The very costly se­cret:

The Ukrainian Week - - CONTENTS - An­driy Holub

The pit­falls of Yanukovych's $1.5bn case

It’s been more than two months since Pros­e­cu­tor Gen­eral Yuriy Lut­senko an­nounced that US $ 1.5 bil­lion of “money be­long­ing to the Yanukovych crime syn­di­cate” had been con­fis­cated. The money had barely been trans­ferred into the Trea­sury when ATO Pros­e­cu­tor Kos­tiantyn Ku­lyk, who Lut­senko says was in charge of this in­ves­ti­ga­tion, was awarded the Pres­i­den­tial Or­der “For Ser­vice” III De­gree.

Of­fi­cial sources still of­fer lit­tle in­for­ma­tion about the de­tails of this case. On April 28, Lut­senko an­nounced that one of the mem­bers of the “Yanukovych crime syn­di­cate” had cut a deal with the in­ves­ti­ga­tors to re­veal the way the or­ga­ni­za­tion op­er­ated and to name other mem­bers. Based on this plea bar­gain, the court was able to con­fis­cate “nearly US $1.5bn from the ac­counts of sev­eral com­pa­nies.

How­ever, the Sin­gle Reg­istry of Court Rul­ings (SRCR) con­tains the rul­ing of the Donetsk Oblast Court of Ap­peals in a suit brought by six Cypriot and Swiss com­pa­nies who chal­lenged the March 28

de­ci­sion of the Kram­a­torsk Dis­trict Court. This doc­u­ment makes it clear that what is be­ing chal­lenged is this plea bar­gain with the in­ves­ti­ga­tion that brought the PG so much glory. The seven for­eign com­pa­nies are the own­ers of some of the con­fis­cated ac­counts. Ac­cord­ing to the agree­ment, the sus­pect ad­mit­ted his guilt in two crimes. One of these in­volved par­tic­i­pat­ing in the crim­i­nal syn­di­cate, the other in­volved laun­der­ing money that had been got­ten through il­le­gal means. This is about as much as can be learned from open of­fi­cial sources. In­ci­den­tally, the Ap­peals Court de­nied the seven com­pa­nies the right to a sec­ond hear­ing in the case.

Far more can be learned from un­of­fi­cial, but equally open sources. The name of this “mem­ber of the Yanukovych crime syn­di­cate” did not man­age to re­main se­cret for even a day. By evening on March 28, the press got its hands on sev­eral pages from the Kram­a­torsk court rul­ing, which not only men­tioned the sus­pect by name as Arkadiy Kashkin, but also his res­i­den­tial ad­dress and the names of sev­eral com­pa­nies whose money was con­fis­cated. It ap­pears that Kashkin was the fic­tive di­rec­tor of Gas Ukraina-2020 in Ser­hiy Kurchenko’s cir­cle, for which he had al­ready been tried in 2015, also based on a plea bar­gain. At that time, Kashkin ad­mit­ted that he sold his pass­port for US $500, af­ter which he was made di­rec­tor of the com­pany. This crime cost him UAH 51,000 in fines, nearly US $2,000.

The com­pa­nies whose names be­came known to­gether with Kashkin’s, ac­cord­ing to the SRCR, were in­volved in other crim­i­nal cases as well. Some of them were first no­ticed back in 2014 in the ma­te­rial ev­i­dence in a case charg­ing for­mer NBU Gover­nor Ser­hiy Ar­bu­zov with money-laun­der­ing through a “Bank TV” that he set up un­der the cen­tral bank. As of the end of May 2017, this case re­mains un­re­solved. Later on, these com­pa­nies ap­pear in a case about bil­lions in machi­na­tions in­volv­ing do­mes­tic gov­ern­ment bonds (OBDP), sup­pos­edly with the par­tic­i­pa­tion of top of­fi­cials in the Yanukovych regime. So far, there’s no in­for­ma­tion about a fi­nal judg­ment in this case, ei­ther.

How­ever, the PGO and its boss, Yuriy Lut­senko, con­tinue to earnestly main­tain the “se­cret of Polichinelle” in the full text of the Kram­a­torsk Dis­trict Court’s rul­ing. Of­fi­cially, the mil­i­tary pros­e­cu­tor has for­bid­den the publi­ca­tion of the rul­ing for se­cu­rity rea­sons. Even with­out this, though, it’s hard to give a fi­nal an­swer to the $64,000 ques­tion: What kind of in­for­ma­tion about hy­po­thet­i­cal deals in­volv­ing Yanukovych, Kurchenko and Co. and worth bil­lions can be pro­vided by some­one who sold his pass­port for a mere $500?

