While visiting Ukrainian troops out east, Acting Interior Minister Arsen Avakov wrote on his Facebook page that his office’s investigation of Serhiy Kurchenko, previously known as Ukraine’s youngest billionaire, revealed that his schemes with petroleum products cost the country Hr 26 billion, or $2.2 billion.
Avakov said: “I told them (people in Luhansk Oblast’s Svatovo) that Kurchenko’s scams with petroleum products cost the country Hr 26 billion last year alone, and that they were done with false re-export and fake invoices.”
This is double the original estimate of the size of the fraud Avakov gave in March, when the investigation was launched and Kurchenko was accused of bringing $1.1 billion of losses – oligarch’s VETEK conglomerate evaded $875 million in taxes and caused state-owned oil and gas company Naftogaz to lose $200 million in revenues.
According to Avakov, four companies within VETEK imported oil products worth $2.7 billion with the aim of exporting the processed gasoline, including Zovnitransgaz, Petrol, Petrol-Forwarding, and Armada-Plyus. However, the companies never exported the gasoline, and instead sold it on the domestic market. No customs duties or taxes were paid as a result.
Businessman has denied the charges via VETEK’s website on March 3: “I am an honest Ukrainian businessman who has always been investing in Ukraine.”
Avakov’s comments were made on the eve of the scheduled May 19 public disclosure of the ministry and General Prosecutor Office’s two-month investigation into Kurchenko’s business affairs. “You are the first to know,” Avakov told the stunned crowd.
The General Prosecutor Office’s initiated an investigation in March of several companies belonging to Kurchenko that were involved in the oil and gas trading business, including VETEK. Eleven criminal investigations were opened related to Kurchenko’s businesses in several Ukrainian regions.
Kurchenko is seen as a proxy for assets belonging to ex-President Viktor Yanukovych and his inner circle. His precise location is unknown, but most media outlets believe he is in Moscow along with the rest of Yanukovych’s associates.
Acting Prosecutor General Oleg Makhnitsky earlier estimated assets stolen by Yanukovych’s circle at $100 billion, including $32 billion transferred to Russia in cash. According to these figures, Kurchenko with $2.2 billion defrauded does not seem to be the one who stole the most part of those money.
On April 23, Kurchenko was placed on the international wanted list for embezzlement.
Kurchenko’s flight appears to be having a positive influence on state revenues. On April 18, Prime Minister Arseniy Yatsenyuk said that since the elimination of Kurchenko’s fraudulent schemes the treasury has received a Hr 835 million windfall. Yatsenyuk also announced that the tax police had already seized Hr 700 million of the refugee businessman’s money, finance.ua reported.
Kurchenko answered Yatsenyuk’s claim on April 24 by explaining that the sharp 40 percent rise in gasoline and diesel prices in the first quarter of this year combined with an equally dramatic devaluation of the hryvnia were responsible for the additional income. “While trying to represent this as an achievement of the government in combating corruption,” Kurchenko’s statement reads, “it is rather no more than evidence of a misunderstanding of the real processes in the economy. The head of the Cabinet is merely trying to save face by using unsubstantiated accusations against bona fide entrepreneurs.”
Despite being wanted in Ukraine and the threats by the new Ukrainian government to nationalize his assets, Kurchenko appears to be back in business. On April 15 Gazeta.ru reported that he was in negotiations to buy one of Crimea’s largest gas station chains Sovremennik.
In the meantime, the banks that serviced Kurchenko’s empire – Brokbiznesbank and Real Bank – were declared insolvent and put under administration by the National Bank of Ukraine on March 3. The Kharkiv-based Real Bank should be liquidated for want of an investor, Gazeta.ua reported on May 13.
To add insult to injury, prestigious Forbes magazine withdrew its license to publish from Kurchenko on March 4, citing “damage to the brand” as its reason. However, Ukrainian office has sued this decision in court and the process is ongoing. Moreover, transferring of Odesa Oil Refinery to Russia VTB bank is seen as illegitimate by Ukrainian government.
Korrespondent magazine in November of 2013 estimated Kurchenko’s wealth at $2.4 billion. His VETEK is a conglomerate which manages assets in energy, banking, media and sports. Odesa Oil Refinery, Kherson Oil Transshipment Complex, Brokbiznesbank, Real Bank, and Ukrainian Media Holding are its main holdings.
Kyiv Post business journalist Evan Ostryzniuk can be reached at [email protected].
