Offshore financial records leak: what gives?

The international community is discussing the giant leak of offshore financial records involving dozens of figures, mostly politicians, known across the world. Journalists are promising further sensational reports concerning Russia, Ukraine, and Azerbaijan.

Ukraine’s international reputation was badly damaged early during this scandal when the finger was pointed at President Petro Poroshenko – and this considering that Ukraine’s positive post-Maidan image has been tarnished by the administration’s snail’s pace of reform. Despite the Panama law firm’s leaked documents, Washington has reiterated its support for President Poroshenko and government. The Day’s previous issue has an article entitled “What should the president say and do?” (http://day.kyiv.ua/en/article/day-after-day/what-should-president-say-and-do) that offers data relating to Ukraine’s political latter-day history, explaining why Ukrainian politicians find themselves exposed to scandal while slimming Ukraine’s chance of a European future. It was very interesting to follow the reaction of Ukraine’s political community, general public, and media to that Panama leak, let alone the way the scandal and possible consequences were being discussed.

Needless to say, accusations addressing President Poroshenko (well grounded in many cases) and refutations by those who defended him – particularly ones on his payroll – have been in the media limelight. Have there been any attempts to make an in depth analysis? Have there been straight-to-the-point questions asked? There have been, even if just a few. But on this further on. First, about those who are taking advantage of the situation.

Monday night’s Svoboda Slova (Freedom of Expression) talk show on Viktor Pinchuk’s ICTV Channel was a battlefield with most lashing out at and others defending Petro Poroshenko. The head of state has failed to explain the offshore scandal convincingly, most likely because so many lies have accumulated that he is governed by falsehood. In the meantime, Pinchuk is playing his own game, using, among others, the so-called Eurooptimists, who are found in various Verkhovna Rada factions, particularly the Petro Poroshenko Bloc. Some of them attended the talk show. Mustafa Nayyem, who is a member of the PPB, spoke about the investigation into the Poroshenko case.

As a matter of fact, Viktor Pinchuk is demonstrating his capabilities, that very much in today’s Ukrainian politics depends on what he has to say. President Poroshenko appointed Leonid Kuchma as the representative of Ukraine for the Minsk talks and as a member of the Constitutional Court. If need be, this clan can arrange for the toppling of the current president (standby platforms are known to be in the process of construction). Ukrainian society probably wants Poroshenko replaced because he has failed to keep his promise to sell his businesses and carry out reforms, but in that case it would be necessary to replace both the president and the system, along with its architect, Leonid Kuchma. Viktor Yanukovych never realized that the Kuchma family, aided by the Maidan, was the main reason behind his political fiasco.

Another significant fact is that the National Anticorruption Bureau and the Prosecutor General’s Office have actually refused to investigate the [newly] available data concerning the president’s offshore bank accounts. After a public outburst there were media reports to the effect that Roman Nasirov, head of the State Fiscal Service, had ordered to check media information about Poroshenko having allegedly established three offshore companies to manage his assets, without including them in his property status declarations – and this at a time when similar investigations were underway in a dozen countries. In Iceland, thousands gathered for rallies of protest in response to media reports exposing Prime Minister Sigmundur David Gunnlaugsson’s tax evasion attempts, demanding his resignation.

“The most terrifying aspect of this situation is that all those Leshchenkos, Gnaps, Nayyems, all those Eurooptimists are rocking the boat, being unaware of what keeps this country in one piece. This country is kept in one piece by a corrupt oligarchic consensus. If we remove this oligarchic consensus, the whole structure will come tumbling down. A sociopolitical structure capable of balancing the interests of various social groups, taking over political power without losses – or with minimal losses – in case the old regime falls, collapses, could be an alternative,” journalist Yurii Romanenko wrote on his Facebook page.

