KIEV, Ukraine -- Three Ukrainian doctors have been charged with removing kidneys from victims of human trafficking for sale to wealthy foreigners for up to $200,000 US per kidney, Ukraine’s interior ministry said on Friday.
The doctors, who have been arrested, “were part of an international criminal group whose members had for a long time trafficked people from Ukraine into one of the southern ex-Soviet nations,” it said in a statement.
It said authorities had identified more than 30 victims of the alleged illegal transplant ring, including “citizens of Ukraine, Moldova and Uzbekistan who had been trafficked abroad.
“(Each of them) came back home without a kidney, thus becoming disabled,” the ministry statement said.
It said buyers paid $100,000 to $200,000 per kidney.
The ministry did not name the country where the organs were removed from the victims or say whether the buyers travelled there for transplants.
Most of the recipients were from a country where Ukrainians had “emigrated en masse in the early 1990s”, it said, in a possible reference to Israel.
The Interior Ministry said suspected members of the crime ring had bought real estate worth over $1 million apiece and spent lavishly on luxury cars and trips abroad.
If convicted, the doctors face prison terms of up to 12 years.
Friday, 15 October 2010
Will Ukrtelecom Sale Be Honest?
KIEV, Ukraine -- The auction of the state-owned fixed—line telephone monopoly due Dec. 28 will be the nation’s biggest since Kryvorizhstal was sold for a record $4.8 billion.
Ukraine’s government on Oct. 13 formally launched a privatization tender for a controlling stake in fixed-line telephone monopoly Ukrtelecom, the sale of which has long been stalled due to political gridlock.
The auction, to be wrapped up by Dec. 28, sets the stage for the nation’s biggest auction since top steel mill Kryvorizhstal was bought for a record $4.8 billion by the world’s largest steel group, ArcelorMittal.
With a starting price of $1.3 billion, the Ukrtelecom sale is likely to raise badly-needed fresh cash to cover stretched state finances. But don’t expect the biggest bidders to line up for Ukrtelecom, let alone a record-making sale price.
The sale is proceeding with controversial restrictions that threaten to exclude leading global telecommunications companies from the bidding.
As the first big sell-off of state property under President Viktor Yanukovych, who took power on Feb. 25, the Ukrtelecom sale is being watched closely to gauge how transparently privatization will be conducted under his leadership.
Concerns exist that valuable assets could be sold off at below-market prices to well-connected oligarchs, as happened when Yanukovych served as prime minister from 2002-2004 and again from 2006-2007.
It was, after all, in 2004 when Yanukovych served as premier that the Kryvorizhstal steel giant was first privatized for $800 million to two billionaire oligarchs, despite bids nearly twice as high by steel groups.
The winning bid then was by a consortium backed by longtime Yanukovych supporter Rinat Akhmetov, Ukraine’s richest man, as well as billionaire Viktor Pinchuk, son-in-law to then President Leonid Kuchma.
The Kryvorizhstal steel mill was renationalized and resold after the Orange Revolution by the government, then headed by Yulia Tymoshenko. It was and is still regarded as Ukraine’s only successful and clean privatization.
Five years later, fears are running high now that Yanukovych could try to limit competition for Ukrtelecom, ensuring that it ends up in the hands of chosen business allies.
On Oct. 13, Oleksandr Ryabchenko, head of Ukraine’s State Property Fund, expressed hope that at least $1.5 billion would be raised when the winning bid was chosen. But he admitted that competition could be limited by the tender conditions.
Top European telecoms companies that have to various degrees expressed interest in Ukrtelecom over the years – including Deutsche Telekom and Norway’s Telenor – are prohibited from taking part in the tender because they are more than 25 percent government-owned. Telecoms that hold more than a 25 percent market share in Ukraine are banned from bidding by another condition.
Oleksandr Bondar, former head of Ukraine's privatization agency, said the conditions were created to exclude some bidders. "The thing is being put together in an entirely unprofessional manner," Bondar said.
In a note to investors, Kyiv-based investment bank Dragon Capital concluded that the restrictions would boost tender chances for domestic billionaires and Russian bidders. ”We consider domestic business conglomerate System Capital Management and Russia’s AFK Sistema, which owns domestic cellular operator MTS, the most likely bidders for Ukrtelecom,” Dragon said.
System Capital Management is the business holding of Akhmetov.
Ryabchenko insisted that the tender restrictions were required by Ukrainian legislation, but neither he nor other top officials could explain why Yanukovych’s dominant ruling coalition could not change the legislation ahead of the tender to boost competition in the auction, and, in turn, generate more cash for budget coffers.
“We do not have the right to sell Ukrainian assets to other states. This is not privatization,” Ryabchenko said.
Meanwhile, Serhiy Lyovochkin, head of the presidential administration, stressed that the Ukrtelecom sale would be transparent. He also defended the bidding restrictions citing national security concerns and described Ukrtelecom as a “strategic” asset that provides telecommunications to much of the country, including government and military.
But Lyovochkin could not explain how such national security concerns could be minimized if Ukrtelecom is sold to private business interests, including Russian oligarchs who are strongly influenced by the Kremlin. “That’s a good question,” Lyovochkin said in at an Oct. 13 briefing in response to a question.
Experts say Ukrtelecom is a highly bureaucratic and mismanaged corporate dinosaur which has been milked of its profits and has sharply lost value in the past decade. It has fallen decades behind European peers in terms of introducing new telecoms technologies.
But it still controls about 80 percent of the fixed-line market in Ukraine, a country of 46 million citizens, as well as a major share of the nation’s telecommunications backbone.
It holds the country’s sole 3G license, has only a relatively small mobile business after its leading mobile phone company was sold off in 2003 to Russia’s MTS at a fire sale price of about $200 million.
