You're reading: US cables show skepticism, warnings about Yanukovych

Lament expressed over crimes that remain unpunished.

U.S. diplomats were unconvinced by attempts in recent years to recast President Viktor Yanukovych and his Party of Regions as democrats, describing in cables how they were told of alleged criminal activities, insider deals and a desire for revenge by Yanukovych and his allies after his electoral defeat in 2004.

The cables, recently released by whistleblower website WikiLeaks, give an insight into the inner workings of Ukraine’s political and business world from a string of top Ukrainian officials, opposition figures, oligarch businessmen and civil society actors.

Cables sent to Washington, D.C., from 2006 to 2010, based on several conversations with civil society actors, cautioned that Yanukovych’s ruling Party of Regions could revert to its “authoritarian ways” if it comes back into power.

Additional cables citing candid conversations with oligarchs revealed the ambivalence of Ukraine’s leading businesspeople towards “too much power being put in one person’s hands,” a situation which many analysts say describes Ukraine’s current reality.

The cables describe government officials, including Yanukovych and Deputy Prime Minister Borys Kolesnikov and others, as bent on revenge for the 2004 Orange Revolution, the peaceful democratic uprising that denied Yanukovych the presidency in a rigged presidential election.

The communiques lamented how many current lawmakers and officials escaped justice after they were witnessed by thousands of election observers committing election fraud and other violations during the fraudulent Nov. 21, 2004 presidential election. Viktor Yushchenko won a re-vote on Dec. 26, 2004 to become president.

Taken as a whole, the cables paint a colorful picture of cutthroat competition for power and resources among the nations political and business elites.

As in previous cables released by WikiLeaks, murky privatizations were cited, in particular, Nikopol Ferroalloy Plant and Kryvorizhstal, leading industries in the nation.

A Feb. 2, 2006 cable cited former Interior Minister Yuriy Lutsenko confirming an interrogation of former State Property Fund Chair Mykhailo Chechetov. In it, Chechetov “acknowledged that the privatization of certain enterprises, including Nikopol (Ferroalloy Plant) and Kryvorizhstal (steel plant), didn’t occur according to established privatization guidelines and were illegal, but had been carried out on orders of top Ukrainian officials, including then-President (Leonid) Kuchma and Kuchma’s son-in-law (Viktor) Pinchuk.”

In other cables, the ambassadors were impressed with how the pro-presidential Party of Regions had “disciplined” and polished its thuggish image following the failed 2004 presidential election.

“Yanukovych has been clear in his recent conversations with us that he wants to shake the image of authoritarianism and corruption that dogged him in 2004,” Ambassador John E. Herbst noted on Jan. 26, 2006.

One cable, citing the Zaporizhya branch of the Committee of Voters, warned that “their [Party of Regions] true nature would reemerge if successful,” citing examples of electoral fraud during the 2006 parliamentary elections.

Billionaire Rinat Akhmetov, known as chief financier of the pro-presidential Party of Regions and a member of parliament, cautioned against too much power being held in one hand, according to the U.S. cables.

A June 21, 2007 cable written by then U.S. Ambassador to Ukraine William Taylor, based on a conversation with Akhmetov, noted that Ukraine’s richest man opposed the “concentration of too much power in one hand,” favoring checks and balances in the Ukrainian government.

Akhmetov’s press office didn’t respond to a Kyiv Post inquiry before it went to press.

The cables also describe Yanukovych’s reluctance to acknowledge election fraud had taken place in 2004. He was further described as being bitter over the “December 2004 ‘putsch’ denying him the presidency.”

“The Lithuanian vignette indicates that Yanukovych continues to feel he was mistreated, including by [former President Leonid] Kuchma, during Ukraine’s 2004 presidential election crisis,” a Feb. 21, 2006 cable noted.

Taylor’s May 13, 2009 cable identifies current Deputy Prime Minister Borys Kolesnikov as seeking revenge for his four-month detention in 2005 when currently incarcerated Lutsenko, as interior minister, targeted him as part of an anti-corruption campaign. But allegations against Kolesnikov were never proved.

Kolesnikov, in charge of getting the nation ready to co-host next year’s European soccer championship, has repeatedly said he has no vengeful feelings toward Lutsenko.

The cables also lamented that no high-level government officials were convicted for election fraud in 2004. Former Sumy Governor Volodymyr Shcherban, who was accused of election rigging, extortion, tax evasion and abuse of office avoided prosecution after three members from the Party of Regions posted $2 million bail, paid for by Akhmetov, according to a 2007 cable.

The inability to fight corruption, especially public procurement rackets and kickbacks from state-owned companies, the cables said, exacerbates Ukraine’s energy dependence on Russia.

“Observers often cite (state-owned oil and gas company) Naftogaz as a prime example of this kind of widespread procurement corruption,” an Aug. 1, 2007 cable said.

An Oct. 15, 2009 cable revealed that “second-tier oligarchs and members of the Ukrainian parliament are extorting from the country’s banks and threatening bankers.”

Taylor cited a representative of Austrian-owned Raiffeisen Aval telling him that one-third of the bank’s non-performing assets were deliberate non-payment of loans. The cable said that mini-oligarchs and well-known politicians along with their close relatives were “causing the biggest headaches in the industry.”

The bank’s board member alleged that two shareholders of agribusiness Ukrzernoprom, had refused to make payments on or even negotiate with Raiffeisen on the company’s defaulted $14 million loan.

A Raiffeisen Aval spokesperson refused to comment to the Kyiv Post. Inna Dekhtiar, the spokeswoman for Ukrzernoprom, said the cable released by WikiLeaks confused many details associated with that loan, that neither person mentioned were its recipients or Ukrzernoprom shareholders, and that there are several companies of different type and ownership that carry the name Ukrzernoprom.

A cable authored by Tefft on Jan. 4, 2010 cited former State Security chief Valentyn Nalyvaichenko telling him that Kostantyn Zhevago, a young, wealthy businessman and Bloc of Yulia Tymoshenko parliamentarian had run a $62.5-million money laundering operation and vote-buying scheme during the nation’s latest presidential election.

The former chief spy told Tefft that the SBU had in one incident stopped a Finance and Credit Bank vehicle carrying $62,500 and the official seals for 300 fictitious companies based in Donetsk Oblast.

Nalyvaichenko confirmed in an e-mailed message to the Kyiv Post that while heading the Security Service of Ukraine under Yushchenko that he uncovered a money-laundering scheme at Zhevago’s Finance and Credit Bank in 2009.

“Regarding the text (of this particular cable), I can affirm that within the framework of fighting political corruption and dirty money laundering in 2009 in Ukraine, the SBU seized substantial amounts of cash and stopped the functioning of illegal financial centers, including the said bank (Finance and Credit Bank),” Nalyvaichenko wrote.

No charges were brought against Finance and Credit Bank. Zhevago’s spokesperson declined to comment.

Kyiv Post staff writer Mark Rachkevych can be reached at [email protected]