Yulia Tymoshenko, blonde-braided Aryan princess of Ukraine’s ‘revolutions.’ Imprisoned, we are told, for political reasons, and released to breathless Western coverage and Ukrainian indifference following the crowd-coup which toppled ‘pro-Russian’ Ukrainian president Yanukovych last week. But in November, not long before the unrest in Kiev began, France’sMediapart told a different story, of a ‘businesswoman’ turned politician who, as soon as Ukraine became independent, set up offshore companies in Cyprus and the Caribbean to steal hundreds of millions of dollars from Ukraine’s taxpayers and natural gas customers. And the hair turned out to be a dye-job.
American or European accounts of Tymoshenko’s legal troubles are almost uniformly vague and sympathetic; the account here, with allegations of vast theft from impoverished Ukrainian households, of politics as merely a technique of organized embezzlement, and even of murder for hire, leaves little room for sympathy. Mediapart wrote this report with Tymoshenko in prison, her allies out of power. Freed after the coup, the state prosecutor removed from office, and the web site detailing the charges against her abruptly removed from the internet, it seems likely that the very serious charges discussed here will no longer be pursued, at least at home.
The government in Kiev has hired an army of international lawyers to track down the hundreds of millions of dollars embezzled in the mid-1990s by Yulia Tymoshenko and Pavel Lazarenko, the former prime minister who has been convicted and sentenced to prison in Switzerland and the United States. The money trail passes through Geneva.
Incarcerated in a prison hospital in Kharkov, Tymoshenko was sentenced in Oct. 2011 to seven years for abuse of power. She begins her third year in detention with an almost unblemished reputation in Europe, where she is portrayed as fierce leader of the opposition, an ill woman who is being mistreated by the government of Ukraine. In recent weeks, the European Union has put intense pressure on Kiev to resolve the “Tymoshenko Case” by allowing the imprisoned former president to be sent to Germany to treat the slipped discs in her back. A medical release was in fact set as a precondition for an EU association agreement with Ukraine.
In the end, the Kiev government gave up on the agreement with the EU; on Thursday the 21st [of November, 2013]it suddenly announced that the negotiations were being put on hold in order to “safeguard national secutity and revive economic relations with Russia.” The same day, the Ukrainian parliament voted down six different bills that would have allowed Ms. Tymoshenko – and any other Ukrainian convict- to seek medical treatment abroad. President Viktor Yanukovych thus reaffirmed that his main opponent would not ‘escape her penal responsibilities.’ The following Sunday, tens of thousands of Ukrainians demonstrated in Kiev to protest this sudden about-face toward the EU.
Simultaneous with this vast diplomatic maneuver, Ukrainian authorities in November launched new judicial offensive against Tymoshenko, already deeply wounded by her legal troubles. This time, they revived her distant past, when in the mid-1990s, she built a fortune in the natural gas industry with the help of her mentor, former Prime Minister Pavel Lazarenko, himself convicted of money laundering, wire fraud and extortion in Switzerland in 2000, and then in the United States in 2004. Lazarenko was released from a California prison in Nov. 2012, after serving eight years.
At the time a beautiful brunette before her extreme makeover as a glamorous blonde Ukrainian peasant., Ms. Tymoshenko was nicknamed the ‘Gas Princess.’ She headed the private company that had a monopoly on gas distribution in the Ukraine, United Energy Systems of Ukraine. The American legal proceedings against Lazarenko – most of which can be perused on the internet – show that colossal sums of money were siphoned into foreign accounts that fed Lazarenko’s personal bank accounts in the United States, Switzerland, Antigua and Barbuda. These facts are comprehensively documented, though very few defenders of the Ukrainian opposition seem to recall them.
At the beginning of November, the Ukrainian government retained the services of the prominent London law firm of Lawrence Graham, expert in the recovery of embezzled assets, to track down “at least 200 million dollars” stolen by former prime ministers Tymoshenko and Lazarenko.
Yulia Tymoshenko and Angela Merkel at the European People’s Party summit, Sept 2010. Photo EPP.
The focus of the investigation is Switzerland, where two lawyers are managing the case, one of them the Geneva-based Francois Membrez, famed for his involvement in humanitarian causes and the struggle to seize the ill-gotten assets of foreign rulers. The strategy pursued by Lawrence Graham, which investigated, among others, Paulo Maluf, Sao Paulo’s corrupt former mayor – is to file money laundering complaints against numerous Swiss banks in order to freeze the stolen funds, potentially allowing them to be returned to Ukraine. A departure from the usual method, in which the judicial branch of the victim country requests help from the judicial branch of the country where the stolen funds ended up, via a rogatory commission.
