A series of investigative articles chronicled how President Viktor Yanukovych took control over a 138-hectare estate and how he hid his tracks in the process.
President Viktor Yanukovych lives in a house surrounded by a multi-million dollar estate with its own bowling alley, enormous clubhouse, soon-to-be-built tennis court, a near-by hunting ground and shooting gallery.
Yanukovych’s story – and he’s sticking to it – is that he only owns a house on the estate and a tiny patch of land around it.
Click here to view the trail of proxy companies and front men used to conceal how Mezhyhirya was taken over.
How Mezhyhirya changed hands from state to private control in 2006-2007
The president says he doesn’t know who owns the surrounding territory of 138 hectares, equal to 24 Shevchenko Parks – where massive construction and development is taking place. Nothing improper here, says the administration.
But an investigation by the popular news website, Ukrainska Pravda, and one of its investigative journalists, Serhiy Leshchenko, has revealed how Yanukovych went from occupying a modest state-owned house to becoming the entire estate’s de facto lord of the manor. The website says the presidential administration didn’t answer its inquiries.
In a country where pensioners struggle to get by on a meager $100 per month, the story of how the president took control over the Mezhyhirya estate may – in the opinion of Ukrainska Pravda and others – go down in the annals of Ukraine’s history as a case study of grand-scale corruption.
Leshchenko’s articles revealed complicity at the highest levels of government, including former President Viktor Yushchenko and ex-premier Yulia Tymoshenko, in relinquishing government-ownership over the estate’s property and for allowing the leasing of land there without competitive bids or auction.
Ukrainska Pravda also linked the owners of companies implicated in the Mezhyhirya estate to Yanukovych, his political entourage, including his elder son, Oleksandr, and identified one Donetsk-based bank through which all the Mezhyhirya companies did their business.
It then traced how a multi-layer web of dummy companies, trust managers and front men stretching from to Lichtenstein and England were used to disguise the real masters of Mezhyhirya.
Here is the abridged version in English of the Ukrainska Pravda story:
Yanukovych on June 4 described his relationship to the 138-hectare Mezhyhirya estate where he’s lived since 2002, this way: “Just keep in mind, I only have a hectare and a half. Beyond that it’s forbidden to walk [on the territory]…There’s [another] owner there,” he explained to journalists.
But two months after the press conference, Yanukovych revealed his insatiable appetite for splendor when boasting to Germany’s political and business elite in Berlin on Aug. 30: “It’s not a little secret to anyone…I built this one house, a clubhouse if you will…Honka built it, it’s a Finnish company…”
He then praised the Germans for their pedantry and told them that he prefers “German quality.”
“We, all the club (house’s) members, had the same wish – that the ‘house’ look good both on the outside and inside. The hardwood, the squared beams with which the house was being assembled kept ‘moving’ all the time. … So we invited bids, not a huge call for bids, and Germans won the tender. And no matter how this house settled or raised, the [wood] beams beautifully held together, nothing has collapsed. … I spoke with the (German) workers. I’ll tell you, they are the worker’s intelligentsia,” he complimented the German crowd.
He had just admitted to owning a gigantic mansion belonging to a private company leasing 129 hectares on the compound.
No impeachment proceedings were launched, no investigative commissions were formed and no charges were brought. Construction continued unperturbed at Mezhyhirya.
Mezhyhirya: From state ownership to private
Yanukovych’s neighbors are Tantalit (129 hectares), a limited liability company, and Renaissance of Ukraine foundation (7.6 hectares).
Both legal entities are building their versions of recreation centers. The president has 1.7 hectares.
All three are indirectly linked via a network of dummy companies and front men reflecting an alternative identity to who really is behind Mezhyhirya.
Yanukovych first moved into a state-owned home in Mezhyhirya when he packed his bags in 2002 and left Donetsk to serve as prime minister under former President Leonid Kuchma.
According to Ukrainska Pravda, it appears that the president rented the home through Renaissance of Ukraine Foundation, which had already inked a lease on April 1, 2003, along with three hectares of adjoining land.
