Igor Kolomoisky
Bringing to justice a corrupt entity subject to US sanctions is what Washington wants from Kyiv, writes DS.
Volodymyr Zelenskyy, it seems, couldn't get away with a mere window dressing against Ihor Kolomoisky. He's forced to demonstrate to Washington that he's taking more effective action. However, he's still very afraid to fulfill the main demand—initiating serious criminal proceedings against the oligarch.
The 8,2 billion UAH case
On March 15, Prosecutor General Iryna Venediktova and the National Anti-Corruption Bureau of Ukraine (NABU) announced charges against three former PrivatBank top managers. These included former Chairman of the Board Oleksandr Dubilet (father of Dmytro Dubilet, who, thanks to Zelenskyy, served as a Cabinet Minister from August 2019 to March 2020), former Deputy Chairman of the Board and Director of PrivatBank's Treasury Lyudmila Shmalchenko, and Director of the Interbank Operations Department Nadezhda Konopkina.
Dubilet Sr. is known to be hiding abroad. However, both of his accomplices are in Ukraine. "Nadiya Konopkina and Lyudmila Shmalchenko were designated suspects right in the NABU building. They weren't arrested because they didn't try to escape," said Mark Savchuk, head of the NABU Public Oversight Council.
According to the NABU, the actions of all three suspects are classified under Article 366 and Part 5 of Article 191 of the Criminal Code. Article 366 covers forgery of official documents. In cases of serious consequences, it is punishable by imprisonment for a term of two to five years. Even more serious is Part 5 of Article 191—embezzlement, misappropriation of property, or taking possession of property through abuse of official position, committed on an especially large scale or by an organized group. This crime is punishable by imprisonment for a term of seven to twelve years with confiscation of property.
The case concerns the embezzlement of $314,9 million from PrivatBank in December 2016 (the eve of nationalization), equivalent to UAH 8,2 billion at the National Bank exchange rate. Venediktova detailed the case on her personal Facebook page. According to her, the investigation has all the necessary evidence, from documents signed with false dates to the inclusion of fictitious data in accounting records.
This is the second high-profile case in the past four weeks in which former PrivatBank top managers have been charged. The first case involved losses of approximately 136 million hryvnias, which could be considered a modest sum for Kolomoisky. However, 8,2 billion hryvnias is 60 times greater, and this amount is no longer insignificant—even for Kolomoisky.
And that's not all. Venediktova announced that "there will be new charges" and promised: "I will inform citizens of new developments as they emerge, which means very, very soon."
As a reminder, on January 16, 2018, the National Bank published the results of an investigation by the Kroll detective agency. The investigators concluded that fraudulent actions in favor of former PrivatBank shareholders caused $5,5 billion in losses. Now, Kroll's findings have begun to be confirmed by the Ukrainian investigation.
According to Censor.net, the NABU opened a criminal case on March 6, 2017. The investigation has accelerated rapidly in just the last two months. In February, Venediktova requested an expert opinion from the SBU's Institute of Forensic Expertise, asking questions that the prosecution would need to answer, and by February 19, the expert opinion was ready.
"Undoubtedly, such decisiveness on the part of some Ukrainian authorities was only possible thanks to the political support of the IMF mission and the administration of new US President Joseph Biden," Censor.net notes. "According to our sources, the NABU is currently investigating a major case against PrivatBank—the very same $5,5 billion that the National Bank and Kroll estimated. The case involves dozens and hundreds of incidents, orders, and expert assessments, and the investigation is ongoing."
It appears that NABU and Venediktova are now jointly demonstrating to the Biden administration their zeal in exposing Kolomoisky. And since Venediktova is "200%" the president's man, it can be concluded that Zelenskyy has moved even closer to a major war with Kolomoisky.
Zelensky's biggest fear
However, the real situation is far more interesting. Unraveling the PrivatBank case is not the only, or even the most important, thing Washington wants from Kyiv.
Washington isn't satisfied with the PrivatBank case, which only affects top managers and not the (former) owners. It is demanding criminal charges against Kolomoisky personally for corruption while serving as head of the Dnipropetrovsk Regional State Administration.
