Archive for January, 2018


Azov/National Corpus to patrol the streets of Kyiv?

January 29, 2018

It appears that Azov, or rather its civilian movement and political party National Corpus has “sworn in” another 600 people in a ceremony in Kyiv – with MP and former Azov Battalion commander Andriy Biletsky “taking the parade”.

Not exactly the most reassuring message for a nation whose authorities have a weak grasp upon the rule of law, and to be blunt, not exactly the sort of messaging Kyiv would wish to send to either western partners nor a manipulative Kremlin propaganda machine.

As with all propaganda, and some readers will view the above-linked Azov website as being as much about propaganda as any neutral information dissemination – yet there is much to be lost within the fog of literal translation and subsequent interpretation.

It’s not what you say, but what people hear that frames perceptions.

So what was said?

“Нас багато. Ми не боїмося застосувати Силу, аби встановити на вулицях Український Порядок!” is the text accompanying the video of the swearing in ceremony.  That, fairly accurately translated equates to “We are many. We are not afraid to use force to install the Ukrainian Order on the streets!”

Nowhere however, is there a statement that announces a structured and systematic patrolling of the streets of Kyiv by National Corpus – and certainly nothing that proclaims anything akin to police patrolling within the Azov Press website.  Their Facebook Page also makes no such specific claims.

Indeed, National Corpus have for some years involved themselves in numerous acts and incidents, sometimes violent in nature, for what they consider the national good – particularly when it comes to the prevention illegal construction and social issues such as drug dealing or being the last resort for certain citizens when the State has otherwise let them down or ignored them.  Thus their cause oft garnering (often temporary and issue specific) societal support – if not necessarily their methods employed.

A reader might view the organisation prima facie as a mixture of functions taken from the Muslim Brotherhood in relation to “social outreach”, combined with vigilantism of oft a distinct nationalist flavour, and a social justice (where “ends justify the means” (Exitus acta probat – Ovid)) enforcer.

In sum, the “swearing in” ceremony and accompanying rhetoric is perhaps better understood through the lens of a limited ability and thus inferred threat per nationalist propaganda to patrol the streets of Kyiv (akin police) rather than a declaration to systematically and deliberately do so.

After all, 600 is not a particularly large number to set about patrolling the streets of Kyiv in any kind of “policing” role – it takes thousands to police Kyiv – but it is a number large enough to be very problematic to those that draw the attention of National Corpus in Kyiv.

There are therefore issues of accountability and rule of law.  Any “parallel policing” is obviously not accompanied by parallel policing powers.  There is a very thin, and perhaps occasionally smudged line between robust mass civil activism, hooliganism, criminality and vigilantism – a line that National Corpus must tread carefully lest it fall the wrong side of the law.

What is perhaps interesting is the apparent lack of reaction from the political class – in particular the Ministry of Interior which will be the politically accountable ministry when or if the police have to tackle any National Corpus incidents that cross the rule of law line.

That said, astute readers will be aware of the connections of Interior Minister Avakov to Andriy Biletsky, Azov, and the number of former Azov appointees in fairly senior Interior Ministry positions – Vadym Troyan for example.  Few would doubt some “choreographed incidents” will therefore occur.

Though such people may well be good at their jobs (or not), if there be a “threat” from National Corpus and Azov, it is perhaps not going to come from 600 newly sworn in people to its ranks, but rather the seepage of nationalist ideology from such institutional leaders – that on the proviso such individuals are incapable of compartmentalising personal ideology from daily institutional management.

An institutional management replete with patriots usually has a fine moral compass – an institutional management replete with nationalists less so.  There is, after all, a significant difference between patriotism and nationalism.

Nevertheless, it remains to be seen how such parades and social media chatter will shape the public discourse.  It seems doubtful National Corpus will be seen regularly patrolling with the police however.


A National Bureau of Financial Investigations – Investor Confidence?

January 25, 2018

In Davos President Poroshenko has been speaking.

Of interest from his wide-ranging oratory is a statement regarding the creation of the National Bureau of Financial Investigations, and an explicit expectation that investor confidence will follow.

“This (the National Bureau of Financial Investigations) will be the only analytical service, and none of the other law enforcement agencies will even be able to knock on the door of business.  We plan to create an effective system to protect the interests of investors. 

We will replace the profit tax in order to stimulate the attraction of investments, but only in the case when the funds are not withdrawn from Ukraine.  When you invest in Ukraine, you do not pay taxes.”

With regard to the removal of tax upon foreign investment in Ukraine insofar as long as it is invested and remains working within Ukraine – well OK.

At some point however, genuine FDI (rather than recycled/laundered Ukrainian FDI via offshore companies) will want to extract their returns, and thus will be taxed.  Nevertheless, so be it.  Currently attracting FDI is a significant problem and so why not change the tax regime in an effort to attract FDI?  It will either be effective – or not.  It will have to be one tool in a much larger toolbox to achieve significant FDI rather than a “stand alone” instrument, but a tool it would be.