In March 2007, when he was prime minister a second time, Yanukovych entertained journalists in this same residential building.
The gargantuan clubhouse seen from the Dnipro River to which President Viktor Yanukovych referred on his Aug. 30 visit to Berlin. (Ukrainska Pravda)
He played the guitar and spoke about his prison terms. Just days after the house party, the house was leveled and a giant “administrative” building was built in its place by Tantalit, at least 1,000 square meters in size.
Renaissance of Ukraine Foundation was registered in 2003 in a residential building apartment in Obukhiv city, a district center in Kyiv Oblast.
This foundation would for the next eight years provide cover for Yanukovych.
Renaissance of Ukraine re-organized its land lease agreement in 2004 when it leased 3.9 hectares directly from the Vyshgorod District Adminstration, where Mezhyhirya is located.
Then it almost doubled the land leased in 2007 when it leased an additional 3.7 hectares.
The foundation gave this ironic purpose for leasing the state-owned house in which Yanukovych lived: “The property which is being leased will be used by the lessee to implement measures to promote national and international programs aimed at improving socio-economic conditions.’’
Both times the foundation arranged leases without undergoing a bidding process and leased land at below-market prices – Hr 3.30 per month for 100 square meters.
The foundation is linked to Vasyl Hulyk, the current deputy head of the State Affairs Department and former director of a company that provides landscaping, maintenance and utility services on Mezhyhirya.
On paper, it was founded by Donbas resident Oleksandr Yurchenko, the founder of Zoryaniy film center where Yanukovych’s 2004 election headquarters was located.
Zoryaniy’s director was Andriy Kravets who on the day of Yanukovych’s presidential inauguration was appointed head of the presidential affairs department and the builder of an office building in Brovary, where many Mezhyhirya-linked companies have an address.
According to Ukrainska Pravda, Renaissance of Ukraine is actually controlled by Yanukovych’s son, Oleksandr, who handles all matters related to real estate and land on Mezhyhirya that the foundation leases.
Yurchenko, the Donbas resident who was the original founder of Renaissance of Ukraine, also co-founded Dom Lesnika. This company supplied $3.36 million worth of building materials to Mezhyhirya in 2009 and the first half of 2010.
Another co-founder of Dom Lesnika is Ivan Tokhtamysh, who is the director of a hunting and fishing club registered in Mezhyhirya and founded by Yuriy Boiko, fuel and energy minister, Serhiy Tulub, Cherkassy Oblast governor and Volodymyr Demishkan, another close Yanukovych friend who heads the state roadway company.
But to show to what lengths people went to cover up all the links, Renaissance of Ukraine had its founder changed to two Donetsk city female residents in 2009: Yulia Blyzniuk and Lolita Shapkova. However, the lion’s share of property was eventually taken over by Tantalit, a company with ties to Yanukovych.
While serving as prime minister for the second time in 2006, Yanukovych arranged for the Presidential Administration’s State Affairs Department, which was then subordinate to former President Viktor Yushchenko, to transfer ownership of Mezhyhirya property to the Cabinet of Ministers controlled by Yanukovych.
On June 13, 2007, Yanukovych issued a government order whereby management of Mezhyhirya property was given to the Environmental Ministry headed then by Yanukovych confidant Vasyl Dzharty.
Then the Cabinet issued an order transferring the property from the Environmental Ministry to Nadra Ukraina, a for-profit state-run company, headed by Eduard Stavytsky, a subordinate of Dzharty.
In turn, on Sept. 25, 2007, Nadra Ukraina decided to swap property with a mysterious Donetsk company called Medinvesttrade.
Nadra Ukraina gave Medinvesttrade Mezhyhirya property, including the building in which Yanukovych resided, in return for two palaces in the center of Kyiv.
Apparently Yushchenko had no qualms swapping property with Yanukovych.
