Archive for January 1st, 2012

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Welcoming in 2012 – What to look forward to in Ukraine?

January 1, 2012

Well, happy New Year to you all.  Welcome to 2012 and I hope it will be a year that brings you all good health and happiness.

What has 2012 got install for Ukraine in 2012?

Well to quote Donald Rumsfeld,  “We know there are known knowns: there are things we know we know. We also know there are known unknowns: that is to say we know there are things we know we don’t know. But there are also unknown unknowns — the ones we don’t know we don’t know.”   As much as that quotation has been used as a source of satire and wit, it is nonetheless a very accurate and honest expression.

There are a lot of known knowns for Ukraine in 2012 and here are a few “headliners”.

The initialing (and thus official sealing) of the AA and DCFTA will occur, though signing and ratification bringing the agreement into effect will not.

Probable elections for a new Odessa Mayor when the current failure resigns early.

Ukraine will co-host the Euro 2012 championships.

There will be a parliamentary election in October.

There are many known knowns, however one that is not a headline event (yet) and the one that will bring undoubted interest when it occurs, is the release of former Ukrainian Prime Minister Pavlo Lazarenko form jail in California after completing a 9 year jail term for doing nefarious deeds with nefariously acquired cash.  Unless he meets an untimely end, he will be released in 2012.

For those of you that read this blog regularly, I have written about him before and his up and coming release, as you will recall.

Another known known is that another Ukrainian former Prime Minster is also in jail entering 2012.  Yulia Tymoshenko sits currently serving a 7 year term whilst also under investigation for other offences as well.

Amongst those offences are alleged nefarious dealings when she set up and directed United Energy Systems of Ukraine.  At the time she was a very close ally to Lazarenko who ultimately as Prime Minister gave UESU a monopoly contract relating to imported Russian gas and turning Ms Tymoshenko into a very rich woman.  It also helped turn him into a very rich man and ultimately helped get him jailed in the USA when he went on the run from Ukraine.

How did they both get so rich?  Well it is all a matter of public record in the USA and the Internet is replete with links to the original US court case material and a subsequent appeal by Lazarenko that did not see him freed.

To cut a long story fairly short, Lazarenko gave Yulia Tymoshenko’s UESU a monopoly contract to act as intermediary for Russian imported gas.  Why did there need to be an intermediary?  Good question.  It had everything to do with tax breaks at the time as UESU was partially owned by UESL which was partly owned by a Turkish national.  At the time, that meant, due to partly foreign ownership, an exceptionally good tax break (one assumes to encourage FDI to Ukraine in the 1990’s) and said tax break automatically drops to the bottom line as profit.

UESU then handed title to the Russian gas to UESL who were ultimately paid by the consumers of Ukraine.  (Russia claims that it is still owed $405 million by UESU for unpaid gas.  For years Ms Tymoshenko categorically denied any such debt, but has since admitted there is a debt but not at the amount to which Russia claims.)

In this mix there is another company called Somolli Enterprises, a Cypriot registered company allegedly opened by Ms Tymoshenko and her husband back in 1992.  I say allegedly to be as gracious as I can to Ms Tymoshenko.  There are sworn statements by a then Cypriot Mayor that they did indeed open this company as he acted as temporary director and met them personally.  This statement was used in the prosecution of Lazarenko in the US.

Somolli Enterprises is a key component in his crimes.  One assumes it is equally key in the forthcoming prosecution of Ms Tymoshenko.  Fortunately for the Ukrainian prosecutors, the US prosecutors have done much of the work when following the money.

Suffice to say, money pinged around UESU, UESL and Somolli so hard and so fast in the laundrette that hundreds of millions of dollars miraculously flew off in different directions via Somolli Enterprises to Switzerland, the US and others.

Nobody knows how much went into Swiss accounts although we do know which Swiss banks were involved.  They were Credit Suisse, Credit Lyonnais, Banque Populaire, Banque CSC Alliance.  Nobody knows to this day how much still sits there.

$20 million went through the US system in the following institutions:  Hambrecht & Quist, West American Bank, Fleet, Boston, Roberston & Stephens, Bank of America, Fenner & Smith, Merril Lynch, Pacific Bank and the Commercial Bank of San Fransisco.

Another $70 million went to an unnamed US bank in Poland and to the European Federal Credit Bank (Antigua).

So we have a known known that Lazarenko will be released in 2012.  We have a known known that Ms Tymoshenko is currently under investigation for her role in these shenanigans leaving a sizeable debt to Russia still owing, and a known known that much of the US investigative material used to convict Lazarenko implicates Ms Tymoshenko in name and deed as far as dealings with UESU and Somolli are concerned.

Let’s move to some known unknowns.  We do not know when Ms Tymoshenko will be tried over this matter.  It may well be after Lazarenko is released.  He is still wanted in Ukraine on international arrest warrants issued almost a decade ago but we do not know if the US will extradite him back to Ukraine upon release.

We do not know if Mr Lazarenko would give evidence against Ms Tymoshenko or if indeed evidence will be sought from him.  We do not know if he will be tried in Ukraine for the same offences he was found guilty of in the US or whether they will be put aside and he will be tried on a long list of other matters that occurred in Ukraine of which he is accused and has been accused of since the international arrest warrants were issued almost a decade ago.

As for unknown unknowns, well this matter stands a chance of becoming a story bigger than any other in Ukraine during 2012 upon Lazarenko’s release and is an event I am probably looking forward to more than any other in 2012 despite my love of football and my interest in policy, process and how the October elections will pan out.

One has to suspect that upon Lazarenko’s release, one way or another, what happens in the video link will be an accurate reflection, quite probably for more people than just Ms Tymoshenko from the Dnepro clan that did so well under Lazarenko’s patronage:

What to look forward to in 2012? – Quite a lot actually, it’s going to be an interesting year!

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