The British branch of anti-corruption campaigners Transparency International is calling on the UK government to investigate why Ukrainian oligarch Gennadiy Boholyubov, who, along with his business partner Ihor Kolomoisky, is accused of massive fraud, was granted British citizenship.
The two businessmen owned Ukraine’s largest bank, PrivatBank, and are accused of defrauding it for years before the Ukrainian government nationalized it in 2016 and was forced to inject $5.5 billion in public money to replace missing cash.
PrivatBank brought proceedings in the London High Court which led to a worldwide freeze of the two men’s assets last December – $1.9 billion plus interest – a total of $2.5 billion.
The new owners of PrivatBank chose London as a venue for litigation because three of the companies used in allegedly fraudulent schemes are British, and Boholyubov had been a UK resident.
Golden visa
Boholyubov gained residency in Britain in 2009 under a scheme called Tier 1 visa – dubbed the “golden visa” – which granted residency to people investing one million pounds (some $1.3 million) into UK businesses.
After six years golden visa holders were eligible for UK citizenship, and Boholyubov got a British passport to add to his collection of Ukrainian, Israeli and Cypriot passports.
This summer lawyers for Kolomoisky and Boholyubov challenged the freezing order, arguing that English courts do not have jurisdiction against the two men, who now live in Switzerland.
Transparency International’s British branch (TI-UK) describes its purpose as “combatting corruption in the UK, reducing the UK’s role in fueling corruption overseas and combatting corruption in the international defense and security sector.”
Its spokesperson Dominic Kavakeb said: “Given the allegations against Mr. Boholyubov, the UK government should ask itself how and why he was granted a UK investor visa, allowed to buy property in London, use English companies, and given citizenship. Were adequate checks conducted on the source of his wealth?”
Safe haven
Billionaire Boholyubov is listed with Kolomoisky as among Ukraine’s richest men. He lived with his wife, Sonia, and four children at one of London’s ritziest addresses, Belgrave Square, in a house valued at around $80 million. Other exclusive London properties owned by Boholyubov are cumulatively worth around $250 million.
“The UK should investigate the part it played in this scheme – what checks were applied before the investor visa and citizenship were granted and the property purchase completed, and whether greater due diligence should have been done,” Kavakeb said.
He added that Britain had for too long been regarded “as a safe haven for corrupt individuals and their illicit wealth” and “while the government has made good promises, we’re still waiting on a number of actions that would curb the dirty money flowing into the UK.”
Ben Cowdock, a researcher at IT-UK who covers Ukraine, said the group worked with the British authorities to introduce “Unexplained Wealth Orders” – an investigative tool to help law enforcement act on corrupt assets, possibly seizing them if the suspect cannot satisfactorily explain the source of their wealth.
“For example if you had a Ukrainian politician supposedly earning $20-30,000 per year and they bought a 15 million pound (some $20 million) house in the UK that would be a good subject for an unexplained wealth order,” Cowdock said. “And if they are unable to explain that wealth then that could be used in civil procedures to take that asset from them.
Cowdock said that Bogolyubov did not seem to be taking his duties as a British citizen seriously by denying that the English courts have jurisdiction over him and avoiding court appearances in London. He said that “whilst these individuals are global citizens, which means they can live anywhere they choose, their assets stay in English jurisdiction.
“If Bogolyubov is found to have been involved in criminal activity and the government have granted him citizenship then that (revoking citizenship) is something they should definitely be looking at.”
Cowdock said efforts to seize assets owned by Boholyubov and Kolomoisky in the UK would be helped if the two were convicted in Ukraine. “Then the UK authorities are very much more likely to take an interest in their UK assets”, he said. “Whereas if they don’t it’s a lot more difficult for UK authorities, because those two are extremely wealthy individuals who have managed to mix illicit wealth with legitimate wealth and mingle it so that unexplained wealth orders might not be able to disentangle the two.”
Further checks
Frances Preston, spokesperson at UK’s Home Office, which oversees immigration, security, law and order, said: “We do not routinely comment on individual cases or ongoing legal proceedings.”
But she added that “in 2014 and 2015 we took action to tighten up the Tier 1 investor route. This included introducing new powers to refuse applications where there are reasonable grounds to believe funds have been obtained unlawfully.”
Although the new restrictions were introduced after Boholyubov was granted residency in Britain, the spokesperson said the Home Office is “undertaking further checks on investors who came to the UK through this route before the reforms were introduced.”
Money laundering?
During five days of High Court hearings in London last July, Judge Timothy Fancourt heard that as owners of the bank, Boholyubov and Kolomoisky presided over hundreds of mysterious, convoluted payments bouncing millions of dollars between dozens of bank accounts in different countries – including Cyprus and the British Virgin Islands. The transactions were so complex they may have been generated by algorithms and bore all the hallmarks of money-laundering.
Boholyubov and Kolomoisky did not appear in court and denied any wrongdoing. They claimed they were victims of political persecution by Ukrainian President Petro Poroshenko.
The judge will likely give his decision next month. If he reaffirms the freezing orders, PrivatBank hopes that will open the way to the two oligarchs standing trial on fraud charges in 2019 or 2020, and Kyiv recouping some of the billions it spent to keep the bank afloat.
