By late January this year, Ukraine’s President Zelensky had realised bountiful Western aid, on which his country depends for survival, would not keep flowing if significant amounts of it wound up lining private offshore accounts. He has therefore stepped up anti-corruption efforts. So far, 15 senior officials have lost their jobs; six are already facing criminal prosecution.
As an example, Ukraine’s Deputy Defence Minister, Vyacheslav Shapovalov, resigned amidst accusations of supplying rations at inflated prices. This has; in turn, resulted in his boss, Defence Minister Oleksii Reznikov, being shuffled to a less prominent position.
Shocking and outrageous as this may seem in the midst of Ukraine’s heroic defence of its sovereignty against massive force majeure by the Russian military, it is small beer, when compared to corruption that went before. While still in the Soviet Union, the Ukrainian SSR saw its share of nomenklatura who knew how to work the system. As the Soviet Union collapsed 30 years ago, well placed opportunists embraced raw capitalism and turned themselves into oligarchs. The Panama Papers (Süddeutsche Zeitung, Munich, 2016) found “more high-ranking officials involved in salting their money away offshore than any other country”.
After serving as Prime Minister in 1995/7, it was only, in 2005 that Pavel Lazarenko “discovered that he owned Gateway Marketing Inc., an offshore company. He also had shares in another offshore hideaway—Bassington Ltd.—that is the most interesting because control was shared with Yulia Timoshenko, a protégé who also became Prime Minister of Ukraine.
Lazarenko fades from front-line Ukrainian politics but has meanwhile caught the attention of various authorities and is detained at San Francisco accused of “siphoning off hundreds of millions of dollars through bribery, fraud and embezzlement`.
Meanwhile Timoshenkp is of particular interest because Ukraine is still wrestling with her legacy. She hails from what seems like an oligarch breeding ground; the city of Dnepro (formerly the unpronounceable Dnepropetrovsk).
She acquired her taste for profit early, by selling pirated videos of Hollywood films during the Soviet era. When the Soviet Union collapsed, she leveraged the modest $1m thus acquired into her holding the presidency of United Energy Systems of Ukraine. Within a year she was controlling much of Ukraine’s energy supply. Yet she appears to have paid barely $11,000 in taxes that year. Although briefly jailed in 2001 for “gas snuggling and tax evasion”, influential friends shielded her image (and therefore career) from serious damage,
With her hair dyed blonde and rolled in traditional side buns, she becomes a prominent figure in the “Orange Revolution” of 2004. As its darling, she rides that popularity to serve as Prime Minister for the next five years.
But US courts who have thrown her mentor and fellow Bassington-owner Lazarenko in jail try to come after her with accusations of money laundering, bribes and a small matter of $18.3 million indebtedness. Though lawyers evade this, she engages in some dodgy dealing with Putin over gas, loses the 2010 presidential election to Viktor Yanukovych,
She is thereupon accused of abusing her power in making those gas deals and is jailed for seven years. Half Ukraine sees her as their own “Joan of Arc;” the other half as a grasping oligarch.
Which brings us to Petro Poroshenko. Having parlayed a lucrative business of importing cocoa during the Soviet era into the Roshen confectionery empire, earning him the nickname “The Chocolate King”, he turned to a political career and served in various ministerial roles in the Timoshenko government.
In the 2015 presidential election, he stood against her, campaigning as a reformed oligarch who would sell all his companies.
“As the President of Ukraine, I will and want to focus only on the welfare of the nation.”—Petro Poeoshenko 2014 Campaign Literature
He was duly elected at the first ballot in May 2014, gaining 54% of the vote. His campaign promise soon rang hollow. Within three months of becoming President and Commander-in-Chief, while Crimea was being annexed; while all hell was breaking loose in Donbass; while 7,000 Ukrainian soldiers were surrounded in Ilovaisk. what was his response?
To establish an offshore shell company (Prime Asset Partners in the British Virgin Islands). This allowed him to finesse his campaign promise andclaim he no longer has his chocolate empire. Meanwhile, Crimea falls, Donbass enters eight years of civil war and the soldiers of Ilovaisk get no help. In fact, thousand are slaughtered as they escape the town under a supposed cease-fire that the Russians broke.
When asked to provide the offshore law firm setting up the shell company with the purpose of the account, they are told it is “a holding for companies for Roshen Group”. When asked for a statement of character of the official owner, International Invest Bank affirms Petro Poroshenko “has always kept his account properly and to our satisfaction”.
Turns out Petro Poroshenko owns International Invest Bank.
What is tragic about all this is that the Orange Revolution specifically demanded that the 100 richest people in Ukraine—the oligarchs who had so much, while 80% of the people lived in poverty—should not be involved in politics at all.
Little wonder Poroshenko was heavily defeated in the 2018 presidential election by a man whose only involvement had been playing a president in a TV drama. Luckily for Ukraine, Zelensky proved more popular, more selfless and more effective than the slew of self-serving pirates who preceded him.
The present war may well have been triggered by Putin, realising that —finally—he faced a President who could not be bought.