Leak of documents exposes Ukrainians’ big money flows
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.
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.
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.
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.
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.
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.
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.
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.