Mykola Zlochevsky became fabulously rich under President Viktor Yanukovych. As Minister of Ecology, he became the owner of one of the largest private gas production companies in the country, Burisma Group. Licenses to develop fields for Zlochevsky's companies were approved by the ministry, which he also headed. After the Maidan, he fled the country, becoming the subject of several criminal cases. And under President Petro Poroshenko... Mykola Zlochevsky's VIP clients (investigation) Radio Liberty, translation: Argument).
Mykola Zlochevsky is one of those who became fabulously rich during Viktor Yanukovych's presidency. As Minister of Ecology, he grew his business to the size of one of the largest private gas producers in the country, Burisma Group. Licenses to develop gas fields for Zlochevsky's companies were approved by the ministry, which he himself headed. After the Maidan, he fled the country. But three years later, his business is running like clockwork. Zlochevsky himself has been removed from the wanted list, and the prosecutor's office has closed his criminal cases one after another. Such decisions are typically not made in Ukraine without the consent of the country's top leadership. Perhaps the president's inner circle benefits from Zlochevsky's business, the legality of which remains questionable, continuously producing and selling gas in Ukraine? Journalists from the program "Schemes," a joint project of Radio Liberty and the UA:Pershyi channel, gained access to the 2016 reports of Burisma Group companies and analyzed who is purchasing gas from Zlochevsky's companies.
Abandoned Fortress
Back in 2009, there was a forest near Kyiv, between Vyshgorod and the village of Khotyanivka. Just a year later, massive construction began on the Kyiv Reservoir dam in place of the felled trees.
The estate, which the then Minister of Ecology of the Government, Mykola Zlochevsky, built on the dam of the Kyiv Reservoir on the site of a felled forest
Here, Mykola Zlochevsky, the Minister of Ecology in the Azarov government, began constructing his future fortresses. He arrived here about a year before the Maidan.
One of the estates that Nikolai Zlochevsky built on the dam of the Kyiv Reservoir
His financial affairs rapidly improved during Yanukovych's presidency.
How did Nikolai Zlochevsky become rich?
On the one hand, Zlochevsky headed the Ministry of Ecology and Natural Resources. It was this agency that decided who would be granted access to Ukrainian subsoil for mineral extraction. On the other hand, he owned a business that received special permits for gas extraction at several fields across Ukraine. This was done with numerous violations, without an auction or competitive bidding process.
Thus, Minister Zlochevsky, with his influential position, built his own highly profitable business—one of Ukraine's largest private gas producers, Burisma Group. He even invited former Polish President Aleksander Kwaśniewski and Hunter Biden, the son of then-US Vice President Joe Biden, to the board of directors.
"There is very clear evidence that the documents submitted by companies linked to Zlochevsky were missing one crucial document—the approval from local communities. Is this a violation? It's a complete violation," says Yaroslav Yurchyshyn, Executive Director of Transparency International Ukraine. He believes that challenging the decision in court and terminating the companies' operations based on this document would be entirely logical.
What happened to Zlochevsky after the Maidan?
After the Revolution of Dignity, Zlochevsky fled Ukraine. His dam fortresses remain empty.
Law enforcement then opened several criminal cases against the former minister and his companies. However, nearly three years of investigation yielded no results. Zlochevsky's businesses continue to operate like clockwork.
Burisma Group companies currently produce Ukrainian gas at eight fields in five regions. Zlochevsky himself has also almost completely resolved his legal problems, both in Ukraine and abroad. A London court lifted the freeze on $23,5 million that the UK's Serious Fraud Office had frozen in Zlochevsky's accounts because the Ukrainian prosecutor's office failed to provide evidence that the funds were of illicit origin.
"The case opened in the UK was not investigated properly, professionally, or independently by the Ukrainian prosecutor's office. It was systematically 'flushed', likely due to political negotiations," says Daria Kaleniuk, executive director of the Anti-Corruption Action Center.
The Ministry of Internal Affairs removed Zlochevsky from its wanted list. The Prosecutor General's Office, which initially investigated the former minister's illicit enrichment, eventually reclassified the case as a lesser offense—tax evasion—and closed the investigation in 2016.
Burisma Group recently announced the successful conclusion of all legal proceedings in Ukraine against Mykola Zlochevsky and his companies, seeking payment of 180 million hryvnias in additional taxes.
"This decision is the result of months of joint work by two teams – the Prosecutor General's Office of Ukraine and Burisma Group," the company said in a statement.
Experts from Transparency International and the Anti-Corruption Action Center, who have been monitoring the investigation from the outset, believe that the Prosecutor General's Office deliberately closed the criminal cases against Mykola Zlochevsky and his company as a result of political agreements.
"It's obvious that the prosecutor's office 'leaked' the case against Zlochevsky. It's obvious that the prosecutor's office 'leaked' the case against Burisma. It's obvious that the prosecutor's office didn't fully investigate how Zlochevsky issued licenses to himself," says Daria Kaleniuk.
“There could be a political order here,” agrees Yaroslav Yurchyshyn.
Another Ukrainian law enforcement agency, the National Anti-Corruption Bureau (NABU), continues to be interested in Zlochevsky and his companies. Meanwhile, the newly created Specialized Anti-Corruption Prosecutor's Office is attempting to overturn the special subsoil use permits granted to Burisma Group companies through the courts. However, with limited success—the lawsuit was recently dismissed due to the six-month deadline for filing it being missed.
Lobby at the highest level?
Who exactly among the post-Maidan authorities ensured the rehabilitation of a former Yanukovych-era official who had become fabulously rich while in power?