As stated many times by the blog, the expansion and dilution (read opening the captured oligarch economy) will only be achieved by the introduction of many more market entrants into the economy.  Jailing the oligarchs will simply not occur, and seizing their assets to simply redistribute them internally among the elite changes nothing other than the end named beneficiaries.

If this new tax initiative (plus other tools) therefore brings about significant (genuinely foreign) private/corporate FDI then it can only be beneficial by way of diluting the captured oligarch economy.  Diversifying and diluting the economy will prove to be the only effective way to deal with the influence of the oligarchy.

That, ultimately, is a national security issue – and also a matter of NATO integration under Article 3 of the Washington Treaty.  Economic resilience is as much a national security and NATO issue as military resilience when all is said and done.  Hence ingrained corruption and organised crime are also a national security issues, for they too undermine the economy, and also society.

However, also related to national security is the unambiguous presidential declaration at Davos that the “National Bureau of Financial Investigations” will be born.

Currently the exceptionally busy and often misdirected SBU is far too involved in the daily policing of economic and business matters – rather than the collection, collation, analysis and dissemination of business and economic intelligence that poses a genuine national security threat.

The same can be said of the SBUs involvement in the daily policing of organised crime.

The core tasks of the SBU are, and should be, counter-terrorism and counterintelligence.  Daily policing and enforcement relating to organised criminality should be a matter for the police – not the SBU.  The SBU’s role, in general (there are always exceptions) should be that of keeping a watchful eye and initiating police involvement where necessary – not the actual frontline policing in and of itself.

Ergo the daily policing and enforcement of business and economic affairs that are deemed a significant risk to national security would also benefit from an enforcement arm – which prima facie the National Bureau of Financial Investigations would appear to be.

However, it seems unlikely that the presidential statement that “none of the other law enforcement agencies will even be able to knock on the door of business” is perhaps going to prove to be an exaggeration – dependent upon the nature of the business.  It is difficult to see how Customs can be removed from knocking on the door of businesses involved in import/export.  Or State Regulators, – hygiene or fire et al.  Perhaps a matter of how wide or narrow the definition of “law enforcement” agencies is for any reader.  Nevertheless, reducing the number of corrupt and rapacious State bodies involved with business is clearly a wise policy.

It so follows, dependent upon the structure, processes, parameters and institutional integrity of the new National Bureau of Financial Investigations, that the fate and parameters of the chronically corrupt State Fiscal Service may be equally as effected as that of the SBU.

Questions are also raised regarding how it will dovetail with both NABU and the newly created State Bureau of Investigations (SBI) remits?

By logical extension, a question that necessarily follows is under which ministerial umbrella would a National Bureau of Financial Investigations sit – if any?

The SBU is directly responsible to the President.  In assuming some of those SBU responsibilities, would the NBFI also fall under direct presidential control/reporting?  Probably not.

However if the NBFI is to replace the SFS as the agency knocking at the door of business, should it fall under the Ministry of Finance, as the festering SFS currently does?  Maybe.

Then again, as a domestic law enforcement and investigatory body, does it not fit better within the (already very powerful) Interior Ministry remit?  Should this ministry get yet more powerful?  Probably not.

All internal policy and structure questions for Ukraine of course.

Returning to the presidential statement however, and external perceptions, how independent and insulated will the NBFI be, if to give any additional weight to investor confidence as the quoted presidential oratory suggests it will?  Its investigative independence will be an absolute necessity – particularly as confidence in the prosecutors office and judicial system remains low despite “reform”.

As always, structure, processes and effective implementation will prove to be key if the NBFI is to have any positive impact as part of the solution to attracting FDI.  Nevertheless, the NBFI should be welcomed if only to take on some of the current SBU scope – for the SBU is very much in need of structural reform.


When can Trukhanov return from his “holiday”? A blatant fraud updated

January 23, 2018

In October 2016 an entry appeared entitled “An impressive fraud even by the standards of Odessa City Hall“.

In the decade this blog has been running it was indeed the most blatant and obvious of frauds, involving the very top of City Hall and a company well within the orbit of one of the regions most brutal and infamous “raiders” closely associated to Yulia Tymoshenko.

The sordid details naming names are to be found in the above link, but for brevity City Hall sold a building to this individual for UAH 11.5 million and 7 months later bought it back for UAH 185 million – approximately 16 times the sale cost and with little change to the functionality of the building.

Eventually in 2017, NABU began to investigate this obvious and clearly organsied criminal incident among others – such as the dodgy circumstances surrounding Odessa Airport and road tenders relating to companies “associated” with the mayor.

Although NABU investigations have not tempered the corruption and criminality within City Hall, it has at least forced a little more discretion with regard to such criminality and the effects in the public domain.  The on-going scams and schemes a little less obvious and public – but on-going they are.

