OCCRP Report Details Post-Maidan Officials’ Use Of Offshores To Send Funds Out Of Ukraine

October 4, 2016
Mykola Gerasimyuk in 2014.

Ukraine Day 960: LIVE UPDATES BELOW.

Yesterday’s live coverage of the Ukraine conflict can be found here.


An Invasion By Any Other Name: The Kremlin’s Dirty War in Ukraine


One Ukrainian Fighter Killed, Another Wounded Yesterday In The Donbass

Yesterday saw yet another day of violence in the Donbass, with one Ukrainian volunteer fighter killed and a soldier wounded.

Serhiy Kravchenko, a member of the Pravyi Sektor Volunteer Corps (DUK) and a former soldier with the 95th Airmobile Brigade, was killed yesterday evening.

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DUK commander Andriy Stempitskiy reported on Facebook today that Kravchenko had died in an “unequal fight” with a diversionary group of Russia-backed fighters.

According to a post on Kravchenko’s units Facebook page, Kravchenko had been left the regular army after being wounded during the battle for Donetsk Airport and spent eight days in a coma. He subsequently joined the DUK to continue fighting.

At noon today, Colonel Andriy Lysenko, spokesman for the Ministry of Defense, announced that one Ukrainian serviceman had been wounded by enemy shelling in Zaytsevo, north of separatist-held Gorlovka.

The Ukrainian military’s ATO Press Center claimed this morning that Russia-backed forces conducted 31 attacks yesterday. 

According to the report, Russia-backed forces largely restricted their choice of weaponry to grenade launchers, machine guns and small arms, in contrast to the last few days which have seen repeated use of mortars and even 152 mm artillery.

The one exception was an attack near Talakovka, just northeast of Mariupol, in which Ukrainian positions came under fire from BMP infantry fighting vehicles.

The Donetsk regional police reported that further attacks took place in the early hours of this morning. At 00:30 today, the police report that Russia-backed fighters fired on a residential area of Maryinka, southwest of Donetsk, damaging a school building.

In turn, Eduard Basurin, military spokesman for the Russia-backed separatists in Donetsk, today accused Ukrainian forces of firing on separatist-held territory 126 times over the last 24 hours.

According to Basurin, Ukrainian troops fired dozens of mortar rounds on the northern and northeastern outskirts of Donetsk city, also firing three tank shells.

Meanwhile OSCE-led efforts to establish demilitarized zones on the front line suffered another setback yesterday when Russia-backed forces redeployed to the Petrovskoye area, south of Donetsk.

While the OSCE reported on Sunday that one armored combat vehicle remained in this, one of three designated “disengagement areas,” their team said that four BMP infantry fighting vehicles had indeed been removed from the separatist-held area.

However yesterday Reuters published photos, picked up by Ukraine’s TSN, of Russian or Russia-backed separatist soldiers redeploying to Petrovskoye, along with several BMP-2 IFVs.

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The Ukrainian military last night reported that their own forces in the Petrovskoye area had come under fire from automatic grenade launchers.

— Pierre Vaux

OCCRP Report Details Post-Maidan Officials’ Use Of Offshores To Send Funds Out Of Ukraine

The Organized Crime and Corruption Reporting Project (OCCRP) has published an investigation into the use of offshore entities and property purchases by several Ukrainian officials in the post-Maidan government.

Amongst those named in the report are Mykola Gerasimyuk, Ukraine’s first deputy prosecutor-general from June to December, 2014, and Yuriy Tereshchenko, who was acting head of the state armaments conglomerate Ukroboronprom and the State Service for Export Control.

According to the OCCRP findings, Gerasimyuk used offshore entities registered in the Seychelles, Panama and Belize to move hundreds of thousands of dollars-worth of funds out of Ukraine, eventually into a Latvian bank and property purchases in Slovakia and Croatia.

More significantly, given his official duties in the immediate aftermath of the Maidan revolution, Gerasimyuk appears to have been negotiating bribes in exchange for skewing legal cases or dropping charges against associates of former President Viktor Yanukovych.

According to other emails obtained by OCCRP, Gerasimyuk was being offered bribes to drop charges against associates of Yanukovych. He was also contacted over politicized property disputes worth tens of millions of dollars.

One correspondent using the name “China Town” appealed to Gerasimyuk on behalf of Armen Sarkisyan, a businessman from the East Ukrainian town of Horlivka, offering a $500,000 bribe for his freedom.

According to the emails to Gerasimyuk, Sarkisyan was under suspicion of organizing ‘titushki’ or hired thugs deployed by Yanukovych against protesters in the Maidan protests, among other things. The letter said Sarkisyan “is ready for all forms of solving the problem and will act properly. Can you help?” The dialogue then continued cryptically discussing the size of the bribe. Gerasimyuk answered in Cyrillic letters, ‘Match? How?” possibly a corruption of the English ‘how much’?

