Will Crime Keep Pay­ing In Ukraine?

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The Na­tional Anti-Cor­rup­tion Bureau of Ukraine on April 20 ar­rested on graft charges ex-Peo­ple’s Front party law­maker Mykola Mar­ty­nenko, one of the most in­flu­en­tial power­bro­kers to be de­tained in Ukraine since it gained in­de­pen­dence in 1991.

De­spite be­ing sus­pected of mul­ti­mil­lion-dol­lar cor­rup­tion, Mar­ty­nenko was re­leased with­out bail af­ter a pow­er­ful col­lec­tion of mem­bers of par­lia­ment and min­is­ters vouched for him in court.

The no-bail re­lease may fore­shadow the fate of any crim­i­nal pros­e­cu­tion against Mar­ty­nenko.

The chances that he will get a fair trial lead­ing to his con­vic­tion un­der the cur­rent gov­ern­ment are low: While the NABU is deemed to be rel­a­tively in­de­pen­dent, the ju­di­ciary and the pros­e­cu­tion ser­vice are no­to­ri­ously cor­rupt and viewed as sub­servient to Pres­i­dent Petro Poroshenko and other politi­cians.

Mar­ty­nenko, who sees the case as fab­ri­cated and po­lit­i­cal, has been charged with or­ga­nized crime and em­bez­zling $17 mil­lion dur­ing ura­nium ore sales to the state-owned East­ern Ore Dress­ing Plant.

The way to the top for Mar­ty­nenko, 56, started in the 1980s when he was a top Kyiv ap­pa­ratchik of the Kom­so­mol, the Com­mu­nist Party’s youth or­ga­ni­za­tion, where many busi­ness­peo­ple got their start when the Soviet Union col­lapsed. In the 1990s he set up trad­ing com­pa­nies in the nu­clear and nat­u­ral gas in­dus­tries.

Mar­ty­nenko is a long-timer in

pol­i­tics: He has wielded in­flu­ence over the en­ergy in­dus­try since he be­came a mem­ber of par­lia­ment’s en­ergy com­mit­tee in 1998. He had been the first deputy chair­man of the com­mit­tee since 2002 and its chair­man since 2007, man­ag­ing to sur­vive four pres­i­dents be­fore he stepped down as a law­maker in 2015 amid a cor­rup­tion scan­dal.

Given his clout, Mar­ty­nenko is an even big­ger fish than State Fis­cal Ser­vice Chief Ro­man Nasirov, who was ar­rested by the bureau on graft charges and re­leased on Hr 100 mil­lion ($3.77 mil­lion) bail in March.

“Nasirov was a high-rank­ing of­fi­cial who im­ple­mented de­ci­sions, while Mar­ty­nenko was one of the de­ci­sion­mak­ers,” po­lit­i­cal an­a­lyst Vi­taly Bala said.

Nasirov and Mar­ty­nenko are the first po­lit­i­cal heavy­weights who were ar­rested while they or their close al­lies were in power.

Be­fore, politi­cians ar­rested in Ukraine were ei­ther in the op­po­si­tion or out of power, like ex-Prime Min­is­ter Yu­lia Ty­moshenko.

Both Poroshenko and ex-Prime Min­is­ter Arseniy Yat­senyuk have been ac­cused of be­ing im­pli­cated in Mar­ty­nenko’s schemes, which they deny. Still, Mar­ty­nenko has been seen as the main cash cow for Yat­senyuk and the Peo­ple’s Front.

No bail set

Olek­sandr Bo­brovnik, a judge at Kyiv’s Solomyan­sky Court, re­leased Mar­ty­nenko with­out bail on April 22, two days af­ter the ar­rest. Sports Min­is­ter Ihor Zh­danov, Cen­tral Elec­tion Com­mit­tee Deputy Chief An­driy Ma­hera and 18 Peo­ple’s Front law­mak­ers of­fi­cially vouched that the sus­pect would not at­tempt to flee, while three other min­is­ters pub­licly sup­ported Mar­ty­nenko.

If Mar­ty­nenko flees, the 20 of­fi­cials who vouched for him will only have to pay a fine worth a to­tal of $1,454 to $2,908.

Bo­brovnik is ac­cused of hav­ing links to Poroshenko’s top ally and law­maker Olek­sandr Hra­novsky, who de­nies them.

