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Why Yanukovych could never sign an EU deal

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Dec. 5, 2013, 11:18 p.m. | Op-ed — by Halyna Senyk


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Halyna Senyk

There is a private reason why President Viktor Yanukovych would not sign an association agreement with the European Union. For him, closer ties with Europe mean more risk to lose assets he has acquired during his presidency.

Until the year 2007, Yanukovych, then a member of parliament, officially lived in a 140-square-meter penthouse in Kyiv.  He then sold his apartment to Serhiy Klyuev, now a lawmaker and head of the banking regulation committee, and a member of supervisory board of the central bank.

The apartment fetched a ridiculously high price of $ 7 million, or $50,000 per square meter. By comparison, ex-Prime Minister Pavlo Lazarenko bought his sprawling 20-room home mansion in Novato, Calif. for $6.75 million. Now old news, Lazarenko was convicted in the U.S. of money laundering, extortion, tax evasion and had his house seized.

To dress the deal up somewhat, the official deed said that the apartment was actually 380 square meters in area – despite the fact that his 2007 declaration stated that he only owned 140 square meters.
Despite numerous media reports on this phenomenal real-estate deal, the Prosecutor General Office did not find it suspicious. Both sides have denied wrongdoing.

Since the start of his presidency in 2010, Yanukovych has resided in a former national reserve area called Mezhyhirya, a vast estate sprawling more than 137 hectares of land.

This land was privatized through a chain of murky operations, which the now jailed Yulia Tymoshenko tried to challenge in court as prime minister.

The president claims that he lives on only 1.76 hectares of land there that he purchased from the local government. Neither the president nor the Vyshhorod District Administration have ever disclosed how much was paid for the land. The remaining land 135 hectares belonged Tantalit, which bought the parcel of land in 2007. Tantalit was founded by a UK-based firm Blythe Europe, Ltd, run by Reinhard Proksch.

Interestingly, Serhiy Kluev in July 2009 also sold his prosperous solar energy business Activ Solar  to Proksch, whose home address doubles as the address of registration of P&A Corporate Trust – the official owner of Activ Solar.

Activ Solar is a successful near- monopoly in producing solar energy in Ukraine. Since Serhiy Kluev’s brother, Andriy Kluyev – a co-owner of Activ Solar – held the office of Deputy Prime Minister of Ukraine, Active Solar received state bank interest-free loans, tax exemptions, extremely low prices on land leases (3 percent of the value per year), duty-free import of equipment, and one of the highest green tariffs in Europe.

Moreover, even the European Union’s direct budgetary support in 2011 was spent on hooking Activ Solar plants to the energy grid, instead of being spent on energy-saving projects, as required by the Europeans. As a result of the violation, the European Commission halted direct budget support to Ukraine.

In 2008, Tantalit signed a 49-year land lease at a very low rate and started  developing Mezhyhirya, turning it into a royal-class luxury estate.  

In just three years, two former old state dachas and shabby service buildings located in Mezhyhirya’s wild forest were transformed into a huge 5-storied palace, 3-storied guest house, a golf course, a yacht club, a helicopter pad and hangars, and a racetrack with horse stables. Neither Tantalit revenue documents nor Blythe Europe’s tax reports have ever provided a clue to the origin of the money invested in the development of Mezhyhirya.

In September 2013, Blythe Europe Ltd. suddenly decided to sell Mezhyhirya to Serhiy Kluyev, who became the honored neighbor of President Yanukovych in his estate.

Mezhyhirya is surrounded by a five or six-meter fence, and has no public access. It is guarded by a the state special police force, and nobody except Yanukovych, his family and visitors are allowed to enter.
It seems that the only person who benefits from using Mezhyhirya is Yanukovych, which would suggest that he is the beneficial owner of a luxurious estate located in a pristine forest on the bank of the Dnipro River.  He has only admitted to owning a tiny part of that estate, though.

On top of being a landlord, Yanukovych is a successful writer. In 2011 he claimed to have received $2.5 million for writing a book called “A Year in Opposition.” In 2012, he said he received royalties worth $2 million for “Opportunity Ukraine”, which was published by “Mandelbaum Verlag” in Austria. However, few people (if any) have seen his books in Ukraine.

Yanukovych’s older son, who has a background in dentistry, during the term of his father’s presidency became one of the most successful business persons in Ukraine, whose wealth in 2013 was estimated by Forbes at $187 million. Oleksandr Yanukovych is successfully engaged in the coal-mining industry, construction business and banks. His VBR bank (Oleksandr Yanukovych owns 100 percent of its stock) in 3 years of its existence increased its capital by 20 times.  

All the above would not be possible if Ukraine was a part of the EU. Yanukovych would positively feel more comfortable in the company of Russian President Vladimir Putin (17 years in power), Belarus President Oleksandr Lukashenko (25 years in power) or Kazakh President Nursultan Nazarbayev, who often seem to confuse national wealth with that of their own.  

Halyna Senyk is a lawyer specializing in international law, and CEO of PEPWatch, a nongovernmental organization which is currently undergoing the registration process.

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