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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

“How can the money stolen from Ukrainians be recovered?”

Daryna KALENIUK about the London forum on a “special” question
13 May, 2014 - 11:23

The aggression in southern and eastern Ukraine is the consequence of rampant corruption in Ukraine – not only because, in all probability, “separatists” are being furnished with the Ukrainian money smuggled abroad by high-placed “refugees.” The all-pervading corruptness of the authorities is one of the major factors that caused the crisis of Ukrainian statehood and, hence, failure to resist the aggressor and mistrust of citizens towards their state.

Actually, Candidate of Sciences (Economics) Oleksii Moldavan considers rampant corruption fatigue “the main cause of mass-scale protests in Ukraine.” “At a closer examination, all the protesters’ demands, including integration into the EU, boil down, one way or another, to the Ukrainians’ desire to curb the totally uncontrolled corruption,” he says.

However, the new government is making very slow progress in and sometimes overtly hinders the process it has itself hyped up so much. As you remember, the first thing the new government said on coming to power was that “state coffers are empty” and the money had been taken away by “the criminal Yanukovych regime.” And do you know what this government has done since then to return what was “stolen”? Moreover, which of the officials is responsible for returning this money to Ukraine?

As the Ukrainian Maidan events and the preceding high-profile corruption scandals shook almost the entire world, foreign governments reacted in a flash by freezing bank accounts, canceling visas, denying entry, etc. For example, the Barack Obama administration has announced the intention to organize an FBI section to inquire into and suppress corruption in the governmental circles of foreign states, including Ukraine. In late April the UK froze $23-million-worth assets associated with corruption in Ukraine. On May 4 Switzerland froze the $193-million-worth accounts of Yanukovych and his close associates.

And what has Ukraine done?

The Prosecutor General’s Office has assessed how much “Yanukovych and Co.” managed to smuggle out of Ukraine. It is as much as 32 billion dollars in cash in Russia and another 100 billion dollars in the EU and the US. A special investigative group is inspecting 50 businesses and banks, as well as 33 people from Yanukovych’s inner circle, to spot the stolen public money. Yet well-informed experts say investigators are soft-pedaling many cases. This makes it very likely that the frozen funds on European and American banks’ accounts will not only fail to return to Ukraine by the end of the year, but will “vanish into thin air” and no one will ever be able to find them.

Moreover, there seems to be a struggle in Ukraine for returning the money. There are people in, of all places, the Presidential Administration, who overtly wish to “privatize” this field and are attempting to lay down “corruption control rules” to suit their own interests. The motives are obvious: to cash in on this, make short work of a rival, and cover their bases.

Besides, these “characters” perhaps consider it inappropriate to create a precedent for returning the laundered money to Ukraine. For it is obvious that those who talk about “the problem of spotting the assets and returning what was stolen,” putting all the blame on the Yanukovych era only, are stretching the truth. Only the poor residents of Ukraine’s Far East, influenced by Russian TV, will believe that the economy can be wrecked in two months and a country can be reduced to a pre-default condition in just three years. Yes, in the period of Yanukovych’s presidency, the schemes were perfected as much as they could. “Perfected” is the key word here. In other words, as “effective managers,” the Yanukovych family only improved what had been done before. Who by? When? How? A remark by Oleksandr Yeliashkevych, Ukraine’s 2nd and 3rd convocation MP, at the international expert conference “The Recovery of Stolen Assets of the Corrupt Political Elite of Ukraine: How not to Miss the Chance?” makes it somewhat easier to answer these questions. “Fifteen years ago the newspaper Den published my interview ‘The Lazarenko Case Is Only One Chapter in the Kuchma Case.’ A new chapter is opening now – the Yanukovych case. This may be followed by the Firtash, Medvedchuk, Pinchuk, Surkis, Lytvyn, and Tabachnyk cases,” he said.

Incidentally, during his recent visit to Kyiv, US Vice President Joe Biden made it clear that Americans do not as much expect as they are assessing whether Ukrainians are able to reorient from the revolution of dignity to revolution of efficiency after so many victims of the Maidan, and prove that they can not only overthrow regimes, but also change systems, work with different approaches, and carry out the reforms.

The Day has already written that on April 29-30 London hosted an international forum on assisting Ukraine to recover the withdrawn assets and promised to report on its results.

This forum was attended by high-rank law-enforcement officers from the US, the UK, Austria, etc. Of course, high on the agenda was, above all, the money of Yanukovych and the Family. Reportedly, the contacts were extremely fruitful, debates hot-heated, and agreements promising. But there was very little information about this in Ukraine until now.

The Day has recorded an exclusive interview with the Anticorruption Center executive director Daryna KALENIUK who opened the London conference.