Today, that mobile phone business is valued at billions of dollars, more than Ukrtelecom will itself be sold for. Moreover, the MTS mobile business in Ukraine generates perhaps hundreds of millions of dollars in profits annually, while Ukrtelecom mustered only $6 million in the first half of this year.
Without a strong mobile business of its own, Ukrtelecom has gradually lost clientele, revenues and profits. Corporate and private clients have increasingly turned to better quality services provided by privately-owned mobile and fixed-line operators.
Ukraine’s government on Oct. 13 formally launched a privatization tender for a controlling stake in fixed-line telephone monopoly Ukrtelecom, the sale of which has long been stalled due to political gridlock.
The auction, to be wrapped up by Dec. 28, sets the stage for the nation’s biggest auction since top steel mill Kryvorizhstal was bought for a record $4.8 billion by the world’s largest steel group, ArcelorMittal.
With a starting price of $1.3 billion, the Ukrtelecom sale is likely to raise badly-needed fresh cash to cover stretched state finances. But don’t expect the biggest bidders to line up for Ukrtelecom, let alone a record-making sale price.
The sale is proceeding with controversial restrictions that threaten to exclude leading global telecommunications companies from the bidding.
As the first big sell-off of state property under President Viktor Yanukovych, who took power on Feb. 25, the Ukrtelecom sale is being watched closely to gauge how transparently privatization will be conducted under his leadership.
Concerns exist that valuable assets could be sold off at below-market prices to well-connected oligarchs, as happened when Yanukovych served as prime minister from 2002-2004 and again from 2006-2007.
It was, after all, in 2004 when Yanukovych served as premier that the Kryvorizhstal steel giant was first privatized for $800 million to two billionaire oligarchs, despite bids nearly twice as high by steel groups.
The winning bid then was by a consortium backed by longtime Yanukovych supporter Rinat Akhmetov, Ukraine’s richest man, as well as billionaire Viktor Pinchuk, son-in-law to then President Leonid Kuchma.
The Kryvorizhstal steel mill was renationalized and resold after the Orange Revolution by the government, then headed by Yulia Tymoshenko. It was and is still regarded as Ukraine’s only successful and clean privatization.
Five years later, fears are running high now that Yanukovych could try to limit competition for Ukrtelecom, ensuring that it ends up in the hands of chosen business allies.
On Oct. 13, Oleksandr Ryabchenko, head of Ukraine’s State Property Fund, expressed hope that at least $1.5 billion would be raised when the winning bid was chosen. But he admitted that competition could be limited by the tender conditions.
Top European telecoms companies that have to various degrees expressed interest in Ukrtelecom over the years – including Deutsche Telekom and Norway’s Telenor – are prohibited from taking part in the tender because they are more than 25 percent government-owned. Telecoms that hold more than a 25 percent market share in Ukraine are banned from bidding by another condition.
Oleksandr Bondar, former head of Ukraine's privatization agency, said the conditions were created to exclude some bidders. "The thing is being put together in an entirely unprofessional manner," Bondar said.
In a note to investors, Kyiv-based investment bank Dragon Capital concluded that the restrictions would boost tender chances for domestic billionaires and Russian bidders. ”We consider domestic business conglomerate System Capital Management and Russia’s AFK Sistema, which owns domestic cellular operator MTS, the most likely bidders for Ukrtelecom,” Dragon said.
System Capital Management is the business holding of Akhmetov.
Ryabchenko insisted that the tender restrictions were required by Ukrainian legislation, but neither he nor other top officials could explain why Yanukovych’s dominant ruling coalition could not change the legislation ahead of the tender to boost competition in the auction, and, in turn, generate more cash for budget coffers.
“We do not have the right to sell Ukrainian assets to other states. This is not privatization,” Ryabchenko said.
Meanwhile, Serhiy Lyovochkin, head of the presidential administration, stressed that the Ukrtelecom sale would be transparent. He also defended the bidding restrictions citing national security concerns and described Ukrtelecom as a “strategic” asset that provides telecommunications to much of the country, including government and military.
But Lyovochkin could not explain how such national security concerns could be minimized if Ukrtelecom is sold to private business interests, including Russian oligarchs who are strongly influenced by the Kremlin. “That’s a good question,” Lyovochkin said in at an Oct. 13 briefing in response to a question.
Experts say Ukrtelecom is a highly bureaucratic and mismanaged corporate dinosaur which has been milked of its profits and has sharply lost value in the past decade. It has fallen decades behind European peers in terms of introducing new telecoms technologies.
But it still controls about 80 percent of the fixed-line market in Ukraine, a country of 46 million citizens, as well as a major share of the nation’s telecommunications backbone.
It holds the country’s sole 3G license, has only a relatively small mobile business after its leading mobile phone company was sold off in 2003 to Russia’s MTS at a fire sale price of about $200 million.
Today, that mobile phone business is valued at billions of dollars, more than Ukrtelecom will itself be sold for. Moreover, the MTS mobile business in Ukraine generates perhaps hundreds of millions of dollars in profits annually, while Ukrtelecom mustered only $6 million in the first half of this year.
Without a strong mobile business of its own, Ukrtelecom has gradually lost clientele, revenues and profits. Corporate and private clients have increasingly turned to better quality services provided by privately-owned mobile and fixed-line operators.
Yanukovych Turns Up Heat On Rival
KIEV, Ukraine -- Ukrainian authorities attacked the previous government of Yulia Tymoshenko by releasing an international report that alleges several hundred million dollars were misspent during her term.
