The Fight Against Corruption
The country’s maturing civil society and media are exposing fresh details of suspected wrongdoing in government as the nation’s leaders talk tough about fighting corruption, with little to show by way of success.
What investigations have revealed is that people in both the president’s and prime minister’s circles are suspected of involvement in corrupt schemes, sometimes in collusion with each other, as if to dispel a popular assumption that the two are rivals.
Ukrainian Prime Minister Arseniy Yatsenyuk, however, is still trying to put a shine on his tarnished reputation as a corruption fighter.
“We’re appealing to our European partners: we need help in rooting out corruption,” Yatsenyuk said at the International Anti-Corruption Conference in Kyiv conference on Nov. 16. He asked for the West to set up a fund to pay for higher salaries to judges, prosecutors and other civil servants – ostensibly to keep them from resorting to bribe-taking and corrupt schemes. He also asked for Western expertise in fighting crime and corruption.
But given the emergence of more details of more shady business that top officials are said to be involved in, the prime minister’s remarks rang hollow with many people.
Days earlier, on Nov. 10, a report by Liga.net alleged that people close to Yatsenyuk and President Petro Poroshenko control the Odesa Portside Plant, a prized state-owned asset that officials have slated for privatization.
The prime minister’s spokeswoman, Olga Lappo, did not immediately respond to a request for comment on the latest allegations. Poroshenko’s spokesman, Sviatoslav Tsegolko, did not reply to a request for comment.
In late October, Odesa Portside Plant signed a gas contract with an obscure Austrian company linked to lawmaker Mykola Martynenko, a close ally of Yatsenyuk, according to Liga.net.
That company, Antra GmbH, has never before supplied gas and previously worked in telecommunications, yet it was selling gas to the
Odesa plant at inflated prices. Its website – set up just days before the contract was signed – is nearly empty, with little information on employees.
Amid reports that the company is a front for Ukrainian officials, the director of Antra GmbH, Eugen HinricksSchramm, held a press conference in Kyiv last week.
“Nobody from the Ukrainian government is a founder,” he said, adding cryptically that “our founders don’t want publicity,” Interfax-Ukraine reported on Nov. 12.
Hinricks-Schramm is listed as the owner of nearly a dozen companies in the Slovak business register, though none seem to be operating currently.
Until May, the company was known as System Actives GmbH and it was involved in telecommunications. At that time, its sole owner was Leonid Marchuk, a Ukrainian living in Vienna. Marchuk’s former business partner is Mikhail Vergeles, who managed a company belonging to the energy company BRINKFORD, owned partly by Mykola Martynenko.
Critics say the company was created by proxies of Ukrainian officials to secure the contract for gas supplies and use the opportunity to skim money off the factory’s proceeds.
Martynenko has repeatedly denied the allegations against him. In comments to the Kyiv Post sent by his spokesman Andriy Lyashenko, Martynenko attributed the latest claims to a “campaign to discredit” him.
“Myths have simply been created, and they have been circulating for many… years. What have they led to, these myths? Where’s the proof?” Martynenko said in an interview with Liga.net published on Nov. 18.
His comments came in response to a question regarding yet another scandal, the supply of uranium concentrate to the Ukrainian state-owned company VostGOK through an Austrian shell company, Steuermann Investitions.
Last June, the Security Service of Ukraine, or SBU, probed a scheme between VostGOK, the Stepnogorsk Plant in Kazakhstan and Steuermann Investitions that reportedly put a $10 million dent in the state budget. The deal saw VostGOK purchase uranium concentrate from the Kazakh plant through the Austrian company – despite the fact that VostGOK is meant to produce its own uranium concentrate.
But journalists at Ukrainska Pravda say Martynenko is behind it all. Steuermann Investitions, the mysterious Austrian outfit at the center of the questionable uranium deal, is part of the supervisory council of the Zaporizhia Abrasives Plant, which has been linked to Martynenko.
Journalists who conducted the investigations said they were warned of an “information war” to “neutralize” them, Sevgil Musaieva-Borovik, the chief editor of Ukrainska Pravda, wrote on her Facebook page on Nov. 15.