While it is true that the Kuchma-sired clannish-oligarchic system should be replaced, the big question remains: Who will take over? On December 12, 2013, during Euromaidan, Den/The Day’s Editor-in-Chief Larysa Ivshyna wrote that she’d often said something that many found not to their liking, that Ukrainians were hanging by a thread known as the Party of Regions, over an abyss, and that, should that thread be torn, all would come tumbling down, finding themselves in a situation with the bad President, Yanukovych, replaced by President Putin. Precisely the situation in Crimea and Donbas today. During the Euromaidan and before the parliamentary elections, Den/The Day called on the activists to unite and form a political force of their own (four roundtables were held), lest they dissolve amidst the old political projects. They didn’t unite and most became part of the old system. As a result, we can see many young Ukrainian politicians who differ little from the old guard. There is still a chance. Even if few remain on the right path, they must be supported and encouraged.

l SOCIETY MUST BREATH DOWN RANKING OFFICIALS’ NECKS

Mykhailo BASARAB, political analyst:

“First, this offshore accounts scandal has seriously tarnished the president’s reputation. Ukrainians doubtlessly know what an offshore bank account is all about, just as they realize that this topic will quickly fade from the media limelight. Second, there is a large scale investigation to be made into a large journalist consortium, and this investigation will most likely be carried out with the aid of Western clandestine agencies. Journalists have declared that there will be further reports, facts and figures involving other VIPs. I wouldn’t rule out the possibility of further leaks pointing the finger at the president, abuse of office, offshore companies, you name it. This reality-show serial will have sequels, all to the detriment of the president’s reputation. Of course, all such leaks are damaging Ukraine’s international image and the consequences may be very negative. Take the April 6 Dutch Referendum. If they say ‘No,’ even if this doesn’t affect the implementation of the Association Agreement, the signal will be bad for Ukraine’s EU membership prospects. Ukraine is waiting for tranches from international financial partners, donors, and investors. Such scandals are bad for Ukraine’s investment climate. The European Union will pass judgment on further sanctions against Russia in July, and this considering that there was a strong anti-sanction lobby in Europe even before the offshore accounts scandal. This scandal will be another trump card for all who oppose Ukraine in Europe. Of course, one shouldn’t oversimplify the situation by saying that all accusations against Poroshenko are automatically aimed against Ukraine. Poroshenko is an ad hoc figure in Ukraine’s relationships with its strongest partner, the United States. Washington’s restrained statement in regard to the offshore accounts scandal was something well to be expected. Nothing sensational, meant to quieten Ukrainian society, to the effect that there will be no obstructing Ukraine’s contacts with its Western partners.

“There is talk about impeachment, considering the circumstances, but Ukraine’s impeachment procedures have gaps, there is no law on ad hoc inquiry committees, but there are ample legal grounds for initiating these procedures. On the other hand, Ukraine could hardly benefit from impeachment in wartime and with elections pending. With all the external and internal challenges, any degree of domestic instability would play into the aggressor state’s hands. The dilemma remains, however: on the one hand, this isn’t the time for early presidential or parliamentary elections, let alone mass protest rallies; on the other hand, we have no right to remain silent, because a silent society begets authoritarianism.”

“Ukrainian society must keep breathing down the necks of all top-level officials, for them to realize that this society will instantly respond to any wheelings and dealings on their part, even if there are no hallmarks of a criminal case, if such actions can be qualified as manipulations subject to Ukrainian legislation or international law. Petro Poroshenko is President of Ukraine first and businessman next. After taking his Oath, he should’ve parted with his business past. Ukrainian society has been waiting for this parting far too long. With the president obviously not intending to explain the reasons behind the offshore bank accounts scandal or resign, the only possible way to put public pressure on him is a public investigation into the circumstances of the case.

“All citizens of Ukraine should want to build a powerful civil society capable of putting pressure on all those in power, demanding changes for the better ‘upstairs.’ Leading public activists could exert such pressure, win elections, and take important executive posts. However, it is important to remember that a civil society can’t replace the government machine. There has to be a balance between a strong civil society and a strong administration. Today’s government, regrettably, relies on an oligarchic consensus. This consensus could be dismantled only by a strong government that would be able to launch a large scale anticorruption reform. Otherwise, in the absence of strong political institutions, an abrupt end to the existing political balance would be too risky for both the state and society. Representatives of a civil society could meanwhile reinforce their social institutions, to quickly find an alternative to the old elites and build up their demands for systemic changes. At a certain point, leading public figures could vie in elections, win, and form the critical nucleus required for a systemic reset of the ruling class, so it could see the dismantling of that oligarchic consensus as a top priority, do it, and raise the state to the level of key decision-making center ruled by law.”