Stolen Billions: Schemes of Ukraine’s Fugitive President

(UPDATE: An earlier version of this article contained several statements that have been found to be inaccurate. We apologize for the error.)

Before a pro-democracy uprising ousted Viktor Yanukovych in 2014, Ukraine's president had a penchant for filling his wallet with the country's budgetary funds. Despite fleeing the country years ago, many fear Yanukovych's fraudulent schemes still have Ukrainians putting money in the ex-president's pockets.

Moreover, his associates continue to seize businesses in Russia, Ukraine, and Europe. Our partner outlet Novaya Gazeta brings you an investigation done with the publication's shareholder and businessman Alexander Lebedev. It examines Yanukovych's corrupt international racket.

Backstory

In 2013, Ukrainian president Viktor Yanukovych rejected an EU trade agreement, which would have shifted the country closer to Europe and away from Russia. The move sparked protests across the country, which turned bloody in early 2014 and saw Yanukovych flee to Russia.

It was then that the extent of Yanukovych’s opulent lifestyle was unveiled. His sprawling country estate featured what many have described as “absurd luxury”, including a golf course, a vintage-car collection and a private zoo housing the now famous ostriches. Yanukovych and his cronies embezzled an estimated $40-$70 billion. Authorities are still working on recovering the ex-president’s assets.

Last year, a Ukrainian court found the ex-president guilty of high treason. It sentenced him to 13 years in prison in absentia. Russia, which recognizes Yanukovych as a legitimate leader, has continued to serve as a place of hiding for the fugitive ex-president.

Business Seizure 

Yanukovych's cronies have a track record of seizing businesses in Ukraine - restaurants, hotels, department stores - often through raider attacks.

Last year, an attempt on the life of Ukrainian lawmaker and businessman Vyacheslav Sobolev, which killed his 3-year-old son, was linked to Emelyanov, Tatkov, and the Malik brothers. Sobolev believes their motive was an attempt to seize a trading asset belonging to him. "Before the start of the war (the Russian invasion of Ukraine - ed.), they managed to take away property belonging to me in Donetsk. Now they intend to seize a shopping center in Mariupol through a raider attack," he said.

Back in 1997, Sobolev opened the first supermarket in Donetsk called "Obzhora" (meaning "Glutton"), which grew into a chain. It was seized through a raider attack during Yanukovych's presidency, which was associated with Emelyanov and Tatkov.

Yanukovych's associates often built schemes around buying out debt obligations. One such scheme included reeling in suspect bank employees and seizing the debt of the "victim company." The debtor would receive a notice demanding the repayment of the debt. Then after 30 days, when the deadline had passed, they would re-registered the enterprise ownership.

When Yanukovych fled to Russia, his cronies also fled Ukraine, finding a new home in Austria, where they continued their schemes.

The Circle of Cronies 

Following Lebedev's investigation into the international racket of the ex-president, his cronies retaliated. Specifically, a gang consisting of former Donetsk court deputy head Arthur Emelyanov (now based in Austria,) the former chairman of Ukraine's Supreme Economic Court Viktor Tatkov, the eldest son of Ukraine's ex-president, Alexander Yanukovych, and Donbas brothers Dmitry and Pavel Malik (also resides in Austria.)

One of the companies they operate, recently Russian-registered Invest Factor, filed a lawsuit against Lebedev's Crimean lodging businesses in February, demanding they repay a debt. Only these businesses never borrowed money from Invest Factor. This debt comes through ingenious operations conducted in Ukraine at the end of 2019 and the beginning of this year.

In a corporate raiding move often used in the region, the Yanukovych gang dug up an obscure and expired debt repayment transaction by businesses formerly linked to Lebedev. They bought the debt and brought litigation into the Russian legal field, where the Ukrainian fugitive cronies have the upper hand.

A lawyer for Invest Factor refused to speak to Novaya Gazeta in March at a hearing in occupied Crimea. The case is still ongoing.

