Sprawling Firtash investigation alleges new US, Spanish ties
Dmytro Firtash — the exiled Ukrainian oligarch who allegedly rigged the Russia-Ukraine natural gas trade and played kingmaker for President Petro Poroshenko — sought financing in the United States for a corrupt scheme involving a mine in India, U.S. federal prosecutors say.
The 115-page document, filed in Chicago federal court on July 25, also alleges for the first time that Firtash intended to bribe persons in the U.S.
The fresh allegations come in a criminal case that has stranded Firtash in Vienna as he fights extradition to America on charges that he denies and dismisses as politically motivated.
Dan Webb, an attorney for Firtash in Chicago, said that the new allegations were baseless, and noted that they did not appear in the indictment against his client.
“As far as the government’s statement in its brief that Firtash had some connection to Russian organized crime, there is absolutely no evidence to support that allegation,” Webb wrote. “None whatsoever!”
The oligarch is accused of bribing Indian officials in a byzantine plot to control the supply of a form of titanium used to manufacture Boeing’s 787 jumbo jets.
U.S. prosecutors call Firtash an “upper-echelon” member of the Russian mafia.
He also faces extradition on a separate money laundering and organized crime case in Spain.
That Spanish case has tied the saga back to Kyiv, with the son of former Kyiv Mayor Leonid Chernovetsky spending one month in a Barcelona jail last year. The son — Stepan — denied any ties to Firtash in an interview with the Kyiv Post.
“I am not even acquainted with Firtash,” he declared in his office at the top of the DTEK Tower in Kyiv. “I have not seen him once in my life.”
Origins in 2006
The alleged scheme dates to 2006, a time when Ukrainian oligarchs were spreading their wings and buying up assets around the globe.
Prosecutors say that Firtash began to look at India at the same time that Boeing, the U.S. plane producer, was starting to build a supply chain for its 787 jet, and needed titanium sponge.
Firtash swooped in, using an intermediary to sign a memorandum of understanding with an Indian provincial government to mine there.
From there, prosecutors allege that Firtash wired $18.5 million in bribes through U.S. banks to corrupt Indian officials for permits, while sending a top aide — former Hungary Culture Minister Andras Knopp — to negotiate with Boeing in the U.S.
In a bid to prevent Firtash and Knopp from having the criminal case against them dismissed, prosecutors hinted at unrevealed evidence.
The feds argue that evidence presented at trial will show “that multiple transfers of money into the United States from abroad were designed to finance or reimburse the expenses of a conspirator operating within the United States.”
The prosecutors suggest that some of the alleged bribes may have been marked for persons in the U.S.
“The government expects the evidence will show that other transfers were destined for the benefit of third parties located within the [U.S.] who were designated as third-party beneficiaries of the bribes paid in order to obtain approvals for the project,” Chicago prosecutors write.
As the scheme progressed, Firtash brought on another client for a separate U.S. project: Paul Manafort, then political consultant for the Party of Regions, led by deposed Ukrainian President Viktor Yanukovych.
In 2008, Manafort’s company scouted New York City’s Drake Hotel on behalf of Firtash for a potential $850 million redevelopment project.
A letter filed as an exhibit in a civil lawsuit by ex-Prime Minister Yulia Tymoshenko details a $25 million escrow payment from Firtash’s firm to spur the project.
“DF is still totally on board and a wire will be forthcoming either the end of this week or next week as a partial payment on the 1.5,” Manafort wrote in one email, referring either to Firtash or to his company, Group DF, paying an increment of $1.5 million.
This week’s filing says that Knopp, Firtash’s Hungarian deputy, recently got a government residency permit to stay in Moscow, where he has lived since Firtash’s indictment.
Spanish, Russian mob?
Spanish authorities want to try Firtash on money laundering charges as part of a three-year investigation into the Russian mafia’s presence in Spain called “Operation Variola.”
Three months before Firtash’s re-arrest in February, Spanish police in Barcelona named him as a suspect. The decision on where Firtash gets sent is up to Austrian Justice Minister Wolfgang Brandsetter.
The case has also ensnared Stepan Chernovetsky, son of former Kyiv Mayor Leonid Chernovetsky. “They followed me for three years, they wiretapped me, they knew everything about me,” the younger Chernovetsky said, calling his July 2016 arrest at gunpoint a “big shock.”
Prosecutors seized a sushi restaurant that he co-owned with an Armenian expatriate and detained 11 others, including Misbah Aldroubi, a Syrian businessman who served as CEO of Firtash associate Hares Youssef’s Hares Group in the mid-2000s. Chernovetsky denies any ties to Youssef.
A police report accuses Chernovetsky of heading “a criminal organization in Spain, whose activity is laundering money that comes from illegal activities from outside Spain.” It ties Chernovetsky to Aldroubi through a company called Cherd Investment, allegedly used to launder money into the restaurant.
Chernovetsky, whose stake in the 2008 sale of Pravex Bank earned him hundreds of millions of dollars, denies any wrongdoing. He was released on appeal by a three-judge tribunal in September 2016.
“The tribunal has access to everything,” he said. Once the judges saw the evidence, he said, “they released me without bond and returned my passport.”
“If there was a connection [to Firtash], so many months have passed,” Chernovetsky said. “Let them show it.”
Firtash had big influence in Ukrainian politics. He summoned Poroshenko and ex-boxer Vitali Klitschko to Vienna in spring 2014. He claims to have paved the way for Poroshenko’s May 2014 election by convincing Klitsckho to run for mayor instead. "We got what we wanted," Firtash told a court on April 30, 2015.
Dmytro Firtash attends a court hearing on April 30, 2015, in Vienna.