Nearly three years after former Ukrainian President Viktor Yanukovych fled to Russia in 2014, nobody even seems to have worked out how much money he and his cronies stole from Ukraine.
Experts speaking on the Asset Recovery Panel at the Kyiv Post’s 5th Tiger conference on Nov. 29 said that whatever the amount, it is doubtful most of it will ever be recovered: Even in countries with strong judiciaries, which Ukraine still lacks, asset recovery can take a decade, they said.
“We can say that a huge amount was stolen,” said Andriy Stelmashchuk of Vasil Kisil and Partners, and one of those responsible for electing Anton Yanchuk, the current deputy justice minister, as the new head of the State Agency for Asset Recovery Management under the Cabinet of Ministers.
“The Ukrainian state budget forecast for asset recovery this year was Hr 7.7 billion ($308 million). Next year it’s Hr 10.5 billion ($420 million),” Stelmashchuk said.
“But this year we recovered Hr 71,000 – 74,000 ($2,840 – $2,960).”
The State Agency for Asset Recovery Management will start working next year to help coordinate the faltering efforts made up until now by various agencies to recover the assets, said the panelists.
Myroslava Krasnoborova, the deputy head for international cooperation at the Prosecutor General’s Office, said that when it started its work, the department had little experience in this scale of asset tracing. She said that the department had built good relationships with international financial intelligence agencies but had failed to prove to its European partners that individuals had assets in their countries – a prerequisite for freezing assets.
Meanwhile, Daria Kaleniuk of the Anti-corruption Center criticized the Deputy Prosecutor General in charge of asset-related prosecutions, Yuriy Stolyarchuk. She said he had not presented any of the evidence his team had collected, or the amount of assets they had seized abroad.
Kaleniuk said that the most effective way to seize assets is to convict the embezzler in a criminal case. That way it is harder for the person to claim that their rights have been violated – which can happen if assets are seized by courts without a conviction, she said.
“I think the best way is to collect evidence and convict people,” said Kalynyuk. “I have to ask the Prosecutor General’s Office: What have they been doing for two years? Fifty FBI agents were sent to the Prosecutor General, financed by the U.S. Embassy. But I hear that they’re hiding themselves away, and don’t want to talk to anyone.”
Others were even more pessimistic.
“I think the chance of recovery of all these assets is zero, because the momentum has been lost,” said Konstantyn Lykarchuk, a lawyer who specializes in asset recovery, from the Tiger Conference audience.
“They have switched hands many, many times, and you cannot realistically trace them,” he added.
Stelmashchuk said that it would be possible to recover some of the assets if there were third party funding for a team of asset tracers, which usually takes a 30-percent success fee.
However, the panel’s moderator, former finance minister and investment banker Natalie Jaresko, said that any hedge fund involved in such efforts would be looking at the probability of success: “The hedge fund would need to have confidence in the domestic criminal process,” she said.
There is also the case of $11 billion lost in the banking sector. Since Yanukovych fled and the economy nosedived, many banks have been declared insolvent. Some of the money lent to these failing banks by the NBU as refinancing loans has since vanished.
“Problem number one is that Ukraine is a profoundly dysfunctional state,” said Igor Budik, Chief Risk Officer at the National Bank of Ukraine. “So the central bank’s asset recovery is not going to work.
Budik gave the example of the NBU’s attempts to call in the personal guarantees on the refinancing loans lent to VAB Bank, owned by Oleg Bakhmatyuk. Budik said that Bakhmatyuk has filed counter suits to annul the terms of the refinancing loans. These are now being considered, stalling the process.
In the case of failed banks, Budnik suggested that Ukraine’s Deposit Guarantee Fund, responsible for recovering the losses, pursue civil cases over criminal ones. The evidence bar is lower, he said, giving several examples of Russia effectively using court rulings in civil cases in recent years to seize assets in the UK.
Kaleniuk agreed, pointing to the new powers given to the Deposit Guarantee Fund in April 2015 to pursue beneficial owners to recover assets.