Ura­nium scheme

Mar­ty­nenko was ar­rested be­cause of his sus­pected in­volve­ment in the ura­nium sup­ply scheme, which is be­ing in­ves­ti­gated by the NABU and Aus­trian au­thor­i­ties.

The Ukrain­ska Pravda on­line news­pa­per re­ported in 2015 that Aus­tria’s Steuer­mann In­vesti­tions, which is al­legedly con­trolled by Mar­ty­nenko, was sell­ing Kazakh ura­nium ore at a huge profit to the state-owned East­ern Ore Dress­ing Plant, which buys ura­nium for Ukraine’s state nu­clear power mo­nop­oly En­er­goatom. The NABU sus­pects that the state-owned plant was buy­ing the over­priced ura­nium and re­ceiv­ing kick­backs.

Mar­ty­nenko’s busi­ness part­ner Ser­hiy Pereloma, a deputy CEO of oil and gas firm Naftogaz and chair­man of the Odesa Port­side Plant’s board of di­rec­tors, is also a sus­pect in the case. He was also re­leased with­out bail.

An­other sus­pect is Rus­lan Zhurilo, act­ing CEO of United Min­ing and Chem­i­cal Com­pany and an ex-deputy CEO of the East­ern Ore Dress­ing Plant.

Ti­ta­nium scheme

An­other NABU case linked to Mar­ty­nenko is an al­leged graft scheme at the United Min­ing and Chem­i­cal Com­pany (OGKhK), which used to sell ti­ta­nium ore at be­low-mar­ket prices to Aus­tria’s Boll­w­erk, whose owner Wolf­gang Eiberger is the CEO of Steuer­mann — a firm al­legedly con­trolled by Mar­ty­nenko. The case is also be­ing in­ves­ti­gated in Aus­tria.

Zhurilo and ex-OGKhK ex­ec­u­tives Yury Pert­sev and Olek­siy Morokhovet­s were charged with em­bez­zling Hr 300 mil­lion ($11.3 mil­lion) from the com­pany, ar­rested and re­leased on bail in Jan­uary.

Other schemes

The NABU, as well as Swiss and Czech au­thor­i­ties, have also been in­ves­ti­gat­ing Mar­ty­nenko on sus­pi­cion that he ac­cepted 30 mil­lion Swiss francs from Czech en­gi­neer­ing firm Skoda to give it a con­tract to sup­ply equip­ment to En­er­goatom.

Yet an­other case in­volv­ing Mar­ty­nenko con­cerns an al­leged cor­rup­tion scheme at the Odesa Port­side Plant, through which Aus­tria’s An­tra sold nat­u­ral gas to the plant at above-mar­ket prices.

Mar­ty­nenko’s part­ner Pereloma and Shchurikov, a deputy CEO of the plant, are ac­cused of em­bez­zling Hr 205 mil­lion ($7.7 mil­lion) from the com­pany. They were ar­rested in July and re­leased on bail.

The Pros­e­cu­tor Gen­eral’s Of­fice has also in­ves­ti­gated ex-law­maker Ihor Skosar’s claim that he gave a $6 mil­lion bribe to Yat­senyuk through Mar­ty­nenko for a place on the Batkyvshch­yna Party’s par­lia­men­tary list in 2012.

Yushchenko poi­son­ing

Both Mar­ty­nenko and his main busi­ness part­ner David Zh­va­nia were in­ves­ti­gated in the case of the dioxin poi­son­ing of the for­mer Pres­i­dent Vik­tor Yushchenko, then a pres­i­den­tial can­di­date, in 2004.

Ac­cord­ing to a doc­u­ment leaked from the Pros­e­cu­tor Gen­eral’s Of­fice, the in­ves­ti­ga­tors were con­sid­er­ing a ver­sion that Zh­va­nia could have poi­soned Yushchenko be­cause the late Rus­sian ty­coon Boris Bere­zovsky and his Ge­or­gian part­ner Badri Pa­trkat­se­shvili had re­moved him as an in­ter­me­di­ary for fund­ing the Yushchenko cam­paign, and Zh­va­nia, switch­ing his sup­port to an­other can­di­date, wanted Yushchenko out of the race. Zh­va­nia de­nies the ac­cu­sa­tions.

