Follow the money – and then?

June 5, 2014

About 4 months ago I wrote about sanctions and stated:

“As sanctions are traditionally employed (be they targeted at individuals or nations alike) to change the direction of the leadership and not as a punishment for past deeds – the question now arises as to whether the EU Member States will actually sanction anybody at all.

Certainly there must now be a large question mark over the process – as there will be few EU Member States that will want to move the parameters of sanctions from “direction changing tools” to that of “punishment” after the fact.”

Fair enough?  Whether you think so or not, I stand by that position.

I also stated:

“Perhaps the EU Member States, in an effort to support the “EU brand” in Ukraine, would be wise to make a very public declaration that all assets held within their sovereign territories belonging to, or believed to belong to, any names that would have been on an agreed sanctions list, will now be subjected to criminal investigation regarding money laundering as a far better alternative?”

Needless to say, that transition from assets frozen by politically imposed sanctions to assets subject to freezing due to criminal investiations – money laundering – has not occurred.

Perhaps as something of a “puritan” when it comes to the use of sanctions and the rule of law, both in and of themselves individually, and when it appears the wrong tool for the job is being used, raising the issue at the end of February was too soon for policy makers.

However, they are going to have to confront the issue now.

Some of the previous regime leaders who are subject to sanctions have now appealed to the European Court of Justice to have their assets returned:

29th April – Andriy Portnov filed suit at the ECJ  in Luxembourg.

12th May – Mykola and Alexander Mykola did the same.

14th May – Viktor Yanukovych Senior and Junior as well as Alexander also filed.

15th May – Sergie Kurchenko followed suit, as well as the Klyuyev brothers.

Quite right too, as sanctions will no longer change the direction of their leadership of Ukraine.  It is the wrong tool.

However, so vast are the sums involved they are clearly not from any legitimate enterprise.

But what figure is legitimate?  The place to start would seem to be the public tax declarations submitted by these people – with any undeclared additional monies therefore “suspect”.  As Ukrainian politicians always submit public tax statements that surpass the very best tales of Tolkien or Lewis Carroll, then let them be hoisted by such a petard as the legitimate starting place.

The court petitioning parties will hopefully now force domestic European authorities to do what they should have already done – open money laundering investigations in every jurisdiction where monies and assets of these people are found.  Unfortunately for the petitioning parties, such complex money laundering investigations can take years – and assets will remain frozen accordingly.

So, a move from sanctions to criminal investigation required to employ the right tool for the job is now necessary.

Unless –

The enforcing authorities are aware of certain activities of those sanctioned that would warrant encouragement to change their current course by continued sanctions.

Perhaps somebody is financing something nefarious that has political or destabilising results in Ukraine?

Maybe somebody is financing – in part or in full – some events manifesting in eastern Ukraine?

It certainly seems that one of the aforementioned sanctioned parties is up to no good within the RADA currently.

Yesterday, another 20 Party of Regions deputies left the party.  No surprise considering the party is now a hollow shell with no future.  However, why now, why en masse, and to whom do they move to?

It appears Sergey Kurchenko has Vladimir Oleynik making approaches in the RADA to form a new political group which Mr Kurchenko will finance under a new payment model.

Previously Party Regions MPs were paid $5,ooo – $10,000 for voting “the right way”, each and every vote cast, under the previous Yanukovych regime – quite lucrative with so many votes in the RADA – although it did allow for some not to vote “correctly” each and every time, as losing such small sums occasionally was no big financial loss.

Mr Kurchenko’s new group will have a very differently structured payment/loyalty system.  Every MP will be paid $200,000 each month for voting “correctly” throughout that month – without uplifts for RADA speeches and public appearances in the media touting the “right lines”.  A “wrong” vote means no payment at all – absolute loyalty gained at the expense of the personal integrity of MPs, any held ideology and of course, a continued raping of democracy.

However, an expensive pursuit costing a few $million per month for Mr Kurchenko.  He is technically a rich man.  A $ billionaire – if he can access all his assets.


So the question is, to continue to justify the use of sanctions (in their traditional role) on these people, rather than a move to criminal money laundering investigations, what do the Europeans/US know that the public don’t?  They surely are not about to stupidly smudge the boundaries of what politically imposed sanctions are supposed to do and confuse that with what the rule of law is for – or are they?

It would be a very clear indication to the public if some of those currently subjected to sanctions were then moved to criminal investigation – inferring they no longer have any detrimental policy within Ukraine that needs “redirection” – and others remained subject to sanctions, giving inference they are still actively undermining Ukraine from without.

A further question for the European/US political policy makers that also raises its head, is whether those who would now get into the political bed with the currently sanctioned Mr Kurchenko, should also be subject to sanctions for taking his ill-gotten cash and continuing to erode any consolidation of democracy in Ukraine?

Let’s see what the EU and ECJ will do with these recently filed applications regarding sanctions – and let’s see whether the European diplomatic community can apply some coercive/persuasive diplomacy to these 20 MPs and prevent them from becoming a Trojan horse in the RADA.

Another new party to look out for will be called Партия Развития Украины (ПРУ) – Party of Ukrainian Development, formed by Sergei Liovochkin – Unveiled 2 the public 21 June (ish).

It will be interesting to see what unfolds over the next few months.



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