Konstantin Kagalovsky
TVi TV channel founder Konstantin Kagalovsky is asking the country's leadership to investigate the corporate raid.
To the President of Ukraine P.A. Poroshenko
To the Prime Minister of Ukraine A.P. Yatsenyuk
Dear Petr Alekseevich,
Dear Arseny Petrovich!
I am following political developments in Ukraine with great interest. I congratulate you on the successful parliamentary elections. I sincerely hope for the formation of an effective parliamentary coalition capable of ensuring the rapid implementation of much-needed reforms in your country and laying the foundation for long-term democratic and economically successful development.
Slightly abusing our close acquaintance, which at certain stages, I thought, even veered into personal friendship, I would like to address you both with this letter. I am referring to the well-known case of the corporate raid on my television channel, TVi, the use of funds from the state-owned company Energoatom for this purpose, and the subsequent laundering of the proceeds of the criminally expropriated state funds outside of Ukraine. The organized crime group, as you well know, included high-ranking officials of the Yanukovych regime, now hiding in Moscow, as well as former and current members of Parliament, currently in Kyiv.
The London office of Bryan Cave already contacted you, Arseniy Petrovich, as Prime Minister of Ukraine, with a letter on this matter on April 17 of this year. Having received no response, they also contacted you, Petro Oleksiyovych, as the newly elected President of Ukraine. The latest letter was transmitted through the Ukrainian Embassy in London on June 24. /Copies of the letters are attached./
These letters contain a request for an investigation into criminal offenses committed in Ukraine by an organized group of individuals including Zhvania, Knyazhitsky, and others. They also contained questions about the role of the state-owned company Energoatom in this case. Their accomplice, a man named Altman, was smart enough to use funds received from Energoatom to pay for services rendered in the UK by companies that had transferred the stolen property. However, even before the case was heard on its merits, an English court has already sentenced Altman's intellectual and organizational contributions to a prison sentence of eighteen months. When it comes to money laundering crimes, and the criminal activities are typically carried out in a coordinated manner across several countries, EU member states and the US are accustomed to the cooperation of other civilized countries, such as Switzerland. Therefore, such an appeal to the new Ukrainian leadership is unlikely to surprise you. The former President of Ukraine, who now works in Moscow and the Moscow region, was not approached with such requests.
The poor fellows never received a response to their first letter of April 17, nor to their second letter of June 24.
However, in the second letter of June 24 addressed to the President of Ukraine, “Brian Cave”, with the politeness typical of the English, expressed “hope and confidence” /I quote literally/,
that the investigation into crimes committed on the territory of Ukraine is in full swing.
Since this concerns the television channel, I didn't want to raise the issue before the parliamentary elections. I didn't want anyone to think I wanted to get the channel back at that time, which had been stolen from me, to use it during the election campaign in the interests of one political party or another.
Now that the elections are over, it's time to return to this issue. As a citizen of the United Kingdom of Great Britain and Northern Ireland, I, with the politeness characteristic of us Englishmen, express my hope and confidence that the aforementioned letters did not reach either you, Petro Oleksiyovych, or you, Arseniy Petrovich, due to the ineffective work of your administration at the time. I remember how, after Yanukovych's flight, everything had to be literally rebuilt from scratch.
That's why I took the liberty of contacting you directly. And since you're "advanced"—that is, modern and intelligent—I think Facebook is the most convenient way to communicate. Although not entirely bureaucratic.
To amuse you a little, I'll give you an example from recent Ukrainian history regarding various types of communications. A professor with no criminal record didn't check Facebook, but he also didn't always receive letters in the mail on time. I remember he was once planning a visit to America, and a group of journalists decided to send him a letter. Rather than wait for him to return home and for them to report it, they came up with a simpler solution. They printed the letter on a full-page in the Washington Post. And at the hotel, the American staff—kind and attentive—didn't likely understand what it said. They probably only understood that it had something to do with Ukraine. And the newspaper and the letter were placed free of charge at the door of every member of the Ukrainian delegation's room. Even for the professor himself.
I have a simple question for both of you! How are we going to live from now on?
You both know this story all too well, its ins and outs, sometimes even down to the smallest details. And you know the people involved very well—both those who fled to Moscow and those who are sitting in Kyiv. This issue, unlike pregnancy, which, they say, sometimes resolves itself in the ninth month, won't resolve itself.
What do I expect from you, as the leaders of the Ukrainian state? Simply to accommodate our British friends at Bryan Cave and issue strict instructions to the relevant law enforcement agencies to conduct and complete a criminal investigation into the hostile takeover and theft of my television channel, as well as the related fraud, document forgery, bribery, and
corruption in the state-owned company Energatom and the subsequent laundering of criminally obtained money outside of Ukraine.
I would ask you, Petro Oleksiyovych, as the President of Ukraine, to take the investigation under your personal control.
I'm confident that law enforcement agencies are capable of conducting this investigation quickly and effectively, especially if they sense that their superiors are truly committed to it. I know many people in Kyiv who would be happy to share information about this case. I know many who will be compelled to share, although perhaps not with great reluctance.
The whole story is an open secret. Even "Bryan Cave" cites email correspondence between the perpetrators, including those wearing parliamentary badges at the time. As the old saying goes today: "There's nothing secret that won't eventually come to light, especially if it was sent via email."
Regarding Energoatom, it seems quite surprising, especially from abroad, that while other major state-owned companies—Naftogaz and Ukrzaliznytsia—have been exposed for embezzlement and corruption amounting to billions of dollars, the state-owned energy company is doing just fine. Perhaps this is because the "overseers" of Energoatom, appointed by the former president and his cronies, were focused on developing production and increasing labor productivity?
