Leak of doc­u­ments ex­poses Ukraini­ans’ big money flows

Kyiv Post - - NATIONAL - By Anna My­ro­niuk my­ro­niuk@ kyiv­post.com

Ed­i­tor’s Note: Go to kyiv­post.com for the full ver­sion of this story.

Ukrainian oli­garchs and politi­cians ap­pear at the cen­ter of yet an­other in­ter­na­tional money laun­der­ing scan­dal, this time worth $2 tril­lion. The FinCEN Files leak re­veals that they were among the global rich who moved dirty money abroad, aided by in­ter­na­tional banks.

The FinCEN Files are a leak of con­fi­den­tial sus­pi­cious ac­tiv­ity re­ports filed by banks to the U. S. Trea­sury De­part­ment’s in­tel­li­gence unit, the Fi­nan­cial Crimes En­force­ment Net­work, known as FinCEN.

Buz­zFeed News ob­tained over 2,100 such re­ports and shared them with the In­ter­na­tional Con­sor­tium of In­ves­tiga­tive Jour­nal­ists (ICIJ).

Ac­cord­ing to the FinCEN Files, be­tween 1999 and 2017, global banks moved more than $2 tril­lion in pay­ments they be­lieved were sus­pi­cious and flagged bank clients in more than 170 coun­tries, iden­ti­fy­ing them as po­ten­tially be­ing in­volved in il­licit trans­ac­tions.

Ukrainian names that ap­peared in the in­ves­ti­ga­tion in­clude some of the coun­try’s wealth­i­est peo­ple: fugi­tive former Ukrainian Pres­i­dent Vik­tor Yanukovych; a busi­ness­man known as his front­man, Ser­hiy Kurchenko; oli­garchs Ri­nat Akhme­tov, Ihor Kolo­moisky and Dmytro Fir­tash; ex-Prime Min­siter Yu­lia Ty­moshenko; and Yanukovych-con­nected busi­ness­man An­driy Klyuyev.

The FinCEN unit was in­volved in search­ing for and re­triev­ing money stolen from the coun­try by Yanukovych, the cor­rupt Ukrainian pres­i­dent who was ousted by the EuroMaidan Revo­lu­tion in 2014. The vast ma­jor­ity of FinCEN’s find­ings were handed over to Ukrainian law en­force­ment. Some con­cern Paul Manafort, an Amer­i­can po­lit­i­cal con­sul­tant who worked for Yanukovych and who led Don­ald J. Trump’s elec­tion campaign in 2016.

Af­ter re­ceiv­ing FinCEN’s re­port on Manafort, the U.S. De­part­ment of Jus­tice later in­dicted him. In 2018, he was con­victed on eight charges of tax fraud, bank fraud and fail­ure to dis­close for­eign bank ac­counts.

The FinCEN leaks in­clude those banks’ re­ports on Manafort. Some of the records were gath­ered as part of a U.S. con­gres­sional in­ves­ti­ga­tion into Rus­sian in­ter­fer­ence in the U.S. pres­i­den­tial elec­tion in 2016.

The ICIJ in­ves­ti­ga­tion de­tails 200,000 trans­ac­tions the banks deemed as sus­pi­cious in their re­ports. At least 489 trans­fers were made to and from Ukraine.

Over 400 jour­nal­ists across the globe have been an­a­lyz­ing the FinCEN Files for over a year. The Kyiv Post also con­trib­uted to the in­ves­ti­ga­tion.

In this story, we of­fer a round-up of ICIJ and its part­ners’ find­ings about Ukraini­ans.

Vik­tor Yanukovych

What FinCEN Files re­vealed: Ukrainian pros­e­cu­tors es­ti­mated that Yanukovych and his as­so­ciates had em­bez­zled $100 bil­lion from the coun­try since 2010. FinCEN Files traced some of that em­bez­zled money. It had passed through Latvia.

“Vik­tor Yanukovych ran the Ukrainian gov­ern­ment like a crim­i­nal or­ga­ni­za­tion, en­abling grand cor­rup­tion and prof­it­ing from di­verse schemes,” a 2016 FinCEN in­ter­nal re­port on Ukrainian klep­toc­racy stated.

FinCEN mapped out the Ukrainian of­fi­cials and Yanukovych as­so­ciates in­volved in em­bez­zling state funds and the com­pa­nies linked to them.