The Ukrainian authorities raised their attacks on the previous government of opposition leader Yulia Tymoshenko to an international level on Oct. 14, when an all-star team of U.S. lawyers and investigators released a report alleging that several hundred million dollars were misspent during her latest term as prime minister, from the start of 2008 to March 4.
The 176-page report by two U.S. law firms, Trout Cacheris and Akin Gump Strauss Hauer & Feld, as well as detective firm Kroll, suggested that members of Tymoshenko’s government made big bucks from kickbacks and money laundering using foreign shell companies.
The investigation also alleges that the ex-prime minister’s team diverted state money to her presidential election campaign, which she lost to President Viktor Yanukovych on Feb. 7.
The firms – known for their work protecting the images of some of Yanukovych’s business and political allies in the past – were hired by the Ukraine’s government to audit their predecessors.
The investigators and Yanukovych’s government touted the report as evidence of his commitment to fighting Ukraine’s endemic corruption.
They said it represents the first serious attempt to get to the bottom of graft in a country that hears many corruption allegations among politicians, but has seen no high-level conviction.
But the opposition claims the investigation is a smear campaign aimed at discrediting Tymoshenko and her allies.
They say it is the latest in a string of attempts to clamp down on critics and opponents of Yanukovych, who they say is taking Ukraine on an authoritarian path.
The report doesn’t name Tymoshenko, but investigators made clear that they considered her to be at the center of many allegations.
The report picked six cases which it said “were selected in order to provide a survey … of suspect government actions during the stated period of time.”
The investigators blamed Tymoshenko’s government for misappropriating taxpayers’ money when buying sugar, vaccines, importing cars and even selling carbon credits to other countries.
In one of the more serious allegations, the report claims that 200 million euros out of the 320 million euros Ukraine received for selling Kyoto protocol carbon credits were spent on pensions instead of being used exclusively to finance environmental projects.
Two lawsuits have already been filed in the West in connection with the results of the investigation.
The Ukrainian Emergency Ministry on Oct. 11 filed a lawsuit in a court in the United Kingdom against British firm Legal Business Consultants accusing it of being a part of an international conspiracy allegedly involved in the sale of 27 depreciated medical vehicles to the ministry at inflated prices.
In the end the cars were allegedly decorated with Tymoshenko banners and used during her electoral campaign.
On Sept. 17 Ukrvaktsina, a state-run entity within Ukraine’s Ministry of Health, filed a court action in a U.S. court charging Ukrainian firm Interfarm, along with U.S. based Olden group, of selling overpriced vaccines to Ukrvaktsina, linking the conspiracy to the Tymoshenko government.
Hryhoriy Nemyria, a former deputy prime minister and a close adviser to Tymoshenko, said the report is politically motivated. He denied large-scale corruption in the government, but said he couldn’t comment on the specific cases until he had studied the accusations more thoroughly.
“Instead of reforming the Ukrainian economy they are engaged in a witch hunt of the opposition. We denounce these findings. They are obviously politically motivated,” Nemyria said.
Nemyria pointed out that these firms had only looked into the work of Tymoshenko’s government, and not Yanukovych’s from 2006-7.
The representatives of the three firms that did the report denied this to be a witch hunt and said they do not have any agenda behind.
Kroll and Akin Gump are not new to Ukraine.
After the murder of journalist Georgiy Gongadze, Kroll was hired in 2001 by then-President Leonid Kuchma’s son-in-law Viktor Pinchuk to probe the case.
In the end the firm issued a report saying Kuchma wasn’t involved, which was widely viewed an attempt to absolve him from suspicion arising from alleged discussions he had with senior officials about dealing with the journalist.
Akin Gump lawyers have also had experience working in Ukraine.
The firm’s lawyers have in the past defended Ukraine’s richest oligarchs and strongest Yanukovych’s backers – Rinat Akhmetov, Ukraine’s richest man, and gas tycoon Dmytro Firtash.
At times these firms have pressured investigative journalists who write stories about both Ukrainian businessmen by threatening to file lawsuits against them.
Both Kroll’s and Akin Gump’s representatives said they have clients around the world but denied having any conflict of interest in this investigation and added that in their findings there were guided by facts.
While normally such cases are handled by the Ukrainian domestic state prosecutors and investigators, in this case the government decided to add more international flavor – and legitimacy – to that by filing the lawsuits to western courts that bear more credibility than Ukrainian ones.
Volodymyr Fesenko, director of the Kyiv-based Horshenin Institute think tank, said the new government is looking to create an image for itself as an anti-corruption crusader, as well as to discredit the opposition.
The report doesn’t mention Tymoshenko or any of her top lieutenants, but investigators left no doubt as to who was the focus.
“In our report one can see a list of transactions that lead to Tymoshenko,” said Mark Macdougall, a partner at Akin Gump, at the press conference in Kyiv on Oct. 14.
“I think we’ll hear some names down the road. And that’s when politics will start.” said Fesenko.
When asked how much tax payers’ money was and will be spent on the U.S. lawyers and investigators, Plato Cacheris with Trout Cacheris law firm said “it was much less than the money stolen” and would not elaborate further.
In turn, Ukraine’s Finance Ministry also refused to reveal any details, calling it a commercial secret.
A senior government official said that $2 million in state budget funds had been spent on the first stage of the audit.
The official, speaking on condition of anonymity because he was not authorized to comment on the issue, said the aim was to recover a sum up to 100 times larger than the firms’ fees.
The official added that two further stages of investigations are planned, which will cost roughly the same each.
“So far we have done what we needed to. But there is a high possibility the Cabinet will ask us to do some other things,” Cacheris said.
