The U.S. government identified about $250 million in Lazarenko bank accounts around the world, including Guernsey, Antigua, Switzerland, Liechtenstein and Lithuania. The governments complied with a U.S. government request to freeze the assets.
Consequently, a lot of nations, institutions and people are lining up to claim the money. Among them are the U.S. Department of Justice, liquidators of the bank in Antigua, U.S. company Universal Trading & Investment Co., Ukrainian businessman Oleksiy Dityakovskiy, Russian Gazprom, Lazarenko’s family and others.
Lazarenko, who ended his prison sentence on Nov. 1, 2012 but who remains in America seeking a residency permit, has consistently attempted to reclaim some of the frozen assets. But the district court in San Francisco refused his claims, finding that Lazarenko obtained the money by illegal means.
Lazarenko was convicted in America for laundering money through U.S. banks. It is a complex accusation, requiring proof of the loot’s criminal origin. Documents in Lazarenko’s case clearly state that the money was acquired from corrupt activities in Ukraine, in particular, through extortion, fraud and transportation of stolen property.
The evidence unearthed showed that Lazarenko, while serving in government including as prime minister from 1996-1997, extorted from businesses in exchange for giving them government protection and economic privileges. In court, Lazarenko acknowledged that he received 50 percent of profits in kickbacks in many of the most lucrative sectors in Ukraine – including natural gas, grain, dairy and the sale of state resources.
Lazarenko’s accomplice Petro Kirichenko testified in court that Lazarenko used this extortion scheme with everyone, allowing him to become fabulously wealthy, especially from selling natural gas purchased from Russia at highly favorable rates. His actions defrauded the Ukrainian people.
Breakdown of claims
The U.S. Department of Justice has the dominant claim to receive Lazarenko’s money because he was arrested, tried and convicted in America. The Justice Department is now awaiting the Washington D.C. district court’s ruling on the distribution of Lazarenko’s money.
Dityatkovskiy, the former owner of Dnipronafta company, claims that he incurred $1.38 million in losses because of Lazarenko’s kickbacks. A U.S. court declined Dityatkovskiy’s claim.
Universal Trading & Investment Co., a Massachusetts-based company which was contracted by Ukraine’s general prosecutor in 1998 to help investigate the activity of United Energy Systems of Ukraine (UESU) that was partly owned by imprisoned ex-Prime Minister Yulia Tymoshenko, a former Lazarenko protegé, and United Energy International in London, claims it has a right to 12 percent of any recovered money for its services. The company claims it played an important role in the freezing of $144 million that used to belong to Balford Trust, the beneficiary owner of whom is Lazarenko, in Guernsey, in 1998.
Gazprom has also claimed that it is owed $65 million, citing a decision by a Russian court in 2001, according to which UESU owed Russia money. But a Washington court also turned down the claim.
Ukraine’s government, in particular the general prosecutor’s office, also made a claim on Lazarenko’s money. On May 14, 1998, General Prosecutor Bogdan Ferentz signed an agreement with UTICo on legal assistance in returning Lazarenko’s money to Ukraine for a 12 percent commission.
The successor of Ferentz, Mykhailo Potebenko, broadened the mandate and entrusted UTICo with returning the money taken out of Ukraine by Lazarenko partner Kirichenko. However, in 2003, the Pechersk District Court of Kyiv ruled that the power of attorney issued by the general prosecutor is not enforceable. Ukraine’s Supreme Court upheld this decision on June 14, 2006, and Ukraine’s Justice Ministry explained in two 2010 letters that UTICo had no power to represent Ukraine’s interests in U.S. courts in the Lazarenko and Kirichenko cases.
Separately, Ukraine’s government wants Lazarenko’s money returned. But American officials have insisted that stolen assets should be returned to the people who suffered and not to their corrupt politicians.
In a nutshell, the fate of roughly $250 million illegally obtained and laundered by Lazarenko is now in the hands of a American court in Washington, D.C. Even after the ruling, the actual return will take much longer. We are hoping that Lazarenko’s stolen money will be returned where it belongs – to the Ukrainian people.
Halyna Senyk is member of the board of directors of the Anti-Corruption Action Centre in Kyiv, a non-governmental organization, and Daryna Kaleniuk is its CEO.
