Ac­tivists cry foul as courts, pros­e­cu­tors clear Zlochevsky

Kyiv Post - - National - BY ALYONA ZHUK ZHUK@KYIVPOST.COM

The club of top of­fi­cials of fugi­tive ex-Pres­i­dent Vik­tor Yanukovych’s regime who have suc­cess­fully avoided pros­e­cu­tion has a new mem­ber.

Ex-Ecol­ogy Min­is­ter Mykola Zlochevsky was cleared of cor­rup­tion charges and can now re­turn to Ukraine af­ter three years of ex­ile. A Ukrainian court closed the case against him in Novem­ber, but the pub­lic only heard of the de­vel­op­ment when the ex-min­is­ter’s oi­land-gas com­pany, Burisma Group, an­nounced it in Jan­uary.

The Pros­e­cu­tor Gen­eral’s Of­fice sat on the case for two years. It fi­nally changed the thrust of the in­ves­ti­ga­tion from il­licit en­rich­ment to tax eva­sion, and then set­tled.

But pros­e­cu­tors are now un­der fire from anti-cor­rup­tion ac­tivists for in­ten­tion­ally botch­ing the case and let­ting Zlochevsky off the hook.

Sab­o­tage claims

Zlochevsky was among sev­eral top of­fi­cials who fled Ukraine af­ter the EuroMaidan Rev­o­lu­tion that ousted Yanukovych on Feb. 22, 2014. Months later, some $35 mil­lion was found in his com­pa­nies’ bank ac­counts in the United King­dom, prompt­ing money laun­der­ing and il­licit en­rich­ment in­ves­ti­ga­tions in the UK and Ukraine.

He was also in­ves­ti­gated for giv­ing gas ex­trac­tion li­censes to af­fil­i­ated com­pa­nies - mainly ones in the Burisma Group.

But the charges were then whit­tled down to a sin­gle case of tax eva­sion, which was set­tled by a Kyiv court in Novem­ber, with Burisma agree­ing to pay Hr 180 mil­lion. The set­tle­ment con­sti­tutes less than 20 per­cent of the sum dis­cov­ered in Zlochevsky’s bank ac­count in 2014.

Burisma called the clos­ing of the case the re­sult of “full co­op­er­a­tion be­tween the of­fice of the pros­e­cu­tor gen­eral” and Burisma’s lawyers.

How­ever, this “full co­op­er­a­tion” could ac­tu­ally be an il­le­gal back­room deal, claims Daria Kale­niuk, the ex­ec­u­tive di­rec­tor of the An­tiCor­rup­tion Ac­tion Cen­ter. “The pro­ceed­ings led by the Pros­e­cu­tor Gen­eral’s Of­fice weren’t just shut - they were in­ten­tion­ally botched,” Kale­niuk says.

An­swer­ing the claims, pros­e­cu­tors say the case was in­ves­ti­gated prop­erly.

But “we have doubts about that,” says Yaroslav Yurchyshyn, an ex­ec­u­tive di­rec­tor at Trans­parency In­ter­na­tional Ukraine.

Lost mil­lions

The pros­e­cu­tors’ work on the Zlochevsky case has long been cause for con­cern.

In 2015, then-Deputy Pros­e­cu­tor Gen­eral Davit Sak­vare­lidze launched a crim­i­nal pro­ceed­ing into pos­si­ble abuse of of­fice by the pros­e­cu­tors who worked on Zlochevsky’s case. The Na­tional Anti-Cor­rup­tion Bureau of Ukraine took over the case in early 2016, and is still in­ves­ti­gat­ing it.

How­ever, in a press re­lease sent out by the Burisma Group, Zlochevsky said that the clos­ing of the case against him and his com­pa­nies was “a big step for­ward for Ukraine in gen­eral, and for Burisma Group in par­tic­u­lar.”

Zlochevsky served as Ukraine’s ecol­ogy min­is­ter in 2010-2012, dur­ing the Yanukovych pres­i­dency. Dur­ing that time, the State Ser­vice of Ge­ol­ogy and Min­eral Re­sources of Ukraine, which works un­der the Ecol­ogy Min­istry, granted li­censes for gas ex­trac­tion to Zlochevsky’s com­pa­nies.

In the spring of 2014, af­ter Yanukovych fled and the West started im­pos­ing sanc­tions against his as­so­ciates, An­driy Kicha, Zlochevsky’s lawyer and a top man­ager at the Burisma Group, tried to trans­fer some $23 mil­lion from ac­counts in the UK to Cyprus. The UK au­thor­i­ties blocked the op­er­a­tion, froze the ac­counts, and launched an in­ves­ti­ga­tion to de­ter­mine the source of Zlochevsky’s money, sus­pect­ing money laun­der­ing.