It's important to emphasize that the Biden administration did not impose sanctions against Kolomoisky for PrivatBank. Although the US authorities have numerous complaints against the perpetrators of fraudulent schemes at this bank, the US Department of Justice is raising these complaints not in press releases announcing the sanctions, but in lawsuits seeking to seize the US assets of Kolomoisky and his business partners.
The sanctions were imposed specifically for corruption during his tenure as head of the regional state administration. US Secretary of State Antony Blinken specifically emphasized this on March 5: "Today, I am announcing the designation of oligarch and former Ukrainian government official Ihor Kolomoisky for his involvement in significant corruption. While serving as head of the Dnipropetrovsk Regional State Administration of Ukraine from 2014 to 2015, Kolomoisky engaged in corrupt conduct… including using his political influence and official power for personal gain."
Blinken concluded his statement on sanctions against Kolomoisky by stating that the US State Department "will continue to use similar authorities and tools to promote accountability for corrupt actors in the region and around the world." And holding a corrupt actor subject to US sanctions accountable is precisely what Washington is seeking from Kyiv.
Commenting on the sanctions, State Department spokesman Ned Price confirmed: "The Secretary of State has credible information that Kolomoisky was involved in significant corruption while serving as head of the regional state administration... This credible information was gathered from a variety of sources. It should be noted that Kolomoisky's corrupt activities have been widely reported by numerous media outlets, and this has also been the subject of investigations by the Ukrainian government."
This is effectively a hint to Zelenskyy that Washington based its sanctions not on rumors, but on actual documents obtained from both journalists and the previous Ukrainian government. And the Biden administration expects Kyiv to impose full-scale sanctions and launch serious criminal proceedings against Kolomoisky specifically for corruption in 2014-2015.
We won't list all the possible facts. Let's give one illustrative example. On the night of March 19-20, Dnipropetrovsk Regional State Administration Head Kolomoisky personally arrived at the office of Ukrtransnafta, a company 100% owned by Naftogaz Ukrainy. According to MP Serhiy Leshchenko, Kolomoisky was accompanied by men armed with automatic weapons. The day before, Ukrtransnafta's supervisory board had removed Oleksandr Lazorko, a former Privat Group member, from his position as chairman of the company's board, appointing Yuriy Miroshnik as acting head of Ukrtransnafta. Kolomoisky then opposed Miroshnik.
"I can hardly imagine how any governor or businessman could seize the office of any institution, demanding that their barricaded protégé remain in office. If Petro Poroshenko and Arseniy Yatsenyuk pretend nothing happened, they will recognize the right of any other oligarch to break into the premises of state-owned companies to protect their managers," MP Mustafa Nayyem stated at the time. "Ihor Kolomoisky has no right to bear the title of civil servant. Both the president and the prime minister have every leverage to correct this mistake. Any agreement with him will destroy trust in the country's top officials. Yesterday, the country was challenged. By leaving this incident unaddressed, the president and prime minister will be admitting their own weakness." On March 24, Poroshenko dismissed Kolomoisky as head of the Dnipropetrovsk Regional State Administration.
Serhiy Leshchenko and Mustafa Nayyem have been considered very close to the American Embassy in Kyiv for many years. And there's no doubt they helped expand Washington's dossier on Kolomoisky's dealings. If Zelenskyy doesn't know what Kolomoisky corruption Secretary Blinken is referring to, he can confidently call Leshchenko and Nayyem—they'll explain.
However, Zelenskyy is so afraid to raise this issue that he's putting himself in an unfavorable light with Blinken, who generally treats him favorably. On March 12, Zelenskyy made an official video address to the citizens of Ukraine, stating: "Regarding US sanctions against the former owners of PrivatBank, we support this decision and are working to return the funds to Ukraine."
When the Ukrainian president publicly manipulates the official US position, pretending that Washington imposed sanctions against Kolomoisky as the former owner of PrivatBank (and not as the former head of the regional state administration), this is unlikely to go unnoticed in Washington. And this will add credence to those in the Biden administration who hold Zelenskyy in far lower regard than Blinken.
The motives behind Zelenskyy's fear remain anyone's guess. But it seems the criminal case against Kolomoisky is such a taboo for him that Washington won't help.
In the subject: How the National Bank helped Igor Kolomoisky withdraw money from PrivatBank depositors
The EU follows the US lead: it supports anti-Kolomoisky sanctions.
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