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Nashi Hroshi | 21Dec2013 | Daria Kaleniuk, Halyna Senyk, Executive Director, PEPWatch  [07:39, Ukr, Eng. subtitles]

Are EU banks doing business with Ukraine's crooked politicians?

Euro Maidan Win1 video
Published on 21 Dec 2013

[00:00 -- 00:53]
Nashi Hroshi [Our Money]: Sanctions. One of the most frequently heard words in Ukraine today. People are talking about sanctions, hoping for sanctions, and counting on sanctions. We're talking about special measures by the United States and countries in Europe that will affect the finances of those in power in Ukraine. After all, despite their great love for Russia, they all keep their money in European banks. And its through European companies that our top officials pay for their lives of luxury in Ukraine. Apparently, it's more reliable that way. But as our colleagues in the Anti-Corruption Action Center in Ukraine told Nashi Hroshi [Our Money], sanctions are really not necessary in order to relieve our top dogs of all their assets. In European countries, all the necessay legal instruments are already in place ... all that's needed is the will. For a video lecture on how to move Viktor Yanukovych from his luxury compound Mezhyhiria to a Khrushchev-era 2-room in his rundown hometown of Yenakievo, keep watching.
[00:54 -- 01:19]
Hectares of premium land surrounding luxury villas, private jets, luxury cars -- that entire posh lifestyle that is taken for granted by Ukraine's political and business elite is paid for, of course, through foreign accounts. Love Russia all you want, but keep your own cash somewhere safe. Still, perturbed by the brazenness of Ukraine's officials, Europe is gradually beginning to understand that some of that money not only smells, it positively stinks.
[01:20 -- 02:07]
Daria Kaleniuk, Director, Anti-Corruption Action Center: We have found a way for the law enforcement agencies in Europe and the U.S. to find assets and bank accounts that our business and political elite hold abroad. While Ukrainians keep waiting for sanctions and for bank accounts to be frozen, the folks at the Anti-Corruption Action Center discovered that to freeze the accounts of companies that are controlled by Ukraine's powers-that-be, no sanctions are needed at all. All that is needed is the desire and the knowledge that the money that these companies are using was gained by corrupt schemes. There's an instrument called International Standards on Combating Money-Laundering that states that banks are forbidden to work with corrupt foreign political figures.
[02:08 -- 02:31]
Nashi Hroshi: European legislation contains a concept called PEP. Take Olexandr Yanukovych. He's a definite PEP. Premier Azarov, an elderly PEP. National Security Council Secretary Andriy Kluyev and his brother Serhiy, two PEPs. Ukraine's entire Cabinet of Ministers, all PEPs. The Verkhovna Rada? Nothing but PEPs.  And then there's the President of Ukraine, Viktor Yanukovych, the ultimate PEP.
[02:32 -- 03:46]
Daria Kaleniuk: Banks are supposed to figure out whether a client is a PEP or not, PEP being a new concept meaning Politically Exposed Person. Someone who is politically engaged. Under the term come all the heads of Ministries, members of the Verkhovna Rada, judges of higher courts -- and, of course, their close relatives: sons, brothers, wives ... and business partners. A bank that has determined that their client is a PEP is obligated to then determine the source of the money that the client is placing. If any suspicions are raised at the bank about the legitimacy of the source of this money, the bank is supposed to refuse to work with that client. That's first. Secondly, the bank should report on suspicious activities, called a Suspicious Activities Report, to the country's financial oversight agency.
[03:47 -- 04:19]
Nashi Hroshi: Now for the most interesting bit. Ukraine's officials basically don't earn much money that isn't suspicious. If the son of the president, Oleksandr Yanukovych has seen his wealth increase by 7,280% in the three years since his father took office, that's suspicious. If his father suddenly lives in luxury on 136 hectares of prime real estate, that's also suspicious. There are plenty of reasons to look into those European companies to which money is transferred from Ukraine and from which presidential luxuries are later paid.
[04:20 -- 04:32]
Halyna Senyk, Executive Director, PEPWatch: Only you have to prove that, in order to own Mezhyhiria, Sukholuchchia and other such estates, Yanukovych used a foreign agent to launder his money.
[04:33 -- 04:52]
Nashi Hroshi: Luckily, such a foreign agent exists. His name is Reinhard Proksch. He's a lawyer, a resident of the U.S. and the director of several European firms that have direct links to some of Ukraine's main 'Eurointegrationists': Viktor Yanukovych, the Kluyev brothers, and the Azarov family.
[04:53 -- 05:00]
Halyna Senyk: Mezhyhiria, Sukholuchchia, the helicopters, the jets -- they're all connected to a single individual abroad.
[05:01 -- 06:11]
Nashi Hroshi: Lawyer Proksch in fact stands at the pinnacle of all the assets linked to Yanukovych, Azarov and the Kluyevs ... and brings the entire web together. How? Reinhard Proksch runs three companies: P&A Corporation, Blythe Europe and Astute Partners. Let's start with the last one. Astute Partners has a stake in TOV Dim Lisnyka [Forester House Ltd], the very company that was granted the hectares that are known as Sucholuchchia, eventually taking over the entire forestry territory and building Yanukovych's private hunting preserve there. From Dim Lisnyka, the link goes directly to Mezhyhiria, which is primarily linked to the company Tantalit, which was owned by Blythe Europe and whose director was that very same Proksch. Not long ago, Tantalit was bought out by Party of Regions MP Serhiy Kluyev, confirming the close partnership between the Kluyev brothers and the president.  The Kluyevs, of course, also make use of Proksch's services. P&A, which Proksch once ran, has a controlling stake in Activ Solar GmbH, a Kluyev business involved in building solar panel farms. And the Proksch group also controls the company that owns the home of Oleksiy Azarov, the premier's son. Of course, it's far more modest than Mezhyhiria, but it's located in Vienna.
[06:12 -- 06:38]
Halyna Senyk: Proksch is that person who, like Kirichenko, can shed light on just how all that money belonging to Ukraine's political upper crust was laundered. Based on that, we were able to show to what extent these people -- the premier, vice premier and president -- all used the services of a single person, and without any doubt, this one person could tell us exactly how this money was being laundered.
[06:39 -- 07:03]
Nashi Hroshi: Freezing the accounts of the companies controlled by Proksch will lead to a chain reaction, because we're not talking just about the companies directly in this corrupt network. A freeze will also hit those companies to whom money was being transferred. And so poor Viktor Yanukovych might not be able to buy his next crystal chandeliers and Party of Regions faithful Kluyev and Azarov won't be able to pay the utility bills on their Austrian estates.
[07:04 -- 07:21]
Daria Kaleniuk: We propose that EU countries, EU politicians and U.S. politicians make use of those instruments that are already in place. All they need to do is to uphold their own laws! Laws that forbid their banks to do business with corrupt politicians.
[07:22 -07:39]
Nashi Hroshi: With just a little bit of political will, Europe can easily make this winter the coldest one yet for Ukraine's grandees, no matter what Russia has promised.