Ukraine MP's UK empire raises transparency questions

By bne IntelliNews May 24, 2013

Graham Stack in Kyiv -

It was billed in the Ukrainian media as the wedding of the decade to be celebrated on the uniquely romantic date of September 9, 2009 - 9/9/9. Ukraine's gossip columns were abuzz with details of the wedding, with international stars such as Eros Ramazotti being flown in to perform at estimated total fees of $1m. Donetsk grandees such as soon-to-be-president Viktor Yanuokvych and Ukraine's richest man Rinat Akhmetov were known to be attending. But the question that had journalists stumped: who was getting married?

Only the day after the opulent celebrations did the name of the bride become known and at first glance it was an anticlimax: Party of Regions MP Yury Ivanyuschenko had given away his daughter Yana to a resident of Monaco. Journalists scratched their head at the name: Yury Ivanyuschenko had been listed as a Party of Regions MP since 2006, but no one remembered ever seeing him in parliament. Indeed, it transpired he had been based in Monaco for most of the last decade. Ukraine's company register did not list him as owner of any assets that could explain his apparent wealth, and Ivanyuschenko was also almost entirely absent from the media record - with two telling exceptions: donating money in 2001 towards construction of a church in his hometown, the small Donetsk mining town of Enakievo - also the hometown of the Yanukovych family itself - and an exposé of Donetsk organised crime published on the internet in 2007 and ignored at the time, that mentioned Ivanyuschenko as being the Enakievo strongman in the 1990s, and having run a gang of killers with 40 hits under their belt. The exposé was based on an alleged leaked Russian intelligence report. A libel suit won by Ivanyuschenko in 2011 against the website produced testimony from the relevant Russian offices denying knowledge of any such document and a ruling that demanded the withdrawal of the article.

In February 2010, wedding guest, fellow townsman and longstanding friend of Ivanyuschenko, Viktor Yanukovych was elected president of Ukraine. By the end of 2011, Ukraine media rankings listed Ivanyuschenko as the second most powerful man in Ukraine, following Yanukovych himself, despite his holding no office besides that of MP. Media claimed that Ivanyushenko was tasked with taxing financial flows in Ukraine's massive shadow economy, and dubbed him the president's "left hand man" - "left" denoting shady in Russian. Ivanyuschenko had won a libel action to quash media stories of an organised crime background, and Ukraine's interior ministry and security service issued statements that there were no records of his involvement in any such criminal activities.

Ivanyuschenko, who does not have a press secretary, failed to respond to phone calls and emails from bne.

Adding to the controversy surrounding Ivanyuschenko's sudden meteoric rise was his talent for acquiring assets and winning state tenders. First, Ivanyushenko outed himself as the senior partner of secretive Lugansk mining magnate, Ivan Abramov - and thus was part owner of a swathe of lucrative Donbass coal mines and processing plants, as well as Lugansk gas structures. Then in 2011, he acquired one of Europe's largest open-air markets, the massive "7-Kilometer" market in Odesa, with annual rent revenue estimated around $29m. In 2011, he acquired a controlling stake in Azovmash, Ukraine's largest builder of the railcars crucial to the metal and mining and agricultural sectors, as well as Kyiv's Zhulyanii airport. In March 2012, he and Abramov detailed their assets in a list handed to journalists at Forbes Ukraine, which also included financial and agricultural assets. Forbes Ukraine estimated his assets as totaling $168m, making him only the 77th wealthiest person in Ukraine, but also calculated that structures linked to Ivanyuschenko had won around $300m worth of state tenders in 2012.

Address to depress

While Ivanyuschenko jets between Enakievo, Kyiv and Monaco, both the list handed to Forbes as well as the company registers of Ukraine and UK show that he has opted to use the UK as the jurisdiction for holding his rapidly increasing Ukrainian assets - and one London address in particular, 122-126 Tooley Street.

Since his "coming out" at his daughter's wedding, he has set up an entire holding structure for his sprawling assets at this address: thus most of his assets are controlled via holding companies Pallace Limited and Rollexa Ltd registered at 122-126 Tooley St, and their subsidiaries at the same address, such as Impool Ltd, Gazoil Corporation Ltd, Keenor Ltd, Keens Ltd and Goodlight Capital Ltd, which together own dozens of assets in Ukraine, according to the Interfax Spark database. The massive Odesa 7-Kilometer market is owned via Parrox Corporation Ltd, also registered at 122-126 Tooley St.

