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Poroshenko, allies face criminal probe for funneling budget funds into offshore accounts

The case also involves National Bank ex-chief Valeria Gontareva
Former Ukrainian President Pyotr Poroshenko AP Photo/Efrem Lukatsky
Former Ukrainian President Pyotr Poroshenko
© AP Photo/Efrem Lukatsky

KIEV, August 1. /TASS/. Ukraine’s National Bureau of Investigation has launched a criminal probe against former President Pyotr Poroshenko and his allies into siphoning off billions in foreign currency from the state defense company Ukroboronprom into offshore accounts under the guise of bogus contracts.

"I hereby inform you of a new criminal proceeding that may target dozens of Poroshenko’s allies. Yesterday, the National Bureau of Investigation officially registered it and launched the investigation," Andrei Portnov, lawyer and former First Deputy Chief of Staff for Ukrainian President Viktor Yanukovich’s administration, wrote on his Telegram channel.

The case also involves former National Bank chief Valeria Gontareva, officials from the state defense company Ukroboronprom and the state-owned Ukreximbank, who "organized transfers of billions in foreign currency directly from Ukroboronprom to offshore accounts and other jurisdictions under fake contracts for their own gain, while being aware that this harms national security and Ukraine’s defense capability," Portnov stated.

To this goal, upon the direct orders of Poroshenko and Gontareva, in January 2016, the central bank abolished foreign currency control acts, in order to specify that Ukroboronprom’s offshore payments can be carried out in advance, without any control and limits on the sums. These steps, according to Portnov, resulted in Ukraine’s defense budget funds being embezzled to the tune of billions of hryvnia.

The former official is sure that this case may result in the seizure of all property (which includes plants, shares, real estate and money) owned by Poroshenko and Gontareva, to then be handed over to the state. In addition, Poroshenko and his allies can expect lengthy jail sentences.

Other criminal charges

Poroshenko is also suspected in Ukraine of high treason, abuse of power, money laundering, tax evasion, an attempt to usurp judicial power, and illegally appointing ministers in 2016 when there was no coalition in the country’s parliament, the Verkhovna Rada.

One of the cases involves a shipbuilding and armaments company in Kiev, Kuznitsa na Rybalskom, Poroshenko’s major asset. According to unofficial data, the former head of state signed a sham contract on selling it to Ukrainian businessman Sergey Tigipko. A criminal case was launched into tax evasion and money laundering.

On July 28, Poroshenko and his family set out on an overseas vacation. Before his departure, he was summoned for questioning on August 12. The ex-Ukrainian president was interviewed for the first time last week as a witness. Later, Poroshenko assured that there was no criminal case against him. However, on Thursday Ukraine’s Vesti newspaper reported that the former president asked US lobbyists to help protect him from any potential criminal charges.

Corruption permeating Ukroboronprom

Ukrainian President Vladimir Zelensky earlier said the country’s law enforcement agencies had uncovered a new corruption scheme in the defense industry. According to him, over the past five years, some $30 mln had been siphoned off to offshore company accounts under dubious contacts for alleged services.

Shortly after Zelensky’s statement, on July 22 Ukraine’s military prosecutors carried out searches in the offices of the government, border and tax services as well as the Spetstechnoexport enterprise, which is part of Ukroboronprom. The searches came after intelligence agencies had uncovered a massive embezzling scheme in the defense sector, the military prosecutors explained. This concerns a criminal case into the embezzlement of more than $6.7 mln under a contract signed between a foreign company with one of Ukroboronprom’s enterprises on delivering special equipment to Ukraine’s State Border Guard Service.