One could argue that former Ukrainian president Yanukovych is a model case for major public asset theft, how to profit from the secrecy of the global financial system and on the failures and hurdles in recovering those assets.
Money, money, money, money
While credible estimates are as always difficult, if not impossible to make, it seems certain that tens of billions of dollars from the Ukrainian state budget were embezzled in Ukraine or funnelled abroad by public officials in just five years between 2010 and 2014, when the former President fled the country following the Euromaidan protests. The work of Ukrainian and international journalists and activists such as the YanukovychLeaks – documents found at the bottom of a lake in front of Yanukovych’s former Mezhyhirya palace – revealed an impressive number of properties in Ukraine ultimately belonging to the ex-president, including the Mezhyhirya palace itself, offices and apartments in downtown Kyiv and others. Mezhyhirya quickly became a potent symbol of the lavishness and corruption of the ousted Ukrainian regime after the revolution in 2014, when thousands of Ukrainians went to admire the extravagances of the residence, including chandeliers worth $80,000, decorative woodwork worth $3.7 million, a full-size replica of a Spanish galleon and much more.
A mafia-like network
Many asked themselves how did Yanukovych and his clan manage to steal so much in such a short time. Yanukovych headed a “mafia structure which spread across different state structures and ran a multi-billion dollar criminal syndicate whose tentacles reached almost all walks of the Ukrainian state and Ukrainian life”, according to the former Ukrainian acting Prosecutor-General in 2014. Yanukovych could safely hide his allegedly stolen assets thanks the secrecy of European banks, as revealed by the asset freezes put in place in the EU regarding former Ukrainian officials and Yanukovych himself. He could also greatly benefit from offshore and shell companies, trusts and foundations to hide the real ownership of his proprieties. Predictably, the most glaring example is Mezhyhirya, which investigations by the Ukrainian Anti-Corruption Action Center and others showed was acquired by the Ukrainian real estate company Tantalit, in turn owned by a UK shell company and an Austrian firm.
A complex return
The case of the former Ukraine president has received a lot of attention by civil society in Ukraine, journalists, the EU and other countries; but the people of Ukraine are still waiting for their government to act on their promises to bring the assets back. Yanukovych and his cronies are under investigation for embezzlement and misuse of public funds, but five years after their ousting no one has to date been convicted. Investigations, necessary to trigger the recovery of assets from abroad, are proceeding slowly, mainly due to the failure of reforming the justice system and particularly the General Prosecutor’s Office in Ukraine. Time is flying and the sanctions enacted by Canada, Switzerland, the US and the EU freezing the assets of individuals of the former regime are at risk of being lifted, as is already partially happening with the EU. One major case was the lifting in March 2017 of EU asset freezes linked to Ivaniushchenko, one of Yanukovych’s closest allies, due to a lack of proof of embezzlement, which brought outrage among activists: now Ivaniushchenko is free to use some $5.4 allegedly stolen and is unlikely to be convicted for his crimes. “Asset receiving” countries also play their role in slowing things down: the UK for example, after making great announcements on recovering the Ukrainian money, failed to conduct investigations on the role of UK companies, as shown by a Guardian report.
At the same time, Ukraine has made some progress in establishing asset recovery bodies such as the National Anti-Corruption Bureau and the Specialized Anti-Corruption Prosecution, which do not deal with top-level officials but are tasked with tracing and seizing assets of acting officials. Through this system, which still needs to be fully enforced with the creation of specialised anti-corruption bodies, already assets of around $200 million have been seized. Interestingly, on the 28th April Ukrainian President Poroshenko announced that the state savings bank Oschadbank had begun the confiscation of an estimated $1.5 billion in assets allegedly stolen by former president of Ukraine Viktor Yanukovych. This appears to be a first important step in recovering the billions allegedly stolen under Yanukovych’s presidency between 2010 and 2014. However, it is very unclear how or even if the great majority of the tens of billions allegedly stolen by Yanukovych will ever be recovered.