ANALYSIS: Battle against corruption grinds to a halt in Ukraine (10/09/05)

ANALYSIS

Battle against corruption grinds to a halt in Ukraine

by Roman Kupchinsky
RFE/RL Organized Crime and Terrorism Watch

Former Security Service of Ukraine (SBU) head Oleksander Turchynov, who was forced out of office when the government of former Prime Minister Yulia Tymoshenko was dismissed on September 8, recently spoke to RFE/RL in Kyiv about the government's stalled drive to combat corruption. Mr. Turchynov charged that President Viktor Yushchenko himself ordered a halt to some of the SBU's investigations.

Ukrainian Internal Affairs Minister Yurii Lutsenko announced during a September 23 press conference in Moscow that he has been informed by the Russian Internal Affairs Ministry that Ihor Bakai, wanted by Ukrainian law enforcement agencies for allegedly defrauding the Ukrainian state of $300 million, was granted Russian citizenship by a special decree from Russian President Vladimir Putin. Mr. Putin's decree granted Mr. Bakai citizenship for his contributions on "behalf of Russian culture and art."

Mr. Lutsenko commented that he, too, had come to make a contribution to Russia by bringing with him some 100 volumes of evidence of Mr. Bakai's wrongdoings, but conceded that he stood little chance of success. "If this is the Russian decision, then we can do little to change it," he stated.

Mr. Bakai, the head of former Ukrainian President Leonid Kuchma's property management office, resigned as the head of Naftohaz Ukrainy, the state energy monopoly, in 2001. Mr. Lutsenko said that among the charges against Mr. Bakai was defrauding the state in gas-purchase deals with Russia's Gazprom and Turkmenistan. Mr. Lutsenko also stated at the press conference that Mr. Kuchma had "fronted for Mr. Bakai and covered up his activities."

Responding to the Bakai affair, Mr. Kuchma was quoted by the Ukrayinska Pravda website as saying that "Mr. Bakai is a talented manager, but he does not know when to step on the brakes."

Putin reportedly upset by gas probe

The investigation into allegedly fraudulent practices in the transport of Turkmen gas to Ukraine by two companies, Eural Trans Gas and RosUkrEnergo, that was begun by the SBU in May, was halted by President Viktor Yushchenko's direct order, Oleksander Turchynov told RFE/RL on September 20.

Mr. Turchynov stated that Mr. Yushchenko told him in mid-August to stop "persecuting my men" and that the investigation of RosUkrEnergo was "creating a conflict with Russian President Putin." Mr. Turchynov would not elaborate on why Mr. Putin was so upset by the investigation.

Soon after Mr. Turchynov's removal as head of the SBU on September 8, the website Obozrevatel reported on September 21 that the SBU officer in charge of the investigation of RosUkrEnergo, Andrii Kozhemiakin, was transferred from the case to other duties. Mr. Turchynov confirmed this information for RFE/RL.

According to Mr. Turchynov, Yurii Boiko, the former head of Naftohaz, was interrogated twice by the SBU in conjunction with the RosUkrEnergo case and was about to be arrested when President Yushchenko ordered Mr. Turchynov to let him go. Soon afterward, Mr. Boiko, now the head of the Republican Party, signed a pre-parliamentary election pact with former Prime Minister Anatolii Kinakh's party, which supports the pro-Yushchenko faction.

Mr. Turchynov told RFE/RL that during the second interrogation of Boiko, investigators confronted him with evidence that he had received kickbacks from the RosUkrEnergo scheme.

As to the activities of Oleksander Tretiakov, President Yushchenko's former top adviser, Mr. Turchynov claimed that Mr. Tretiakov in fact became the person responsible for overseeing the functioning of the RosUkrEnergo gas scheme after Mr. Yushchenko's election. According to a report released by Procurator General Sviatoslav Piskun on September 22, Mr. Tretiakov was found innocent of any wrongdoing. Mr.

Kickbacks for gas

Mr. Turchynov also said the SBU had turned to the Turkmen security service for information concerning the large sums of money allegedly being laundered to Turkmen leaders from this gas-transportation scheme. Soon after the request was made, Turkmen President Saparmurat Niyazov, who is also known as Turkmenbashi, ordered the arrest of Yolly Gurbanmuradov, the deputy prime minister in charge of energy and gas.

RFE/RL reported in June that Turkmen National Security Minister Geldymukhammed Ashirmukhammedov told Mr. Niyazov and the Cabinet of Ministers more about Mr. Gurbanmuradov's alleged activities. "Yolly Gurbanmuradov, at the end of October [2004], received Internet information from representatives of foreign intelligence services about selling Turkmen oil at reduced prices," Mr. Ashirmukhammedov said. "After that, he established unofficial contacts with representatives of foreign intelligence services and offered his services to them." Mr. Niyazov also accused Mr. Gurbanmuradov of having three wives.

