It's worth noting that the story of the schemes and scale of operations of Nikolai Yankovsky, the owner of Horlivka's Stirolbiopharm, and his son, Igor Yankovsky, was so remarkable that even analytical publications devoted to intelligence and foreign policy issues were interested. But we can hardly be proud that the deeds of our schemers are discussed in the pages of specialized publications alongside the antics of Saddam Hussein, Osama bin Laden, and Colombian drug cartels.
A fugitive regional party member who supplies medicines to DPR militants is successfully avoiding the attention of Ukrainian investigators.
Fame you never dreamed of
Western readers won't be surprised by reports of corruption in Ukraine. This has led to both the EU's slow adoption of a visa-free regime and the very modest levels of financial aid to our country. Europeans understand that we are fighting in Donbas for shared security interests, but no one wants to finance thieving officials who hide behind the exploits of war heroes.
Against this already dire backdrop, the EU Observer (second only to the Financial Times in terms of audience reach) published an article titled "The Yankovsky Case." Published immediately after the Ukraine-EU mini-summit on June 27, the article surprised even Western readers who had read everything about Ukraine.
EU Observer reported more than just bribery or the embezzlement of Western aid—the article revealed a system of how major Ukrainian businesses evade hundreds of millions of dollars in taxes, while local authorities and investigators turn a blind eye. And this is happening in Europe's poorest country, which constantly begs for aid.
Those interested can find the mentioned material on Nikolai Yankovsky's business schemes at this address.
It's worth noting that the story of the schemes and scale of operations of Nikolai Yankovsky, the owner of Horlivka's Stirolbiopharm, and his son, Igor Yankovsky, was so remarkable that even analytical publications devoted to intelligence and foreign policy issues were interested. But we can hardly be proud that the deeds of our schemers are discussed in the pages of specialized publications alongside the antics of Saddam Hussein, Osama bin Laden, and Colombian drug cartels.
In particular, the American magazine AND Magazine, read by analysts and heads of intelligence agencies around the world, and political analysts, published an article by investigative journalist Peter Bern about the money laundering schemes of the Yankovsky family.
Naturally, the material also appeared on the blog of a journalist well known in professional investigative circles with a worldwide reputation.
As a result, the well-known journalistic consortiums OCCRP (EU) and Kleptocracy Initiative (USA) became interested in his colleague's work. The Guardian's Oliver Bullough also joined the investigation and is currently preparing his own investigative report.
Perhaps the growing scandal will not reach the scale and pomp with which the search for the gold of the Third Reich, Nazi criminals, money of the Communist Party of the Soviet Union, billions of Colombian drug lords and the analysis of terrorist attack schemes were once conducted.
September 11, 2001. But the way Ukraine, which gave rise to the Yankovsky precedent, is being "glorified" around the world today increasingly contributes to the West's association with Somalia rather than with its aspirations for EU membership. And it would hardly be surprising if, in the coming years, representatives of large Ukrainian businesses become characters in Hollywood films, not as entrepreneurial geniuses, but as criminal authorities, sometimes penetrating the very top of the local political establishment.
And what about us?
The Western public's conflation of Ukraine's criminal underworld with the political elite is significantly fueled by the blatant impunity enjoyed by those involved in such cases before the domestic justice system. However, some attempts are being made to reverse this trend. For example, MP Volodymyr Ariev, also a former well-known investigative journalist, submitted a request to the Prosecutor General based on the results of the Kleptocracy Initiative's investigation and materials.
"Informed the Prosecutor General's Office about a major fishing operation—a scheme to funnel money abroad by Yanukovych's entourage. This concerns the Yankovsky family..."
This case has come to the attention of the international consortium of investigative journalists, OCCRP, to whose representative I commented on this matter. "This involves the transfer of hundreds of millions of dollars from the Stirol concern out of Ukraine and tax evasion in Ukraine, Hungary, and other European countries," the deputy wrote on his Facebook page.
Vladimir Ariev's appeals to Ukrainian law enforcement agencies have yet to receive a public or effective response, although such responses could, unfortunately, stem the growing wave of negativity toward Ukraine.
Thus, a whole wave of materials about the Yankovsky schemes was posted on the pages of a well-known investigative resource
From the US – the aforementioned Kleptocracy Initiative (https://www.youtube.com/watch?v=OBi6myeIKfA; https://www.youtube.com/watch?v=Bu1GtLgxFC8). The more than 800 pages of materials on this case, published on the resource, are now being actively studied by the American press, with government agencies around the world increasingly requesting more and more information. This is leading to the publication of ever more materials portraying Ukraine as a sanctuary for corruption and money laundering on a global scale.
