UARU
Pre-Election Gambit: Will Poroshenko Sacrifice a Friend for Presidency?
28 February, 2019

Editor's Note: This is an opinion-style article by Hromadske's political correspondent Maksym Kamenev who has long been studying and reporting on Ukrainian politics. The views and opinions expressed in it are those of the author and do not necessarily reflect the views of the publication.

Ukraine’s President Petro Poroshenko, if re-elected for a second term, must be the guarantor of transparency into an investigation and the court’s impartiality on charges against one of the closest members of his team Oleg Gladkovsky (December 2018). Photo: Mikhail Palinchak / POOL

10 years ago Ukraine’s President Petro Poroshenko sacrificed a joint business with National Security and Defense Council deputy secretary Oleg Gladkovsky to save his confectionery corporation Roshen. Now he must sacrifice Gladkovsky himself in order to preserve his chances of re-election.

“The partner who undertakes the implementation of a project, answers financially in the case of failure.”

According to Ihor Kononenko, lawmaker and friend of Poroshenko, this principle guided his relations with business partners, with whom he teamed up almost 30 years ago.

In 2009, Poroshenko applied this principle to Oleg Svynarchuk. For many years they owned the Bogdan Corporation, which manufactured minibuses. The auto business was growing rapidly and the partners even planned to build a plant in Nizhny Novgorod, Russia. But the 2008 financial crisis knocked down Bogdan, which was supposed to be still paying loans.

Later, Poroshenko told the magazine Forbes Ukraine that, given the circumstances, he then left the automobile business. Svynarchuk traded his minority stake in Roshen for Poroshenko’s stake in Bogdan. Thanks to the agreement, Poroshenko would no longer have to pay the corporation’s debts in the event of Bogdan’s bankruptcy. Three years later, the corporation stopped work at its main plant, but Roshen continued to generate profits, because people continued to buy sweets.

Business Looking Up

In 2014, when Poroshenko was elected president of Ukraine, he gave Svynarchuk a chance to become a public official. Svynarchuk then changed his last name to a more palatable one - Gladkovsky (his mother's maiden name) and moved from business to public service.

READ MORE: Poroshenko's Associate Made Money Smuggling Weapons From Russia – Investigation

Poroshenko appointed him head of the Interdepartmental Commission on the policy of military-technical cooperation. Since February 2015, Gladkovsky had also become the first deputy secretary of the National Security and Defense Council, headed by Oleksandr Turchynov. According to him, in this position he is responsible for the military-industrial complex and military-technical cooperation.

Under Poroshenko, the affairs of the Bogdan corporation improved. It began to supply vehicles for the army and launched the production of new models, including the Bogdan 2251 ambulance. In the first half of last year, Bogdan declared 191 million hryvnias ($7 million) in profits, although the same period in 2017 was unprofitable.

Last year, Bogdan also restructured the loan agreement with the state Ukreximbank to the amount of 1.3 billion hryvnias ($48 million). The group received this loan 10 years ago and must now repay it by December 25, 2031, inclusive.

According to a report by the National Agency on Preventing Corruption, Gladkovsky never handed over his corporate rights to management, and therefore has the ability to manage his business, although this is expressly prohibited by the law "on public service".

First Deputy Secretary of the National Security and Defense Council Oleg Gladkovsky (left) during a meeting of the National Security and Defense Council of Ukraine in Kyiv, February 18, 2015. Photo: Vladimir Strumkovsky / UNIAN

Corruption Accusations

Questions surrounding Gladkovsky’s work as an official started to accumulate. Initially, they came from journalists. It all started with the fact that gradually key positions within the system of state defense enterprises were awarded to Gladkovsky’s friends and acquaintances.

Then it turned out that "Bogdan" bought part of its components in Russia. After this investigation, Security Service officers came to the office of online newspaper Ukrayinska Pravda and demanded it take down the publication.

In 2017, officials openly spoke about corruption in the defense order system. The State Audit office officially announced that in the three years prior it recorded financial abuses within 12 enterprises of state defense holding company Ukroboronprom, amounting to 558 million hryvnia ($20.6 million).

At the same time, the National Anti-Corruption Bureau of Ukraine (NABU) became interested in defense corruption. Bureau detectives detained Deputy Minister of Defense Igor Pavlovsky, who was accused of embezzling 149 million hryvnia ($5.5 million) through a corruption scheme involving fuel procurement, in particular, by the company Trade Commodity.

The court released Pavlovsky on bail, with Gladkovsky also vouching for him. “[Pavlovsky] has always taken an active position and stood up in defense of state interests,” Gladkovsky then explained his position.