Nevertheless, every time Mayor Trukhanov goes on a holiday, perceptions for some are that the holiday is in fact his (temporarily or permanently) fleeing Odessa – and the current circumstances surrounding his on-going vacation seem to lend some credibility to such rumours this time.

Mayor Trukhanov is currently on “holiday” in Greece and has been since 26th December 2017.  (Mayor Trukhanov likes Greece – perhaps because it is very strongly rumoured he holds Greek citizenship.)  However that “holiday” has been extended, City Hall announcing that he remains in Greece until 26th January.

In short Mayor Trukhanov appears to have decided to take an entire month off – and to spend it in Greece.

A reader will be wondering how many other mayors of major Ukrainian cities have taken an entire month off – suspecting the answer is in fact none.

There is of course a reason for this extended holiday – beyond Mayor Trukhanov’s love of Greece (and strongly rumoured citizenship).

The aforementioned NABU investigation has plodded onward relating to so blatant a scam as to be an affront to any criminal conspiracy.

During Mayor Trukhanov’s “winter holiday” in Greece there have been developments that a reader may not have expected.

The nefarious buyer – turned seller of the building in question has now offered to return UAH 95 million to City Hall of the UAH 185 million it paid.

How generous!

Instead of a criminal conspiracy involving the highest positions of City Hall making 16 times profit, due to NABU interest the offer to reduce that criminal profit to 8 times has been made.

The deal being offered is as obvious as the initial blatant fraud.

The buyer/seller entity involved in this criminal act still makes a very healthy profit (no doubt to be shared somehow with those atop City Hall) and avoids jail.

Mayor Trukhanov can return from his “extended holiday” without any requirement to resign and after a little renegotiation of the existing Odessa City Hall-Bankova political understandings, will not face arrest or conviction.  The Bankova has the leverage to renegotiate a deal far more to its liking with Mayor Turkhanov than that initially agreed in 2014/15.

Both the city and The Bankova avoid early elections for Mayor of Odessa – for The Bankova have clearly not identified a malleable alternative to Mayor Trukhanov.

NABU is seen to have effectively returned UAH 95 million in criminally obtained money back to the City budget – albeit without having the scalp of Mayor Trukhanov or a senior City Hall official to go with it.  Any scapegoat, if required, to be found among lesser beings.

Therein is the grubby deal on offer – though it may not be accepted by The Bankova.  The consequences for Mayor Trukhanov (and those behind him) would therefore be grim.

So why has Mayor Trukhanov extended his “holiday” in Greece if a “solution” has now been found to mitigate the fallout of such a blatant scam facilitating his safe return?

Unfortunately for Mayor Trukhanov, the City Hall extraordinary session to vote to accept the buyer’s offer to return UAH 95 million (and thus set the circumstances for the Mayor’s trouble-free return) that was due to be held on 9th January failed to occur.  (It was holiday season for all other City Hall Deputies too, and not enough were available to attend and reach the required number of Deputies present.)

There are also problems in forming a quorum within the City Hall budget committee (four failed attempts this month thus far), who would have to vote to propose to accept this offer to City Hall Deputies.  A matter of protocols being seen to be followed – particularly with NABU involvement.

The next scheduled City Hall session that can create a set of circumstances for a trouble-free return is due on 31st January.  Perhaps there will be an extraordinary session prior to that date considering the extension of Mayor Trukhanov’s stay in Greece is only officially until 26th January (baring a further extension) – yet rumour abounds that this session may be postponed.  If the City Hall session be yet further delayed it will surely be interpreted that “no deal” has been yet been negotiated with The Bankova.

A reader must therefore ponder whether Mayor Trukhanov’s stay in Greece will be yet further extended, and for how long?

Beyond that, after 1 month’s continuous “holiday”, at what point is Mayor Trukhanov deemed to be failing in his duties?  If thus officially deemed to be failing, then his position then is temporarily filled by Alexey Potapsky who is the City Hall Speaker, until the fate of the Mayor becomes clear and/or new elections are held.  Mr Potapsky is a “Goncharenko man” and thus by extension a “Poroshenko man”.

National elections are coming – control over regional administrative resources to unfairly assist election campaigns will no doubt feature in the thinking of some campaign managers (as it always does).  Leverage is with The Bankova in the (probable) on-going renegotiation with Mayor Trukhanov.

Nevertheless, all possible grubby deals aside to “settle” this matter, there was a criminal conspiracy that turned into a criminal act.  The theft of a bar of chocolate is the same as the theft of $1 million – an act of theft.  No more and no less.  The mens rea and its realisation occurred.

The crime was still committed even if more than 50% of the proceeds are being offered to “strike a deal” so that the big players involved avoid jail.

It may well be that agreement can be made that jail will be avoided – but that should not negate convictions and criminal records for those involved.  To be blunt, all of those involved in this criminal scam are long known to be nefarious in character – let them be given an appropriate criminal record to reflect that even if jail is “off the table” as part of a grubby deal.

