The Fight Against Cor­rup­tion

Kyiv Post - - Front Page - BY AL­LI­SON QUINN [email protected]

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)

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