Last year, NABU reported that it was investigating 22 criminal proceedings in which Ukroboronprom enterprises appear. According to information obtained by Hromadske, at least two of them feature Gladkovsky’s name. However, law enforcement officers haven’t yet transferred the cases to court.

“Such cases are usually investigated for a long time as there is an international component. Money is laundered in several stages with the help of offshore companies from different jurisdictions, so it takes a lot of time to get answers to international inquiries about these companies,” says Olena Shcherban, a lawyer at NGO Anti-Corruption Action Center.

Ukraine’s Deputy Minister of Defense Ihor Pavlovsky at a meeting of the Committee on National Security and Defense of the Verkhovna Rada, July 12, 2018. Photo: Dmytro Replyanchuk/ Hromadske

The Response

On February 25, the situation has changed. Material produced by journalists at Bihus.info turned large-scale exposing of corruption into a factor influencing the presidential campaign. Poroshenko staked his chances on patriotism and the message that there were no alternative politicians who could supposedly stand up to Russian President Vladimir Putin.

Among other things, Poroshenko positioned himself as the builder of the army that stopped the Russian aggression. "Those who steal from the army, I will cut off their hands," he had promised. The time to fulfill that promise had come.

On Sunday night, the president had to make a choice. He could either refute journalists’ accusations – as he did after the publication of the Panama papers, after the investigation into his trip to the Maldives and after videos emerged of Viktor Medvedchuk, who choose Putin to be his daughter’s godfather, visiting the Presidential Administration at night. Or he could distance himself from Gladkovsky.

At first, Poroshenko publicly avoided speaking with journalists about the Gladkovsky situation. At 9 am on February 26, the president unexpectedly held a meeting of the “leadership of the defense sector” at the armed forces headquarters. On the official Facebook page, Poroshenko stressed that he visited the military specifically at their invitation.

It appeared as if Poroshenko decided to “clarify” to the military whether Ukroboronprom leadership and his friend Gladkovsky were really profiting off equipment supplies for the armed forces, and whether the president himself was involved in this.

But Poroshenko did not give an explanation to those present, at least during the public part of the meeting, Instead, he recited to the military what and how many weapons they had received in recent years.

“The state today can support the armed forces, which is a priority use of taxpayers’ funds,” Poroshenko said, as if nothing had happened.

Whether Turchynov, who also visited the headquarters, was meanwhile also thinking about how funds allocated for purchase and repair of weapons could have been embezzled, remains unknown. He spoke at the closed part of the meeting.

The Presidential Administration’s press service and the National Security and Defense Council (NSDC) did not respond to Hromadske’s question of whether the possibility of corruption within state defense procurement was discussed at the meeting.

Unofficially, Hromadske’s interlocutors within both the president’s team and the NSDC secretary’s team advised to wait for Gladkovsky’s statement and promised to provide the official position of their leaders later.

Within the president’s circle, they claim that the facts cited in the investigation came as news for him and he decided Gladkovsky’s fate on Sunday evening, immediately after seeing the first two parts of the investigation.

“He said that Oleg should be removed – permanently, obviously,” one Hromadske interlocutor said. Whether Poroshenko personally discussed this matter with Gladkovsky currently remains unknown. Those within the president’s circle claim that they have not met, but they do not rule out the possibility that the former business partners spoke on the phone.


 

Ukrainian President Petro Poroshenko (center) arrives at the operational meeting of Ukraine’s Armed Forces leadership, Kyiv, February 26, 2019. Photo: Mykhailo Palinchak / POOL

Following the meeting at the armed forces headquarters, when Poroshenko flew to Odesa, where, together with US Special Representative to Ukraine Kurt Volker, he met the US Navy's guided-missile destroyer Donald Cook, Gladkovsky issued an official statement.

“In order to prevent any insinuations, I appeal to the Chief Military Prosecutor's Office and the NABU with a statement regarding the speedy verification of all the facts set out in the "investigation" and to provide answers to the whole society and me personally,” the statement read. Gladkovsky also stated that he asks for his powers as deputy secretary of the NSDC and the head of the interdepartmental commission on export control to be suspended during this verification process. Although, he did not specify whom he was asking.

Almost immediately after this, the president’s press secretary, Svyatoslav Tsegolko, said that Poroshenko supported Gladkovsky’s decision and urged law enforcement to urgently verify the information in the investigation.

That evening, Poroshenko had the opportunity to answer questions from journalists. He was supposed to take part in opening the forum “Occupied Crimea: 5 Years of Resistance" but unexpectedly canceled his appearance at the event.

