The Lazarenko saga: trial of former prime minister of Ukraine set to begin (08/10/03)

The Lazarenko saga: trial of former prime minister of Ukraine set to begin

by Roman Kupchinsky
RFE/RL Organized Crime and Terrorism Watch

On Friday, June 13, Pavlo Lazarenko, the former prime minister of Ukraine detained in New York in February 1999 and eventually arrested and charged with money laundering and mail fraud, was released from detention by Judge Martin Jenkins in San Francisco in order to be allowed to listen to testimony given to federal investigators in Kyiv.

He will remain outside the California federal detention center until his trial begins in mid-August. According to the Reporter of June 19, Mr. Lazarenko posted bond of $86 million. The money, however, is tied up in litigation in Antigua, where that government also has accused Mr. Lazarenko of money laundering.

When his request for release was granted, his team of U.S. defense lawyers - led by Harold Rosenthal - along with the chief of the Organized Crime Strike Force in the U.S. Attorney's Office in San Francisco, Martha Borsch, and her investigators went to Ukraine, Cyprus, Israel, Antigua, Switzerland, the Netherlands and England in an attempt to question a number of witnesses in the case. The list of those they intended to question included Ukrainian President Leonid Kuchma; the man who appointed Mr. Lazarenko as prime minister.

The Lazarenko trial promises to be a revealing one, and the prospect has placed many present and former high-level Ukrainian officials in a state of heightened alert. The Ukrainian media, repeatedly cited by the Council of Europe and human rights groups as lacking in essential freedoms, has largely ignored the request by U.S. investigators to have the president - along with national security adviser Yevhen Marchuk, the former head of the Ukrainian gas monopoly Naftohaz Ukrainy, Ihor Bakai, and former Prime Minister Valerii Pustovoitenko - questioned.

The Ukrainian media did, however, report that the Americans wanted to question opposition leader Yulia Tymoshenko. Ms. Tymoshenko, an outspoken critic of President Kuchma, was recently cleared of corruption charges by a Kyiv appellate court. Subsequently, after a brief hearing, the Ukrainian Supreme Court, stacked with presidential appointees earlier this year, threw out the decision of the appellate court and reinstated the charges of corruption and bribery against her.

The Lazarenko saga is long and arduous. After his arrest in Switzerland in 1998, Mr. Lazarenko jumped bail of $3 million and returned to Kyiv, where he continued his political activities and announced that he would be running for president. In February 1999, just prior to a meeting of the Parliament that was to vote on removing his immunity from prosecution, he left Ukraine for Greece. At this point, the Ukrainian Parliament lifted his parliamentary immunity and he flew to the United States, where he was picked up at New York's JFK International Airport on charges of trying to enter the United States on an invalid travel document. He unsuccessfully applied for political asylum.

When word got out that Mr. Lazarenko had been arrested in the United States, Ukrainian authorities repeatedly demanded that the United States return him to Ukraine to stand trial. Since there is no extradition treaty between the two countries, this demand was not honored. Many analysts at the time felt that Mr. Lazarenko could not receive a fair trial in Ukraine, that the chances of him dying in detention were higher than average, and that the Ukrainian insistence that Mr. Lazarenko be sent home was a way of silencing him rather than seeing justice done.

Mr. Lazarenko's arrest in the United States was a disastrous event for some officials in Kyiv. Their colleague, a high-level Kyiv insider, was now inside a jail cell in San Francisco; and if he decided to share his knowledge with U.S. investigators, it might have unpredictable consequences.

This event was compounded in November 2000 when it was revealed that a member of President Kuchma's security detail, Mykola Melnychenko, had been covertly recording conversations in the president's office since late 1998. The recordings, the gist of many of which suggested illegal activities, were in themselves a serious indicator of high-level corruption in Kyiv.

The conversations appeared to reveal President Kuchma insisting on the silencing of a vocal journalist, Heorhii Gongadze, who was soon afterwards found beheaded outside of Kyiv. They also included a conversation in which the president demonstrated an intent to sell an advanced radar system, the Kolchuha, to Iraq. And while the Kolchuha has not been found in Iraq, the conversation ultimately discredited the president of Ukraine internationally.

And while President Kuchma maintained his innocence, the Melnychenko recordings were authenticated by the FBI and by a private audio laboratory in the United States and shown to be genuine. A government laboratory in Kyiv, which did not have a copy of the original recording device or chip onto which the conversations were digitally recorded, nevertheless announced that they were fakes.

The recordings were not only damaging, their release coincided with the interrogations taking place in San Francisco, where a member of Kuchma's inner circle was now being held.

More to the point was the nature of Mr. Lazarenko's alleged crimes. According to the indictment in California, he made most of his illegal profits in the energy business. The Melnychenko recordings also appeared to suggest that most of the money in various presidential slush funds was coming from the energy barons, particularly from the state gas monopoly, Naftohaz Ukrainy, run by Mr. Bakai. Recent revelations suggest that this system has not ended, and that Ukrainian and Russian leaders are still using the criminalized energy business in order to enrich themselves.

As the U.S. investigation of Mr. Lazarenko continued, the Ukrainian Procurator General's Office announced in February 2002 that it was charging him with ordering the killings of two Ukrainian officials, Vadym Hetman, the former head of the National Bank of Ukraine, and Yevhen Scherban, a member of Parliament. According to prosecutors, Mr. Lazarenko had paid a criminal gang close to $1 million to kill the two men. But, unfortunately, the men who were alleged to have done the actual killings themselves had since died, and so the only person left in the prosecution's case was the driver of one of the deceased suspects. He was tried and sentenced last month.

Shortly after Mr. Lazarenko's arrest, on June 19, 1999, a man who worked for him for many years in Dnipropetrovsk when Mr. Lazarenko was the oblast chairman and later was an adviser when his boss became prime minister, Petro Kirichenko, was also arrested in California. Mr. Kirichenko was widely suspected of being the "bag man" for Mr. Lazarenko. It was allegedly Mr. Kirichenko who set up the different offshore shell companies and numerous coded bank accounts for him. According to informed sources, Mr. Kirichenko knew everything that was taking place in the conspiracy.

Mr. Kirichenko, like his employer, was a high roller and had purchased an exclusive oceanside home close to Mr. Lazarenko's in Marin County, Calif., for $10 million (cash). Mr. Lazarenko himself owned comedian Eddie Murphy's former mansion, which he bought for $6.75 million. After a few months in prison, Mr. Kirichenko decided to cooperate with the prosecution and was released. And while the nature and extent of Mr. Kirichenko's cooperation has not been made public, many suspect that it is damaging to many high-level officials in Kyiv, including the president.

It remains to be seen whether President Kuchma and others will allow Mr. Lazarenko's lawyers or investigators from the U.S. Attorney's Office to interrogate them. One, former Prime Minister Pustovoitenko, who at the time of Mr. Lazarenko's tenure as prime minister was in the Cabinet of Minister's and allegedly knew all the details of what went on, has already stated that he will not talk to the visitors from the United States. The president's office had not made a decision on whether the president would answer any questions by the time this article went to print. Altogether, there are some 50 witnesses on the list of those to be questioned.

One of the issues to be resolved by the investigation is whether Mr. Lazarenko acted alone in all instances or conducted any of his activities at the behest of others.

The trial of Mr. Lazarenko is scheduled to begin on August 18. Barring any further delays, testimony will begin on that day which might shed a great deal of light on illegal activities in Kyiv and the role, if any, played by Ukraine's political elite in those transactions.

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