In a conversation with Ukrainska Pravda, Stavytsky confirmed that Nadra Ukraina had transferred the two centrally located palaces to the State Affairs Department a day after Mezhyhirya property was received.
Days later, Donetsk-based Tantalit bought the Mezhyhirya property for Hr 89 million from Medinvesttrade, which declared bankruptcy in June.
Tantalit had taken control over several residential buildings, cellars, sheds, a sewage station, greenhouses, and a security check point.
With Medivesttrade bankrupt, it would seem the first chain in dispossessing Mezhyhirya property from government control was cut off. But land still had to be leased from the government, according to legislation.
On Oct. 2, 2008, Tantalit signed a 49-year lease with the Vyshgorod District Administration. The lease stipulated a below-market rate of Hr 4 per month for 100 square meters.
According to the lease terms, the contract could be considered null and void only if both sides agreed to it. Also, the lease has a clause that allows the lessee to purchase land.
The 2008 lease was formally approved by Vira Ulianchenko, a close Yushchenko ally who served as Kyiv Oblast governor.
Ulianchenko also let the lease of 17.5 hectares go through on Yanukovych’s favorite hunting club in Sukholuchchya, Vyshgorod District where Dom Lesnika, whose founder also established Renaissance of Ukraine Foundation, is building a hotel and restaurant complex.
Dom Lesnika is also a chief supplier of imported building materials to Mezhyhirya.
It surprised few that Ulianchenko’s husband was appointed Education Minister Dmyto Tabachnyk’s deputy soon after Yanukovych’s inauguration.
Consequently, Yanukovych didn’t forget about Vyshgorod District’s head, Anatoliy Olshanskiy, who closed his eyes to the land leases.
He was recently appointed the head of the Boryspil district of Kyiv Oblast, whose international airport, surrounding forests and close proximity to Kyiv via an expressway allows for many pay-to-play opportunities.
Former Prime Minister Yulia Tymoshenko only took an interest in Mezhyhirya after talks collapsed with Yanukovych when trying to form a “broad coalition” with him in 2008.
The land-lease contracts were dated on those days when Tymoshenko held discussions with Yanukovych. When she did act, her efforts were stalled by the nation’s corrupt judicial system.
Tymoshenko had initiated a judicial cancellation of the land-lease contracts.
However, first the investigative commission under the leadership of Party of Regions deputy Mykola Dzhyha expunged relevant contracts with the Vyshgorod District Administration in 2008 and then later the prosecutor general hid them under the guise of “carrying out inspections.”
A judge halted the legal investigation until the inspection was completed, which apparently is still ongoing.
In another parallel yet artificially inspired process, the Supreme Economic Court ruled that Tantalit LLC, which leases 129 hectares on the estate, is the legal owner of property on Mezhyhirya. Of the three judges who rendered the January ruling was the daughter of Party of Regions deputy Mykola Kruhlov, Olena Mamontova.
Nobody paid attention to the glaring conflict of interests. And within months, in March, Kruhlov himself was appointed the governor of Mykolayiv Oblast.
Proxy investors behind Tantalit, 129 hectares
According to building plans, Tantalit is building a health and recreation center in Mezhyhirya which includes a yacht club with a covered slip on the Kyiv Sea shore; a golf club, an equestrian club, an administrative building and club house, as well as other developments.
Dom Lesnika, whose founder also established Renaissance of Ukraine Foundation that is developing 7.6 hectares on Mezhyhirya, drafted the building plans on both Mezhyhirya and the Sukholuchya hunting club where Yanukovych likes to hunt wild boar.
A legal entity and an individual are Tantalit’s founders.
A Donbas native registered in a Kyiv dormitory is one of the co-founders with 0.03 percent capital share.
According to Ukrainska Pravda, his name is Pavlo Lytovchenko, a proxy for Yanukovych in other companies.
He had been seen many times in Yanukovych’s reception room inside the Party of Regions headquarters on Lypsky Street when the Ukrainian president was still a member of parliament and in opposition.