“It was a forum in the government-to-government form. This means that most of the panel discussions were held behind the closed door. Moreover, some of them were closed not only to civil society, but also to representatives of various ministries. There was a discussion among financial intelligence officers – even law-enforcement bodies are not invited to this kind of meetings. This format allowed representatives of 33 countries to share, without breaching the confidentiality of investigations, the information they have found about the wealth of Yanukovych and his close associates who are subject to EU and US sanctions.

“Incidentally, the impression was that, for example, the law-enforcement bodies of Austria were more interested in the recovery of stolen Ukrainian assets than our side was. They brought the entire information about these profits to London, and the Austrians’ key question to the Ukrainian law-enforcement bodies was: ‘What do you have? What is the current stage of investigation?’ They need a predicate offense – the proof that Yanukovych obtained his property illegally. They at least need criminal proceedings to be instituted, say, for public property theft or some other economic crime, rather than for mass-scale human rights violations. Otherwise, their hands are tied up.”

You say 33 countries were represented at the forum. You mean the laundered Ukrainian money is now on the accounts of 33 countries?

“Thirty three are the ones that accepted the organizers’ invitation and came. For example, there were representatives from the Isle of Man and the island of Jersey. The 33 do not necessarily have anything to do with Yanukovych’s money.

“But it became clear to us from backstage chats that even the insular countries that imposed no sanctions on our ex-officials brought some information on their accounts, property, and assets.”

And what did Ukraine bring?

“My impression is that our law-enforcement bodies are making very slow progress in solving economic cases. There are several factors that cause this. These crimes are very complicated indeed, and one must know how to tackle them. Our side does not have this experience. Moreover, the investigation of these crimes needs proper coordination, whereas in Ukraine the Interior Ministry and the Prosecution Service stay out of contact.”

The press service of the Prosecutor General’s Office of Ukraine released the other day a statement of the Acting Prosecutor General Oleh Makhnitsky that Ukraine knows how to speed up the recovery of billions-worth funds stolen from the Ukrainian people and criminally smuggled out of this country. He allegedly said this in London at a joint press conference with US Attorney General Eric Holder and British Home Secretary Theresa May. What is it all about?

“I don’t know about the ‘summary procedure’ Makhnitsky spoke about. I have a record of his final speech – either I missed it or it was not there. He delivered a message, as all the others did, that the recovery of funds is a long and difficult process.

“In theory, Ukraine can recover the money quickly. Other countries are ready to render prompt assistance in recovering these funds. But the reality is that if Ukraine fails to supply information about the criminal origin of funds, even the money now frozen on European banks’ accounts will have to be unfrozen.”

What amount of money remains frozen today?

“I don’t know exactly what foreigners found. Makhnitsky spoke about 100 billion dollars on accounts and another 32 billion was smuggled in cash to Russia.”

These stolen billons are said to have returned to Ukraine… in the shape of weapons and “little green men.”

“You can forget about the cash taken to Russia. And, in my view, it will also be difficult to recover those 100 billion. For it is the usual money on banking accounts. A part of it is in corporate rights. It is not so easy to freeze it. I spoke to the Austrians on this topic. For example, companies related to Andrii Kliuiev, ex-secretary of the National Security and Defense Council, are functioning there. For a company to be fully frozen, Ukraine must submit 100-percent proof of the criminal origin of capital. The Austrians froze his bank accounts on suspicion. This is not sufficient for closing a business. Moreover, if the Ukrainian law-enforcement bodies fail to open a case that will prove a corruption-related origin of the frozen funds, the Austrians will have to unblock the accounts very soon. So I don’t understand why Ukrainian prosecutors are dragging their feet.”

What Anticorruption Center evidence did you give the Europeans in London?

“You can see this on the website yanukovich.info.

“The simplest case is that of Oleksandr Yefremov. He owns a company in the US, and the FBI is really conducting an investigation. But the Ukrainian side does not help. It is either not carrying out an investigation at all or is doing this very slowly. For example, Ukrkombank has already announced its bankruptcy, which means that it has already had all its cash withdrawn. But it could have been investigated because of a US connection.

“A year or two ago, Denys Kazansky conducted a very thorough investigation of a Stakhaniv firm that had gone bankrupt through a direct interference of Yefremov, who was the governor at the time, but, for some reason, no proceedings have been instituted in Ukraine. And, taking into account Yefremov’s unrestrained behavior and the current events in Luhansk, this looks somewhat strange.”

Shortly before, addressing the international expert conference “The Recovery of Stolen Assets of the Corrupt Political Elite of Ukraine: How not to Miss the Chance?” co-organized by the Anticorruption Center, Ihor Bilous, Deputy Minister for Revenues and Taxes, announced that, as a result of the London forum, Ukraine would establish, in conjunction with the European Anti-Fraud Office (OLAF), a task force to investigate into criminal cases associated with financial fraud and smuggling of illegally-obtained funds outside Ukraine. What do you know about this? Has this force been set up yet?

