Only months after a popular uprising in February 2014 ended the corrupt rule of Ukraine’s pro-Russian president Viktor Yanukovych, his successor Petro Poroshenko appointed to top law-enforcement positions men linked to a money-laundering system similar to that which operated under Yanukovych.
Yanukovych’s tenure was notorious for the operation of the massive so-called ‘State Programme’ money-laundering system, used to evade taxes and customs, as well as to move illicit funds out of the country. The system was curated by the then-prosecutor general Viktor Psonka and tax minister Oleksandr Klimenko, whose joint flight out of the country after the ousting of Yanukovych has become legendary after being recorded on CCTV: the two men muscled their way through the resistance of border guards to reach a private jet waiting to whisk them off to Russia.
The victory of the Euromaidan protest movement in February saw a ‘civilian’ catapulted into the post of prosecutor general for the first time in Ukrainian history – Oleh Mahnitsky, a practicing criminal lawyer. Yet just four months later, the newly elected Poroshenko fired Mahnitsky and appointed his own allies as chief prosecutor and first deputy chief prosecutor. The new men, Vitaly Yarema and Mykola Gerasimyuk, were career officers in the prosecutor’s office and criminal police, and, according to a cache of around 1GB of documents including internal emails seen by bne IntelliNews, they were allied with an integrated money-laundering system similar to that which operated under Yanukovych.
To many this comes as little surprise. As far back as 10 years ago Poroshenko was being accused of having too-close ties with a prosecutor general – a pattern of behaviour that has continued to this day. Earlier this year, the president was forced under extreme pressure from the country’s Western backers to get rid of his appointee Viktor Shokhin, a close ally who was widely criticised for hampering anti-corruption reforms despite being the top prosecutor.
Emails and offshores
The documents leaked to bne show that Poroshenko-appointee Gerasimyuk, the first deputy prosecutor general, used the services of professional money launderers to move large sums of secret money abroad. The money launderers ran a platform of offshore firms, as well as a network of fictitious Ukrainian firms. They also ran operations with millions of dollars in cash in Kyiv, according to the documents.
The leaked documents included Gerasimyuk’s email inbox as well as extensive internal documents from within the money-laundering operation. The emails show Gerasimyuk negotiating bribes for dropping charges against cronies of former President Yanukovych.
One email (
In another mail (
Gerasimyuk was also contacted directly (
By contacting Gerasimyuk, Granovsky successfully influenced criminal proceedings bearing on a $120mn property dispute over control of a shopping mall, between his business Assofit and Cyprus firm Arricano, allege Arricano representatives. After leaving office in December 2014, Gerasimyuk went to work as parliamentary assistant to Granovsky, who had been elected an MP two months previously.
Granovsky’s influence on the Prosecutor General’s Office continues to this day: photographs of an official meeting between Ukraine's current prosecutor general, Yury Lutsenko, and Cyprus prosecutors held in September showed that Granovsky also attended the meeting.
Because the emails leaked to bne derive only from Gerasimyuk’s inbox, his response to the corrupt proposals is unclear. But a sign that he was enriching himself can be seen by the large secret payments he made overseas, via a system of offshore vehicles operated by money launderers.
The payments were for his daughter's tuition fees in England and the US, as well as for luxury real estate in Slovakia and Croatia, as bne IntelliNews wrote in 2015. Gerasimyuk has since denied owning any property abroad.
Gerasimyuk’s payments were routed via offshores Smartus Business, Itaco Alliance and others. These offshores were part of an integrated money-laundering and tax-evasion system similar to that run under Yanukovych by Psonka and Klimenko. Many other secret payments by officials flowed through the same network of offshores. Some corporations also used the system to make hidden, possibly illicit payments.
One of the operators of the money-laundering platform contacted Gerasimyuk directly to notify him that his offshore payments had gone through successfully.
The operator transferring Gerasimyuk’s money abroad (
This suggests (
Gerasimyuk sent emails (
On February 11, 2016, the National Bank of Ukraine withdrew Bank Premium’s licence, citing “violations of laws on financial monitoring uncovered during an unscheduled audit”.
Gerasimyuk acknowledges that he knows Dumchev well. “Yes, of course I know Sergei Dumchev, for six or seven years,” Gerasimyuk tells bne IntelliNews by phone. Gerasimyuk, however, denied using the email address.
Dumchev’s press secretary, Anna Ostrovskaya, also denies that Dumchev used the respective email address, or that he had anything to do with the offshores in question. Dumchev declined to be interviewed on the subject.
Dumchev is not only acquainted with Gerasimyuk, but acknowledges being a longstanding close friend of Gerasimyuk’s boss and associate, Vitaly Yarema, who was the prosecutor general from June 2014 to March 2015. “Sergei Oleksandrovich [Dumchev] has never hidden the fact that he has been friends with Vitaly Yarema around 20 years, ever since Vitaly Grigorovich [Yarema] served in the Kyiv criminal investigations department,” Dumchev’s press secretary Ostrovskaya says, adding that Vitaly Yarema is godfather to Dumchev’s daughter, making him Yarema’s kum, an important degree of non-blood kinship in Ukraine.
Yarema could not be contacted for this article. In his only interview since leaving the post of prosecutor general in February 2015, he said allegations against him of corruption were made by those whom he had investigated.
