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Legal opinion on financial corruption in Ukraine

15:04 29 January 20186112
Legal opinion on financial corruption in Ukraine

Legal opinion on the existence of threats to the foundations of national security and defense because of the involvement of Ukrainian officials in activities that can be classified as financial corruption of international level

For 27 years now, Ukraine has resumed its statehood, but hopes for a better life for millions of ordinary people remain a phantom dream. We are moving to the abyss, having lost the Heavenly Hundred and tens of thousands of soldiers on the Donetsk front.

Recent research and surveys indicate a very common perception that corruption is deeply rooted, and corruption on an especially large scale remains the most acute problem. In addition, the low level of public confidence in the judiciary and politicians persists.

We must admit that the peak of the three-year growth of the Ukrainian economy in 35% was at the time of the most corrupt and pro-Russian team of Yanukovych. In 2013, GDP was 183 billion dollars, or 4 thousand dollars per person, salary - 430 dollars, minimum pension and salary 120-150 dollars, inflation - 0.5%, foreign trade - 162 billion. However, in the next three years, the world record of economic decline in 2 times was set (to the level of the 1990s), and impoverished people were suppressed by devalued hryvnia, unreasonable tariffs, inflation of 20-30%. People were lowered beyond acceptable poverty.

The reasons are not so much in the Russian occupation as in the inheritance and expansion of corrupt schemes and in the supposedly "free" hryvnia exchange rate for leaching funds from the real economy into the shadows.

The facts were published in Ukrainian and foreign mass media regarding the documents of the Panamanian law firm Mossack Fonseca about the involvement in offshore companies of officials, where, in particular, the name of the chairman of the National Bank of Ukraine Valeriya Hontareva was mentioned and data on the status and business projects in offshore zones both of her own and of her family members were provided, which adversely affects Ukraine's international image and undermines public confidence.

The head of the US State Department said that it makes no sense for Ukraine to fight for its body in the Donbas if it loses its soul by becoming corrupt. Former US Vice President Joseph Biden stressed that corruption continues to be the biggest problem in Ukraine. 

According to Art. 7 of the Law of Ukraine "On the Fundamentals of National Security of Ukraine" at the present stage, the main real and potential threats to Ukraine's national security, stability in society is, in particular, the weakening of the system of state regulation and control in the sphere of economy; a dangerous increase in the share of foreign capital in strategic sectors of the economy, the spread of corruption in public authorities, the merging of business and politics, organized criminal activity.

Analyzing all the events and scandals, the Institute experts collected and studied a number of documents, on the basis of which the experts came to conclusions about the involvement of Ukrainian officials in activities that could be classified as financial corruption of the international level.

International non-governmental organizations estimate the amount of withdrawn money from Ukraine to offshore zones in tens of billions of dollars - from 117 (Global Financial Integrity) to 167 (Tax Justice Network).

Data from the International Consortium of Investigative Journalists (ICIJ) show that 643 Ukrainians own 469 offshore companies and many domestic officials are related to them, although they do not have the right to engage in business under Ukrainian law.

Offshore companies in Ukraine are not formally banned from the point of view of the current legislation, but the moral side of the question arises in such a difficult time for the country. During a military conflict, officials and politicians shy away from paying taxes, and society is struggling to raise funds to support the army.

Experts of the Institute of Law and Society, studying the issue of the collapse of the banking system, the reasons for the decline in the standard of living of every Ukrainian, for the depreciation of the national currency, came to the conclusion that one of the reasons is that the leadership of the National Bank is carried out by a person without proper professional qualifications.

Hontareva, before being appointed head of the National Bank of Ukraine, had a joint work experience in senior positions in banks for only 9 years and 8.5 months. In order to qualify for the post of head of the NBU, she was short of three and a half months.

Such activities of the head of the NBU as an unskilled specialist led to the undermining of Ukraine's economic sovereignty and security, to the depreciation of the national currency, to the erosion of public confidence in the banking system of Ukraine, to the outflow of capital and investment, which is a direct causal link between the result of its activities and professional qualification.