“The London forum also discussed the coordination of investigations under the aegis of the Ministry for Revenues and Taxes – they have a financial inquiry service, i.e., the former tax police. They are ready to take part in the investigation.

“Lack of coordination is one of the acutest problems of the government and the law-enforcement bodies. The Prosecution Service is in fact the prime mover in this field. But, for Ukraine to recover what was stolen, the Ministry of Justice should also make an effort. The law also needs to be amended.”

Ideally, the search for, detection, and recovery of the funds that were obtained in a corruption-related way and smuggled from Ukraine should be job of the National Bureau of Anticorruption Investigations which such public initiatives as Resuscitation Package of Reforms and Anticorruption Center demand to be established. Incidentally, what is now the situation with Bill No. 4780?

“The Verkhovna Rada has now four bills about establishing the National Bureau of Anticorruption Investigations. So no one knows when and in what shape this bureau will be set up. It will please somebody very much if the bureau remains a nonstarter.

“Incidentally, there was scandalous appearance at the London forum of Ms. Olena Tyshchenko who is now referred to as chief of an interdepartmental anticorruption legislation task force. Nobody invited her to this forum. She appeared as representative of… the Presidential Administration, although she had been introduced at our previous discussions as representative of Tetiana Chornovol, the governmental commissioner for anticorruption policies.”

What did Ms. Tyshchenko do in London?

“Ms. Tyshchenko lobbies recovery of the withdrawn funds by way of hiring law firms – out of competition, by the way. This provision is in draft law No. 4700, ‘On the National Corruption Control Service,’ which was registered on April 14 by MP Serhii Pashynsky in a glaring violation of the Verkhovna Rada Regulations. It was a third registered bill on the National Anticorruption Bureau. We are against this. Moreover, we are categorically warning that this must not be done. I will explain this on the example of the case about the return to Ukraine of ex-premier Pavlo Lazarenko’s money. In 1998 Ukraine hired the American law firm UTICo to recover Lazarenko’s corruption-related assets that had been spotted and frozen in the US. Under the contract, UTICo was to receive 12 percent of Lazarenko’s money that would be identified and returned to Ukraine’s budget. This means that if at least a half of the money seized by the US government had been returned, which is 125 million dollars, the firm’s lawyers would have been paid a fee of at least 15 million. UTICo did not recover the money but still calculated the contractual percentage and tried to get it by filing lawsuits to Washington and California courts. Moreover, UTICo’s claims slowed down for years the making of a decision to finally sell a Novato villa and blocked the court order to confiscate 250 million dollars in Washington. After all, a Washington court ruled that UTICo had no legitimate claims to Lazarenko’s money. Later, US and Ukraine courts handed down a number of rulings to the effect that UTICo had not even been authorized to represent Ukrainian citizens in the Lazarenko’s money recovery case, even though the Prosecutor General’s Office had delegated it this right. In the course of time, Ukraine’s Ministry of Justice also confirmed this (letters No. 39-41.934 of July 23, 2010, and of September 21, 2010).”


Olena Tyshchenko, ex-wife of the well-known Ukrainian businessman Serhii Tyshchenko (chairman of the supervisory board of Fortuna Bank Plc and a number of other large businesses), is known to the media in connection with a money laundering case against the Kazakh businessman Mukhtar Abliazov. In September 2013 she was arrested and taken into custody in Moscow, where she was accused of legalizing $3.3 billion embezzled by BTA Bank ex-governor Mukhtar Abliazov. A criminal case was opened against Tyshchenko under to articles of Russia’s Criminal Code – 159, “Very Serious Fraud,” and 174.1, “Legalization of Stolen Funds.” Investigators also maintained that no other than Tyshchenko had recruited the crime perpetrators and headed a structural unit by organizing Abliazov’s unlawful deals. Later last year, Tyshchenko, 37, the mother of four children, was amnestied. The amnesty became possible after BTA Bank had withdrawn its claim to be paid $439 million in damages.

In late April, Olena Tyshchenko was appointed in Ukraine as head of an interdepartmental task force for anticorruption legislation. This touched off a wave of indignation in the media and social networking sites. The media claim that her appointment was lobbied by Serhii Pashynsky, the acting chairman of the Presidential Administration, who is a business partner and friend of Serhii Tyshchenko, her ex-husband. Pashynsky himself denies this fact. “As far as I know, Tania Chornovol engaged Olena Tyshchenko as an expert into drawing up the law, and I see no problems here,” the acting Presidential Administration chief said, when a journalist asked him why Olena Tyshchenko, who had been involved in money laundering, was appointed as chief of the interdepartmental anticorruption legislation task force.

By Alla DUBROVYK, The Day