Ukraine Sweeping Arrests of Tax Officials, Explained

Ukraine launches unprecedented wave of mass anti-corruption arrests. 23 former high-ranking officials from regional tax offices were detained by the National Police and the Military Prosecutor of Ukraine on 24 March, 2017. They are accused of helping to money launder more than $3.5 billion for the fugutive President Victor Yanukovych.

Hromadske has gathered information on what is known about the arrested tax officials and how their arrests were carried out.

Who Are the Detainees?

Among the detainees are 7 ex-heads of regional tax offices, 3 of their deputies, 2 ex-heads of city tax offices, 11 heads of district tax offices (6 of them are ex-heads of regional tax offices in the capital city, Kyiv). The head of the Ministry of Internal Affairs, Arsen Avakov, announced the list of detainees in a press conference.

They all worked at the State Fiscal Service of Ukraine when the fugitive Viktor Yanukovych was president. Back then, the Fiscal Service was called the State Tax Administration and was headed by Yanukovych’s ally, Oleksandr Klymenko, who is wanted by the Prosecutor General of Ukraine for corruption and currently lives in the Russian Federation.

The head of the Ministry of Internal Affairs, Arsen Avakov (right) and Ukraine’s Chief Military Prosecutor, Anatoly Matios (left) announced the list of detainees in a press conference. Photo: Andriy Novytskiy, UNIAN

What are the Detainees Accused of?

According to the investigators, the arrested tax officials are accused of organising a widescale system of illegal money transfers in cash.

“Because of the criminal scheme, which involved these officials, the Yanukovych family failed to pay 96 billion hryvnia in taxes to the budget,” said Arsen Avakov, head of the Ministry of Internal Affairs.

How Did This Scheme Work?

‘Conversion centres’ were at the heart of the schemes. This is a system of made-up companies, which allow businesses to transfer non-cash funds into bank accounts in cash or bonds in order to minimize tax.

In 2010-2011, when Oleksandr Klymenko was head of the system of the Ministry of Revenues and Duties, most of the centres, according to the investigation, were under the unofficial control of the tax office. They called this scheme “state program”

In Which Regions did the Operation Take Place?

According to Ukraine’s Chief Military Prosecutor, Anatoly Matios, the operations took place in 15 regions. However, the list of the detained includes former tax officials from seven regions: Kyiv, Dnipropetrovsk, Poltava, Kharkhiv, Luhansk, Odesa, and the Autonomous Republic of Crimea (where the Crimean tax-officials are being detained is unknown).

How Were They Detained?

The operation consisted of 454 searches involving 1,700 employees of the National Police and around 500 military prosecutors.

Why Were There Helicopters?

For each detainee there were close to 74 police officers and 22 prosecutors. Law enforcement officers reported that searches are continuing, but currently no new suspects have been brought in for questioning. Several detainees were taken to Kyiv by helicopter.

According to security officials, the helicopters were for efficiency, not to create a spectacular image for television.

Hromadske journalists recorded the arrival of two of the helicopters at Zhuliany airport.

Photo: Andriy Novytskiy, UNIAN

Why Was Nasirov There?

The operation’s organizers revealed that the head of the State Fiscal Service, Roman Nasirov, assisted law enforcement. “This man has done everything possible to prove the guilt of the detainees,” said Anatoly Matios.

Nasirov is currently at the beginning of his trial on charges of abuse of power. He has been suspended from his duties as chairman of the State Fiscal Service, which under his leadership has been repeatedly accused of further promoting the aforementioned “conversion centres”.

How is the Case Moving Forward?

As of 20:00 on May 24, Kyiv’s Pechersk District Court has taken precautionary measures for some of the accused, with the possibility of bail amounting to either more than 450,000 and more than 570,000 USD, and including the obligation to wear an electronic bracelet.

/Translated by Sofia Fedeczko, Eilish Hart