ANALYSIS: Ukraine's government tries to get a grip on corruption (06/26/05)

ANALYSIS

Ukraine's government tries to get a grip on corruption

by Roman Kupchinsky
RFE/RL Belarus, Ukraine and Moldova Report

During the last two months of 2004, as the Orange Revolution was changing the face of the Ukrainian body politic, approximately $1 billion left Ukraine. Some of this money was reportedly private and some belonged to the Ukrainian treasury. The people responsible for transferring this money out of the country have been identified, according to a spokesman for the Ukrainian Internal Affairs Ministry (MVS), and investigations into the matter are under way, Interfax reported on June 1.

This announcement was the latest in a series of statements made by Ukrainian law enforcement agencies on the promised post-election clean-up of corruption and crime in Ukraine. According to Internal Affairs Minister Yurii Lutsenko, some 18,000 criminal cases have been initiated by the MVD since the new government took power at the end of January.

The most widely publicized cases so far have been the arrests of two regional leaders, Borys Kolesnykov from the Donetsk Oblast and Ivan Rizak from the Zakarpattia Oblast. Both men are in prison while investigations of their cases continue. Mr. Kolesnykov was arrested on charges of extortion, while Mr. Rizak was charged with "inducing suicide." The Procurator General's Office claims that he did so by harassing an individual to the point that the person committed suicide.

Both men were known as supporters of former President Leonid Kuchma and their arrest has led the opposition to declare that they are being "politically persecuted."

In mid-June, Mr. Rizak's two assistants were also charged with crimes and put on a wanted list.

Another Kuchma-appointed regional leader, Volodymyr Scherban from Sumy, has been indicted on a number of charges, including extortion, and is being sought by the police. He is alleged to have fled to Russia. Mr. Scherban, originally from Donetsk, was the leader of the Liberal Party of Ukraine prior to being indicted.

On June 7, Interfax-Ukraine reported that the former deputy chief of the Security Service of Ukraine (SBU), Volodymyr Satsiuk, was being sought in connection with "grave crimes." According to Procurator General Sviatoslav Piskun, Mr. Satsiuk reportedly left Ukraine and an Interpol red alert will be posted for him.

Mr. Satsiuk has often been mentioned in connection with the poisoning of Viktor Yushchenko in 2004. The dinner party during which many suspect that dioxin was administered to Mr. Yushchenko, then a presidential candidate, took place in Mr. Satsiuk's summer home.

However, after the June 7 announcement, Interfax quoted a "source close to the investigation of the poisoning" as saying that Mr. Satsiuk was being sought for misuse of SBU funds and not in connection with the Yushchenko poisoning.

One highly visible case is that of Ihor Bakai, the former head of the presidential property-management department in the Kuchma administration. Prior to holding that position, Mr. Bakai was the head of Naftohaz Ukrainy, the state oil and gas monopoly, from which he was forced to resign in 2001 after being exposed for having conducted a series of suspicious transactions. After leaving Naftohaz, Mr. Bakai was elected to Parliament, though according to numerous parliamentarians he only appeared once in the session hall - to be sworn in.

Mr. Bakai was indicted in March on charges of defrauding the state of tens of millions of dollars in a series of illegal real-estate transactions; an Interpol warrant for his arrest was issued. At that time, Russia's ambassador to Ukraine, Viktor Chernomyrdin, announced that Mr. Bakai had obtained Russian citizenship. Apparently Mr. Bakai had fled to Moscow during the 2004 election campaign and obtained citizenship, but it remains unclear if he received it in Kyiv from Mr. Chernomyrdin or in Moscow. Ambassador Chernomyrdin has denied issuing Mr. Bakai a Russian passport.

Ukrainian authorities have asked the Russian Foreign Ministry for Mr. Bakai's extradition to stand trial in Ukraine, but there has been no response to the request so far.

In May Ukrainian Transport Minister Yevhen Chervonenko met with Mr. Bakai in Moscow. Mr. Chervonenko told the Ukrayinska Pravda website that Mr. Bakai travels around Moscow freely, accompanied by armed bodyguards.

A number of other wanted Ukrainian suspects are believed to be hiding in Moscow, including former Odesa Mayor Ruslan Bodelan, former Internal Affairs Minister Mykola Bilokin and former MVS Gen. Oleksii Pukach.

Mr. Pukach is wanted on suspicion of involvement in the murder of Heorhiy Gongadze, an Internet journalist killed in September 2000. Two other MVS officers have already confessed to taking part in the killing and are presently in jail in Kyiv. Former Prime Minister and presidential candidate Viktor Yanukovych was asked on June 1 to appear for questioning by the Procurator General's Office in conjunction with a case involving the improper use of state funds when he was prime minister. Mr. Yanukovych did not appear on the date he was requested to and was said by his office to be in Moscow. He did, however, appear the following day. The consequences of a possible indictment of Mr. Yanukovych, the leader of the Party of the Regions, could be disruptive for the government and might polarize Ukrainian society once again, since Mr. Yanukovych did obtain almost half the votes cast in the final round of the presidential election.

On June 3, SBU chief Oleksander Turchynov was quoted by Interfax as saying that in 2004 alone over 3 billion hrv ($594 million) was stolen from the budget in different value-added-tax (VAT) repatriation schemes. The individuals and companies responsible for the different VAT rackets are being investigated, Interfax reported. One such company allegedly involved in VAT schemes is the charitable foundation for children run by former President Kuchma's wife, Liudmyla.

Another major investigation centers on the activities of the state-owned railways operated by the Transport Ministry. It's former head, Heorhii Kirpa, was often mentioned as a potential presidential candidate in 2004. Mr. Kirpa committed suicide during the election campaign.

The Transport Ministry was apparently involved in large-scale fraud, and on June 3 Interfax reported that 13 managers of the railways company were facing charges.

The most prominent case, however, remains that of Mr. Kuchma and his alleged involvement in the kidnapping and murder of Heorhiy Gongadze. Mr. Kuchma has been called in for questioning twice since leaving office.

According to the SBU's Chief, Mr. Turchynov, Mykola Melnychenko, Mr. Kuchma's former bodyguard who made secret audio recordings in the president's office, has agreed to be interviewed by the FBI. The FBI has also agreed to authenticate Mr. Melnychenko's recordings, specifically those passages where Mr. Kuchma is alleged to be telling his subordinates to "take Gongadze, turn him over to the Chechens," which could constitute an order to kidnap the journalist.

If the FBI authentications show the recordings to be genuine, Mr. Kuchma is liable to be arrested on kidnapping charges. It would be an event for which many Ukrainians have waited five years.

Roman Kupchinsky is a contributor to the RFE/RL Belarus, Ukraine and Moldova Report.

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