The Ukrainian authorities raised their attacks on the previous government of opposition leader Yulia Tymoshenko to an international level on Oct. 14, when an all-star team of U.S. lawyers and investigators released a report alleging that several hundred million dollars were misspent during her latest term as prime minister, from the start of 2008 to March 4.
The 176-page report by two U.S. law firms, Trout Cacheris and Akin Gump Strauss Hauer & Feld, as well as detective firm Kroll, suggested that members of Tymoshenko’s government made big bucks from kickbacks and money laundering using foreign shell companies.
The investigation also alleges that the ex-prime minister’s team diverted state money to her presidential election campaign, which she lost to President Viktor Yanukovych on Feb. 7.
The firms – known for their work protecting the images of some of Yanukovych’s business and political allies in the past – were hired by the Ukraine’s government to audit their predecessors.
The investigators and Yanukovych’s government touted the report as evidence of his commitment to fighting Ukraine’s endemic corruption.
They said it represents the first serious attempt to get to the bottom of graft in a country that hears many corruption allegations among politicians, but has seen no high-level conviction.
But the opposition claims the investigation is a smear campaign aimed at discrediting Tymoshenko and her allies.
They say it is the latest in a string of attempts to clamp down on critics and opponents of Yanukovych, who they say is taking Ukraine on an authoritarian path.
The report doesn’t name Tymoshenko, but investigators made clear that they considered her to be at the center of many allegations.
The report picked six cases which it said “were selected in order to provide a survey … of suspect government actions during the stated period of time.”
The investigators blamed Tymoshenko’s government for misappropriating taxpayers’ money when buying sugar, vaccines, importing cars and even selling carbon credits to other countries.
In one of the more serious allegations, the report claims that 200 million euros out of the 320 million euros Ukraine received for selling Kyoto protocol carbon credits were spent on pensions instead of being used exclusively to finance environmental projects.
Two lawsuits have already been filed in the West in connection with the results of the investigation.
The Ukrainian Emergency Ministry on Oct. 11 filed a lawsuit in a court in the United Kingdom against British firm Legal Business Consultants accusing it of being a part of an international conspiracy allegedly involved in the sale of 27 depreciated medical vehicles to the ministry at inflated prices.
In the end the cars were allegedly decorated with Tymoshenko banners and used during her electoral campaign.
On Sept. 17 Ukrvaktsina, a state-run entity within Ukraine’s Ministry of Health, filed a court action in a U.S. court charging Ukrainian firm Interfarm, along with U.S. based Olden group, of selling overpriced vaccines to Ukrvaktsina, linking the conspiracy to the Tymoshenko government.
Hryhoriy Nemyria, a former deputy prime minister and a close adviser to Tymoshenko, said the report is politically motivated. He denied large-scale corruption in the government, but said he couldn’t comment on the specific cases until he had studied the accusations more thoroughly.
“Instead of reforming the Ukrainian economy they are engaged in a witch hunt of the opposition. We denounce these findings. They are obviously politically motivated,” Nemyria said.
Nemyria pointed out that these firms had only looked into the work of Tymoshenko’s government, and not Yanukovych’s from 2006-7.
The representatives of the three firms that did the report denied this to be a witch hunt and said they do not have any agenda behind.
Kroll and Akin Gump are not new to Ukraine.
After the murder of journalist Georgiy Gongadze, Kroll was hired in 2001 by then-President Leonid Kuchma’s son-in-law Viktor Pinchuk to probe the case.
In the end the firm issued a report saying Kuchma wasn’t involved, which was widely viewed an attempt to absolve him from suspicion arising from alleged discussions he had with senior officials about dealing with the journalist.
Akin Gump lawyers have also had experience working in Ukraine.
The firm’s lawyers have in the past defended Ukraine’s richest oligarchs and strongest Yanukovych’s backers – Rinat Akhmetov, Ukraine’s richest man, and gas tycoon Dmytro Firtash.
At times these firms have pressured investigative journalists who write stories about both Ukrainian businessmen by threatening to file lawsuits against them.
Both Kroll’s and Akin Gump’s representatives said they have clients around the world but denied having any conflict of interest in this investigation and added that in their findings there were guided by facts.
While normally such cases are handled by the Ukrainian domestic state prosecutors and investigators, in this case the government decided to add more international flavor – and legitimacy – to that by filing the lawsuits to western courts that bear more credibility than Ukrainian ones.
Volodymyr Fesenko, director of the Kyiv-based Horshenin Institute think tank, said the new government is looking to create an image for itself as an anti-corruption crusader, as well as to discredit the opposition.
The report doesn’t mention Tymoshenko or any of her top lieutenants, but investigators left no doubt as to who was the focus.
“In our report one can see a list of transactions that lead to Tymoshenko,” said Mark Macdougall, a partner at Akin Gump, at the press conference in Kyiv on Oct. 14.
“I think we’ll hear some names down the road. And that’s when politics will start.” said Fesenko.
When asked how much tax payers’ money was and will be spent on the U.S. lawyers and investigators, Plato Cacheris with Trout Cacheris law firm said “it was much less than the money stolen” and would not elaborate further.
In turn, Ukraine’s Finance Ministry also refused to reveal any details, calling it a commercial secret.
A senior government official said that $2 million in state budget funds had been spent on the first stage of the audit.
The official, speaking on condition of anonymity because he was not authorized to comment on the issue, said the aim was to recover a sum up to 100 times larger than the firms’ fees.
The official added that two further stages of investigations are planned, which will cost roughly the same each.
“So far we have done what we needed to. But there is a high possibility the Cabinet will ask us to do some other things,” Cacheris said.