Sources in Kyiv suspect that Mr. Gurbanmuradov was arrested in order to silence him because he knew the mechanisms of how money from the RosUkrEnergo gas-transport scheme was being kicked back to high-level Turkmen officials who were then placing it in offshore banks.

The shake-up in the Turkmen energy sector continued through the summer. In August, former minister and Turkmenneft head Saparmammet Valiev was sentenced to 25 years in prison for embezzlement and other purported crimes. Former Turkmenneftegaz head Ilyas Charyev, who was fired in June, was sentenced to 24 years' imprisonment. In both cases, the sentences were announced although there were no reports that the men had been tried. In September President Niyazov fired Guichmurad Esenov, head of the Turkmenbashi refinery, for alleged corruption and drunkenness.

Khudaiberdy Orazov, Turkmenistan's former central-bank chief and now an opposition leader in exile, told RFE/RL's Turkmen Service that he believes Mr. Gurbanmuradov's legal problems are part of Mr. Niyazov's attempt to cover up his own business activities.

A report in April 2005 titled "Turkmenistan: People! Motherland! Leader?" by the Conflict Research Center Studies, a part of the Defense Academy of the United Kingdom, notes: "The president [Niyazov] has made claims that his personal fortune, for the most part stored in European banks, amounts to $3 billion."

Suspects released

Two former senior officials arrested by the Ukrainian Procurator General's Office on charges of fraud, embezzlement and inciting a riot were released from prison in September. Ivan Rizak, the former head of the Zakarpattia Oblast Administration and Borys Kolesnykov, head of the Donetsk Oblast Council, are now free, and Mr. Kolesnykov has resumed his job as head of the oblast council.

On September 23, Mr. Yushchenko announced a pact with the opposition in which he promised to look into an amnesty for those convicted of vote rigging during the 2004 Ukrainian presidential elections. Commentators and law enforcement officials in Kyiv told RFE/RL that it was pointless to keep these people in prison when the individuals who ordered them to rig the vote were never investigated or arrested.

The case of the September 2000 murder of Internet journalist Hryhorii Gongadze appears to be stalled and the chances of finding and convicting those responsible for ordering the killing of the journalist are slim, according to an appearance on Ukrainian television by Serhii Holovaty, a lawyer working with the Gongadze family.

During a press conference after being relieved of his position as the head of the SBU, Mr. Turchynov stated that the SBU had authenticated the portion of the notorious tape recordings made by Mykola Melnychenko, a member of Mr. Kuchma's security detail, which deals with the Gongadze case. The SBU determined that the recordings are authentic and not fragments of conversations spliced together and that the speakers were indeed Mr. Kuchma, former SBU head Leonid Derkach, former Internal Affairs Minister Yurii Kravchenko (who is deceased and, according to the official report, committed suicide in February by shooting himself twice in the head) and current Parliament Chairman Volodymyr Lytvyn. Earlier the same recordings had been authenticated by the FBI.

On the tape, Mr. Kuchma tells Mr. Kravchenko to "get rid of Gongadze."

According to Ukrainian law the recordings cannot be admitted into court as evidence.

According to Mr. Turchynov, former Internal Affairs Ministry Gen. Oleksii Pukach, who was in charge of the ministry's special units that followed Gongadze and who is suspected of personally taking part in kidnapping the journalist, is in hiding in Israel and the Israeli police cannot seem to locate him. Mr. Pukach is considered a key link in the chain of men who gave the order to kidnap and kill Gongadze and the perpetrators.

Other suspects wanted on a variety of charges are reportedly hiding in Moscow and in the United States. Former Sumy Oblast head Yurii Scherban, wanted on charges of defrauding the state of millions of dollars, is alleged to be hiding in Florida, while Volodymyr Satsiuk, wanted in connection with the poisoning of Mr. Yushchenko during the 2004 presidential campaign, is alleged to be in Moscow, as is the former head of the Odesa Oblast Administration Ruslan Bodelan, who is wanted on charges of fraud and embezzlement.

Mr. Turchynov also pointed out in an interview with the Obozrevatel website that the procurator general's investigation into former National Security and Defense Council Secretary Petro Poroshenko's alleged involvement in five separate instances of corruption was "at best a bare minimum," given the evidence collected by SBU investigators into Mr. Poroshenko's alleged activities.

Roman Kupchinsky is the editor of RFE/RL Organized Crime and Terrorism Watch.

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