Whatever the case, a little local Odessa colour to keep an eye upon over the coming week (or perhaps longer).



A return to the firearms issue (after the latest Odessa murders)

January 22, 2018

Way back in July 2015, an entry appeared relating to the matter of illicit firearms in circulation within Ukraine.

To be blunt, very little has changed regarding the causes and proposed cures since that entry, although clearly the number of seized illicit firearms has increased due to increased policing activity – be that increased activity terrorism or criminally driven.

In July 2015 the blog stated – Discounting lawfully issued weaponry to those on active service, clearly there is a need to review existing firearms laws, deciding what weapons can be privately held and those that will be prohibited by law, how and where they must be registered, how they must be stored and how they can (or cannot) be carried in public places – All the usual parameters to legitimate private firearm ownership.  (Whether or not there would be a need for legislative changes after that review remains to be seen.)

Thereafter providing a legal window for those holding currently anonymous/unregistered weapons that they will legally be allowed to hold the opportunity to identify and register those weapons with the State would seem rather sensible – together with an amnesty for surrendering all weapons that will be prohibited by law from being privately held, post any review.  Accompany any amnesty windows with a “buy back” incentive, offering the cash value of the weapons surrendered.

The result being all illicitly held firearms/weapons/heavy weapons – having given the nation opportunity to legalise the currently illegitimate – would fall under the reviewed (and possibly unchanged) firearms legislation – or terrorist legislation where appropriate.

No amount of legislation or amnesty opportunities will account for all the weaponry that has seeped, and will continue to seep, across Ukraine.  It would be a fantasy to think that organised crime, vigilantes, or “swivel-eyed underground groups” will not retain weaponry, appoint quatermasters, and secrete weapons for “future operations”/”just in case”.  No doubt illicit arms stashes will be found a decade from now, buried, hidden etc., and no doubt many will be used in illegal activity in the years ahead too.

The point being however, if new temporary legislation relating to the illegal possession of weapons on the street will be classed as terrorism, should it not be accompanied by the opportunity to legalise – or surrender – currently illicit and unregistered weaponry held, that does not and will not appear on the street, to owners who can then be held accountable for the weapons they now possess – thus beginning to address what will be a very difficult future issue.

Does it not seem sensible to start a process of bringing illicit weaponry into the legal realm, or providing opportunity to depose of it without legal consequence via amnesty, and thus begin to account for it and its ownership as soon as possible – particularly that illicit and anonymous weaponry held outside of the ATO zone?”

To be blunt it still seems very sensible in 2018 considering the lack legislative and review progress over the issue.

But what is the extent of the seepage in both numbers and geographical area from the occupied Donbas, vis a vis and also plus the historical gun trafficking figures?

Leaving aside grenades and other weaponry that are not strictly firearms (of long or short barrels), clearly some illicit firearms have absolutely nothing to do with the occupied Donbas.

The very recent and tragic murder of a police officer in Odessa by Valentine Doroshenko (leader of the “Stalin Party”, and a genuinely mentally unwell individual from his youth) was not the result of a firearm from the occupied Donbas.

Indeed the firearms recovered from Mr Doroshenko’s (literally) underground workshop in the photograph to the left tell their own story.

The late Mr Doroshenko, mentally unwell as he was, clearly manufactured his own firearms.

This is not an isolated case.

There are fairly frequent reports of arrests in the Odessa Oblast relating to the reactivation and/or conversation of firearms.   The purpose of reactivation and/or conversion for many arrested for engaging in such practices is to sell them – and they do indeed sell.

It thus follows that every such arrest and any subsequent conviction increases not only detected crime statistics, but also, a priori, gun trafficking statistics fairly often.

Ergo, if there are fairly frequent arrests of those converting and/or reactivating firearms in Odessa, does demand outstrip supply for firearms seeping from the occupied Donbas, or is supply from the occupied Donbas not enough to meet the demand for illicit firearms in Odessa Oblast?

Is it perhaps that these are two distinct markets with very little smudging where military grade firearms and home manufactured and/or re-engineered weapons meet?

Is this distinction based upon price and/or contacts/accessibility – or both?

Are there any statistics that specifically separate illicit firearms seeping from the occupied Donbas vis a vis illicit firearms statistics as a whole?  What is the methodology used?  How accurately can the history of a firearm be confirmed or assessed?

How many weapons are a legacy of post-Soviet Ukraine – be they legitimate or illicit?  That number will not necessarily have increased.  Thus that number, plus reactivations/conversions, minus seizures equates to an increase or decrease?

What of firearms destined for the Ukrainian military that never arrived, but “went missing” en route?  What of those “liberated” from armouries in 2014 when “needs must”?

How many ATO veterans illicitly hold “mementos”?

What parameters can manufacturer, age, caliber, and maintenance say about a firearm’s history and source – and does that help identify what is truly seepage from the occupied territories vis a vis what was there before the war but otherwise hidden?

