Ukraine has the highest number of politicians named so far in the Pandora Papers, a giant investigation of leaked offshore data.
The investigation consists of 11.9 million leaked documents with 2.9 terabytes of data that the International Consortium of Investigative Journalists (ICIJ) started publishing on Oct. 3.
Ukraine tops the list with 38 people, while Russia has 19, Honduras and the United Arab Emirates have 11 each, and Nigeria has 10.
The revelations attest to the widespread use of offshore schemes, and in this case, most notably so far, by Ukrainian powerbrokers and businesspeople.
Also see Self-Servant of the People: Zelensky’s offshore schemes
The reliance on offshore havens by wealthy Ukrainians partially stems from the desire to protect businesses from corporate raiders and corrupt officials in a country that still has no genuine rule of law.
However, offshore schemes are also often used by politicians, officials and oligarchs to hide ill-gotten wealth and evade taxes.
During the 2019 presidential election campaign, then-candidate Volodymyr Zelensky attacked his rival, then President Petro Poroshenko, for using offshore schemes.
But the Pandora leak has turned the tables on Zelensky himself, showing that he and his inner circle have owned a network of offshore companies which they failed to declare.
Vitaly Tytych, a lawyer and ex-head of judicial watchdog Public Integrity Council, told the Kyiv Post there is nothing illegal in offshore firms per se. However, it is the job of law enforcement to check whether crimes were committed in each specific offshore scheme.
“Investigators should determine this,” Tytych said.
Before Zelensky, Poroshenko was hit with an offshore scandal during the analogous Panama Papers leak in 2016.
In 2014, Poroshenko set up an offshore firm in the British Virgin Islands, according to the Panama Papers.
The failure by Poroshenko to declare the offshore company raised questions about what he might have been trying to hide and whether tax evasion was involved.
He denied the accusations of wrongdoing.
After the leak, Poroshenko claimed he set up the firm to transfer his assets to a blind trust — an arrangement that allegedly let Rothschild Trust manage his assets without his involvement while he was president. But Poroshenko’s critics argued that the trust was not actually “blind,” and he could influence decisions about his assets through his proxies.
Zelensky’s offshore debacle is in many ways reminiscent of Poroshenko’s offshore scandal in 2016.
Ironically, some of those who criticized Poroshenko’s offshore firms defended Zelensky’s behavior, and the other way around.
Zelensky’s public image has been tarnished because during the election campaign he presented his political style as the antithesis of Poroshenko’s secret under-the-table dealings.
The Pandora Papers reveal that offshore schemes can also be used to hide assets in Ukraine’s Crimea, which was occupied by Russia in 2014.
Oleksandr Gerega, a businessperson and lawmaker from the For the Future faction, and his wife Halyna Gerega owned five Cypriot offshore companies in 2015–2019. One of them, Edlagor Enterprises Limited, owns the Novatsentr K hypermarket chain in Crimea.
Novatsentr K is the largest taxpayer in Sevastopol in the Russian-annexed peninsula.
Gerega has failed to include the offshore companies in his asset declarations.
He claimed he lost control of his Crimean assets after the occupation.
Gerega is one of Ukraine’s wealthiest people. He and his wife have a net worth of $1.7 billion.
Gerega was a member of ousted ex-President Viktor Yanukovych’s Party of Regions and voted for the so-called “dictatorial laws,” which cracked down on civil liberties in January 2014 during the EuroMaidan Revolution.
Offshore companies, it appears, are also a way to conceal luxury jets.
In 2015 a British Virgin Islands-based offshore company owned by Roman Bugayev, a board member at Akhmetov’s SCM group, got a Credit Suisse loan to buy a Falcon 7X jet, according to the Pandora Papers. Such jets are worth around $50 million on the market.
The company was investigated by financial regulators in the British Virgin Islands, according to the Slidstvo.info investigative journalism project. SCM denied such an investigation took place.
Akhmetov has regularly used a Falcon 7X jet to fly between Ukraine and Europe.
Trident Trust, the company that helped Akhmetov set up the offshore firm, also worked with Paul Manafort, an ex-campaign manager for former U. S. President Donald Trump. Manafort was convicted in 2018 on fraud charges.
U.S. media have reported that Akhmetov introduced Manafort to Yanukovych before the U.S. lobbyist became a consultant for the former president.
The Pandora leak shows that Ukrainian officials and businesspeople routinely buy high-end real estate in London.
After Borys Lozhkin became Poroshenko’s chief of staff in 2014, his daughter Anastasia bought a $4.6 million apartment in downtown London.
The apartment is located centrally next to University College London, where Anastasia studied.
To buy the property, she got a loan from a British Virgin Islands-based offshore firm owned by Lozhkin.
Lozhkin has confirmed the report, saying that his daughter expects to repay the loan within 10 years.
“She chose the apartment herself — the price is not high for downtown London,” Lozhkin told Slidstvo.info.
He did not include the offshore firm and the loan in his asset declarations. Lozhkin argued that, as of 2014, the law did not require him to declare such assets.
Among other Ukrainian businesspeople and politicians known to own luxury real estate in London are Gennady Bogolyubov, a partner of tycoon Ihor Kolomoisky and former co-owner of PrivatBank, businessperson Alexander Yaroslavsky, the daughter of ex-lawmaker Serhiy Kivalov and Ihor Voronin, a partner of oligarch Dmytro Firtash.
The Pandora Papers also added new details about the offshore empire owned by Russian president Vladimir Putin’s cronies.
The daughter of Sergei Chemezov, a close ally of Putin and head of state conglomerate Rostech, has an offshore company called Trident Trust that owns an 85-meter luxury yacht worth about $140 million.
The 2016 Panama Papers leak revealed that Chemezov’s son Stanislav owned an offshore company that was benefiting from the construction of a $550 million fiber-optic highway by Rostech.
In 2019, the Organized Crime and Corruption Reporting Project, a Kyiv Post partner, published a report that Chemezov’s relatives and associates own luxury villas in the Spanish resort of S’Agaro.
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