The applicant replied, “100,000 guests will come to you when a person receives freedom of movement, another 400,000 will be invited to celebrate when the charges are fully dropped, I will be guarantor and depository,” suggesting a total $500,000 bribe for dropping charges against Sarkisyan.

A later email from the same mysterious ‘China Town’ address sent Gerasimyuk documents relating to “activities of the Kyiv prosecutors’ office directed against my firm and my family.” The attached documents relate to cases brought against the law firm Lavrynovych & Partners, run by Maksym Lavrynovych, the son of Oleksandr Lavrynovych who served as MInister of Justice under former President Viktor Yanukovych. Yanukovych fled Ukraine for Russia in 2014.

Maksym Lavrynovych told OCCRP the law firm had nothing to do with that email or the Chinatown address.

“We are a reputable law firm and never, ever were involved in any bribe or corruption cases,” he said in an email.

Gerasimyuk was also contacted directly on his personal email by top businessmen, with details of criminal investigations that they may have wanted to influence in their favor.

In August 2014, influential businessman Aleksander Granovsky sent Gerasimyuk a summary of a criminal investigation into an allegedly fake loan agreement, which, if successful, would influence a long-running dispute over ownership of one of Ukraine’s largest shopping malls, Sky Mall in Kyiv, in his favor. An Estonian businessman claimed to have invested up to $120 million in the project.

Granovsky was head of the board of Assofit, one of the parties to the dispute. The mail was sent from Alexander Granovsky’s email address and the subject line read: “Backgrounder on the case. The hearing is scheduled for Monday.” The mail was sent on Sunday, Aug. 10, the day before the hearing.

According to Mikhail Merkulov, CEO of Cyprus company Arricano (Assofit’s opponents in the dispute over control of Sky Mall), there has been “massive interference” in the dispute by the prosecutor general’s office, police and courts in favor of Assofit including the criminal charges against representatives of Arricano and of its affiliates mentioned in Granovsky’s emails.

After leaving his job as first deputy prosecutor general at the end of 2014, Gerasimyuk became a paid parliamentary assistant to Granovsky, who had entered Parliament in November 2014 as a member for the presidential bloc of Petro Poroshenko. Granovsky told OCCRP reporters he did not try to influence Gerasimyuk in the case.

Gerasimyuk also said his new job as Granovsky’s assistant had nothing to do with the Sky Mall case.

Meanwhile Yuriy Tereshchenko’s son, Oleksandr, is documented as having engaged in a rather shady deal to purchase a £331,938 ($423,327) apartment in Kennington, London, in December, 2014.

The funds were wired to the London real estate agent from Berly Trade Ltd., one of the same Seychelles-registered entities used by Gerasimyuk, using money from a account with Latvia’s ABLV bank.

Berly Trade is clearly a newly formed paper company likely designed to be part of a ploshchadka. It had been incorporated less than six months previously, in July of 2014. That September, it opened an account at ABLV. Funds started to trickle through the accounts in October 2014, according to a redacted bank statement among the leaked documents, which covers only the first three weeks of Berly’s activities

The statement shows that $190,000 was paid into Berly’s accounts in those three weeks, much of which flowed out to other firms with accounts at the same bank. The payments do not look like normal business transactions. For example, around $42,000 was paid in six separate wires. The paperwork shows that the money was used to buy flowers from suppliers in Ecuador. Larger sums were paid to and received from other firms with accounts at ABLV. 

By December 2014, millions were moving through the accounts. Besides the funds moved to London for the Tereshchenko apartment, in December 2014 Berly paid a total of around $800,000 in seven wires to another offshore firm in the Marshall Islands with a bank account at the Julius Baer bank in Switzerland. The money was “for marketing services” according to payment orders found among the documents.

In subsequent months, Berly received and wired millions more from and to other offshores, as well as from and to firms and individuals from countries including Tunisia, Turkey, the Czech Republic, Hungary, and the US. 

How could Oleksandr Tereshchenko, then a 19-year-old student, could afford such a purchase? 

In March of 2014 Oleksandr Tereshchenko’s father, Yury Tereshchenko, wrote an op ed in the Kyiv Post on taking over Ukroboronprom. The elder Tereshchenko said that corruption had been sapping revenues from Ukraine’s defense industry, but that this would stop under his watch. 

Later in 2014, the senior Tereshchenko headed the State Service for Export Control, which licences exports of military and dual-use goods (which can be used for either military or commercial purposes).

Despite Yury Tereshchenko’s vow to end corruption, in December 2015 Ukraine’s SBU security service arrested one of his deputies, Serhiy Golovaty, just after he received the final installment of a $250,000 cash bribe for providing an export license to a local company. According to the SBU, some of the funds were found in Yury Tereshchenko’s home. The elder Tereshchenko was suspended and then fired in June 2016 from his job.

The report also delves into the offshore transactions of two former MPs – Roman Zabzalyuk and Gennady Balashov – the latter having campaigned for Ukraine to drastically lower tax rates in order to remove in the incentive for Ukrainians to use offshores.

— Pierre Vaux