When in Kyiv, Ivanyuschenko occupies a magnificent office overlooking the Saint Sophia Cathedral, a Unesco world heritage site. By contrast, his UK address at Tooley St is a shabby ground floor office in a side street. And Ivanyushenko's companies share offices with numerous other East European businesses, some of whom have featured in bne reports: Thus, Espace Soft Trading, a Ukrainian-run company suspected by the UN of attempting to breach arms sanctions on Eritrea in 2012, is listed at the same address. Diafall Ltd, which made up the numbers in an allegedly rigged Ukrainian state tender for a $400m drilling rig in 2011, is also a denizen of 122-126 Tooley St. Sergei Dadechko, former CEO of looted Ukrainian bank Rodovid, who narrowly survived an assassination attempt in Kyiv in March 2012, is director of three companies at this address.

In 2011, two Moldovan businessmen, Viorel and Victor Topa, accused companies registered at the Tooley St address of expropriating their stakes in Moldovan banks. Another company on the street, Liberton Associates, is claiming debts worth tens of millions of dollars from Ukraine's state-owned atomic power operator Energoatom, also derived from court decisions in Moldova. The court case even led to a Moldovan arrest warrant issued for the head of Energoatom in Moldova in 2012. "The reason there are so many companies registered at this address is that we are a company formation agency," explains 73-year-old Brian Wadlow, manager for a number of company service providers at 122-126 Tooley St, as well as at number 88a. "And the reason that there are so many companies from Eastern Europe here is that we have someone - agents - in those countries."

Wadlow's company incorporation service includes providing nominee directors and shareholders, both individuals and corporate, a service in hot demand by Eastern European businessmen keen to have a UK address while keeping their names off the public record. According to the website, which enables the tracing of directorships, Wadlow's activity as nominee director goes back to 1992, and he has personally acted as nominee director for over 600 companies, with company formation firms registered at the same address accounting for many hundreds more.

As bne reported in 2012, the Moldovans Victor and Viorel Topa brought a lawsuit against UK companies they claimed had wrongfully acquired their stakes in Moldovan banks. The judge issued a discovery order forcing Wadlow to hand over all documents relating to the companies. The result of the discovery order was to establish that Moldova's richest man and first deputy speaker of parliament, Vladimur Plahotniuc, was the owner of one of the defendants, Tomdal Ltd, registered at the Tooley St address. The controversy surrounding Plahotniuc has since led to the collapse of Moldova's governing coalition, and an ongoing political standoff.

Intriguingly, the discovery order also documented who ordered the company from Wadlow: the Tallinn-based offshore incorporation service Suntiger Five International (SFI) and Estonian Henri Soova, according to Topa's lawyer Patrick Boylan in a 2012 interview with bne.

Chasing Suntiger

According to Suntiger Five's website, the company was set up 1992 - immediately following the breakup of the Soviet Union - and also the first year of Wadlow's activity as nominee director in London. For Henri Soova, the collapse of communism in the Baltics meant an abrupt change in career path; Soova, in his mid-30s at the time, with fluent English, was spokesman for the Estonian Communist Party in the years when the Soviet Union unravelled. His Communist-era contacts eased his move into capitalism. "It was friends from university who got me into the offshore business," Soova tells bne. Soova declined to specify who those friends were.

Soova acknowledged that Wadlow, the company incorporation agent at the Tooley St address, had acted as a nominee director through (Wadlow's firm) Companies Plus for five to six companies during four to five years. "UK is a prestigious EU jurisdiction, UK companies are easy and fast to incorporate, and may have very small share capital," Soova says, denying any systematic connection to the Tooley St address or to Wadlow.

The Suntiger connection may, however, link the Tooley St address to Latvia's secretive banks specialising in private banking for customers from the former Soviet Union. "In 1996, I applied for a loan from Parex to fund an import operation," Kharkiv entrepreneur Aleksander Vanyukov tells bne. "Parex managers wanted a 20% payment on the amount of the loan to be made in advance to them via an Irish offshore, which was then set up for me by the Tallinn company. But I backed out." Soova denied incorporating any company for Vanyukov.

