The very costly secret:
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