Odessa has always been a smuggling hub – weapons are no exception.  Before the collapse of the USSR weapons were smuggled through Odessa – to which the activities of Leonid Minin and associates are testament.  Nothing has changed regarding that smuggling ability.  What has changed is that the destinations of Yugoslavia and Transnistria are no longer end theatres.  (In fact those regions, particularly the former Yugoslavia, possibly still have more illicit and/or unregistered firearms than Ukraine.)

Odessa remains a source, hub and destination for all manner of organised (and disorganised) smuggling and associated organised (and disorganised) criminality.  The longstanding “southern route” (either land or sea) remains the “southern route” in which Odessa plays a major criminal role – be it guns, drugs, people (both smuggling and trafficking), or counterfeit goods.  Like all such illicit routes, the traffic is not one-way, but runs in both directions.

The most recent academic papers shed some light on the matter – but clearly there is further research work to be done.  The conclusions in the above link take a reader back to the proposals of the blog entry of July 2015.

There appears to be little appetite for either a thorough (and evidence based) review of existing firearms legislation, or new or amended legislation to address (and perhaps tackle) the current firearms issues facing Ukraine.

It seems somewhat unlikely that the issue will be addressed before the elections in 2019, but eventually the issue will have to be addressed.



FDI trouble in Yushni – Delta Wilmar suspends investment

January 21, 2018

Not without fanfare in October 2017 came the announcement of FDI from Singapore at Yushni – the deepest port on the Black Sea.

It appears however, that Delta Wilmar, one of the planet’s largest agricultural product processors has run into trouble in Odessa – perhaps unsurprisingly.

The Ukrainian leadership is known for making a lot of self-congratulatory noise and then disappearing in search of the next PR headline – leaving behind whatever then evolves often without so much as casting a nurturing eye over the well-being of inward investors.  It is a special form of self-defeating political folly in a nation where the leadership’s grasp upon the rule of law is decidedly and unambiguously weak.

Delta Wilmar planned to invest $150 million in creating a plant capable of agricultural processing 600,000 tonnes per annum and a berth for the shipping of 3 million tonnes of butter and meal per annum.

Much needed genuine (rather than Ukrainian recycled offshore) FDI, and promising for the development of Yushni (together with several other FDI announcements for the port).

It was clearly good news for all in Yushni, for the Odessa Oblast, and indeed for Ukraine – except Delta Wilmar has suspended work indefinitely.

The reason given by Dhruba Charan Panda, of the Board of Directors of Delta Wilmar, is extortion.

Extortion – Not the sort of public declaration that is likely to encourage more genuine FDI.

It would seem that the apparent extortion modus operandi is a classical one – rather than a new and complicated scheme.

Delta Wilmar states that it was sent a letter by a “charity” offering to “solve problems” with the local law enforcement and State entities – for a fee.

(Whether it be a “charity”or “NGO” is not clear, for at the time of writing no name was provided by Delta Wilmar),

If true, this is a form of racketeering that has a long history in Odessa.  The usual collusion to create problems and then an offer to solve those same problems for very generous (or extortionate) fees.

Delta Wilmar simply ignored this generous offer to resolve any current or future “problems” with the local institutions.

So far, so predictable.

A $150 million project is not about to be ignored by criminal structures however they be fronted – and they are surely connected by hook or by crook to somebody (or people) in power, so any repercussions would be perceived as minimal.

Naturally a reader is pondering what, if anything, the leadership of Ukraine knew about the problems that have led to the suspension of work by Delta Wilmar, prior to that decision to stop being taken?

Who knew what and when in Kyiv – if anybody knew anything at all?

No doubt Delta Wilmar will have raised the issue.  The Malaysian Ambassador is unlikely to have said nothing too.

However, it appears that the “charity” that offered to “solve problems” that Delta Wilmar were clearly expected to meet with the local institutions, also contacted the Ukrainian leadership Kyiv.

According to Mr Panda, the Board of Directors at Delta Wilmar are aware that President Poroshenko and Prime Minister Groisman received correspondence outlining numerous “issues” by the “charity” too – which resulted in additional checks and inspections of Delta Wilmar.  The allegations that apparently included money laundering and smuggling.

Ho humm.

Just because a “charity” is seemingly trying to extort money from Delta Wilmar, it does not necessarily follow that Delta Wilmar are automatically innocent relating to the claims made against it.

Indeed the “charitable entity” that Delta Wilmar claims is attempting extortion, also wrote to the Customs and Tax Committee of Indonesia, US Securities Commission, and the Singapore Stock Exchange where Delta Wilmar is traded.

There is also a law suit filed with the Jakarta High Court alleging money laundering and smuggling against Delta Wilmar by the “charity”.

It is the Jakarta law suit that has finally pushed Delta Wilmar to indefinitely and publicly announce it has suspend its work at Yushni – citing extortion.