Then on February 28, Poroshenko stated that those accused of theft in the defense sector in the investigation will be prosecuted if the information on the offenses is proven to be true.

"If the facts are confirmed then, of course, no surname, no post will not save anyone. As soon as the information emerged, I signed an order on suspension and an appeal to law enforcement agencies," he said. "I emphasize that upon completion of the investigation, the guilty will be brought to justice, if the facts are verified."

Damn Questions

Meanwhile, the president’s team has been looking for the “do-gooder” who, according to the authors of the investigation, gave them the correspondence of those involved in the “schemes” at Ukroboronprom enterprises. And they’re looking for them exclusively among "their own". This time, during informal conversations, Hromadske’s interlocutors from Poroshenko’s team don’t mention the “Russian” or “American” trail, which they had been traditionally inclined to look for in journalistic investigations in the past.

Suspicions immediately fell on the oligarch Ihor Kolomoisky as well as on the Interior Ministry and its head Arsen Avakov. Kolomoisky openly wants Poroshenko defeated and Avakov is the only high-ranking official who does not publicly support Poroshenko’s nomination for a second term. Although, he assures that he will act as a judge this election.

It is known that Poroshenko met with Avakov on Sunday at a meeting of the strategic council. Among other things, it was allegedly decided there that three “old” power structures – the Ministry of Internal Affairs, the Security Service of Ukraine and the Prosecutor General’s Office – should publicly declare their cooperation during the elections.

Another interlocutor recalled that last year prosecutor general Yuriy Lutsenko convinced the president that he had enough evidence to convict Gladkovsky. Lutsenko himself has already said that the Prosecutor General’s Office “has long been investigating” corruption in the defense sector.

Hromadske’s interlocutors, close to the leadership of the Prosecutor General’s Office, have suggested that correspondence between the main protagonists featured in the investigation into Gladkovsky – his son Igor and their business partners – was obtained without a court order and therefore cannot be officially used as evidence. Otherwise the anti-corruption authorities would have long started proceedings.

According to Ukrainska Pravda, the Specialized Anti-Corruption Prosecutor's Office opened proceedings on the basis of materials from the program “Nashi Groshi” (Our Money) on the morning of February 26 under articles on abuse of power, embezzlement of property by an official, and taking bribes. NABU reported that it is already in the process of verifying information set forth in the investigation by journalist Lesia Ivanova.

Ukraine’s Interior Minister Arsen Avakov (left) and President Petro Poroshenko in the helicopter cockpit after the ceremony of transferring Airbus helicopters to the National Guard and the State Service for Emergency Situations, Boryspil, December 21, 2018. Photo: Mykola Lazarenko / POOL

Ghost From Singapore

Poroshenko is known for his tendency to micromanage. So it’s hard to believe that he did not know about the accusations against the leadership of Ukroboronprom, which have come from journalists, officials and law enforcement officers. It turns out that this situation could work for him. But we’re talking about national security issues.

Did the president approve the smuggling of spare parts from Russia, which, according to journalists, was parasitized by Gladkovsky’s son Igor and his partners? What will be Gladkovsky’s fate?

Will law enforcement officials dare to present him with suspicion of committing a crime on the verge of the election? If, of course, they confirm the information in the journalists’ investigation.

Gladkovsky still insists he is not guilty of anything. His son says the accusations are groundless, and the published correspondence is “fake”. He vowed to sue the journalists.

In any case, Gladkovsky’s fate will be decided after the elections, because it is impossible to conduct an investigation and consider the case in court in two months. If Poroshenko loses, he rids himself of responsibility for the fate of his friend. But if re-elected, Poroshenko must become the guarantor of transparency during the investigation and impartiality of the court. Otherwise, he immediately gives his opposition a reason to fight for his resignation. Former Prime Minister and presidential candidate Yulia Tymoshenko decided not to wait for the elections and demanded Poroshenko's impeachment immediately.

On June 19, 2014, speaking in the Verkhovna Rada (parliament of Ukraine), Poroshenko quoted Singapore’s former Prime Minister Lee Kuan Yew: “Start by jailing three of your friends. You know exactly what for, they know what for - and the people will believe you,” the president advised Vitaly Yarema, who was then freshly appointed by the parliament as prosecutor general. Yarema did not send anyone to jail and a year later left his post.

Lee Kuan Yew incarcerated the first of his three friends during the 23rd year of his 31-year reign. Poroshenko had the opportunity to do this in the fifth year of his presidency.

In this case, unlike in business, Poroshenko’s companion might have to pay not with money but with freedom for failure in the public service. Just like the president himself.