These photos were recently published by Ukrainian journalist Olga Vasilevskaya. They show two men, resembling Igor Kononenko and Mykola Zlochevsky, meeting in Vienna. What would a close associate of President Petro Poroshenko discuss with a defendant in numerous criminal cases and one of Viktor Yanukovych's closest allies?
Two men bearing a striking resemblance to Igor Kononenko and Nikolai Zlochevsky meet in Vienna. Photo from Olga Vasilevskaya's Facebook page.
It's no secret that Zlochevsky's cases in Ukraine were investigated by the Prosecutor General's Office's Department for the Investigation of Particularly Important Economic Cases, informally known as the "Kononenko-Granovskyi Department" after the two MPs from the presidential BPP party. Their influence on the Prosecutor General's Office, headed by Yuriy Lutsenko, has been repeatedly documented in numerous journalistic investigations.
Therefore, the publication of the photo only strengthened suspicions that political deals were involved in the closure of Zlochevsky's cases. But what benefit would the authorities and the president's entourage gain then?
People's Deputy Igor Kononenko and Prosecutor General Yuriy Lutsenko
Gas market participants speculate that Mykola Zlochevsky may have ceded part of his business in exchange for immunity. However, an analysis of his company's public ownership structure does not support these rumors—at least in publicly available documents, Zlochevsky remains the sole beneficial owner of Burisma Group.
Why else would the president's inner circle benefit from Zlochevsky's companies continuously extracting and selling gas in Ukraine? Perhaps they're buying it themselves for their own business needs?
"Schemes" gained access to Burisma Group companies' 2016 reports and analyzed who was purchasing gas from Zlochevsky's companies. Their hypothesis was confirmed.
VIP contractors
The "Schemes" film crew traveled to the Filippovskoye gas field in the Ivano-Frankivsk region. From here, gas is extracted and supplied to factories and various enterprises by the limited liability company "Pari."
Pari LLC is one of Burisma Group's four gas production companies, and is wholly owned by Mykola Zlochevsky. Who buys gas from this company?
In all of 2016, it sold gas worth 270 million hryvnias. Some of this went to its own companies, the Burisma Group, for resale.
The remaining extracted gas was delivered to true VIP clients—the companies of President Petro Poroshenko, MP Ihor Kononenko, and Deputy Secretary of the National Security and Defense Council Oleh Gladkovsky.
Piskivsky Glassware Plant
The Piskiv Glassworks Plant in the Kyiv region is owned by Poroshenko's Prime Assets Capital and Kononenko's Vek Foundation. Uninterrupted gas supplies to the plant guarantee sustainable production. Throughout 2016, the plant purchased gas from Mykola Zlochevsky's company, Pari LLC, paying nearly 100 million hryvnias for the gas.
International Tennis Academy
The International Tennis Academy in Pushcha-Vodytsia, Kyiv, was founded by Igor Kononenko's "Vek" foundation, and the deputy's son, Vitaliy, works there. In 2016, the sports facility also received gas from Zlochevsky, although it requires significantly less gas, only for heating and household needs. Last year, Zlochevsky's company received over one million hryvnias for gas from Kononenko's institution.
Fitness club "5th Element"
The Monitor Sports and Fitness Complex, better known as the elite 5th Element fitness club, was founded by the foundations of three business partners—Poroshenko, Kononenko, and Gladkovsky. The 5th Element fitness club, one of the most prominent assets of the president and his associates, is also supplied with gas by Mykola Zlochevsky's companies. In 2016, the sports club purchased gas from the company Pari for over 2,5 million hryvnias.
Thus, three companies belonging to the Ukrainian president and his business partners paid a total of more than 100 million hryvnia to Mykola Zlochevsky's firm in 2016 alone.
Corrupt consensus or “just business”?
There are at least several dozen companies in Ukraine producing and selling gas in such large volumes. But the companies of top government officials purchase natural gas from the Burisma Group of Mykola Zlochevsky, a former minister in the Azarov government who fled the country under threat of criminal prosecution. Ukrainian prosecutors have so far failed to revoke his gas licenses, issued with numerous violations. Is this just business? Or a corrupt consensus on mutually beneficial terms?
Comments
All the individuals and companies mentioned received letters from the editorial staff asking them to comment on the information presented in the story.
Deputy Secretary of the National Security and Defense Council, Oleh Gladkovsky, commented: "Immediately after my appointment to government service, I resigned from all management positions at absolutely all companies. I no longer make any management decisions and have withdrawn from business affairs."
Poroshenko's Presidential Administration responded: "In response to your request regarding natural gas supplies, we inform you that the Presidential Administration is not the custodian of the requested information. Petro Poroshenko has complied with the law's requirements regarding the transfer of assets specified by law into management."
Igor Kononenko commented on the information provided: "I inform you that I do not manage the companies you mentioned and have no direct or indirect influence on their business activities. Please direct these questions to the appropriate authorities."
Kononenko's International Tennis Academy stated that it currently has no contractual relationship with Pari LLC. However, they also did not deny purchasing gas from Zlochevsky's company in 2016.
At the Piskivsky glassware factory, Kononenko-Poroshenko, when asked about the terms and conditions of its collaboration with Zlochevsky's companies, they responded as follows: "In order to achieve the highest financial results from its operations, the company has the right to select the most advantageous offer from among a number of suppliers based on many criteria, including price... In order to maintain a high level of healthy competition in the glass container manufacturing market, it is inappropriate for the company to disclose commercial secrets."
The other individuals and companies mentioned did not respond to requests for comment.
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