The
main reason the government actions seem so exorbitant is because it
covers up political reasons with legal chatter that goes side by
side with the decision to go after these assets. Although the
government says that recovery of Lazarenko’s and Tymoshenko’s
assets from the U.S. and Switzerland would help fill the gap in the
sate budget, until now the government has not even bothered to
collect information about the fate and the size of the assets it
suddenly so desperately wants to return to Ukraine.
A
Department of Justice (DoJ) claim filed
on June 30, 2005 identified
approximately $250 million in assets belonging to Lazarenko. These
assets are frozen in five countries and are being disputed in court
in Washington D.C. with the DoJ being a principle claimant.
Ukraine’s
General Prosecutor’s Office hired Boston-based consulting firm UTICo
to track Lazarenko’s assets on behalf of the nation, but later a
court in Kyiv invalidated the contract, which the prosecutor’s office
had no legal right to sign.
Lazarenko
was found guilty of money
laundering in the U.S. in 2006. The evidence unearthed at the
criminal trial showed that during his tenure as a public official,
Lazarenko formed business relationships with prominent businessmen,
and that some of these business relationships amounted to extortion.
Evidence
also showed that Lazarenko defrauded the Ukrainian people by
obtaining interests in companies, allocating privileges to cronies,
and then failing to disclose his assets and wealth as required. It
was established at trial that Lazarenko was paid kickbacks averaging
50 percent of every business deal, many of which involved the sale of
natural resources, including wheat, dairy products and natural gas.
An accomplice testified at trial that Lazarenko worked with everyone
on a 50-50 basis.
The
government of Ukraine failed to finish the investigation of
Lazarenko’s alleged involvement in grand political corruption and
bring charges against him. It only expressed its interest in
Lazarneko in connection to the political persecution of Tymoshenko.
There have been no accusations or charges against Lazarenko’s
alleged corrupt activities while being governor of Dnepropetrovsk or
Prime Minister of Ukraine. Therefore, Ukraine’s government has weak
or no legal standing for the remission of Lazarenko’s assets.
As
a person convicted of a criminal offence, Lazarenko was sentenced to
nine years in jail and ordered to pay a fine, which he has thus far
failed to pay. As a result, few days ago the Attorney General in
California ordered the confiscation of Lazarenko’s mansion there
(which allegedly belonged to Eddie Murphy at one point). The
estimated value of the mansion is $6.8 million, out of which there
are tax liens of about $2.5 million, since Lazarenko was not paying a
property tax on his mansion.
The
house will probably be listed for sale through a real estate broker.
But that will be up the decision of the U.S. Marshals Service, the
agency responsible for managing all seized assets. After paying tax
debt, the remaining balance for the sale of the mansion can hardly be
more than $4 million.
There
has never been any mention of Tymoshenko’s assets in the U.S. or
anywhere else, and she has never been convicted in the U.S. or
Switzerland of laundering money or corruption. What’s more, the
issue of money laundering on the part of Tymoshenko has never been
raised in the course of the criminal proceedings against her in
Ukraine. Moreover, the European Court for Human Rights found her
detention politically motivated.
Thus
the recent statements of the government of Ukraine about $447 million
of Lazarenko’s and Tymoshenko’s assets cannot be justified by any
legal research, study of the court decisions or other steps which one
would expect from the government prior to making a statement and
hiring an expensive London-based law firm.
I
suspect that the only reason the government actually mentioned
Lazarenko’s assets is to prevent Tymoshenko from leaving Ukraine
and to falsify new accusations against her. To put a lipstick on the
pig, the government commissioned a highly-respected international law
firm, Lawrence Graham, to represent its interests in recovering
Lazarenko’s and Tymoshenko’s money.
This
raises the question of why Lawrence Graham, one of the oldest law
firms in England, which has been around for more than 300 years,
agreed to assist the government of Ukraine in this murky business?
I
suppose the answer may be simple: Lawrence
Graham
has posted a 7 percent drop in revenue for the 2012-13 financial
year, while profits per equity partner (PEP)
dropped 14 percent. Legalweek magazine even mentioned the possibility
of Lawrence
Graham
merging with another big law firm due to its financial difficulties.
Faced with such a challenge, perhaps the murky but generous offer
from the government of Ukraine would come handy for the law firm.
It
would not be the first time the government is trying to use big
foreign companies to justify its political failures. When a scandal
involving overpaid sea rigs took place in 2011, the Ministry of
Justice hired Halliburton consulting firm to justify the overspending
of almost $200 million.
Halliburton’s
office in Moscow successfully issued an evaluation of the purchased
sea rig and found nothing extraordinary in paying more than twice as
much as the sea rig was valued on the market. How much this service
costs to the government of Ukraine, unfortunately, we have not been
able to disclose.
Another
big American law firm Skadden Alp. was commissioned by the Minsitry
of Justice to save the government face in the Tymoshenko v. Ukraine
case in the European Court of Human Rights. Skadden’s report did
not change anything and Tymoshenko won the case. Her detention was
called arbitrary and considered political persecution against the
opposition leader. The government paid more than Hr 10 million for
Skadden’s involvement, according to the state register on public
procurement.
The
question is this: When will the government of Ukraine stop wasting
our money on known-in –advance lost cases and start forcing
Ukrainian civil servants to do their job? As it stands now, the
government of Ukraine is wasting our money on foreign law firms and
supporting the luxurious lifestyles of American and British
solicitors, while making its own people poorer every day.
Halyna
Senyk is member of the board of directors of the Anti-Corruption
Action Centre in Kyiv, a non-governmental organization.
