A team of FBI agents and representatives from the U.S. Justice Department left Ukraine on Nov. 24 after spending two weeks in Kyiv and Dnipropetrovsk investigating money-laundering charges against former Prime Minister Pavlo Lazarenko.
“Together with U.S. agents we conducted investigative work, interviewed witnesses and received a number of documents which are of interest to the U.S. Justice Department.”
– Deputy Prosecutor-General Mykola Obikhod
The FBI team’s visit was the latest development in the more than year-long investigation of Lazarenko, who fled to the United States last February after being served with an arrest warrant at home. Ukrainian prosecutors have formally charged Lazarenko with stealing several million dollars and said the final figure might turn out much higher when the investigation is completed.
Western media have reported recently that it might exceed $700 million. Lazarenko is presently held in detention awaiting court hearings on his extradition to Switzerland, whose law enforcement agencies also have charged him with using the country’s banks to launder millions of dollars. Earlier this month, the government of Antigua and Barbuda, known for its offshore banks, said it uncovered over $80 million that allegedly had been laundered by Lazarenko through Swiss banks.
Days after that announcement was made, Ukraine’s National Bank barred commercial banks from conducting transactions through their correspondent accounts at offshore banks in Antigua and Barbuda and several other offshore banking centers. The next hearing of Lazarenko’s case in the United States was scheduled for January 2000, but Ukrainian officials say they already have enough material to put Lazarenko on trial.
“If he were in Ukraine, we would be able to send the case to court very quickly,” Prosecutor General Mykhailo Potebenko said of Lazarenko, who President Leonid Kuchma fired in 1997 for “health reasons.”
FBI officials declined to provide details of their visit to Ukraine, but said their cooperation with law enforcement agencies here was proceeding apace. “It is an [ongoing] trilateral investigation involving U.S., Swiss, and Ukrainian law enforcement agencies,” said Michael Pyszczymuka of the FBI’s Kyiv-based liaison office.
Obikhod said the FBI team’s visit to Ukraine had to do solely with Lazarenko. “Lazarenko was linked to corruption in the United States before anyone in Ukraine broached the subject. I think that the [West’s] general feeling [about corruption in Ukraine] helped us then and helps us now,” Obikhod told the Post in an interview. He said that future high-profile investigations would be conducted irrespective of the rank of the officials involved.
In addition to setting a precedent in Ukraine’s law enforcement cooperation with the United States and Switzerland, the joint investigation of Lazarenko has fueled suspicions about the activities of other high-ranking politicians in Ukraine, whom international law enforcement agencies have also linked to organized crime. Kuchma’s critics in Ukraine and abroad long have alleged that state-sponsored embezzlement and other illicit activities have been systemically engendered by his most loyal – and wealthy – supporters, who spared no effort to ensure the incumbent’s victory in both the 1994 and 1999 elections.
Among the officials Western media have often cited to describe Ukrainian corruption is Oleksandr Volkov, presently Kuchma’s key aide who had been close to the president since he won his first term in 1994. “The 1994 presidential race [in Ukraine] was financed by two international companies,” said political observer Volodymyr Malinkovych. “Nordex (accused by the U.S. of being involved in organized crime) supported the then incumbent President Leonid Kravchuk, and Seabeco – a Ukrainian-Hungarian-Dutch joint venture – funded Kuchma,” said Malinkovych, who helped manage Kuchma’s 1994 presidential bid.
At the time, Volkov represented Seabeco, which was controlled by Boris Birshtein, a businessman whom the FBI linked to organized crime. Belgian media have repeatedly reported that the country’s authorities were investigating Volkov on charges of illegal financial dealings, noting in particular that Seabeco allegedly transferred $2 million dollars to Volkov’s bank account and another $3 million by associates of Birshtein from Sept. 1994 through Jan. 1996.
Volkov has repeatedly denied all the allegations. A number of other international publications, which wrote about Ukraine in the weeks preceding the Oct. 31 presidential election, all pointed to corruption in Kuchma’s entourage as posing a serious risk to Ukraine’s democratic development.
Stephan Sestanovich, adviser to the U.S. Secretary of State, echoed those sentiments during a visit to Kyiv on Nov. 22. He said corruption would be a key issue during Kuchma’s Dec. 8 visit to Washington. “[Corruption] is an area that we have looked at in trying to develop assistance programs for Ukraine, and it’s a problem that we have tried to address through increased cooperation between our law enforcement agencies,” Sestanovich said.