When the hryvnia fell from 5 to 8 UAH for the dollar in 2008, the investigative commission of the Verkhovna Rada was set up to investigate the activities of the National Bank (the Provisional Investigation Commission of the Verkhovna Rada of Ukraine on the Verification of the Activity of the National Bank of Ukraine during the Financial Crisis) and, as a result, the Verkhovna Rada of Ukraine gave a corresponding negative evaluation of activities of National Bank of Ukraine and of its Chairman in the Decree of the Verkhovna Rada of Ukraine of January 26, 2009 No. 904-VI On the activities of the National Bank of Ukraine in the period of financial crisis and the implementation status of the decisions of the Verkhovna Rada of Ukraine on their issues.

We state that the volumes and refinancing procedures that were implemented by the National Bank of Ukraine are opaque, biased in favor of individual financial structures, contributed to a sharp devaluation of the national currency and to the deepening of inflation.

But Hontareva knocked down the hryvnia exchange rate not for three hryvnia, but more than three times! Therefore, there is an urgent need to investigate the activities of officials of the National Bank of Ukraine, not to allow their escape abroad and to compensate losses caused to the state and to the Ukrainian people.

We note that after the appointment of Valeriya Hontareva, the Chairman of the National Bank of Ukraine, on June 19, 2014, with the help of the record support of 249 people's deputies of Ukraine the dollar exchange rate in relation to the hryvnia was: the official National Bank of Ukraine - 11.85 UAH/USD, Interbank - 11,90 UAH/USD and, as of today, the National Bank - 28.86 UAH/USD.

Studying the previous activities of the head of the NBU, we found out its links with Russian business, which fell under international sanctions, offshore documents and companies.

So, being the founder of the company ICU Holding, Ms. Hontareva's business partner was Mrs. Ulyutina, who is the wife of First Deputy Chairman of the Board of VTB Bank (Russia) Yuri Solovyov. Experts managed to track the close relationship of cooperation through a series of transactions between companies that are registered in different tax jurisdictions.

In December 2013, the offshore company Quillas Equities S.A., which belongs to Solovyov, issued a loan of $ 10 million to another offshore company - Keranto Holdings LTD. The funds were transferred from Quillas Equities S.A. in the Cyprus bank RCB Bank, owned by VTB Bank (Russia). RCB Bank serves an unsecured credit line for $ 650 million, affiliated with Sergei Roldugin, Putin's longtime friend.

Keranto Holdings LTD has a close relationship with the financial group ICU, because they are registered in the same premises, and under the loan agreement Keranto was represented by Dmitry Nedelchev, who is a member of the ICU investment committee.

On June 12, 2014, the offshore company Quillas Equities SA, owned by Solovyov, entered into a consulting agreement with Broidy Capital Management LLC (consultant) stating that the owner of the consultant has considerable experience in the field of international investment and American politics, and served as the Finance Chair of the Republican Party and has access to US politicians and government agencies.

The purpose of providing services is to provide regular political and business analysis, political advocacy, investment advice, and money management to the Company and its affiliates, including but not limited to ICU Holding Ltd. and VTB Bank and its affiliates.

The company must pay the Consultant $ 2,500,000 annually.

In fact, such actions and transactions can be recognized as lobbying, which is directly prohibited by regulatory acts of lobbying in the USA (The Lobbying and Disclosure Act of 1995).

Separately note that Elliott Broidy, who owns the company Broidy Capital Management LLC, was already convicted in 2009 for financial fraud and lobbying for access to the funds of the US Pension Fund and admitted his guilt in bribing officials of the State of New York. In fact, the Hpntareva’s company had to cooperate with a pathological fraudster, who has an experience of giving bribes to officials.