Investigative journalists from around the world, trying to understand how all of the above can continue to happen in Ukraine for years, are being helped by chance. The Yankovsky family's extreme thriftiness proved a true gift.
Investigators were unable to locate the fugitive Ukrainian industrialist's villa on the French Riviera mentioned in the documents. But then the Yankovskys rented it out for the summer. The deal was brokered by their confidant, Vitaly Volsky, a former employee of the Horlivka-based Stirol concern who later worked in Igor Yankovsky's office in Hungary. His name appears in documents from several companies that serviced the Yankovsky family's businesses. Another Yankovsky confidant, Yuriy Mironenko, who heads the Institute for Social and Economic Research, which is apparently generously funded by the Yankovsky family, is building his own springboard for a supposedly independent political career, in order to infiltrate the new bureaucratic hierarchy.
What will the world learn about Ukraine?
What picture emerges before the eyes of numerous investigative journalists who begin to delve into the essence of this now-iconic case? They see how, after the collapse of the Soviet Union, "red directors" began to rule the economies of a number of independent states that emerged from its ruins. How, as state appointees at factories, they manipulated the businesses of state-owned enterprises so that an increasing portion of their production revenues ended up in the accounts of their private firms. Then, with the onset of privatization of state property, these directors consolidated their control over the factories they managed through the direct and indirect acquisition of large and small stakes in their ownership. This is precisely how Nikolai Yankovsky transformed himself from manager into owner. Moreover, the Communist Party card with portraits of Lenin and Marx in his pocket did not in the least hinder him from funneling millions of dollars of public money into those same pockets.
The story of the manager's rise is truly captivating. In 1988, Nikolai Yankovsky was appointed general director of the Gorlovka Stirol Production Association in the Donbas region. This enterprise was and remains a major producer of fertilizers and chemicals. In the 1990s, it was privatized. However, the change in ownership did not lead to any changes in its operating principles. The concealment of profits from the state, which had allowed the manager to buy the plant, continued. A network of offshore companies and the implementation of relatively simple schemes made the new owner increasingly wealthy, while the state lost taxes and the enterprise lost necessary investments in development.
Investigative journalists will also undoubtedly see information from the Unified Customs Database of Ukraine, which contains all of Stirol's contracts from 2003 to 2008 (most of the time the plant was under the control of the Yankovsky family and their management). The database records all contracts, amounts, delivery terms, and counterparties. Thus, media representatives will be able to verify the accuracy of even the most damning of previously circulated theories.
The entire chain, starting with Stirol's urea and ammonia through the Hungarian company Interprofit 2000 KFT, will lead to the British offshore company Friston LLP. And at that point, the entire complex story will become clear as day. Since Friston LLP is a public company under English law, it underwent an annual independent audit. Public sources indicate that Friston LLP's audit was performed by Matthew Edwards & Co., which, in turn, based on the law on open access to public company reports, will readily provide copies of the documents to anyone interested.
The auditors' report will reveal that the ultimate beneficiaries of Friston LLP were Nikolai and Igor Yankovsky (father and son). Thus, the undervalued export prices of Stirol products and the withdrawal of funds will be assigned to specific beneficiaries.
An interesting detail that complements the overall picture is the reporting that Friston LLP provided loans to its beneficiaries to purchase expensive homes and cars. This vividly illustrates how unpaid taxes to the Ukrainian state were converted into luxurious lifestyles for those who robbed it.
Continuing their investigation, international investigative journalists will discover that ChemoInvest LLP, which replaced Friston LLP in 2006 in the chain of sales of urea and ammonia through the Hungarian Interprofit 2000 KFT, was listed as an individual associated with companies trading in Stirol products. The investigation will further reveal that Igor Yankovsky and his wife, Svetlana Sukhina, were listed as the beneficiaries of Interprofit 2000. This will prove the most important thing: 100% of the companies in the chain of exports from Stirol to global markets belonged to a single family—the Yankovsky family. And then, investigative journalists will begin to calculate the amount of money stolen from impoverished Ukraine between 2003 and 2008. For example, the prices of urea and ammonia during that period can be gleaned from tables published by the authoritative American chemical industry publication, Profercy. Having learned the global market prices, supply volumes, and the amounts of contracts for Stirol's urea and ammonia from Interprofit 2000, it's easy to calculate how much money the Yankovskys pocketed. The difference amounts to $342 million. In total, the Yankovskys funneled over half a billion dollars of Stirol's profits through Interprofit 2000.