Ukraine’s chief prosecutor Viktor Pchonka passed through Geneva and Bern on the 14 and 15 of November, where he met with his Swiss peers. Officially, this was described as merely a ‘courtesy visit’ in which both countries discussed judicial cooperation. But in fact, the Ukrainian prosecutor mostly used the visit to announce the imminent filing of ‘complaints,’ though he took care not to mention the name of Yulia Tymoshenko, due to the extreme sensitivity of the case.
In an interview with Mediapart, the prosecutor was more straightforward. “A lot of people have this image of Yulia Tymoshenko as a politician through and through,” Pchonka told Mediapart. “But throughout her working life, whether at the head of United Energy Systems of Ukraine, or as a banker, or as a parliamentary deputy or as prime minister, she has always run into legal trouble, and she has always pursued a single and solitary goal: to make as much money as possible.” Pchonka said that his office will soon file complaints against “two banks” involving “hundreds of millions of dollars that were deposited in the name of companies controlled by Ms. Tymoshenko and Mr. Lazarenko.” He added that “there are investigations and criminal proceedings underway in Ukraine, and sentences have been handed out. The time has now come to bring the stolen money back into the country.”
Reached by Mediapart, Switzerland lawyer Francois Membrez said that “the investigation of these cases is ongoing and will continue for three or four weeks,” refusing to say more. The strategy being pursued by the lawyers is not to reopen the case of Lazarenko, already sentenced and imprisoned, but to freeze assets that followed the same routes but were not discovered by the earlier Swiss and American investigations.
One source tells Mediapart that a complaint has already been filed with the Geneva public prosecutor. For an investigation to have been opened, this complaint must have included a certain amount of legal evidence. Some accounts have already been identified; they are alleged to have received deposits from entities controlled by Yulia Tymoshenko, such as Somolli Enterprises.
This offshore company, registered in Cyprus in 1992 by Yulia Tymoshenko and her close associates, first came to light in the American prosecution of Pavel Lazarenko, where it was clearly identified as one of the channels by which the former prime minister moved hundreds of millions of dollars in bribes at a time when he was working closely with Tymoshenko.
In Nov. 1995, according to an indictment issued by a federal court in California, Lazarenko, then in charge of his country’s energy sector, authorized Yulia Tymoshenko’s freshly-created United Energy Systems of Ukraine to serve as the local distributor n the Dneperpetrovsk region for gas bought from the Russian giant Gazprom.
As early as 1996, the money paid by Ukrainian consumers to Tymoshenko’s company was being siphoned off to the bank accounts of another company, based in London, called United Energy Systems International, also created by Ms. Tymoshenko. Further, instead of paying its debts to Gazprom, UESL transferred $140 million to the infamous Somolli Enterprises in Cyrpus between April and Dec. of 1996. Out of this sum, $97 million later landed in the Swiss, Polish and American accounts of a certain Peter Kiritchenko. Kiritchenko then transferred this money and other funds totaling $120 million to the accounts of Pavel Lazarenko in Switzerland, Antigua and Barbuda. And it is from Switzerland that in 1997 two transfers of $14 million were sent to the California account of the former prime minister.
In the end, the Ukraine national treasury had to pay Gazprom for UESL’s unpaid debts; Pavel Lazerenko having made sure to specify that in case of failure to pay, Ukraine would guarantee the debt.
In the indictment, Yulia Tymoshenko was described as a “co-conspirator.” In June 2004, Pavel Lazarenko, whose claims of ‘political persecution’ convinced no one, was convicted on 29 charges by the federal jury. That year, Transparency International ranked him number 8 on its list of the world’s most corrupt politicians.
But surprisingly, an appeals court eventually dropped the charges pertaining to the “United Energy Systems of Ukraine Fraud,” though they constituted the biggest portion of the indictment, other than the extortion and money laundering charges.
In August 2006, the former prime minister was sentenced to nine years in prison by the federal court in San Francisco, for money laundering, wire fraud and extortion. Tymoshenko however got away clean. To date, no one has succeeded in pinning down her degree of responsibility, or how much she earned during this period.
“We had the evidence [that Yulia Tymoshenko was linked to the Lazarenko cases],” said Martha Boersch, former American prosecutor in charge of the Lazarenko case in an interview with Ukrainian TV. “We had bank account statements. We thought that showing the financial and banking transfers in which Lazarenko and Tymoshenko were both involved was enough evidence. However, the court ruled that it was insufficient proof (…) This does not mean that Ms Tymoshenko was acquitted however.”