In addition, the company ICU was an intermediary in the sale and purchase of domestic government loan bonds between the Agrarian Fund and Brokbusinessbank, which belonged to Sergei Kurchenko. With the participation of the Hontareva’s company the Agrarian Fund transferred its securities to Brokbusinessbank for more than 2 billion hryvnia on February 12, 2014, and the NBU classified the bank as insolvent on February 28. The decision to issue funds to the NBU and carry out all transactions within one working day on February 12, 2014, which was extended to 5:00 am on February 13, was taken by Deputy Chairman of the NBU Prikhodko.

Recently, the talks of the First Deputy Chairman of the National Bank Ekaterina Rozhkova with representatives of Russian and problem banks of Ukraine were announced on the air of one of the TV channels. They testify to the corruption of the banking system, "contractual agreements" in the sphere of refinancing, juggling of collateral, withdrawal of cash, and negligence of law enforcement officers.

On November 27, 2014, and on June 9, 2016, the President of the Institute asked the President of Ukraine and the Verkhovna Rada of Ukraine to IMMEDIATELY dismiss the Chairman of the National Bank of Ukraine Valeriya Hontareva from her position for lack of professionalism and incompetence, lack of stability in the monetary unit of Ukraine, depreciation of the national currency, the destruction of the banking system as a whole. Half a year we spent in the courts, demanding and proving that Hontareva did not have the proper experience.

Phenomena that have occurred in the foreign exchange market have acquired catastrophic forms, led to impoverishment of the Ukrainian people more than three times, bankruptcy of more than 80 Ukrainian banks or more than 40% of banks acting on 01.01.2014. As a result, the Ukrainian banking system lost more than 435 billion UAH. assets, which is about 22% of GDP. The so-called "purification of the banking system" has turned into its destruction, which now blocks the economic recovery, filling the state budget, business growth and the well-being of citizens. We believe that the effectiveness of reforming and regulating the banking system of Ukraine cannot be estimated by the number of liquidated banks.

Against the backdrop of a mass collapse of Ukrainian banks, another process was going in parallel: strengthening the positions of Russian banks. As of the beginning of July 2016, 4 of the 37 largest Ukrainian banks were 100% owned by Russian capital. And 3 banks were based on state Russian capital. The presence of Russian banks in Ukraine led to a massive purchase of US dollars. Thus about 100 million US dollars were transferred to the parent structures for 2-3 crisis days.

Despite the tightening of sanctions by the US and other countries, the attitude of the NBU to Russian banks is only improving.

In fact, such activity of the National Bank of Ukraine leads the country to default. From the currency reserves of Ukraine in 18 billion US dollars 11.5 - IMF loans, 3 billion - credit guarantees of the United States, and there is no Ukrainian money among them. Ukraine for three years has accumulated so much debt that we are going to default.

Why did not the Russian banks undergo more thorough checks by the National Bank of Ukraine during the whole period of the Russian-Ukrainian war, and they are all among the forty banks? Why, after receiving billions of hryvnia of state funds as assistance, "VTB Bank", controlled by the aggressor state, continues to show huge losses, and at the same time, a temporary administration has not been introduced to it, as it was done for Ukrainian banks?

The Institute's experts were surprised at the inaction of law enforcement agencies over the statements of the People's Deputy of Ukraine of the 6 convocation Olexander Shepelev on the withdrawal of $ 800 million abroad with his complicity and high-level officials.

We clearly understand that oligarchs do not have the concept of "aggressor", but only "business". However, Ukrainians do not want their best sons to die for "business".

The increased social danger of such actions is also connected with the fact that they are mainly committed to the systematic employment of criminal activities related to tax evasion, money laundering (legalization) of money obtained by criminal means and the like.

Every year, Ukrainian government organizations receive funds from international partners to reform and combat financial corruption. However, the Ukrainian society has no information on the amount of such funds, reports on the results of their use are unknown.