Latvia's current leading bank for non-resident depositors, Aizkraukles Bank, rebranded as AB.LV, featured Suntiger as its business partner in its annual report for 2008, suggesting that Commonwealth of Independent State customers of Aizkraukles and other Latvian banks could be the source of Suntiger's customers, and of companies registered at the Tooley St address. "I could not ask for more than my modest role as partner of Aizkraukles," Suntiger's Moldovan representative Calin Corjan said in the profile.

Aizkraukles disputes any partnership with Suntiger. "Calin Corjan is the customer of our bank, dealing in Moldovan wines. The company Suntiger International was mentioned in the article at his own discretion," the bank's press service tells bne. Corjan detailed his vintage wine collection in the feature.

"Aizkraukles Bank has never been a partner for Suntiger. Corjan never been manager or director of Suntiger," Soova tells bne. Soova also denied owning or running Suntiger himself. Corjan's personal email was used as the only contact information provided on a Suntiger website version from 2001, but Soova says that the website was "not the company's main website". Corjan is also himself listed as director of a company at Tooley St incorporated in 2001. Corjan did not respond to attempts to contact him. According to Soova, he no longer works for Suntiger.

The connection between the Tooley St address and Latvian banks otherwise holds good where it was possible to establish bank details - including for instance for Yury Ivanyuschenko's Parrox Corporation, which banks at Latvia's Regional Investment Bank, according to its accounts.

Enakievo's other UK address

Mining town Enakievo's other famous son besides Ivanyuschenko, President Viktor Yanukovych himself, may favour a different UK address, according to investigations by Ukrainskaya Pravda.

The investigations identified a number of Crimean desirable residences that appear linked to the Yanukovych family, owned by Ukrainian structures, which are owned in turn by UK companies Navimax Ventures and Roadfield Capital.

Another prestigious property with presidential "family" links is a massive helicopter pad-cum-conference centre arising in Kyiv amid wooded parkland next to the parliament, and intended for presidential use. The Ukraine development company has UK-company Fineroad Business in its ownership structure. Fineroad Business and Roadfield Capital share an address in Cardiff, 82 Whitechurch Road. All three companies were originally set up by Ireland and Overseas Acquisition, Milltown Corporate Services and Fynel Limited, linked by investigations to another major company service provider for Latvian banks, International Overseas Services (IOS).

Like Suntiger, IOS dates back to 1992 - the year relations between the Baltics and their Eastern neighbours changed from Communist to capitalist and Latvia's commercial banking system was born - with the first ever commercial banking licence obtained by Parex Bank.

In an interview in Russian daily Kommersant in 1996, former Parex owner Valery Kargins recalled the embryonic National Bank of Latvia in 1991 - shortly before independence from the Soviet Union. "There were only three people sitting together in one room - the president, a legal expert and an aide," he said.

The aide's name was Gints Poiss, and had been hired primarily because of his knowledge of English, Poiss said in an interview 2011. Journalist investigations have linked Poiss to company service provider IOS, although he has denied involvement. Poiss served on the advisory council at Parex for many years until it was re-nationalised in 2008 when it was close to collpase.

The longevity of Suntiger and IOS over two decades since the collapse of the Soviet Union may indicate how little the Ukraine-Baltic connection has changed over the years, from the wild 1990s down to the present, despite anti-money laundering rhetoric and slick public relations on the part of Latvian banks: a worrying sign given Latvia's pending accession to the Eurozone.

One sign of change may be that British Prime Minister David Cameron has prioritised the issue of corporate transparency for the UK's 2013 G8 presidency and June G8 summit, calling on the EU and the G8 to "break through the walls of corporate secrecy" to tackle corruption and tax evasion. According to a Global Witness report entitled, "Anonymous Companies", published on May 20, he could start by looking closer to home. "Requiring beneficial ownership information to be put in the public domain does not involve much red tape. In the UK, it is estimated that only 1% of companies have beneficial owners who are distinct from their legal shareholders... The time to act on this is now."

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