monopoly on importing and distributing Russian natural gas. UESU was the second largest, after Germany, buyer of Russian natural gas. What impresses one most about these transactions is the crafty way in which UESU cleared its gas accounts with Gazprom through a practically-uncontrollable maze of barter deals. For example, Tymoshenko has just met the Russian minister of defense, with whom she struck a deal on the supply of army uniforms. The military uniform was made at a Ukrainian factory to which UESU supplied electricity. ‘There always are opportunities during a crisis,’ Tymoshenko commented modestly. ‘Our niche is aimed at the weakest organizations eager to work in our system under any conditions. I am sure this is the essence of capitalism.’” “The robber baroness,” the author goes on, “was well-heeled. She just masqueraded the post-communist economy. Tymoshenko gained control over about 20% of Ukraine’s gross product. There were crude speculations that Tymoshenko was his (Lazarenko’s — Ed.) facade, and the prime minister received hundreds of millions of dollars from her generosity. But when I told him about these rumors during an interview, he put his big hand on my knee and assured me with a mystical glance that ‘there were no commercial interests’ and that the country’s benefit was his only motivation.”

All we have to do after this long quotation is recall the last press conference of already former Premier Lazarenko in Kyiv (before he fled the country). Perhaps guided by a deep-seated sense of licentiousness, Mr. Lazarenko confessed to journalists, “Lazarenko is no angel.” Unlike him, Ms. Tymoshenko behaves as if she still had angel wings on her shoulders. But, in truth, fewer and fewer people in and outside this country believe this. The number of those who trust Ms. Tymoshenko will diminish further if Ukrainian fuel and energy businesses begin a court-ordered transfer of their property in favor of another country to which neither Ukraine nor its citizens are indebted.