On August 14, when protesters came to the Parliament to push the legislature to pass the lustration bill, it voted, then passed in the first reading, another important act: the draft law to amend the Criminal Code and the Code of Criminal Procedure of Ukraine. If adopted, it would make punishment for specific crimes against national security and public safety, and for corruption-related offences, inevitable. The bill’s long and dull title hides a crucial mechanism for Ukraine today – it allows criminal proceedings in absentia. “It is currently impossible to have a verdict, or to confiscate the accused person’s property for that matter, unless he or she is physically present in court, ” is the Prosecutor General’s Office excuse. Thus, this mechanism is vitally important in Ukraine’s efforts to recover the funds plundered by the functionaries of Yanukovych’s regime. They are currently all in hiding from investigation, so the judges have no way to convict them in Ukraine and confiscate their stolen property at home, or to assist in international investigation of money laundering by former Ukrainian officials.
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“If, for example, law enforcement officers investigate money laundering in Austria, they have to prove, that these gains are ill-gotten and originate from Ukraine. Ukrainians themselves have to investigate the illegal means by which they were gained,” clarifies Daryna Kaleniuk, an expert in the recovery of stolen assets and Executive Director of the Anticorruption Action Centre. Her view is shared by Gretta Fenner, a Swiss expert on corruption and Managing Director of the Basel Institute on Governance. “The most important thing is to conduct your own financial criminal investigations,” she says in a commentary for The Ukrainian Week. “Some people expect some foreign jurisdictions to do some kind of magic, but they will only start working when Ukraine has done its own homework.” On August 11, Ms. Fenner and Prosecutor General Vitaliy Yarema signed an agreement authorizing the International Centre for Asset Recovery (ICAR) of the Basel Institute on Governance to assist Kyiv in the search and recovery of the assets that were stolen by the former president and his closest allies. ICAR cooperates on such issues with the governments of 15 countries, albeit does not name them for security considerations. According to Gretta Fenner, ICAR experts will assist the Ukrainian government in the recovery of assets, not only from Switzerland, but also other parts of the world. They will help the Ukrainian Prosecutor’s Office in its domestic investigations and in the development of strategies, in cooperation with other entities, to establish good working contacts and arrange meetings. “A Ukrainian delegation will shortly be visiting Switzerland to meet with representatives of Lichtenstein and other parties; simply establishing contacts between these people is an important part of our work,” she says.
What will be recovered?
According to the Prosecutor General’s estimates, the former regime took some USD 100 bn abroad. This figure is hugely different from the currently known funds that lay frozen abroad on accounts in Switzerland (EUR 137 mn), Lichtenstein (USD 30 mn), Great Britain (EUR 17 mn) and Austria (USD 8.3mn reported in April). “We have not yet found where this [gap] comes from, and we are facing a number of challenges,” Fenner says. Therefore, they will focus on the countries for which they already have some data, she adds. This will facilitate the process.
According to a recent report in The Wall Street Journal, Ukraine has already applied to Switzerland, for assistance in the recovery of assets that were sent to its territory by Yanukovych’s allies. It is considered to be one of the countries that are most willing to cooperate with Ukraine in the “repatriation” of illegally gained and exported funds. “In the last 15 years, our country recovered a total of almost USD 1.8 bn to their countries of origin, in other words, more than any other financial centre in the world,” states Franz Schneider from the Swiss Embassy in Ukraine, in a commentary for The Ukrainian Week. Seven criminal cases against representatives of the former regime are already being investigated in Switzerland. However, to help law enforcers abroad, Ukraine must conduct profound investigations and prove the guilt of those, whose capital we want to recover. There is currently little progress in this.
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The EU announced the freezing of “funds and economic resources, which belong to, or are in the possession of” eighteen Ukrainian ex-officials back on March 5. In Ukraine, meanwhile, not all of them have as yet been officially notified of the charges. For instance, Andriy Portnov, the former Deputy Chief of Staff for Yanukovych, mocked the current Prosecutor General for his statements of putting Portnov on the wanted list while in fact, Portnov claimed, he wasn’t. On August 15, the Pechersk Court in Kyiv satisfied Portnov’s lawsuit against Prosecutor General: it ruled the statements of Portnov’s alleged involvement in the murders of protesters on the Maidan in winter false and in violation of Portnov’s rights, and ordered Prosecutor General to refute the claim that Portnov was on the wanted list. This is a dangerous precedent, particularly after Portnov was the first to file an appeal to the European Court in Luxembourg against the imposition of EU sanctions on him. There are now 14 such claims. Ex-premier Mykola Azarov and his son Oleksiy; Ukrainian businessman Serhiy Kurchenko who disappeared from public view shortly after Yanukovych fled Ukraine; ex-Energy and Coal Minister Eduard Stavytskyi; Chief of Staff for Yanukovych Andriy Kluiyev and his brother Serhiy; Viktor Yanukovych and his two sons; ex-Prosecutor General Viktor Pshonka and his son Artem; ex-Tax Minister Oleksandr Klymenko and ex-NBU Chair Serhiy Arbuzov also thought they did not deserve sanctions. If at least one of them wins the trial, sanctions against all former officials on the list will be in doubt, as will the freezing of their assets.
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At the same time, legal action will delay the return of funds to Ukraine. As was explained to The Ukrainian Week by a European Court official, such processes generally take up to two years, while the court hearing lasts 12–18 months after the case is submitted. “An example of the quickest recovery of assets was the Abacha Case in Nigeria – it took more than five years. So I really don’t expect that we will be able to recover the capital for at least three more years,” Fenner says. According to Franz Schneider, the recovery of assets depends on the circumstances of each specific case, as well as on the parties that request the recovery and return the money.
The investigation on Nigeria’s ex-President Sani Abacha took place immediately after his death in 1998, and it was proved that he had stolen USD 3–5 bn. The decree of his successor, General Abubakar, facilitated the return of USD 800 mn to the nation’s budget, and after lengthy negotiations with Switzerland in 2004, a further USD 505.5 mn were returned to Nigeria for projects to overcome poverty, but under the supervision of a third party determined by the World Bank.
According to Gretta Fenner, the recovery of assets is first and foremost politics, and so are its mechanisms. The parties involved must be assured that the recovered assets will not be stolen again. The process will also depend on the country in which the assets are located. “More than likely, friends of Russia will be less willing to cooperate,” she says. Moreover, a model needs to be developed to transfer these funds to Ukraine. In another successful case, the recovery of stolen Kazakh funds, the money was used to set up BOTA Foundation, a charitable organization. According to Daryna Kaleniuk, Ukrainian activists proposed a similar scheme in 2013 by for the recovered capital stolen by former Prime Minister Pavlo Lazarenko.
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Today, recovering even the smallest of the above-mentioned frozen amounts is a necessity for Ukraine, particularly when taking into account the funds required for the restoration of the ruined Luhansk and Donetsk Oblasts. However, we have to keep in mind that the return of exported assets requires extraordinarily painstaking work, which, first and foremost, requires efficient investigation of these cases in Ukraine. Therefore, the law must be finally passed which would allow conviction of the representatives of Yanukovych’s criminal regime in absentia and confiscation of their property.
