2019-10-12_The_Economist_

The EconomistOctober 12th 2019 BriefingUkraine and impeachment 25

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the cancellation was later overturned.

Oliver Bullough’s book “Moneyland”,

which deals with money laundering, re-

cords that during Mr Zlochevsky’s second

stint in control Burisma, a company he had

founded to consolidate his oil and gas in-

terests, was granted nine production li-

cences and saw its natural-gas production

increase sevenfold. As Mr Bullough puts it,

“There is a marked correlation between

Zlochevsky’s period in office and Burisma

expanding. He is a classic example of how

politics in Ukraine has long been business

by other means.” 

Burisma was owned through various

holding companies in Cyprus, and Mr Zlo-

chevsky’s lawyers have insisted that their

client did not benefit from his own official

decisions. But his experience after 2005

must have made him keenly aware that his

fortunes might dip under another regime.

When that other regime arrived, it did

so dramatically. Mr Yanukovych’s victory

in 2010 had wedged open the country’s di-

vides, unlocking the way to revolution, in-

vasion and bloodshed. In 2014 he was over-

thrown and fled to Moscow, taking vast

wealth with him. Russia, irked at having its

man displaced by the “Euromaidan” upris-

ing, responded by annexing Crimea and fo-

menting insurrection in the east.

A friend of my friends

Mr Zlochevsky, out of office, found himself

in a bind. The new government wanted to

get back the money siphoned off by Mr Ya-

nukovych and his cronies, and enlisted the

help of international authorities to that

end. After Mr Zlochevsky tried to move

$23m to Cyprus from a London account

held with bnp, a bank, in March 2015, Brit-

ain’s Serious Fraud Office froze his ac-

count. The sfoargued in court that there

were reasonable grounds to believe Mr Zlo-

chevsky made this money by breaking Uk-

rainian law. Of specific interest was $20m

paid into the account by a company owned

by Sergey Kurchenko, who handled money

for Mr Yanukovych’s family.

Hunter Biden thought he was on to a

good thing. In 2014, Mr Biden was asked to

join the board of Burisma, along with De-

von Archer, his business partner, and Alex-

ander Kwasniewski. Mr Biden is the son of

Joe Biden, then vice president and Barack

Obama’s point-man on Ukraine; Mr Archer

is a friend of the stepson of John Kerry, then

America’s secretary of state; Mr Kwasniew-

ski used to be president of Poland. Mr Bi-

den was reportedly paid $50,000 a month.

The purpose of expanding Burisma’s

board in this well connected way, it seems,

was to buy Mr Zlochevsky protection; as

well as the money-laundering case in Lon-

don, he was also facing two investigations

in Ukraine, one for tax evasion and one

over conflicts of interest involving Bu-

risma’s licences. Mr Zlochevsky, who had

fled Ukraine, also wanted leverage in his

dealings with Petro Poroshenko, the oli-

garch elected president in May 2015.

If such protection was, indeed, Mr Zlo-

chevsky’s plan, it apparently worked. The

prosecutor general’s office failed to supply

the sfowith the documents needed to keep

his account frozen. At the end of the year

someone there supplied Mr Zlochevsky’s

lawyers with a letter stating that he was not

suspected of any crime in Ukraine. The

judge in London released the $23m on the

grounds that Mr Zlochevsky “was never

named as a suspect for embezzlement or

indeed any other offence, let alone one re-

lated to the exercise of improper influence

in the grant of...licences”. 

Vitaly Kasko, who as head of the inter-

national department in the prosecutor’s of-

fice had been trying to help the sfo,

smelled a rat. So did America’s ambassador

to Ukraine, Geoffrey Pyatt, “Those respon-

sible for subverting the case by authorising

those letters”, he said a few months later,

“should—at a minimum—be summarily

terminated.” Anti-corruption activists in

Ukraine argued that the Burisma case and

other attempts to recover laundered loot

failed because the government did not

really want them to succeed. Oleksandr

Onishchenko, a businessman and mpwho

is now a fugitive abroad, says Mr Porosh-

enko was far from dismayed when told that

Mr Zlochevsky was supplying free natural

gas to a glass works run by his right-hand

man and might be willing to do more such

favours. On a recording Mr Onishchenko

claims to have made of this conversation,

the president calls Mr Zlochevsky “a good

guy” and sends him his greetings. Mr Po-

roshenko says this recording is a fake.

With Mr Poroshenko’s credentials as an

enemy of corruption in doubt, the Ameri-

can government helped to set up a new Na-

tional Anti-corruption Bureau (nabu). It

was ring-fenced from interference by Uk-

rainian officials and supervised by the fbi,

which set up an office inside the new bu-

reau. But it found its work blocked by Vik-

tor Shokin, who Mr Poroshenko made

prosecutor general in February 2015.

Pressed by foreign ambassadors and Ukrai-

nian activists, Vice-President Biden be-

came part of an international campaign to

remove Mr Shokin. “The office of the gen-

eral prosecutor desperately needs reform,”

Mr Biden told Ukraine’s mps late in 2015;

privately he told Mr Poroshenko that keep-

ing Mr Shokin would cost him $1bn in aid.

My enemies’ enemy

In April 2016 the president replaced Mr

Shokin with Yuri Lutsenko. In 2006, as in-

terior minister, Mr Lutsenko had launched

an investigation into Mr Zlochevsky. After

Mr Yanukovych returned to power in 2010,

Mr Lutsenko was jailed in what appeared to

be a political vendetta. When he became

prosecutor general in 2016, he brought the

tax evasion case against Mr Zlochevsky to a

conclusion with a fine of $7.4m. The third

case, about the licences, was passed to

nabu, where it remains unresolved.

Activists and outsiders hoped that Mr

Lutsenko would prosecute cases more vig-

orously than Mr Shokin had and co-operate

more with Artem Sytnik, the fresh-faced

head of nabu. Mr Lutsenko disappointed

those critics, using his office to attack

some of them, and worked to undermine

Mr Sytnik and subvert nabuoperations.

Marie Yovanovitch, a career diplomat re-

cently arrived in Kiev as America’s ambas-

sador, told him to stop attacking anti-cor-

ruption activists and former staff such as

Mr Kasko, who had co-operated with the

sfoin the Burisma case. Mr Lutsenko was

not pleased.

Mr Lutsenko and Mr Poroshenko’s fac-

tion pushed on with attempts to remove

nabu’s independence and fire Mr Sytnik.

Things came to a head during a night of

frantic trans-Atlantic calls in December

2017. In part because of pressure from the

Turbulenttimes

Source:TheEconomist

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Maidanrevolutionousts

PresidentYanukovych;Russia

occupiesandannexesCrimea

Russiastartsa warintheDonbas

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eastern Ukrainebya surface-to-airmissile

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RussianFSBintheBlackSea

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Ukrainianshipsfrom

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Russia and Ukraine

exchange prisoners

George W. Bush

United States: presidents

Secretaries of state

Colin

Powell

Condoleezza Rice Hillary Clinton John Kerry Rex

Tillerson

Mike Pompeo

Barack Obama Donald Trump

Leonid Viktor Yushchenko

Kuchma

Ukraine:presidents

Viktor Yanukovych Petro Poroshenko Volodymyr

Zelensky

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