Abduction Attempt Gone Awry 

After moving on from Ukraine, Yanukovych's gang started terrorizing folks in the EU. In October 2018, three Ukrainian immigrants - Vladislav Izrailit and married couple Maxim Slutsky and Yulia Kaplan -  submitted a statement to the Austrian Prosecutor. It was a complaint against Emelyanov, his wife, and Pavel Malik, accusing them of fraud and ordering the abduction of Izrailit.

Slutsky, Izrailit, and Kaplan left Ukraine in the early 90s, received German citizenship, and together began to grow a hotel business. In 2013, they owned 15 hotels (eight in Germany and seven in Austria).

Slutsky met Malik in 2012. The pair launched a joint venture and purchased two hotels in Vienna: "Prince Eugene" and "Cavalier". The relationship soured years later when Slutsky filed a lawsuit against the partner.

Malik and Emelyanov were not happy. According to the statement submitted to the Prosecutor, they decided to kidnap Izrailit to put pressure on him and force him to sign a settlement agreement.

The plan allegedly involved four attackers arriving from Ukraine to abduct Izrailit in Frankfurt, where his office is located and beat him until he agreed to call Slutsky with a proposal for an "out-of-court settlement." According to the statement, Slutsky should have been forced to sign an amicable agreement and recognize the rights of Malik and Emelyanov's wife in the disputed companies. If Izrailit agreed to the kidnappers' terms, he should have been released. If he didn't, then the attackers would continue to beat him until he broke.

But one of the executors, Viktor Skorik, told Slutsky's lawyer about the plan and named three of his accomplices. Skorik named Emelyanov as the customer and Malik, the mediator.

The abduction failed. When Skorik returned home, he went to the prosecutor's office with a confession, realizing that "the case took an unexpected turn." By his own admission, he was scared that Emelyanov, using his connections, would send him to prison. He also allegedly realized that Izrailit was in greater danger than just being beaten.

Ukraine’s dysfunctional law enforcement system has struggled to bring the country’s fugitive ex-president and his circle to proper justice. Failure to do so has meant that international sanctions have also been dropped against Yanukovych and several of his associates in the past year.

The $5 Billion Question

In 2013, America's largest investment group, Franklin Templeton Investments, became Ukraine's primary lender, buying up a fifth of the country's government bonds for $5 billion. The non-transparent deal by Yanukovych's government resulted in hefty interest and forced a restructure not two years later - and Ukraine ended up owing the fund more than $7 billion in 2017, though the bonds have been sold since then. Alexander Lebedev believes that the agreement between Ukraine and Franklin Templeton could have been corrupt. Lebedev is one of the wealthiest people in Russia. Apart from owning shares at Novaya Gazeta, he is the owner of British newspapers, the Evening Standard and The Independent.

According to the Financial Times, before the bond purchase, members of Yanukovych's government, first Vice-Premier Serhiy Arbuzov, and Finance Minister Yuriy Kolobov visited San Mateo in California. The small city is home to just 100,000 people as well as the investment group headquarters. Lebedev believes officials could have discussed laundering stolen money to purchase the bonds on the cheap.

What the high-ranking Ukrainian officials discussed remains unknown. Still, soon after that visit, the investment company acquired Ukraine's government bonds for $5 billion.

After the Financial Times story, Lebedev began his own investigation into Yanukovych's stolen billions and the dubious schemes of the ex-president and his inner circle.

Lebedev's beliefs are also shared by a variety of disreputable figures in Ukrainian politics, including controversial MP Andriy Derkach, who, along with equally controversial MP Oleksandr Dubinsky, fed these insinuations to Rudy Giuliani.

As for Yanukovych's role, Lebedev alleges that investigators on his payroll discovered that funds, linked to the disgraced former president, bought up a significant portion of the bonds on a 50% discount, effectively allowing him to launder his funds.

/Translated and abridged with materials frm Novaya Gazeta correspondent Irek Murtazin. Courtesy of the Russian Language News Exchange.