First major corruption case is litmus test for Poroshenko's new Ukraine

By bne IntelliNews October 1, 2014

Graham Stack in Berlin -


Ukraine's deputy prosecutor general has been linked in the media to massive theft and threatening journalists physically, in what is seen as a test case for President Petro Poroshenko's anti-corruption credentials.

According to an investigation by Ukraine's Nashi Groshi, an anti-corruption NGO, Deputy Prosecutor General Anatoly Danilenko stole 140 hectares (ha) of prime lakeside real estate near Kyiv from the state, using a widespread scheme whereby a state firm was corporatised and then the real estate hived off. Initially a total of 369ha went missing, of which 229ha was returned to the state after an initial enquiry. Only in 2013 did the prosecutor general demand the return of the remaining land, when the statute of limitations had already taken effect. The property is registered in the name of Danilenko's son.

No sooner were the results of the investigation published than the journalist who researched the piece for Nashi Groshi received physical threats from men accosting her at the door of her house. "In all the years of criticising [ousted president Viktor] Yanukovych, we never had to endure physical threats," head of the Nashi Groshi project, Denis Bigus, wrote on Facebook.

Prosecutor General Vitaly Yarema, a close associate both of Danilenko and President Poroshenko, publicly accused the journalist of fulfilling someone else's order, despite the investigation being entirely substantiated out of publically available sources of information.

According to Bigus, Yarema said that the timing of the revelation came as the Prosecutor General's office was about to move against some fuel trading businesses, apparently leading him to believe it was part of a smear campaign against his officials. But this only added fuel to the fire: Bigus writing on Facebook said that sources have now informed him that there is indeed such an ongoing investigation of a filling station chain BRSM-Nafta, believed connected to former energy minister Eduard Stavitsky, and led by Danilenko. According to Bigus' sources, it looks less like a real investigation and more like a shakedown of the fuel trader by Danilenko, who is reported to have offered his services as "intermediary" between the investigators and the firm involved.

Bad week for Yarema

Capping a bad week for Prosecutor General Yarema, journalists also established that his 26-year-old son Valery had been appointed head of the state property register - a potentially highly lucrative post.

During a lengthy damage-limitation press conference, Yarema detailed to journalists what he called "his" success in having the assets of the family of former president Yanukovych and other officials of his regime frozen across Europe. According to Yarema, Latvia had frozen around $40m in accounts belonging to former deputy prime minister Sergei Arbuzov, while Switzerland arrested around CHF26m belonging to the Kluev brothers, Andrii and Serhii.

But sceptics pointed out that this had little to do with Yarema, and that indeed the snail's pace of the investigations in Ukraine being undertaken by Yarema might actually contribute to those accounts being unfrozen, as the affected former officials are now taking legal moves to this end.

Yarema also said that Danilenko might be suspended while an internal investigation takes place.

"Today if you want to do yourself maximum harm in terms of information, it is sufficient to simply fail to respond to the questions of journalists and experts. But I consider it a little victory that at least Danilenko has been suspended from his duties during an investigation," wrote political scientist Taras Berezovets on Facebook.

Prosecutor tradition

Ukraine's prosecutor general under the former president Yanukovych, Viktor Pshonka, became notorious for his corrupt activities, which ended with him fleeing Ukraine in dramatic fashion, leaving behind villas stuffed with gaudy fittings.

But the first new prosecutor general appointed after the ousting of Yanukovych, Oleh Makhnitsky, was only three months in the job before Yarema took over and also came in for some flak this week.

Governor of Dnipropetrovsk and Ukraine's largest banker Ihor Kolomoisky publicly stated at a press conference that during his brief tenure as prosecutor general, Makhnitsky had stolen enough to help buy the Hyatt Regency hotel in Kyiv. Kolomoisky may have been motivated in his comments by his desire to replace the Dnipropetrovsk prosecutor – appointed by Makhnitsky – with his own man.


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