European Parliament President: Ukraine Must Strictly Adhere To Democratic Standards
KIEV, Ukraine -- Ukraine and the European Union will continue to develop bilateral relations with Ukraine adhering to democratic standards, President of the European Parliament Jerzy Buzek announced in Brussels Wednesday, during a press conference after his meeting with Ukrainian Prime Minister Mykola Azarov.
He noted that government officials and EU structures have regular meetings with Ukrainian government members. The next such meeting will be held on November 22, during the EU-Ukraine summit in Brussels.
Preparations for this summit became one of the topics at Wednesday's talks.
During the final press conference, Jerzy Buzek stressed that the close relationships that developed between the EU and Ukraine in recent years may continue to evolve, if the parties strive to achieve mutual compatibility of political and economic systems.
Buzek said he believes that Ukraine should adhere to democratic norms and standards not only in words but in deeds.
It is important not only for the development of relations between the EU and Ukraine, but also for Ukraine itself, he said.
According to the European Parliament head, the agenda of the bilateral relations has very many important things to be discussed at the next EU-Ukraine summit.
Among them there is continuation of negotiations on concluding an association agreement between Ukraine and the EU, establishment of a bilateral in-depth and comprehensive free trade area, and the issue of visa-free entry of the Ukrainian citizens to the EU.
He noted that government officials and EU structures have regular meetings with Ukrainian government members. The next such meeting will be held on November 22, during the EU-Ukraine summit in Brussels.
Preparations for this summit became one of the topics at Wednesday's talks.
During the final press conference, Jerzy Buzek stressed that the close relationships that developed between the EU and Ukraine in recent years may continue to evolve, if the parties strive to achieve mutual compatibility of political and economic systems.
Buzek said he believes that Ukraine should adhere to democratic norms and standards not only in words but in deeds.
It is important not only for the development of relations between the EU and Ukraine, but also for Ukraine itself, he said.
According to the European Parliament head, the agenda of the bilateral relations has very many important things to be discussed at the next EU-Ukraine summit.
Among them there is continuation of negotiations on concluding an association agreement between Ukraine and the EU, establishment of a bilateral in-depth and comprehensive free trade area, and the issue of visa-free entry of the Ukrainian citizens to the EU.
Ukraine Government Probe Implicates Rivals
KIEV, Ukraine -- Ukraine's government issued a raft of corruption allegations against the country's former prime minister Thursday—a move certain to step up tensions with her supporters who say the country's new president is creating an authoritarian state.
a new twist in Ukraine politics, the government of President Viktor Yanukovych has used Western expertise in leveling charges against his rivals.
Investigators released a report researched and written by U.S. private detectives and attorneys who have lately been employed by the country's political elite to burnish its credentials.
The report takes aim at officials who served under former Prime Minister Yulia Tymoshenko, a charismatic populist heroine of Ukraine's 2004 Orange Revolution who was defeated in elections at the beginning of the year and has since seen a number of allies arrested or investigated for corruption or mismanagement.
Ms. Tymoshenko, a longtime arch rival of Mr. Yanukovych, has called the investigations politically motivated.
Political analysts said the latest attack on Ms. Tymoshenko may backfire, since voters in Ukraine have in the past viewed corruption allegations as a public-relations tactic used to destroy opponents.
Ms. Tymoshenko's political career got a boost in the 1990s when she was briefly jailed on corruption charges that were later dropped.
"This is not an attempt to fight corruption," said Oleh Rybachuk, a former chief of staff in Ukraine's presidential administration. "It is a strategy to destroy their lifelong opponent [Tymoshenko]. She's no angel, but this is a selective approach."
Mr. Yanukovych's chief of staff, Serhiy Lyovochkin, denied any political motivation in the investigation, which has so far cost more than $2 million, and which officials say aims at retrieving stolen funds to state coffers.
The firms that compiled the report—the law firms Akin Gump Strauss Hauer & Feld, and Trout Cacheris, and the investigative firm Kroll Inc.—worked for five months in London, Washington and Kiev on the report.
The investigators deny their work is politically driven, and say they were retained to do research into genuine suspicions of unethical behavior.
The investigators compiled 2,000 pages of exhibits to back up allegations, and two civil suits have already been filed in the U.S. and U.K. against companies that allegedly aided corrupt government officials in skimming public funds.
While the report doesn't link Ms. Tymoshenko to any alleged theft, it does accuse some high-level officials around her.
The report says Ms. Tymoshenko steered hundreds of millions of dollars of budget money to boost her popularity before presidential elections that swept her out of power this year, when she was defeated by Mr. Yanukovych, whose allies in Parliament then fired her as prime minister.
Among the more serious charges, the report says Ms. Tymoshenko authorized the sale last year of about €320 million ($443 million) in carbon credits under the Kyoto Protocol framework, and used most of the proceeds to cover a shortfall in Ukraine's pension fund.
Although some has been returned to segregate accounts earmarked for environmental projects as directed by the Kyoto agreement, about €200 million hasn't.
The report also accused the Tymoshenko government of buying 1,000 imported vehicles for the Ministry of Health shortly before the elections, and using them mainly as a mobile advertising gimmick for her campaign.
The report accuses Ms. Tymoshenko of diverting money from a state stabilization fund for banks and steering it into an unrelated program to provide funding for 6.4 million citizens to register and formally own their plots of land.
Hryhoriy Nemyria, former deputy prime minister and a top adviser to Ms. Tymoshenko, declined to comment on specific allegations, saying he hadn't had a chance to review them.
But he denied any widespread corruption in her government, and called the report a smear campaign conducted under the guise of a professional investigation.
He noted that investigators looked only at the Tymoshenko government, without looking at Mr. Yanukovych's own role as prime minister from 2006 to 2007.
"These American firms are being used by a government widely accused of backsliding on democracy in a smear campaign to help cement their rule," he said.
