July 8, 2016

Rada approves arrest of Onyshchenko

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Aleksandr Sinitsa/UNIAN

The Verkhovna Rada voted on July 5 to remove political immunity and arrest National Deputy Oleksandr Onyshchenko for criminal charges related to the theft of $64 million through fraudulent business schemes in the natural gas industry.

Charges mark first major anti-corruption case in post-Maidan period

KYIV – Ukraine’s Parliament voted on July 5 to strip political immunity from National Deputy Aleksandr Onyshchenko and arrest him for criminal charges related to the alleged theft of $64 million through fictitious firms set up in the natural gas trade, which has long been plagued by corruption.

The Verkhovna Rada voted on July 5 to remove political immunity and arrest National Deputy Oleksandr Onyshchenko for criminal charges related to the theft of $64 million through fraudulent business schemes in the natural gas industry.

Aleksandr Sinitsa/UNIAN

The Verkhovna Rada voted on July 5 to remove political immunity and arrest National Deputy Oleksandr Onyshchenko for criminal charges related to the theft of $64 million through fraudulent business schemes in the natural gas industry.

Mr. Onyshchenko had known for at least three weeks that he could be arrested and was already in Austria by the time the vote came up in the Verkhovna Rada. He wrote on his Facebook page that he was preparing for the Summer Olympics and continued to deny wrongdoing.

Despite his evasion of arrest thus far, the criminal charges against Mr. Onyshchenko mark the first major anti-corruption prosecution against a high-ranking official in the post-Maidan period. It is widely believed to have been prompted by demands from Western institutions that the Ukrainian government start punishing large-scale crimes.

“It was necessary to respond to the public demand to activate the fight against corruption,” said Volodymyr Fesenko, the board chairman of the Penta Center for Applied Political Research in Kyiv. “Onyshchenko was simply the first to come across their desk. This deputy’s schemes were cruder and investigating them wasn’t so difficult. His rather high status enabled the National Anti-Corruption Bureau and Specialized Anti-Corruption Prosecutor’s Office to appear successful and draw wide acclaim in the media.”

The government’s prosecution of the Onyshchenko gas scheme involved the arrest of 10 suspects as of June 15. The total of 20 suspected accomplices includes Inessa Kadyrova, Mr. Onyshchenko’s 75-year-old mother, who is alleged by investigators to have organized the corruption scheme with her son.

Mr. Onyshchenko, 47, was born in the Russian Federation and moved to Kyiv in the early 1990s, when he began to acquire his millions in the fuel and energy sector. He was elected to Parliament with the Party of Regions in 2012, before being re-elected in 2014 as an independent candidate.

During this time, he became vice-chair of the parliamentary Committee on Fuel, Energy and Nuclear Policy. His wealth was estimated at $24 million by forbes.net.ua in June 2016. Mr. Onyshchenko used his millions to launch the annual Miss Ukraine competition, as well as pursue his equestrian hobby. He competed in two Olympics – 2008 and 2012 – on behalf of Ukraine.

In January 2013, at the peak of the Euro-Maidan violence, the Onyshchenkos allegedly began organizing schemes to steal money from Ukrhazvydobuvannia, the main state natural gas extraction firm, Prosecutor General Yuriy Lutsenko said in his report to Parliament at the July 5 session.

They created joint venture firms with Ukrhazvydobuvannia to extract gas and sell it at depressed prices to their fictitious firms, which would then resell it at market prices to Ukrainian firms. In one case, a joint venture didn’t bother splitting the proceeds with Ukrhazvydobuvannia from its fraudulent sale, the pravda.com.ua news site reported.

The use of this scheme by three joint ventures resulted in the theft of 1.6 billion hrv, or about $64 million (U.S.), Mr. Lutsenko said in his report. In addition, Mr. Onyshchenko’s firms owe 1.3 billion hrv, or about $52 million, in unpaid rent to extract the gas, officials said when they announced the charges in mid-June.

These rents were not paid starting in 2015, National Deputy Tetiana Chornovol of the People’s Front party said during the session, implying that officials in the Presidential Administration could have been aware of what was happening.

Indeed in a June 16 report, pravda.com.ua said Mr. Onyshchenko not only had frequent phone calls with Ukrainian President Petro Poroshenko during the summer of 2015, but he gained favorable rulings from key state officials.

For instance, an October 2015 meeting between Mr. Onyshchenko and State Fiscal Service Head Roman Nasirov, widely identified as a presidential appointee, led to a decision by the year’s end to allow for spreading out the repayment of the 1.3 billion hrv in owed rent, the report said.

Such evidence was bolstered by the testimony of Radical Party Head Oleh Liashko during the July 5 parliamentary session.

“Every time I went to the president as faction leader, I saw Onyshchenko there. What was this corrupt man doing in the president’s office? Is it a secret that his business is shared among the president, his business partner [Ihor] Kononenko and Onyshchenko? Because Onyshchenko all these years carried money to Bankova [the Presidential Administration],” he said.

“The task of the anti-corruption bureau and anti-corruption prosecutor is to investigate further because the government allowed Onyshchenko to engage in corruption. He paid the government for his cover. At the president’s order, he tried to corrupt the deputies of the Radical Party by buying them off,” Mr. Liashko charged.

Political observers also raised questions as to how officials at Ukrhazvydobuvannia and the State Tax Inspection allowed such amounts to be stolen without any complaints or reports being filed, implying that they were complicit in such schemes.

Mr. Onyshchenko faces up to 12 years’ imprisonment. The precise criminal charges against him are: creating a criminal organization, committing a crime with a criminal organization, taking ownership of property through abuse of office and creating a fictitious enterprise.

In his defense, he claimed there was no evidence against him and that he’s the victim of U.S. government plans to privatize Ukrhazvydobuvannia, which requires selling or liquidating all its related companies, with proceeds going to the Ukrainian government.

After the plans to prosecute were announced, Mr. Onyshchenko even appeared at the offices of the National Anti-Corruption Bureau to meet with its head, Artem Sytnyk, to prove he had nothing to hide. Yet the meeting didn’t bear much fruit for Mr. Onyshchenko.

The process of removing his immunity took nearly three weeks, requiring a parliamentary committee review. When it became apparent that he would be arrested if he appeared in Parliament on the day of the vote, he said he decided “not to allow myself to be demonstratively arrested in the Rada session hall.”

The prosecution of Mr. Onyshchenko and his associates has been led by Mr. Lutsenko, the prosecutor general who was brought in by the president to undertake reforms that would satisfy Ukraine’s Western lenders, including the U.S. government, who were fed up with his predecessors.

In the nearly two months he’s been in his post, Mr. Lutsenko has launched a crackdown on the illegal amber trade in western Ukraine and arrested four former Berkut officers involved in the Euro-Maidan killings in February 2014.

“Lutsenko won’t stop. He has his own plan of action. Build up activity in order to hold the first court cases in the fall or by the year’s end,” Mr. Fesenko said.

Mr. Lutsenko has been working closely with the National Anti-Corruption Bureau and Specialized Anti-Corruption Prosecutor’s Office, both of which were launched in 2015 to help prosecute high-profile cases. The prosecution of Mr. Onyshchenko is their first high-profile case, earning them wide public acclaim, Mr. Fesenko noted.

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