The institution of "overseers," since they were usually not officials but, at most, members of parliament, is not covered by the lustration law. But I don't think this is a tragedy. After all, they are covered by criminal law. And no one has yet passed an amnesty law for criminal offenses committed during the "old regime."
Moreover, I think it wouldn't hurt to remind some of your potential allies and coalition partners that if they intend to continue maintaining the institution of "overseers" in Ukraine, your country will be deprived of Western economic aid. Times have changed. Twenty or thirty years ago, they still said in Washington, "He's a son of a bitch, but he's our son of a bitch! We'll have to help him." Things are different now. Providing economic aid to corrupt regimes is considered not only economically senseless but also immoral. Few in Ukraine adequately understand the role of the moral factor in modern international affairs. Now, finally, they're in luck. Both the president and the prime minister, at certain stages of their careers, and this was not so long ago, headed the Ministry of Foreign Affairs. So you understand exactly what I mean.
The only remaining problem for international financial institutions was how to measure corruption. How specifically, based on what indicators, should they formulate a country's anti-corruption objective, and how should they then evaluate its progress?
A practical solution to this problem is now ripe. In countries where corruption has macroeconomic proportions, its impact on budget expenditures and revenues is easy to calculate. I believe both the presidential administration and the government staff will prepare such a report for you within a day.
And we, I mean the global community, will make every effort to ensure that even such an inert organization as the International Monetary Fund, at its next meeting with its Ukrainian colleagues, sets specific objectives for reducing budget expenditures and increasing revenues by addressing that very "corruption component" as a "prior action" for receiving the next tranche.
Looking at the new parliament, despite all its shortcomings, I'm pleased to see young and new people coming in. I hope they will form the core of those who will sweep all this corrupt scum out of Ukrainian politics. They're laughing at Mustafa Nayyem right now, who frankly said it's hard to live on a parliamentary salary in Kyiv unless you have illegal income. In my opinion, they're laughing in vain. Mustafa is a very, very smart man. True, he lacks political experience. But he, like many other young politicians, will quickly master this skill. It's not rocket science. And tomorrow, Mustafa will start saying it's not about the salary, although, of course, it could use a little increase. But that's not the main thing. The main thing is to abolish parliamentary immunity so that the thieves and corrupt officials who have wormed their way into parliament can't steal and hide behind their immunity. If these two issues are cleverly linked, it will not be difficult to gain active public support for the abolition of immunity and lenient approval for increasing parliamentary salaries.
If we don't begin eliminating the macroeconomic corruption component now, tomorrow another young politician will address the people with simple theses in their platform: "I will increase social spending by such and such a sum, including pensions by such and such a sum, healthcare by such and such a sum, and I will also raise the salaries of our valiant police, etc., etc." The reaction of the electorate (in the terms of the late political Yanukovych—the biomass, and in human language—ordinary people) is understandable: "You're lying, you dog! We've heard it before. There are plenty of you making such promises!" But when they hear in response: "No, I'm not lying. Look! This is how much we steal from this budget item," followed by a breakdown of expenses within the item according to budget classification, as well as a list of "overseers" and other crooks who feed off this item. "Here's how much under this article, here's how much under that... And here's how much we're 'stealing' to finance the current activities and upcoming elections of such-and-such a party. Incidentally, this much reaches the party, and this much ends up in such-and-such places along the way. And here's how much additional revenue we could receive if we stopped theft at customs (broken down by customs, product groups, parties, etc.). So, taking into account my proposed spending cuts and revenue increases, I receive additional resources equal to half of the country's current budget!" Then, purely hypothetically, an interesting electoral reversal is possible. But, as they said in the famous Soviet film "The Diamond Arm," when discussing methods for removing plaster casts, I hope it won't come to that.
It won't happen, because the need to receive foreign economic aid will not allow any Ukrainian government to ignore the views of the global community and international financial institutions. If you don't do this today, someone else will tomorrow. Given my personal sympathy for you, Pyotr Alekseevich, and for you, Arseniy Petrovich, "I would like it if you did this." (The phrase, taken from another classic Soviet film, "Kidnapping, Caucasian Style") Then you and your coalition will forever remain in Ukrainian history.
Returning to Energoatom and my TV channel. Zhvania, who watches Energoatom from Yanukovych, as I've heard, let his colleagues down in the elections and even failed miserably in his own district, like plywood over the French capital. I've heard that he let his colleagues down by making all sorts of promises during the election campaign and then failing to keep them. I strongly suspect that he didn't coordinate these promises with the leadership of his political party. And no one but him bears responsibility for these broken promises.
Even though someone told me that this kind of political material doesn't sink, I'm still uneasy about him. If they ask him to pay for his broken promises, he could be a complete failure.
In the TVi case, and possibly other Energoatom cases, Zhvania isn't just a criminal. He's a valuable witness. Losing such a valuable witness is unacceptable. I would suggest law enforcement begin their investigation with him without further delay.
By the way, I found out recently. It turns out he's the same crook who stole money from the late Berezovsky back in 2004. Boris told me about it back then, but I don't remember his name. There are so many crooks out there, how can you even remember them all, these "goats"!
If I can help you with anything, or if you just want to see me, my mobile number hasn't changed. I'd be happy to fly to Kyiv or meet you at my place in London or at my dacha on the Côte d'Azur. If I'm at my place, I guarantee a delicious dinner with good wine, and if I'm in Kyiv, I wouldn't refuse your invitation.
I wish you success!
Konstantin Kagalovsky.
November 7 2014.
Stanley House, 550 King's Road,
SW10 0UA London, UK
Konstantin Kagalovsky's Facebook post
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