The investigators said they necessarily limited the scope of their research to a few cases of concern to Ukrainian law enforcement and Finance Ministry officials.
They said they hope the report will stand on its merits and the vast amount of credible evidence gathered.
The report accuses officials in Ms. Tymoshenko's government of enriching themselves by acting as intermediaries in government purchases of vehicles, medical products, vaccines and 22,000 tons of sugar needed to replenish the country's supplies this year after they were sold off in the summer of 2009.
Mark MacDougall, who headed the investigation for Akin Gump, said the investigation ranged far outside Ukraine to the state of Oregon, the U.K., Latvia, Israel and the Seychelles, where it found "the use of extensive classic offshore money laundering structures."
Investigators said the findings give a rare glimpse into some of the methods of government graft in a country where allegations are plentiful but proof is usually scarce.
They allege that the cases were part of a wider pattern of malfeasance in Ms. Tymoshenko's government, and that its profile of a half-dozen cases was part of an "effort to provide a survey or cross-section of suspect government transactions during the stated period of time."
"From the start, our job has been to establish the facts," Mr. MacDougall said. "Every material finding in the report is backed by hard evidence."
Kroll and Akin Gump have in recent years been retained by top businessmen and politicians in other high-profile matters in Ukraine.
Kroll was in 2001 employed by a party backed by oligarch Viktor Pinchuk, son-in-law of Mr. Yanukovych's political patron, then-President Leonid Kuchma, to look into the killing of investigative journalist Georgiy Gongadze in 2000.
Mr. Kuchma had allegedly been caught on a tape recorded by a bodyguard discussing with leading officials how to deal with the journalist.
Although the U.S. government determined parts of the tape were authentic, Kroll produced a report maintaining Mr. Kuchma wasn't involved in Mr. Gongadze's killing.
Though some lower-level security service officers were ultimately convicted in the killing, the planners never were.
a new twist in Ukraine politics, the government of President Viktor Yanukovych has used Western expertise in leveling charges against his rivals.
Investigators released a report researched and written by U.S. private detectives and attorneys who have lately been employed by the country's political elite to burnish its credentials.
The report takes aim at officials who served under former Prime Minister Yulia Tymoshenko, a charismatic populist heroine of Ukraine's 2004 Orange Revolution who was defeated in elections at the beginning of the year and has since seen a number of allies arrested or investigated for corruption or mismanagement.
Ms. Tymoshenko, a longtime arch rival of Mr. Yanukovych, has called the investigations politically motivated.
Political analysts said the latest attack on Ms. Tymoshenko may backfire, since voters in Ukraine have in the past viewed corruption allegations as a public-relations tactic used to destroy opponents.
Ms. Tymoshenko's political career got a boost in the 1990s when she was briefly jailed on corruption charges that were later dropped.
"This is not an attempt to fight corruption," said Oleh Rybachuk, a former chief of staff in Ukraine's presidential administration. "It is a strategy to destroy their lifelong opponent [Tymoshenko]. She's no angel, but this is a selective approach."
Mr. Yanukovych's chief of staff, Serhiy Lyovochkin, denied any political motivation in the investigation, which has so far cost more than $2 million, and which officials say aims at retrieving stolen funds to state coffers.
The firms that compiled the report—the law firms Akin Gump Strauss Hauer & Feld, and Trout Cacheris, and the investigative firm Kroll Inc.—worked for five months in London, Washington and Kiev on the report.
The investigators deny their work is politically driven, and say they were retained to do research into genuine suspicions of unethical behavior.
The investigators compiled 2,000 pages of exhibits to back up allegations, and two civil suits have already been filed in the U.S. and U.K. against companies that allegedly aided corrupt government officials in skimming public funds.
While the report doesn't link Ms. Tymoshenko to any alleged theft, it does accuse some high-level officials around her.
The report says Ms. Tymoshenko steered hundreds of millions of dollars of budget money to boost her popularity before presidential elections that swept her out of power this year, when she was defeated by Mr. Yanukovych, whose allies in Parliament then fired her as prime minister.
Among the more serious charges, the report says Ms. Tymoshenko authorized the sale last year of about €320 million ($443 million) in carbon credits under the Kyoto Protocol framework, and used most of the proceeds to cover a shortfall in Ukraine's pension fund.
Although some has been returned to segregate accounts earmarked for environmental projects as directed by the Kyoto agreement, about €200 million hasn't.
The report also accused the Tymoshenko government of buying 1,000 imported vehicles for the Ministry of Health shortly before the elections, and using them mainly as a mobile advertising gimmick for her campaign.
The report accuses Ms. Tymoshenko of diverting money from a state stabilization fund for banks and steering it into an unrelated program to provide funding for 6.4 million citizens to register and formally own their plots of land.
Hryhoriy Nemyria, former deputy prime minister and a top adviser to Ms. Tymoshenko, declined to comment on specific allegations, saying he hadn't had a chance to review them.
But he denied any widespread corruption in her government, and called the report a smear campaign conducted under the guise of a professional investigation.
He noted that investigators looked only at the Tymoshenko government, without looking at Mr. Yanukovych's own role as prime minister from 2006 to 2007.
"These American firms are being used by a government widely accused of backsliding on democracy in a smear campaign to help cement their rule," he said.
The investigators said they necessarily limited the scope of their research to a few cases of concern to Ukrainian law enforcement and Finance Ministry officials.
They said they hope the report will stand on its merits and the vast amount of credible evidence gathered.
The report accuses officials in Ms. Tymoshenko's government of enriching themselves by acting as intermediaries in government purchases of vehicles, medical products, vaccines and 22,000 tons of sugar needed to replenish the country's supplies this year after they were sold off in the summer of 2009.