That warning was followed by a strange phone call made to lawmaker Svitlana Zalishchuk, a friend of lawmaker Sergii Leshchenko. Answering a call from Leshchenko’s phone number, she heard the voice of an unknown caller who warned of “provocations” and said that her and Leshchenko’s phones were being tapped, Zalishchuk wrote on Facebook.
Martynenko, who heads the parliament’s energy committee, faces investigation by Swiss authorities for alleged money laundering, as well as a separate probe by Czech authorities in connection with the same case, according to documents published by Leshchenko.
Yatsenyuk said in a recent interview with Politico that he had not ordered a parliamentary investigation into Martynenko because his ally “strongly denies all these allegations.” Poroshenko has also seen some of his allies accused of corrupt practices – including Ihor Kononenko, deputy head of the president’s parliamentary faction.
Valentyn Nalyvaichenko, the former head of Ukraine’s SBU, said in mid-October that Kononenko had been laundering money on a daily basis from the Ukrprominvest group, created in 2005 by Kononenko and Poroshenko. Nalyvaichenko accused Kononenko of skimming off $100,000-$300,000 from company funds each month through offshore accounts.
Although Nalyvaichenko provided documents to the anti-corruption committee which purported to show illicit money transfers, Kononenko denied the allegations and said they were likely part of a campaign to discredit him ahead of the parliamentary elections.
The president has also come under fire for what activists describe as shady land deals.
Lawmaker Igor Lutsenko last month published a video purporting to show a land plot owned by Poroshenko in Kyiv Oblast. Lutsenko said Poroshenko signed a 49-year lease for land on the river front in Kozyn village. The prob- lem, he said, is that the president paid only 5 percent of the normal price.
Boris Lozhkin, the president’s chief of staff, hasn’t escaped scrutiny. Austrian authorities conducted a preliminary investigation into money laundering related to Lozhkin selling his media empire to Serhiy Kurchenko, who is widely believed to have been ex-President Viktor Yanukovych’s frontman.
According to Leshchenko, Austrian authorities were investigating how €315 million from companies affiliated with Kurchenko ended up on the accounts of firms tied to Lozhkin. Although the foreign investigation ceased after authorities found no wrongdoing, questions have arisen as to how he sold hundreds of millions of worth of media assets in Ukraine but didn’t pay taxes on them. Neither did he own all the assets he sold, Leshchenko said.
Experts say the latest scandals are further evidence of a lack of political will for change, with “two different governments” now in charge. One genuinely wants to dismantle the system and build clean institutions -- including law enforcement -- while the other seeks to keep the status quo, often derided as crony capitalism, oligarchy or kleptocracy.
Oleksiy Khmara, executive director of Transparency International Ukraine, said he believed Yatsenyuk had voiced a proposal for a new international anti-corruption body in order to “buy time to do nothing.” Khmara said while there was progress in reforms, with several new bodies set up to fight corruption, efforts always fail when it concerns officials at the highest levels.
Sociologist Iryna Bekeshkina of the Democratic Initiatives Foundation agreed that drastic change was needed to prevent major protests.
“A lot has changed, society has become intolerant of corruption, the public has started to really put pressure on authorities to get them to act against corrupt officials,” she said,
But Volodymyr Fesenko of the Penta Center for Political Studies said it would be a mistake to think that the country’s problems all revolve around certain individuals accused of corruption.
“The problem is not in Martynenko or other individuals, but in the judicial system and in other areas. Things have actually changed, it’s just that they’re changing very slowly,” he said. But other experts see obstruction. “The government doesn’t have enough political will to fight corruption, it’s more like it’s fighting to keep corrupt schemes for itself,” said Olga Tymchenko of Transparency International Ukraine.
The arrogance -- or lack of political will -- was on full display on Nov. 19 as Interior Minister Arsen Avakov, Prosecutor General Viktor Shokin and Security Service head Vasyl Hrytsak failed to show up at a much-anticipated meeting of the parliament’s AntiCorruption Committee.
Ukrainian Prime Minister Arseniy Yatsenyuk addresses the International Anti-Corruption Conference in Kyiv on Nov. 16. (Andrew Kravchenko)
Lawmaker Mykola Martynenko of the People’s Front in the hall of parliament in October 2013. (UNIAN)