Bank Premium’s role in the system is also indicated by a list of fictitious money-laundering Ukrainian companies included in the same cache of documents.
According to the instructions circulated to clients of the money-laundering platform in April 2015 (
Former Bank Premium CEO Leonid Pervak said he could not comment on the document because of banking confidentiality rules.
According to one of the internal documents, dated April 2015, the activities of around 20 Ukrainian firms operated by the money launderers had come under scrutiny of law enforcement. The operators warned their brokers and clients that they should no longer wire any money to these firms. “In the case of breach of this instruction, clients and intermediaries bear full liability for the funds. Thank you for your understanding,” the letter said.
An ongoing criminal investigation by Ukraine’s military prosecutor, opened in January 2015, alleged that four of the firms listed in this internal document had been used to embezzle funds from Ukraine’s state-owned defence sector in 2012-2014, according to details of the investigation contained in Ukraine’s register of court proceedings.
According to prosecutors, nearly 30 major state-owned defence enterprises had paid around $7mn to suppliers for fictitious supplies of microelectronics. The suppliers then moved the money in turn to the firms operated by the money-laundering platform.
Bank Premium’s loan book dated January 1, 2016, as seen by bne IntelliNews, show that the bank was also involved in shadowy dealings in Ukraine’s energy sector. Thus, in 2014 and 2015 the bank extended around UAH260mn ($10mn) in loans to three gas trading firms – Gaztorgpostach, Skela Tertsium and Poltavagaz Sbyt, despite the countrywide economic collapse. These firms were the tiny bank’s largest borrowers. Criminal investigations are ongoing into these firms’ role in siphoning funds from state energy companies.
Besides the Dumchev address, Gerasimyuk received emails confirming his secret payments abroad via offshores from another email address, “email@example.com”, which identified its user as “Boris Somov”. However, Gerasimyuk addressed the correspondent as “Anatoly”.
“Good day Anatoly, I am sending you the bank details for my daughter, I await the proof of payment document, thanks!!! Mykola Gerasimyuk”, reads one such email. “Boris Somov” replied to Gerasimyuk’s email by sending swift records of payments made for his daughter’s university fees.
A resume (
The mysterious Koval also used the platform for his own personal payments abroad. An invoice (
According to a letter (
Orion Ltd was part of the offshore platform, routing clients’ secret payments to recipients all over the world. Judging by a cluster of contracts (
Bags of money
According to another document in the cache (
On that same day, Tkachev was present in the bank offices of a tiny bank, Bank Alliance, in the heart of Kyiv, when the offices were raided by Ukraine’s SBU security service on suspicion of money laundering for organised crime.
According to redacted court documents from Ukraine’s state register of court proceedings, the SBU raid on Bank Alliance was part of a criminal investigation showing that “on the basis of Bank Alliance, using the said institution’s financial instruments, under the cover of providing financial services in the banking sphere, in the course of 2014 functioned and is still functioning a ‘conversion centre’ [money laundering platform for black cash] with illegal turnover of over UAH500mn [around $20mn] per month”.
In June 2015, Poroshenko fired the SBU head who had ordered the raid, Valentyn Nalivaichenko. Nalivaichenko had been made head of the SBU in the immediate aftermath of the ousting of Yanukovych, prior to Poroshenko’s election.
According to legal complaints and appeals (
Tkachev could not be located for comment. His official employment, as detailed in court documents and according to bne enquiries, was as the director of a small umbrella retail business run out of a one-room office in a Kyiv suburb. Neighbours said the business had moved out in 2015.
The SBU raid confiscated a bag of cash carried by one other person present in Bank Alliance during the raid, Oleksandr Nimchinov, according to the documents. Following the raid (
Besides the difference in colour of the respective bags and different sums they contained, the documents filed to SBU and courts as part of Tkachev’s and Nimchinov’s legal fight to regain the confiscated funds were worded identically, indicating that the same legal team supported them.
Like Tkachev, Nimchinov is an associate of Koval. In Kyiv, the Nimchinov family rent the apartment from Koval where Koval himself is officially registered, bne IntelliNews enquiries established. Nimchinov hails from the same small village as Koval: Stepanivka, in Khelmnitsky region, where the two men grew up and went to school together, Nimchinov’s wife Larisa says in an interview. Oleksandr and Larisa Nimchinov, both decorators by profession, latterly cared for Koval’s dying father in Kyiv. Oleksandr Nimchinov himself declined to talk to bne IntelliNews.
The links between illicit capital export via offshores and ‘black cash’ operations means, for instance, that officials could pay cash received as bribes to the ‘conversion centre’ and request that it be moved abroad to their foreign bank accounts or used to buy foreign real estate.
Poroshenko’s preference for tame and corrupt prosecutors was documented by former US ambassador John Herbst over ten years ago in a diplomatic cable subsequently leaked. Herbst described then prosecutor general Oleksandr Medvedko as parliamentarian Poroshenko’s “crony” whom Poroshenko used for political influence.
Back then as well, Poroshenko’s “crony” prosecutor general had family connections among shadowy financiers: he was related by marriage to ex-banker Pavlo Borulko, currently on the international wanted list for large-scale fraud and money laundering.