A reader is now left to ponder whether the actions of the “charity” beyond its apparent attempts at extortion have any merit, whether it is a matter of a concerted act of belligerence in an effort to convince Delta Wilmar to take the route of least resistance to deliver their infrastructure project, or whether it is simply a particularly spiteful response after a rebuffing by Delta Wilmar.

At the time of writing there appears to be no comment from the government or any relevant ministry.

Perhaps there is shuffling behind the curtain to find a solution – perhaps not.

Whatever the case, until resolutions are found, this incident and the accusations made are not about to make Ukraine any more attractive as a location for corporate FDI.


The “renationalisation” of Odessa Oil Refinery

January 20, 2018

The Odessa Oil Refinery has an interesting contemporary history – and naturally not one without shenanigans involving those holding high office at the relevant time.

Once owned by Russian producer Lukoil, the Odessa Oil Refinery was “bought” by Sergei Kurchenko’s VETEK Group in 2013, less than a year prior to his fleeing Ukraine for Russia along with many of the Yanukovych “family”.

It follows that in 2014 the refinery was swiftly subject of arrest by the Ukrainian courts following the flight of the former Yanukovych regime along with many other assets acquired.

For the 3 years that followed the refinery was placed under the operational control of Ukrtransnaftoprodukt which immediately “sold” tens of thousands of tonnes of oil at extremely questionable prices to Ukrulprodukt – part of the Factor Group headed by Sergei Tishchenko.

Mr Tishchenko is very close to one of the most odious grey cardinals in Ukrainian politics, Sergei Pashinsky of then Prime Minister Arseny Yatseniuk’s People’s Front party.  (Mr Pashinsky is a truly vile and disgraceful character.)

It follows therefore, that Ukrtransnaftoprodukt was swiftly headed by Alexander Gorbunov formerly of the Factor Group over which Messrs Tishchenko and Pashinsky command.

A reader may infer that considering the widely rumoured shenanigans surrounding Messrs Tishchenko and Pashinsky with regard to nefarious petrolium/oil products, the Odessa Oil Refinery was in fact more likely to have been a convenient shield/front for the unlawful activities than it was a source of “off schematic” product.

During the summer of 2017, the courts of Odessa eventually ruled that the Odessa Oil Refinery be confiscated as the proceeds of crime from Mr Kurchencko/the Yanukovych “family” crime syndicate.  The oil refinery to become State owned.

Quite right.

The question however, is whether the odious Sergei Pashinsky (and Sergei Tishchenko) would retain control over the refinery and the ability to use to mask their nefarious ways – despite the fact that the refinery was barely operational at this point.

A new State Owned Enterprise (SOE) has now been created, “SE Odessa Refinery”, to own in its entirety the Odessa Oil Refinery.

Following a State Property Fund “competition” to lead the new SOE, Yuri Stolyarov was appointed.  By “coincidence”, Mr Stolyarov was also appointed to the same position in 2013 by the self-exiled and wanted Mr Kurchenko when he “bought” the plant from Lukoil prior to fleeing Ukraine.

Regardless of any technical ability, a reader may ponder whether Mr Stolyarov is appointed due to being well versed in the schemes and scams through “spillage”, “contamination” and “off-schematic” oil supply to “vested interests” behind the curtain.  (Something that will clearly not have been missed by the appointing body.)

Heading the State Property Fund responsible for the new SOE, and by extension the Odessa Oil Refinery, is Vladimir Derzhavin, the Deputy Head of the State Property Fund.

Naturally Mr Derzhavin did not reach that lofty and influential/facilitatory position by ability alone.  He is somebody’s man – and that somebody is now de facto (though not de jure) in control of the Odessa Oil Refinery via Messrs Stolyarov and Derzhavin.

So is Mr Derzhavin a soul owned by Mr Pashinsky to insure his “interests” at the Odessa Oil Refinery remain?

The unambiguous answer is “no”.

Mr Darzhavin is a former assistant to Ihor Kononenko – President Poroshenko’s leg-breaker in the Verkhovna Rada, and a long time business partner of the president.

Messrs Pashinksy and Tishchenko are therefore “out” and thus removed is a convenient shield/front to other petroleum shenanigans  – and in comes Ihor Kononenko, (a man actively collecting energy assets), and by extension the innermost presidential conclave when it comes to control over the Odessa Oil Refinery.

However, as stated, the Odessa Oil Refinery is not refining a great deal of oil due to over 3 years of legal due process and associated asset arrest, that has only recently (and finally) concluded – it currently remains little more than a regime of preventative maintenance on site.

Further Ukraine has embarked upon a policy of privatisation of SOEs.  This renationalising the Odessa Oil Refinery is therefore very much contrary to that policy.

The question therefore is how swiftly will the Odessa Oil Refinery appear upon the list of SOEs slated from privatisation?

Also in what condition will it be privatised (for the preventive maintenance programme may not have been particularly preventative)?