Poroshenko’s role

Fugi­tive law­maker Olek­sandr Onyshchenk­o, a sus­pect in a graft case, on April 20 re­leased an au­dio record­ing in which a per­son al­leged to be Mar­ty­nenko im­pli­cates Poroshenko in his schemes linked to En­er­goatom and says that the pres­i­dent had “bro­ken” them. Onyshchenk­o told the Kyiv Post that Mar­ty­nenko had been talk­ing about the East­ern Ore Dress­ing Plant and that Poroshenko had al­legedly wanted to get a share in Mar­ty­nenko’s schemes.

Poroshenko has de­nied Onyshchenk­o’s al­le­ga­tions, while Mar­ty­nenko did not con­firm the au­then­tic­ity of the lat­est record­ing, de­spite hav­ing con­firmed that a pre­vi­ous record­ing of his voice re­leased by Onyshchenk­o was au­then­tic.

Not only Mar­ty­nenko but also Poroshenko’s top ally Ihor Kononenko and law­maker Hra­novsky are be­ing in­ves­ti­gated in cor­rup­tion cases con­nected with the Odesa Port­side Plant.

Mar­ty­nenko has been an as­so­ci­ate of Poroshenko since they were both part of ex-Pres­i­dent Yushchenko’s in­ner cir­cle in the 2000s. In 2005 Yushchenko’s chief of staff Olek­sandr Zinchenko re­signed and ac­cused both Poroshenko and Mar­ty­nenko of cor­rup­tion.

Mar­ty­nenko and Poroshenko also have busi­ness links.

One of the con­nec­tions is Dia­manat­bank, which is co-owned by Mar­ty­nenko and Zh­va­nia. The bank went bank­rupt on April 24, say­ing that Mar­ty­nenko’s ar­rest had trig­gered a cash out­flow from it.

Salaries at the pres­i­dent’s Fifth Chan­nel used to be paid through the bank, while firms co-founded by Yevhen Be­sarab, CEO of Dia­mant­bank, and his brother An­driy, used to co-own prop­er­ties on the ter­ri­tory of the for­mer Kyiv Footwear Fac­tory with Poroshenko.

Mean­while, com­pa­nies co-owned by Poroshenko, his busi­ness part­ner Kostyan­tyn Grig­or­ishin, Zh­va­nia and Mar­ty­nenko also used to co-own prop­er­ties on the fac­tory’s ter­ri­tory.

Mar­ty­nenko’s busi­ness part­ner Zh­va­nia is a long-time friend of Poroshenko and was a top mem­ber of Poroshenko’s elec­tion head­quar­ters in 2014. Onyshchenk­o and Artem Bi­denko, a can­di­date for par­lia­ment from the Poroshenko Bloc in 2014, have ac­cused Zh­va­nia of sell­ing seats on the Poroshenko Bloc’s list, though Bi­denko later re­tracted the claim.

No rule of law

The chance of Mar­ty­nenko be­ing con­victed is low due to a lack of in­de­pen­dent courts. Crit­ics say that Poroshenko can also in­flu­ence the case through the anti-cor­rup­tion pros­e­cu­tor’s of­fice, which is tech­ni­cally sub­or­di­nated to Pros­e­cu­tor Gen­eral Yury Lut­senko, a Poroshenko loy­al­ist.

Anas­ta­sia Kras­nosil­ska, an ex­pert at the Anti-Cor­rup­tion Ac­tion Cen­ter, ar­gued that only an in­de­pen­dent anti-cor­rup­tion court se­lected with the par­tic­i­pa­tion of for­eign ex­perts could con­vict Mar­ty­nenko.

“(Oth­er­wise) the court is likely to re­fute the key charges and close the case, cit­ing a lack of ev­i­dence,” she said.


Left: Ex-Peo­ple’s Front law­maker Mykola Mar­ty­nenko, a sus­pect in a mul­ti­mil­lion-dol­lar cor­rup­tion case, sits in court af­ter his ar­rest war­rant on April 21. The court re­leased him with­out bail. He de­nies the charges. Top: Ser­hiy Pereloma, part­ner of...

Peo­ple’s Front law­maker Pavlo Pynzenyk gives an in­ter­view dur­ing a court hear­ing in the cor­rup­tion case against ex-law­maker Mykola Mar­ty­nenko on April 21. (Volodymyr Petrov)

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