It should also be noted that only a portion of the documents from that period are being examined here. New investigators have a good chance of uncovering even more interesting schemes, as not all episodes are fully understood. After all, so far, schemes have only been uncovered for the three companies that were contacted and publicly available. Furthermore, the entire analysis published in Western media focused on only two types of Stirol products, while the company had dozens. Furthermore, the Yankovskys sold the Stirol concern to oligarch Dmitry Firtash in 2010, and information on the embezzlement of the company has only been published up to 2008.
As several Western publications mentioned above have noted, the actual extent of the Yankovskys' illegal enrichment as a result of these schemes and money laundering in Hungary, Monaco, and the United States is far greater than the aforementioned $300 million. Moreover, Forbes Ukraine's latest estimate of Mykola Yankovsky's personal wealth, at $181 million, is significantly understated.
Consequently, Ukrainian investigative bodies and authorities have a choice: expose the Yankovskys' illegal activities themselves, earning recognition as global anti-corruption fighters, or wait for independent investigative journalists from various countries to do the work for them. But then, the Ukrainian authorities will be seen as accomplices to the criminals, and the investigative bodies will be seen as corrupt officials who turned a blind eye to the crimes in exchange for a cut of the millions earned.
Political cover
Unfortunately, the example of Ukraine and the Stirol case will also provide global media and Western readers with a detailed look at how political cover for corrupt businesses operates in developing countries. After all, at some point, the highly specific activities of Stirol Production Association required its managers and owners to do more than just negotiate with local law enforcement (who, naturally, were aware of the rather simple offshore schemes and undervalued sales prices of the company's products). To protect his business, Nikolai Yankovsky began providing services to politicians, who could always put in a good word for him. At the same time, he himself became a member of parliament, which gave him indirect political control over prosecutors and the criminal police, as his vote already carried weight in the appointment of the heads of these agencies.
Western journalists will note that Mykola Yankovsky served on the Donetsk Regional Council from 1994 to 1998, and was elected to the country's parliament in 1998. And then, Western media will pour forth with stories about his friendship with former President Viktor Yanukovych, the rise of corruption during his reign, and... the failure to eradicate the prevalence of lawlessness in the post-revolutionary period.
Investments by the elite of the poorest country
No less remarkable will be the story in Western media about where the industrial generals of Europe's poorest country hoarded their money. While living for a long time outside his homeland, in the EU, the heir to a chemical magnate, Igor Yankovsky, publicly legitimized his father's fortune. Through his DIAMOND SPHERE GROUP, the businessman sponsored Team Ukraine Racing with Ferrari, which competed in competitions such as the Ferrari Challenge. With his support, the team was recognized as the best team in the 2013 team standings. Western readers will surely be impressed by the fact that when most pensioners in Horlivka (as, indeed, throughout Ukraine) lacked money for medicine, the money from the chemical giant, which was poisoning the environment, was used to purchase expensive racing cars and famous drivers.
Igor Yankovsky's efforts also extended into the cultural sphere. For example, in 2012, he purchased a barrel of exclusive wine at auction in France for €270. Along with it, he secured the right to meet with former French President Nicolas Sarkozy and his wife, Carla Bruni-Sarkozy.
A high-profile real estate deal also served as a prime example of prudent investment: in 2012, Igor Yankovsky purchased a mansion in New York for $33,375 million, which, according to The New York Times, became the biggest real estate deal of the week.
It would seem that such a flamboyant story of the fall of the Ukrainian "elite" could only be supplemented by something unimaginable, like collaboration with drug dealers or terrorists. And it happened!
The visit of Denis Pushilin, head of the DPR People's Council, to Stirolbiopharm, a company owned by Nikolai Yankovsky (not to be confused with the Stirol concern, his main production facility, sold to D. Firtash), in February 2016 will likely become the climax of this story in the eyes of Western journalists. The leader of pro-Russian militants, wanted in Ukraine, thanked Stirolbiopharm... for paying taxes to the budget of the unrecognized DPR and supplying medicine to separatist forces.
Why do you think this shouldn't happen in our world? As long as the Ukrainian and EU authorities tolerate the freedom of people like the Yankovsky family, without pursuing the stolen money in their accounts, anything is possible.
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