Should it be slated for privatisation “as is” under the new (and much improved) privatisation legislation, or under the “stewardship” of the new SE Odessa Refinery (read de facto Ihor Kononenko) will UAH hundreds of millions of State funds “appear” (and subsequently disappear) to upgrade the refinery prior to privatisation?

A reader, cynical as they are, must surely suspect that the later will be the case, and that UAH hundreds of millions in State funds will be used (and abused) under the de facto control of Ihor Kononenko – and by extension there will be no rush to place a renationalised Odessa Oil Refinery upon the privatisation list.  Policy be damned.

Something to watch over the next year or two for sure.

Nevertheless, perhaps Odessa should be grateful for small mercies with the departure of the loathsome Sergei Pashinsky from the shenanigans of the Odessa Oil Refinery – even if the de facto control of Ihor Kononenko is a particularly welcoming prospect.


The occupied Donbas “Reintegration Bill” passes with 280 votes in favour

January 18, 2018

As expected, 18th January 2018 witnessed the successful passage of the final reading of the “Reintegration Bill” for the currently occupied Donbas territories.

280 Verkhovna Rada parliamentarians voting in favour – following two days of hundreds of amendments and text tweaking from the first reading of the Bill last year.

At the time of writing, a comparison between the text of the first reading and that of which finally passed for presidential signature is incomplete.

However, there are, prima facie, some points to note relating to the final text.

As expected, The Russian Federation has been formally identified as an “aggressor” within this statute – and rightly so.

Also there is no mentioned of the Minsk documents whatsoever – documents that have never been ratified by any party, the Verkhovna Rada included.  Ergo, the deliberate omission of mentioning the Minsk documents and bringing them into the domestic legal arena is no surprise.  The Minsk process, such as it is, and for all its many failures and few successes (read limited sporadic prisoner swaps and little more with regard to successes) has continued to “work” without mention within Ukrainian statute thus far anyway.

The temporarily occupied Donbas (areas occupied and beyond the administrative control of Kyiv) have been thus labeled in statute – “temporarily occupied territories”.  A far more accurate description than the misnomer “ATO”.  A rebranding has occurred.

It thus follows that the statute identifies The Russian Federation as being responsible for both “moral” and “material” damages caused to Ukrainian citizens and to the Ukrainian State within the occupied territories (without defining the actually territory occupied), whilst underscoring The Russian Federation has no rights within these territories deprived of Ukrainian administrative control within its internationally recognised borders.

Further, those within the administrative and armed structures of the “Republics” can be held criminally responsible.  (That does not necessarily mean that such individuals will be held criminally responsible and that any amnesties under Minsk or presidential pardons are now redundant.)

For those souls within the temporarily occupied territories, the only documents Ukraine will recognise relate to birth and death.  No more and no less.

Attempts to grant the SBU extrajudicial powers with regard to social media, telephone monitoring and email access without court warrant have been rightly discarded from the statutory text.  (Naturally that does not mean such access does not exist and is not being pursued or engaged upon for intelligence gathering purposes regardless of legalities – but it means any evidence gained will have to be submitted only having been obtained with a court warrant for use in any due process.  Intelligence and evidence are not the same thing, so scope to play outside the rules of evidence remains – no matter how illicit that may be.)

No official “start date” of the temporary occupation of the territories beyond Ukrainian administrative control is provided within the statute.  It remains to be seen what effect, if any, this may have upon any subsequent domestic (or perhaps international) court cases.  It appears to be a matter for each judge to decide just when temporary occupation began and when Kyiv can be deemed to have formally lost administrative control of each and any administrative centre and/or process in a given location.

There may also be challenges to the law at the level of the Constitutional Court.  Prima facie there appears to be power granted to the President to employ and deploy the services of the Ukrainian military without parliamentary approval.  The issue being presidential (NSDC) nimbleness verses parliamentary oversight and control for some.

A more academic study of the statute when formally available may raise further issues – both questions and perhaps answers.

Quite what the international legal repercussions there will be relating to this domestic statute will be also remain to be seen.

Whatever the case, this Bill will not provide any immediate benefits with regard to “reintegration” of the temporarily occupied Donbas as its title may infer.  Ultimately it may have few short, medium or long term benefits – either territoriality or socially.  The “ways and means” for survival on either side of the front line are not going to change for those living there.

Nevertheless, it is a statute that domestically at least, recognises the limitations, and by extension reasonably expected administrative abilities of Kyiv regarding events within the temporarily occupied territories by way of statute, whilst naming The Russian Federation for what it is – an aggressor.  There is therefore perhaps as much symbolism as legislative gain from passing this law.

The most important domestic legislation expected to be passed by this Verkhovna Rada session, however, will certainly not be “Donbas Reintegration Bill”.


