Archive for June 11th, 2012

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$53.4 billion sent off shore

June 11, 2012

According to some media reports, the rather handsome sum of $53.397 billion has been sent off shore via Ukrainian banks in the past 2 years.

The main facilitators of this exodus of cash have been Privat Bank which transfered $32.717 billion, Pumb Bank which transfered $3.249 billion and Nadra Bank which move $1.155 billion.

In total, about $51.495 billion went to Cyprus, BVI $1.016 billion and Belize $602 million.

None of this is very surprising of course.  Back in the early 1990’s anybody who was anybody opened a foreign registered company as there were huge tax incentives for external foreign direct investment.  Illicit money was spun off to Ukrainian owned foreign registered companies and then some reinvested back in Ukrainian opportunities as FDI for the tax incentives.

Most of course left the nation and was laundered, as notoriously came to light with Pavel Lazarenko, former Ukrainian Prime Minister and business partner of Yulia Tymoshenko via her Cyprus registered company Somalli Enterprises.

In other notable instances, ex-President Yushenko’s people were caught entering Switzerland with huge sums in the form of Bankers Drafts.

Several RADA people I know have companies registered in New Zealand.

Ukraine, naturally, is not the only nation whose rich and nefarious make the most of tax loopholes.  It is a global phenomenon of which Cyprus is probably the best known host for European cash.  The EU has been looking at the tax avoidance issue for over a decade but has still to make any impression on the matter or indeed on EU member Cyprus, which is the main collaborator for these grey and somewhat shady monetary movements.

The Ukrainian governments, past and present, unsurprising have also left the issue of Cypriot companies alone ( as well as others such quasi-bogus foreign entities) as big business and the RADA are one and the same thing – whether you are in the majority or opposition.

In fact it is noticeable that it is the media which is trumpeting the off-shoring issue whilst MPs of all party colours have stayed quiet.  Off-shoring illicit gains or avoiding tax is something that crosses all political lines here after all.

Will something eventually be done about it?  Unlikely.  In the meantime, the capital flight (or should I say removal of otherwise taxable capital for the public purse will continue – just as it does everywhere else on the planet.

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