At the same time, Ukrainian pros­e­cu­tors started an il­licit en­rich­ment case against Zlochevsky.

How­ever, Ukrainian pros­e­cu­tors pro­vided no help to the case in the UK. In De­cem­ber 2014, the Pros­e­cu­tor Gen­eral’s Of­fice sent Zlochevsky’s lawyer a let­ter stat­ing that no ac­tive case was un­der­way against his client. A London court then dropped the case, cit­ing a lack of ev­i­dence, and un­froze the ac­counts.

Ac­cord­ing to the London court, some $20 mil­lion of the $35 mil­lion in Zlochevsky com­pany ac­counts in Bri­tish banks had come from fugi­tive Ukrainian oil trader and Yanukovych crony Ser­hiy Kurchenko, who is wanted in Ukraine on sus­pi­cion of em­bez­zle­ment.

“That money was the first money ar­rested abroad, right af­ter the EuroMaidan Rev­o­lu­tion,” Kale­niuk said. “And we could have got it back.”

And al­though the Ukrainian au­thor­i­ties put Zlochevsky on the wanted list in Ukraine, the case never went fur­ther.

Af­ter a 30-month in­ves­ti­ga­tion by the Pros­e­cu­tor Gen­eral’s Of­fice, the Podil­sky Court in Kyiv closed the case on Nov. 17 af­ter Burisma Group com­pa­nies paid the state bud­get Hr 180 mil­lion in un­paid taxes. One of the group’s com­pa­nies that paid the set­tle­ment was Esko-Pivnich, where the de­fen­dant was an ac­coun­tant.

“Why have the pro­ceed­ings re­gard­ing Zlochevsky’s pos­si­ble il­le­gal en­rich­ment led to the pro­ceed­ings against an ac­coun­tant at EskoPivnich for tax eva­sion?” Kale­niuk asks.

Zlochevsky was taken off the wanted list even be­fore the fi­nal set­tle­ment, in Oc­to­ber, af­ter an­other Kyiv court is­sued an or­der to pros­e­cu­tors be­cause his case hadn’t been ac­tively in­ves­ti­gated for a year.

Zlochevsky has never re­vealed where he has been liv­ing in the past three years. In De­cem­ber, a Ukrainian jour­nal­ist pub­lished pho­tos of a man she said was Zlochevsky din­ing in Vi­enna with Ihor Kononenko, a law­maker with Pres­i­dent Petro Poroshenko’s fac­tion and Poroshenko’s close as­so­ciate. Kononenko hasn’t com­mented on the is­sue. The fac­tion’s spokesman told the Kyiv Post that the law­maker couldn’t be reached.

Gas schemes

But pros­e­cu­tors may not be done with Zlochevsky yet.

In July, Pros­e­cu­tor Gen­eral Yuriy Lut­senko an­nounced that his of­fice was in­ves­ti­gat­ing Esko-Pivnich, a mem­ber of Burisma Group, on sus­pi­cion of falsely re­duc­ing its prof­its with the use of fic­ti­tious en­ter­prises, and evad­ing about Hr 1 bil­lion ($36 mil­lion) worth of taxes.

At the time, Lut­senko claimed that Zlochevsky was the only share­holder of Burisma Group con­nected to the scheme.

The gas ex­tract­ing com­pa­nies were sus­pected of sell­ing gas to af­fil­i­ated or fic­ti­tious com­pa­nies cheaply. The com­pa­nies then resold it at mar­ket prices.

How­ever, ac­cord­ing to Te­tiana Shevchuk, a lawyer with the An­tiCor­rup­tion Ac­tion Cen­ter, the fo­cus in the gas scheme in­ves­ti­ga­tion is al­ready shift­ing away from Zlochevsky’s com­pa­nies. In the lat­est court rul­ings, the ex-min­is­ter’s busi­nesses weren’t men­tioned at all, ac­cord­ing to Shevchuk.

The Kyiv Post asked pros­e­cu­tors whether the gas scheme in­ves­ti­ga­tion still con­cerned Zlochevsky’s com­pa­nies, but re­ceived no re­sponse be­fore dead­line.

Kale­niuk said Burisma has now em­barked on a pub­lic re­la­tions cam­paign to im­prove its rep­u­ta­tion.

Then-Ecol­ogy Min­is­ter Mykola Zlochevsky at­tends a Cabi­net of Min­is­ters meet­ing in Kyiv on Nov. 2, 2011. Zlochevsky fled af­ter the 2013-14 EuroMaidan Rev­o­lu­tion that ousted Pres­i­dent Vik­tor Yanukovych. He was sus­pected of steal­ing mil­lions of dol­lars, but law en­force­ment au­thor­i­ties have cleared him. (UNIAN)

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