Beginning in 2002, Yulia Tymoshenko became one of the most important figures in the Ukraine political opposition, as head of the parliamentary bloc known as “BlouT.” During the so-called “Orange Revolution” of Nov. 2004, she was everywhere on the front pages of the Western media; they couldn’t get enough of her blonde braids. Her supporters worhsipped her. In 2005, she was named Prime Minister by newly elected President Viktor Yushchenko, and her legal problems related to the fraudulent importation of Russian gas when she headed United Energy Systems, disappeared.
Yulia Tymoshenko at the European People’s Party summit, Sept 2010. Photo EPP.
It would not be until 2010 and her presidential election defeat at the hands of her rival Viktor Yanukovych that her legal problems would resurface. But for Europeans, this would be seen as nothing more than “selective justice” being carried out by a new regime no less corrupt than its predecessors. In 2012 Ukraine was ranked 144th in a list of 176 countries on the Corruption Perceptions Index of Transparency International, worse than Russia, which occupied the 133rd place. Not that this would get in the way of the war machine that is the Ukraine judicial system.
In Oct. 2011, Tymoshenko was sentenced to seven years in prison for ‘abuse of power,’ accused of illegally signing a $10 billion 2009 gas import agreement with Russia while she was Prime Minister. According to the ruling, the text of which is available online, and even translated into English, she was found guilty of pressuring the Ukrainian state company Naftogaz to sign a deal with Gazprom for 2009-2010 that was particularly unfavorable to Ukraine. Between 2008 and 2009, the price of gas purchased by Ukraine jumped from $179.50 to $232 per cubic meter. That amounted to a surplus of $194 million during a period when the transit price of gas did not move.
In Sept. 2012, the Ukraine government hired the American legal firm Skadden Arps to review the ‘Tymoshenko Case,’ and address the issue of ‘selective justice.’ The result was an extremely detailed 300 page report that dissects the gas conflict between Moscow and Kiev in 2008 and 2009. As expected, it exonerated the Ukrainian judicial apparatus. “Based on the record, Tymoshenko has not provided clear and specific evidence of political motivation that would be sufficient to overturn her conviction under American standards,” the report concludes.
In April, 2013, the European Court of Human Rights issued a ruling deeming her temporary detention prior to her August 2011 trial “arbitrary and illegal.” The Ukraine judicial system had justified her temporary detention solely on the fact that Ms. Tymoshenko had “hindered the procedure and had behaved outrageously. However these reasons do not figure on the list of reasons that justify deprivation of liberty,” the ECHR held. Without addressing the heart of the case, the ECHR’s seven judges determined that her incarceration was based on ‘other motives’-that is, political motives, and not the simple search for the truth.
The same ruling however dismissed Tymoshenko’s allegations of mistreatment during her transfer from prison to a hospital on April 20 2012. After reviewing the “medical information” that was available, the European Court of Human Rights held that the time when bruising appeared on Yulia Tymoshenko’s body – of which photos were published all over the world – “did not correspond to the date on which she was saying she had them”. The judges remarked on the fact that Ms Tymoshenko refused twice to undergo a complete legal medical exam.
They added that “it is clear from the abundant information presented to the court that Ms Tymoshenko benefited from a considerable attention on behalf of the Ukrainian authorities who made important efforts which went well beyond the usual arrangements that ordinary detainees in Ukraine are granted when in need of medical treatment”. The court mentioned that it had for that reason rejected in August 2012 a request by Yulia Tymoshenko to obtain medical treatment in Germany.
In Ukraine, Yulia Tymoshenko still faces prosecution in four further cases: for mismanagement of funds from the sale of CO2 emissions allowances, for embezzlement and tax evasion when she headed United Energy Systems of Ukraine, and finally for the murder of one of her rivals, parliamentary deputy Yevhen Shcherban, whose assassination she is alleged to have paid for on orders from Pavel Lazarenko.
Ukraine’s general prosecutor has posted a website that diagrams each of the cases, including English translations. The Shcherban case, which dangles a life sentence over Tymoshenko’s head, is very thoroughly and precisely dissected.
When Mediapart ran this story, much of the documentation was still available on official websites of the Public Prosecutor. Since the fall of Yanukovych, Mr. Pchonka has been removed from office, and the relevant websites abruptly disappeaered. Via the Internet Archive, we have recovered some of the documents referred to in Ms. Duparc’s article, and posted them on International Boulevard. The Skadden Arps report which suggests that Ms. Tymoshenko’s detention was not demonstrably politically motivated is here. And the Public Prosecutor’s documentation of the Shcherban murder case is here.
Agathe Duparc Translated from French by International Boulevard
04 Mar 2014