Mark MacDougall, who headed the investigation for Akin Gump, said the investigation ranged far outside Ukraine to the state of Oregon, the U.K., Latvia, Israel and the Seychelles, where it found "the use of extensive classic offshore money laundering structures."
Investigators said the findings give a rare glimpse into some of the methods of government graft in a country where allegations are plentiful but proof is usually scarce.
They allege that the cases were part of a wider pattern of malfeasance in Ms. Tymoshenko's government, and that its profile of a half-dozen cases was part of an "effort to provide a survey or cross-section of suspect government transactions during the stated period of time."
"From the start, our job has been to establish the facts," Mr. MacDougall said. "Every material finding in the report is backed by hard evidence."
Kroll and Akin Gump have in recent years been retained by top businessmen and politicians in other high-profile matters in Ukraine.
Kroll was in 2001 employed by a party backed by oligarch Viktor Pinchuk, son-in-law of Mr. Yanukovych's political patron, then-President Leonid Kuchma, to look into the killing of investigative journalist Georgiy Gongadze in 2000.
Mr. Kuchma had allegedly been caught on a tape recorded by a bodyguard discussing with leading officials how to deal with the journalist.
Although the U.S. government determined parts of the tape were authentic, Kroll produced a report maintaining Mr. Kuchma wasn't involved in Mr. Gongadze's killing.
Though some lower-level security service officers were ultimately convicted in the killing, the planners never were.
Government Of Ukraine Audit Uncovers Corrupt Practices In Past Financial Operations
KIEV, Ukraine -- The Government of Ukraine announced today that a team of international auditors has completed the initial stage of its independent audit of Ukraine's state finances and operations.
The audit revealed evidence of fraud and misapplication of government funds from 2008 to the first quarter of 2010.
The team of lawyers and forensic investigators led by the Washington, DC law firm of Trout Cacheris, PLLC examined a group of transactions by various government bodies.
The audit found evidence of the use of offshore shell companies, sham contracts and other international money laundering mechanisms in transactions involving private parties and the previous administration, as well as the unlawful misapplication of funds, resulting in the waste and misuse of government assets and the enrichment of private parties.
The largest instance of misconduct they have uncovered involved the unlawful misapplication of 2.3 billion hryvnias (euro 200 million) obtained through the sale of carbon credits under the Kyoto Protocol.
High-ranking officials used these funds to conceal massive deficiencies in Ukraine's pension system shortly before the 2010 presidential election.
The audit also uncovered instances in which offshore shell companies and sham transactions were employed to sell automobiles and pharmaceuticals to the government at highly inflated prices; the use of state credit to purchase 1,000 vehicles which were distributed for political gain; manipulation of transactions with the sugar reserve; and the unapproved use of funds to carry out a land registration program to gain political favor in advance of the recent presidential elections.
Lead audit attorney Plato Cacheris of Trout Cacheris and co-counsel Mark MacDougall of Akin Gump Strauss Hauer & Feld noted that today's announcement is another example of how the Ukrainian leadership is committed to exposing corruption.
"Today's report reveals a pattern of impropriety in transactions involving several levels of the Ukrainian government from 2008 through the first quarter of 2010. We are continuing our investigation and will share additional findings once those investigations are completed," MacDougall said.
The audit revealed evidence of fraud and misapplication of government funds from 2008 to the first quarter of 2010.
The team of lawyers and forensic investigators led by the Washington, DC law firm of Trout Cacheris, PLLC examined a group of transactions by various government bodies.
The audit found evidence of the use of offshore shell companies, sham contracts and other international money laundering mechanisms in transactions involving private parties and the previous administration, as well as the unlawful misapplication of funds, resulting in the waste and misuse of government assets and the enrichment of private parties.
The largest instance of misconduct they have uncovered involved the unlawful misapplication of 2.3 billion hryvnias (euro 200 million) obtained through the sale of carbon credits under the Kyoto Protocol.
High-ranking officials used these funds to conceal massive deficiencies in Ukraine's pension system shortly before the 2010 presidential election.
The audit also uncovered instances in which offshore shell companies and sham transactions were employed to sell automobiles and pharmaceuticals to the government at highly inflated prices; the use of state credit to purchase 1,000 vehicles which were distributed for political gain; manipulation of transactions with the sugar reserve; and the unapproved use of funds to carry out a land registration program to gain political favor in advance of the recent presidential elections.
Lead audit attorney Plato Cacheris of Trout Cacheris and co-counsel Mark MacDougall of Akin Gump Strauss Hauer & Feld noted that today's announcement is another example of how the Ukrainian leadership is committed to exposing corruption.
"Today's report reveals a pattern of impropriety in transactions involving several levels of the Ukrainian government from 2008 through the first quarter of 2010. We are continuing our investigation and will share additional findings once those investigations are completed," MacDougall said.
Ukrainian Telecoms: Crossed Wires
KIEV, Ukraine -- One of eastern Europe’s longest privatisation sagas may finally be drawing to a close. But there is no happy ending in the story of the sell-off of Ukrelecom, Ukraine’s fixed-line telecoms operator.
After missing opportunities to privatise it in better times - when sentiment in financial markets and in telecoms was more favourable - Kiev is selling Ukrtelecom at a difficult moment, when the government’s debts give it little manoeuvre room. Worse, Ukraine is imposing conditions that could limit its chances of getting a decent price.
Legions of investment bankers have visited Kiev and tried to talk telecoms since the Ukrainian parliament approved privatisation 10 years ago and the government sold around 7 per cent of Ukrtelecom to the company’s staff and local stock market investors.
