New Arrest Exposes Ukrainian Money Laundering in Western Europe

The former ‘Narodniy Front’ MP and close associate of the former Ukrainian Prime Minister Arseniy Yatsenyuk Mykola Martynenko, was arrested by the National Anti-Corruption this week on the charge of embezzling $17 million from the the state. This is the third high-profile case instigated by the newly formed National Anti-Corruption Bureau. Daria Kaleniuk, executive director of the ‘Anti-corruption Action Centre’, spoke to Hromadske about the political and legal impact of this case, and why it is so significant.

Why is this case significant? This is the third arrest of someone at the level from the current political elite. What do we need to know about that?

We might need to know the political side of the case and the legal side of the case. I will start with the political. So who is Martynenko, and why is this a very significant story, having Martynenko be suspected of corruption? Martynenko used to the head of the Energy Committee in parliament, he was head of this committee for ages, even before Poroshenko, when Yanukovych was in power. And now, Martynenko continues to be - according to different sources- one of the key sponsors of the ‘Narodniy Front’ party. This is the second largest faction in the Ukrainian parliament and it is headed by Arseniy Yatsenyuk, the former Prime Minister of Ukraine. So, Martynenko is a very influential politician. While is not an MP, he still has a lot of political influence. His business is, of course, very much linked to his political influence. What is the business of Martynenko? Martynenko’s business is simply the control of the state companies. One of the these companies is ‘Energoatom’, this is a Ukrainian monopoly which is state-owned and manages all the nuclear power plants - we have 4 huge power plants. Martynenko lobbied for the manage of this state-owned company, who is under his influence and control, and having this manager [there], means he can influence how the money from ‘Energoatom’ is being spent. Usually, how is money embezzled through a state-owned company?

Mykola Martynenko in the court, April, 22nd. Photo: Hromadske

The state-owned company, for example, purchases some equipment - this equipment is very unique to nuclear power plants. The average citizen would not understand the average market price for such equipment, but in the end, the state would purchase the equipment for a much higher price than the real market price. The price difference remains in the hands of Martynenko through a set of offshore companies. And this is what happens in an investigation where NABU brought suspicion against Martynenko, it’s a similar case, not with Energoatom, but with another state-owned company which is related to energy, which has to produce uranium. Uranium is the sourced used to feed nuclear power plants. This is part of Ukrainian energy security strategy from Russia, to produce and extract its own uranium.

So what is the legal side of the story?

The state-owned company that has to produce uranium and sell it to ‘Energoatom’ and feed nuclear power plants, the state-owned that didn’t produce and extract uranium, but instead, bought it from shell companies. And in this [case], which was investigated by NABU and brought into the court, we see that uranium was bought from an Austrian company, which was managed from Kyiv, whose official owner is Martynenko himself, and which, in turn, purchased this uranium from Kazakhstan, from a Kazakh company. The price changed into tens of millions of dollars, from the moment when this Austrian company bought the Uranium from Kazakhstan, and then sold it to the Ukrainian state-owned mining company. Detectives found proof that shows the difference of this price, which was laundered through a set of shell companies in Great Britain, Panama, and in Austria, and it ended up in the hands of Martynenko’s family. Martynenko’s family then spent this abroad. The case is very interesting because it indicates that, yes, Ukraine is a very corrupt country - millions and probably billions are being embezzled from the state - but then, this money is being laundered through Western Europe, and using a range of shell companies, intermediaries, and western lawyers.

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What about the public disappoint over the number of Ukrainian ministers from the ‘Narodniy Front’ party, including those who are considered to be reformists like the Minister of Infrastructure or the Minister of Education, that have come out in support of Martynenko and are accusing the Anti-corruption Bureau of being politically biased. What is your view on that?

It simply indicates, once again, how powerful Martynenko still is. He is not an MP, he influences ministers who became ministers because of the quota of ‘Narodniy Front’, and he influences a lot of ministers who are members of ‘Narodniy Front’.

Ukrainian ministers came to the court to bail Martynenko. Photo: Hromadske

What we witnessed in court was pure political pressure on the court. And when members of the parliament say that NABU is controlling the judge, this is something that shouldn’t happen in a democracy. Yes, actually I myself do not trust the judge ????, but it’s not how a member of parliament should behave in the court. Coming and threatening the judge, if you decide and agree with NABU’s request to arrest him, or to issue a big bail for him, we will do something.This shouldn’t happen if you want fair justice.

For a foreigner, who doesn’t follow Ukraine closely, sees what is happening now in Ukraine, they would probably think that this is just another fight among new institutions. We now have a number of institutions that are supposed to fight corruption in this country - some of them are related to the government, some are independent, so it quite difficult to understand. As an anti-corruption activist, working for a NGO, with absolutely no ties to the state bodies, do you think the institutions like NABU are really independent? In particular, what could this case prove in terms of their independence?

This case proves that the new law-enforcement agency, that was built up from scratch, whose director was selected through an independent, transparent, competitive procedure, whose detectives were selected through the same very competitive procedure, whose detectives all undergo polygraph tests, is ready to touch untouchable people in Ukraine. Because, Martynenko is an untouchable person -like Nasirov, another case that we have witnessed -and now we see that NABU is maturing.Yes, they spent their first year building up their agency from scratch, building the new institution, hiring new people. Then, the second year they spent looking for the evidence and building these cases, and now this is the first year where they are given the results.NABU can’t convict a person alone, they can’t confiscate assets alone. They need anti-corruption prosecutors, and we now see prosecutors who are eager to cooperate with NABU, but still we have unreformed courts.

Mykola Martynenko was bailed out on April, 22nd. Photo: Hromadske

Despite the charges, there’s always a chance for bail. Nasirov was bailed out, and today we hear that Martynenko has been bailed out. There is always the concern that they would leave the country, or avoid court.

Absolutely, and if Martynenko says that he will not leave the country, the bail does not prevent him from influence the witnesses, and as he still has a very big political influence, he could destroy the case and pressure witnesses, who are providing evidence and building up the case for NABU. Therefore, it was very strategically important to arrest Martynenko, at least for these two months, for which NABU now has the time-frame to finish the case, and present it into the court. I am very much disappointed with the decision of the court, but again, it’s not NABU Specialised Anti-corruption Prosecution’s fault. It is 15 people who are ministers and members of parliament, who are coming into the court and who are pressuring the judge and harassing him, and also harassing NABU Specialised Anti-corruption Prosecution, and at the end, the judge makes that decision which can harm the case. So this case gives one more argument and one more reason why we need to set up an anti-corruption court in Ukraine, where there would be judges selected through the very similar transparent and commitment procedure, the same procedure for the NABU director, and where there will be additional guarantees of the independence of such judges, where we can prevent and somehow protect judges from harassment and possible political interference and influence. Ukraine is committed to such an anti-corruption court. There is already a draft-law in parliament, and I think that the Ukrainian parliament will move forward in considering this law - and by the way, this is also a requirement of the IMF .