On July 4, the prece­dent of the Kashkin case was re­viewed at a ses­sion of the VR Com­mit­tee for coun­ter­ing cor­rup­tion, which was called af­ter Trans­parency In­ter­na­tional Ukraine submitted an ap­peal. Of­fi­cials from the mil­i­tary pros­e­cu­tor’s of­fice who might have pro­vided an- swers to at least some of the ques­tions ig­nored the meet­ing. Ac­cord­ing to TI Ukraine rep­re­sen­ta­tive An­driy Sliusar, this raises doubts about the pres­ence of a pred­i­cate of­fense in this high-pro­file case. In other words, ac­cus­ing some­one of laun­der­ing money that was gained by il­le­gal means is only pos­si­ble af­ter the “il­le­gal prove­nance” of the money has been proven in a court of law.

“By law, the court is not sup­posed to rec­og­nize the agree­ment with the in­ves­ti­ga­tion if there is no ob­jec­tive ev­i­dence of a crime,” says Sliusar. “But the prob­lem is that the court rul­ing has not been pub­lished, so the ar­gu­ments used by the judges in the case are not known.”

MP Ser­hiy Leshchenko, who was at the com­mit­tee meet­ing, noted that even a re­quest by MPs to make the court rul­ing avail­able was de­nied. Nev­er­the­less, he some­how man­aged to get his hands on the de­ci­sion. “I can say openly that I have seen the rul­ing,” Leshchenko says. “There are two parts. The first is about Kashkin and Gas Ukraina-2020. The sec­ond is a de­scrip­tion of the money-laun­der­ing scheme in­volv­ing the Yanukovych crime syn­di­cate. But there is no link be­tween the two.”

Mean­while, Leshchenko is not re­veal­ing his sources. How­ever, the SRCR con­tains other court rul­ings that gen­er­ally point to the scheme Leshchenko men­tions. From March un­til the end of May this year, the Kom­intern Dis­trict Court in Kharkiv ruled on at least five cases in­volv­ing Kashkin’s “col­leagues”—other fic­tive di­rec­tors of com­pa­nies re­lated to Kurchenko. In con­trast to the Kram­a­torsk Court rul­ing, there weren’t any spe­cial con­fis­ca­tions but they also in­volved pleabar­gain­ing and con­tain de­tailed de­scrip­tions of how the Yanukovych-Kurchenko group or­ga­nized their crimes— with­out ref­er­ence to any court rul­ings that might con­firm this. There is also a list of over 400 com­pa­nies through which money was sup­pos­edly laun­dered. Of them, at least 140 are reg­is­tered in Cyprus, Switzer­land, Panama and other off­shore zones, in­clud­ing the ones al­ready known to have been sub­ject to con­fis­ca­tion.

Of course, not all of these 140 com­pa­nies kept money in Ukrainian bank ac­counts. Still, a sig­nif­i­cant num­ber of them had such ac­counts and lost their money af­ter the Kram­a­torsk case. The list in­cludes the seven com­pa­nies that tried to chal­lenge this rul­ing in an ap­peals court: Won­derb­liss LTD, Erosaria LTD, Al­doza In­vest­ments Lim­ited, Opal­core LTD, Akemi Man­age­ment Lim­ited, Lori­com Hold­ing Group LTD, and Fox­tron Net­works Lim­ited. Dmytro Shcherbin, who rep­re­sents three of the firms, says that af­ter the Donetsk Oblast Court of Ap­peals de­nied them a hear­ing, the law­suit has been passed on to a cas­sa­tion court, Ukraine’s High Spe­cial­ized Court. He adds that nei­ther he him­self nor his clients have seen the full text of the Kram­a­torsk rul­ing. When asked if his clients will re­sort to the European Court of Hu­man Rights, Shcherbin re­sponds, “If the cas­sa­tion court re­jects our case, of course, we will turn to the European Court. No ques­tion about that.”

Ac­cord­ing to TI Ukraine’s Sliusar, an ECHR de­ci­sion that goes against Ukraine could put a fi­nal end to any at­tempts to legally re­turn Yanukovych’s money. He notes that if in­ves­ti­ga­tors have grounds for doubt­ing the prove­nance of this money, then it’s hard to imag­ine how this might be proved once the off­shore com­pa­nies have an ECHR rul­ing in their fa­vor in their hands. In this case, the ECHR rul­ing will ef­fec­tively have laun­dered all the money.

AN ECHR DE­CI­SION THAT GOES AGAINST UKRAINE COULD PUT A FI­NAL END TO ANY AT­TEMPTS TO LEGALLY RE­TURN YANUKOVYCH'S MONEY. IT MIGHT HELP OFF­SHORE COM­PA­NIES HAVE THEIR MONEY LAUN­DERED

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