Mako Hold­ing was one such com­pany. It was con­trolled by Yanukovych’s son Oleksandr. Its Swiss branch sent and re­ceived sev­eral pay­ments to and from what ap­pears to be shell en­ti­ties with ac­counts in Latvia, ac­cord­ing to Re:Baltica, a Lat­vian in­ves­tiga­tive jour­nal­ism out­let.

Ser­hiy Kurchenko

What FinCEN Files re­vealed: A close ally of Yanukovych, fugi­tive Ser­hiy Kurchenko, al­legedly kept some $80 mil­lion of laundered money in Lat­vian ABLV Bank.

ABLV main­tained at least nine shell com­pany ac­counts linked to him, Re: Pub­lica re­ported.

One of Kurchenko’s com­pa­nies bank­ing with ABLV Bank was Pana­ma­nian Pros­per­ity De­vel­op­ments S. A. From 2013 to 2014, it re­ceived $5 bil­lion from eight Kurchenko-owned Ukrainian en­ti­ties in pay­ments con­nected to a gaso­line im­port scheme, ac­cord­ing to FinCEN Files. Re:Baltica was un­able to con­tact Kurchenko, who has been keep­ing a low pro­file af­ter flee­ing Ukraine in 2014.

An­driy Klyuyev

What FinCEN Files re­vealed: A UK com­pany of An­driy Klyuyev, a busi­ness­man and ex-chief of staff for Yanukovych, moved $230 mil­lion over five years from 2010 to 2015. JPMor­gan Chase Bank flagged the pay­ments but car­ried them out any­way.

Among Klyuyev’s most prom­i­nent ven­tures was his fam­ily’s so­lar en­ergy group, Ac­tiv So­lar, which re­ceived hundreds of mil­lions of dol­lars in loans from Ukrainian state banks that it never re­paid.

Klyuyev’s UK com­pany NoviRex also fun­neled se­cret pay­ments for po­lit­i­cal con­sult­ing to Manafort, the bank’s re­port notes. Some of the trans­fers to Manafort-re­lated shell com­pa­nies ap­peared to be dis­guised as pay­ments for computer hard­ware, ac­cord­ing to the bank.

Be­sides that, the com­pany in­di­rectly sent mil­lions to Yanukovych, re­ports say.

At­tor­neys for Klyuyev did not re­spond to ICIJ’s re­quest for com­ment.

Yu­lia Ty­moshenko

What FinCEN Files re­vealed: Former Ukrainian Prime Min­is­ter Yu­lia Ty­moshenko may have moved money out of Ukraine through Latvia.

In 2016, one bank re­ported to FinCEN about sev­eral com­pa­nies with a pos­si­ble con­nec­tion to Ty­moshenko, Re: Baltica writes. The bank re­searched the case and con­cluded that her money might have been moved to Canada through shell com­pa­nies.

Two of the com­pa­nies iden­ti­fied by the bank — Rin­gatta Project Ltd. and Wood­mark Sales, Inc.— each had an ac­count in Latvia’s branch of Pri­vatBank. Al­most $16.5 mil­lion went through them be­tween March and De­cem­ber 2014.

There is al­most no in­for­ma­tion on these com­pa­nies. Both were reg­is­tered in the Belize registry, but cur­rently are in­ac­tive.

Re: Baltica was un­able to con­firm Ty­moshenko’s con­nec­tions to the two com­pa­nies, as calls and emails to the press of­fice of Ty­moshenko’s party, Batkivshch­yna, went unan­swered.

Ri­nat Akhme­tov

What FinCEN Files re­vealed: In Oc­to­ber 2014, Lon­don’s Bar­clays bank filed a sus­pi­cious ac­tiv­ity re­port to FinCEN doc­u­ment­ing money move­ments to and from Ri­nat Akhme­tov’s com­pa­nies over the pre­vi­ous five years.

Bar­clays said that in Septem­ber 1999, a re­port by Ukraine’s In­te­rior Min­istry had iden­ti­fied Akhme­tov as a leader of an or­ga­nized crime syn­di­cate. The bank moved the money de­spite the con­cerns.

Akhme­tov’s Sys­tem Cap­i­tal Man­age­ment told ICIJ that the re­port was “fraud and a forgery” and that nei­ther Ak­me­tov nor the com­pany had ever been charged or con­victed of a crime.