But successive administrations failed to go ahead with the planned sale of remaining 93 per cent. Sometimes, the proposed partners weren’t right; at other times it was the price. And always Ukrtelecom’s powerful bureaucrat-managers, along with their political allies, wanted to keep control.
Along the way, the government in 2003 sold off UMC, a successful mobile business Ukrtelecom owned jointly with Deutsche Telekom and the Dutch group KPN. Russia’s Sistema Group was the fortunate buyer, securing control of UMC for only around $200m.
Now, president Viktor Yanukovich (pictured) seems have bitten the bullet on Ukrtelecom itself with his government on Wednesday formally launching a privatisation tender that is due to be completed by December 28.
But these are bad times to be selling a big asset in eastern Europe, where the post-crisis economic recovery is struggling. Ukraine has pulled out of deep recession only with the help of a $15bn IMF assistance package. The debt-laden government badly needs money - and everybody knows it.
Ukrtelecom controls about 80 per cent of Ukraine’s fixed-line market. But the real attraction - and the key to its $1.3bn-plus estimated price tag - may be in its ownership of Ukraine’s only 3G mobile phone licence and a small mobile business.
In any case, controversial tender restrictions threaten to cut leading global telecoms out of the bidding. One rule bans companies in which a government owns more than 25 per cent; that rules out west European operators such as Deutsche Telekom and Norway’s Telenor.
Another condition prohibits bidders with a share of over 25 per cent of Ukraine’s telecoms market. That could rule out Vimpelcom, the Russian company that controls Ukraine’s largest mobile business, which might otherwise be a strong bidder, though perhaps not Sistema, which is second in the market. Vitaliy Shushkovsky, an analyst at Renaissance Capital, said, “It is clear that these conditions limit the potential number of participants.”
The restrictions are expected to boost tender chances for domestic billionaires and Russian bidders. In a note to investors, Kiev-based investment bank Dragon Capital said: “We consider domestic business conglomerate System Capital Management and Russia’s AFK Sistema, which owns domestic cellular operator MTS, the most likely bidders for Ukrtelecom.” System Capital Management is the holding company of Rinat Akhmetov, Ukraine’s richest man and a long-time Yanukovich backer.
Officials suggest that foreign bidders with state shareholders are being excluded on security grounds. But they have not explained why foreign private sector bidders in countries where the state intervenes often in the economy - as in Russia - would be acceptable.
The sale is Yanukovich’s first large privatisation since he took office in February. How he handles these issues will be an important test of his promises to run the economy even-handedly, without favouring his friends in big business.
The prospects for fair play do not look good.
After missing opportunities to privatise it in better times - when sentiment in financial markets and in telecoms was more favourable - Kiev is selling Ukrtelecom at a difficult moment, when the government’s debts give it little manoeuvre room. Worse, Ukraine is imposing conditions that could limit its chances of getting a decent price.
Legions of investment bankers have visited Kiev and tried to talk telecoms since the Ukrainian parliament approved privatisation 10 years ago and the government sold around 7 per cent of Ukrtelecom to the company’s staff and local stock market investors.
But successive administrations failed to go ahead with the planned sale of remaining 93 per cent. Sometimes, the proposed partners weren’t right; at other times it was the price. And always Ukrtelecom’s powerful bureaucrat-managers, along with their political allies, wanted to keep control.
Along the way, the government in 2003 sold off UMC, a successful mobile business Ukrtelecom owned jointly with Deutsche Telekom and the Dutch group KPN. Russia’s Sistema Group was the fortunate buyer, securing control of UMC for only around $200m.
Now, president Viktor Yanukovich (pictured) seems have bitten the bullet on Ukrtelecom itself with his government on Wednesday formally launching a privatisation tender that is due to be completed by December 28.
But these are bad times to be selling a big asset in eastern Europe, where the post-crisis economic recovery is struggling. Ukraine has pulled out of deep recession only with the help of a $15bn IMF assistance package. The debt-laden government badly needs money - and everybody knows it.
Ukrtelecom controls about 80 per cent of Ukraine’s fixed-line market. But the real attraction - and the key to its $1.3bn-plus estimated price tag - may be in its ownership of Ukraine’s only 3G mobile phone licence and a small mobile business.
In any case, controversial tender restrictions threaten to cut leading global telecoms out of the bidding. One rule bans companies in which a government owns more than 25 per cent; that rules out west European operators such as Deutsche Telekom and Norway’s Telenor.
Another condition prohibits bidders with a share of over 25 per cent of Ukraine’s telecoms market. That could rule out Vimpelcom, the Russian company that controls Ukraine’s largest mobile business, which might otherwise be a strong bidder, though perhaps not Sistema, which is second in the market. Vitaliy Shushkovsky, an analyst at Renaissance Capital, said, “It is clear that these conditions limit the potential number of participants.”
The restrictions are expected to boost tender chances for domestic billionaires and Russian bidders. In a note to investors, Kiev-based investment bank Dragon Capital said: “We consider domestic business conglomerate System Capital Management and Russia’s AFK Sistema, which owns domestic cellular operator MTS, the most likely bidders for Ukrtelecom.” System Capital Management is the holding company of Rinat Akhmetov, Ukraine’s richest man and a long-time Yanukovich backer.
Officials suggest that foreign bidders with state shareholders are being excluded on security grounds. But they have not explained why foreign private sector bidders in countries where the state intervenes often in the economy - as in Russia - would be acceptable.
The sale is Yanukovich’s first large privatisation since he took office in February. How he handles these issues will be an important test of his promises to run the economy even-handedly, without favouring his friends in big business.
The prospects for fair play do not look good.
Subscribe to:
Posts (Atom)