Lytovchenko is also on record as one of the founders of Dom Lesnika. In addition, he acted as the founder of Donetsk-based Edelweiss, which belongs to Capital Building Corporation whose real owners include Oleksandr Yanukovych and whose director is Oleksandr Kolesnikaov, also from Donetsk.
Oleksandr Yanukovych also controls Dellit, the security firm which polices both the Mezhyhirya estate and Sukholuchya hunting club and also provides services to AVK Development, which is the general contractor of all development work on Mezhyhirya.
AVK Development’s founder, Vitaliy Sakhatskyi, has since went to work for Yanukovych at the State Affairs Department – he was also vice president of Renaissance of Ukraine Foundation.
The second founder of Tantalit also leads us to Dom Lesnika. On paper, it is Euro East Beteiligungs GmbH, a Viennese-registered firm run by one person, Johann Wanovits, an Austrian stock broker.
The institution where he works, Euro Invest Bank AG, owns 65 percent of Euro East Beteiligungs GmbH. The remaining 35 percent is owned by Blythe (Europe) Ltd.
Blythe is registered at the same London address as Astute Partners Ltd, the proxy company building the hotel and restaurant complex at Yanukovych’s favorite hunting club.
Furthermore, Blythe’s director is Reinhard Proksch, an Austrian lawyer residing in Lichtenstein. He also is the director of Astute Partners, which through Dom Lesnika took control of more than 17 hectares of hunting ground in Sukholuchya.
Land development on Mezhyhirya
The general contractor on Mezhyhirya involving the development of 135 hectares, security and the suppliers of building materials for construction are also linked to Yanukovych.
Dellit security firm controlled by Yanukovych’s elder son, Oleksandr, polices the territory along with a 17.6-hectare hunting club in the same area.
Ukrainska Pravda examined customs documents from 2009 and the first half of 2010 of two importers of building materials with the same mailing address in Brovary of Kyiv Oblast.
The address is a building built by current State Affairs Department Head Andriy Kravets. These importers also are serviced by UkrBiznesBank, a Donetsk bank that is close to Yanukovych and centers heavily in dealings surrounding Mezhyhirya.
The online-newspaper spoke with construction workers and an engineer who worked on Mezhyhirya.
They said Yanukovych often on weekends inspects construction sites in an off-road vehicle.
He was often accompanied by Vasyl Hulyk, the head of KyivUniversalServis, which provides utility maintenance services on Mezhyhirya, and with links to the importers. Hulyk is now deputy head of the State Affairs Department.
The importers, Dom Lesnika and SPS-Group are both registered in the same Brovary address built by current state affairs head Kravets.
Three people work for the two companies. They imported building materials worth $9.5 million over an 18-month period. The other company, SPS-Group, made deliveries worth millions of dollars to Mezhyhirya.
SPS-Group’ real owner is a company founded by UkrKyivResurs, which also has office space at the Brovary address and which is also a shareholder in Delphin-2001, the company through which Yanukovych’s Crimean palace is registered.
Many of the companies mentioned do business with UkrBiznesBank: Dom Lesnika, SPS-Group, KyivUniversalServis, AVK TechnoPromServis, UkrKyivResurs, Tantalit and AVK Development all have accounts here.
According to Ukrainska Pravda, Yanukovych’s elder son Oleksandr became the real owner of UkrBiznesBank after buying Eduard Prutnik’s share in the bank.
Prutnik was the unofficial director of Renaissance of Ukraine foundation, according to Pravda.
This could explain why Serhiy Arbuzov was named first deputy head of Ukraine’s central bank by Yanukovych. He was a top executive at UkrBiznesBank.
Given all the work that went into acquiring the property from the state – and then concealing the acquisition – it appears the president plans to stay a long time at Mezhyhirya. It is doubtful that journalists will be invited there anytime soon.
Read the three main Ukrainska Pravda articles about Mezhyhirya in Ukrainian:
Kyiv Post writer Mark Rachkevych can be reached at email@example.com