In 2015, Bar­clays New York re­ported that it “main­tains con­cerns” that the funds trans­ferred by Akhme­tov’s com­pa­nies “could pos­si­bly con­tain il­licit pro­ceeds.” Still, in the same year, the Bar­clays Switzer­land ac­count of SCM’s as­so­ciate com­pany Sys­tem Fam­ily Man­age­ment (SFM) sent or re­ceived nearly $9 mil­lion in wire trans­fers.

Then the bank’s New York of­fice de­cided to stop ser­vic­ing the com­pa­nies. Akhme­tov and some of his com­pa­nies — SCM, SFM, and Met­invest — were put un­der what Bar­clays called its “Pay­ment Re­jec­tion Fil­ter,” ICIJ re­ported. The oli­garch’s com­pa­nies moved nearly $2 bil­lion be­tween 2009 and 2016 through Bar­clays, ac­cord­ing to the leaked re­ports.

Ihor Kolo­moisky

What FinCEN Files re­vealed: Ihor Kolo­moisky, a pow­er­ful Ukrainian oli­garch and former busi­ness part­ner of the coun­try’s Pres­i­dent Volodymyr Ze­len­sky, has been un­der the scru­tiny of Ukrainian and Amer­i­can law en­force­ment for sev­eral years.

Detectives started go­ing af­ter Kolo­moisky when, in 2016, it emerged that he had al­legedly em­bez­zled $5.5 bil­lion in de­pos­i­tors’ money from Pri­vatBank, Ukraine’s largest lender, which he owned at the time. When the fraud was un­cov­ered, the state na­tion­al­ized the bank.

Kolo­moisky and his part­ners al­legedly di­rected hundreds of mil­lions stolen from Pri­vatBank into the U. S. In Au­gust, the Jus­tice De­part­ment filed two civil for­fei­ture com­plaints that could al­low it to seize $70 mil­lion worth of Kolo­moisky’s real es­tate.

Deutsche Bank, which was pre­vi­ously caught pro­vid­ing its clients with ser­vices to evade sanc­tions, was mov­ing Kolo­moisky’s money.

The leaked records an­a­lysed by ICIJ show that Deutsche Bank moved $240 mil­lion from De­cem­ber 2015 to May 2016 for a shell com­pany reg­is­tered in the Bri­tish Vir­gin Is­lands that, U.S. court fil­ings claim, was con­trolled by Kolo­moisky and his busi­ness part­ner. Deutsche Bank de­clined to an­swer ICIJ re­gard­ing the mat­ter. Kolo­moisky did not re­spond to ques­tions from ICIJ and has pub­licly de­nied any wrong­do­ing in re­la­tion to Pri­vatbank.

Dmytro Fir­tash

What FinCEN Files re­vealed: Fugi­tive Ukrainian oli­garch Dmytro Fir­tash is sus­pected of em­bez­zling $190 mil­lion in state loans that his bank re­ceived in the wake of the global fi­nan­cial cri­sis. Part of that money he ploughed into a deal to pri­va­tize a ti­ta­nium man­u­fac­tur­ing com­pany, ac­cord­ing to leaked doc­u­ments an­a­lyzed by ICIJ and Or­gan­ised Crime and Cor­rup­tion Re­port­ing Project (OCCRP).

Fir­tash and com­pa­nies he con­trols pushed bil­lions of dol­lars through the global fi­nan­cial sys­tem via ma­jor U.S. and U.K. banks. Banks raised sus­pi­cions about Fir­tash trans­ac­tions dat­ing to at least 2003, ac­cord­ing to FinCEN Files.

In Au­gust 2008, a Fir­tash en­tity, Bothli Trade AG, sent $78,101 to Stan­dard Char­tered Bank ac­counts of Periyasamy Sun­der­alingam. Sun­der­alingam as­sisted Fir­tash’s al­leged bribes to In­dian of­fi­cials, the U.S. gov­ern­ment charges in its in­dict­ment of the oli­garch.

The doc­u­ments also allege that Fir­tash stole a hefty part of the $1.5 bil­lion that the Na­tional Bank of Ukraine gave the oli­garch’s bank, Nadra, to sta­bi­lize it, in 2010–2014. Most of the al­legedly stolen money, $110 mil­lion, was trans­ferred to Nadra as the fi­nal in­stall­ment of the state bailout, in early 2014.

Fir­tash’s hold­ing com­pany de­nied all of the al­le­ga­tions.

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