Given the above, in order to inform the Ukrainian society, taking advantage of the opportunity to address international organizations and partner countries with current questions and requests:

  1. To verify the use of financial assistance, that comes to the authorized bodies of Ukraine from your organizations to overcome corruption
  2. To check the information on transactions that occurred on the night of February 12 to February 13, 2014 in Ukrainian time, given the possible withdrawal of about $ 250 million in offshore companies
  3. To conduct an investigation into the existence of signs of money laundering in the activities of ICU and the American citizen Elliot Broidy
  4. Is money-laundering related to the transfer of shares to a blind trust that was accompanied by ICU and probably by Elliot Broidy?
  5. Is Elliot Broidy and related companies registered in the register of US lobbyists? If yes, then check information about what actions and in whose interests, lobbying was conducted in the US?
  6. Did Elliot Broidy and related companies carry out lobbying actions that went beyond the registered lobbying, including for the order of Valeriya Hontareva and related companies, in the interests of Russian companies, that are under international sanctions?
  7. Has an investigation been conducted into the facts of cooperation between US citizen Elliot Broidy and related companies with companies under US sanctions?
  8. Did the US citizen Elliot Broidy and related companies participate in the transfer of ROSHEN's assets to a blind trust?
  9. Is lobbying of the interests of the Russian Federation (VTB Bank) related to the laundering of money obtained by criminal means?

10. Did Elliot Broidy receive an order from Valeriya Hontareva and related companies to contact and interact with US government organizations?

11. Did the citizen of Great Britain Yuri Solovyov declare incomes received during cooperation with banks under international sanctions, or from the group of companies ICU?


To the Verkhovna Rada of Ukraine:

  1. Why was not the Temporary Inquiry Committee established in accordance with Article 89 of the Constitution on the role (influence) of the financial institutions of the aggressor country on the Ukrainian financial system?
  2. Why is the Chairman of the NBU Hontareva still not dismissed after 9 months of filing the resignation letter?
  3. What is the legal status of Valeriya Hontareva, who is on vacation for more than 9 months?


To the President of Ukraine

Why was there no submission to the Verkhovna Rada of Ukraine on the dismissal of Hontareva after 9 months after her statement of resignation from the post of head of the NBU?


To the Security Service of Ukraine

  1. Does the Chairman of the NBU Hontareva have access to state secrets?
  2. How did she gain access to state secrets, taking into account information on the receipt of a loan of $ 10 million from companies under US sanctions (from affiliated companies of VTB)?
  3. How is Hontareva guarded as a person who has access to state secrets?
  4. Does Hontareva provide guidance from abroad to employees of the NBU and what channels of communication does she use?
  5. Why does Hontareva, while in the post of the NBU chairman, lobby the interests of the companies of the aggressor country (VTB, Prominvestbank, Alfa, BM bank)?
  6. Does Hontareva have any connections abroad with foreign lobbyists?


To the anticorruption bodies

  1. How was Hontareva's appointment to the position of Chairman of the National Bank of Ukraine possible, having a conflict of interest with the person who introduced the submission to her appointment (transferred to a blind trust)?
  2. Is the testimony of the People's Deputy of Ukraine of the 6th convocation Olexander Shepelev legalized?



  1. Why does the Prosecutor General have no questions to the chairman of the NBU Hontareva, and to her deputy Rozhkova?
  2. Why does the Prosecutor General's Office have no questions to Hontareva, in connection with the withdrawal of funds from the Agrarian Fund of Ukraine through Brokbusinessbank to offshore in cooperation with ICU?
  3. Why are not officials of the Agrarian Fund and other companies involved in the withdrawal of 2 billion UAH into the offshore brought to justice?
  4. Why was not the NBU Vice-President Prikhodko brought to justice, who continued the banking day during the withdrawal of funds in the amount of UAH 2 billion until 5 am on February 13, 2014?
  5. Why did not State Financial Monitoring Service react to such operations?

Our conclusions and proposals are based not only on our views andunderstanding of the problem, but also on studying and taking into account the opinions of the wide Ukrainian public, which are distributed in the mass media.

We are ready for cooperation and hope for an appropriate response to the appeal.

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