IMF and WB take the stage in the Anti-Corruption Court theatre

January 16, 2018

At the end of 2017 an entry appeared noting obvious Bankova legislative gymnastics relating to the text of the Venice Commission Opinion and the creation of an Ant-Corruption Court in Ukraine, required to complete the Ukrainian domestic anti-corruption architecture.

The issues noted by the blog were, to be blunt, glaring.  So clearly undermining of any potentially independent anti-corruption court was the proposed Draft text, that it was obviously going to draw both ire and irritation from external supporters of Ukraine – be they national, supranational or institutional.

Timed as the presidential submission was to fall after the last plenary session of 2017 had concluded, notwithstanding granting a hiatus from immediate international criticism due to the festive period, that respite has now passed.

The first Verkhovna Rada plenary session of 2018 began on 15th January, by which time both the IMF and World Bank had submitted terse letters to all leaders of The Bankova, Verkhovna Rada, and relevant Ukrainian ministries, outlining the clear perceived failings of the draft legislation – very much in tandem with the blog observations of late December 2017 per the first link of this entry.

Furthermore, it appears that both the IMF and WB interpret the Bankova draft legislation to fail to meet the Ukrainian obligations undertaken with both international lenders.

To be entirely clear, The Bankova will have been very aware of the shortcomings of the submitted legislation, and further it would have been expecting the prickly diplomatic and institutional response of those that have entered contractual agreements and ratified international instruments to support Ukraine during its most dire contemporary times.

Can Ukraine, or indeed President Poroshenko afford to lose the support of those backers?  No.

Does it further the Ukrainian cause to be understood by those backers to be failing in either contractual or ratified agreements?  Naturally not.

Will it in any way win votes for President Poroshenko if the perception seeps through the Ukrainian constituency that such external backing is less than robust and/or that external faith in him has rescinded by any degree?  Hardly.

So what are the options – for despite President Poroshenko stating that the Draft Bill sufficiently accommodates/is in line with the Venice Commission Opinion, it clearly is not (as he will be well aware).

Naturally, Ukraine is a sovereign nation (whatever thoughts The Kremlin may otherwise have).  There are no obligations upon any nation to undertake and implement a Venice Commission Opinion as obligatory.  Said Opinion can simply be ignored.   Ukraine can also decide to breach any clauses within contractual undertakings with the IMF or WB.  It can also renege upon its ratified obligations within any internationally ratified instrument – or indeed withdraw from them.

But there are clearly going to be repercussions in doing so.  That is the entire point of contracts and/or ratified legal instruments.

Should this Draft Bill be forced through the Verkhovna Rada as it currently stands, then both IMF and WB would be well within their rights to defer or desist in providing any further assistance – in part or in full.  Whatever loans and/or grants tied to the “rule of law” and/or “anti-corruption” initiatives via the EU-Ukraine Association Agreement may also suffer, not to mention political relations.  Both the USA and Canada will also express their “disappointment” in tangible ways too.

As such there will be a negative influence over any genuine external (not recycled Ukrainian offshore) corporate FDI into Ukraine.  Trust is a requirement, and trust will not be forthcoming when previous agreements are not honored.

The already unrealistic expectations of privatisation during 2018, (without internal attempts at sabotage of which there appears to be more and more evidence thereof),  will not be met in such an atmosphere – no differently to 2015, 2016 and 2017 privatisation failures.

The Ukrainian constituency will have no trust in an anti-corruption court that those who bailed out Ukraine during its time of absolute need also have no faith in.  Ultimately it would be a vote loser and not a vote winner for The Bankova with such a perception (despite the fact that if and when the court comes into existence it will clearly not be fully functioning until 2020, thus after the next presidential and Verkhonva Rada elections).

Perhaps simply far too politically costly home and abroad to leave the Draft Law as it currently reads?

Yet nothing can be allowed to rock the domestic boat of vested interests either – for the majority of those vested interests will have to align with the current president for him to be reelected – and there are assurances to be given (or threats to be made) for that to happen.

Time will tell just how quickly Messrs Kolomoisky, Bogolyubov and senior PrivatBank officials face criminal investigation for what the NBU has stated is a $5.5 Billion fraud and money laundering “shadow banking” operation per a Kroll report.  How much does President Poroshenko need to keep Mr Kolomoisky (or his media) on side vis a vis any timely prosecution?  What assurances could be given?

Can sufficient number of the 400 individual law suits filed by Mr Kolomoisky (and others) surrounding PrivatBank find their way to a “sympathetic judge” (or several) in order to frustrate criminal prosecution?  After all the entire point of 400 separate law suits is that some will almost assuredly find a “sympathetic judge” somewhere in the system, with the added bonus of causing a due process bottleneck.  Years of civil litigation regardless of criminal investigations.

Ergo, to insure the anti-corruption court is not functional before the 2019 elections are completed, time must be wasted while simultaneously giving the impression that something is being done.

Thus there is a reasonable chance that the Draft Law will be changed during this political theatre.

The Bankova may decide to withdraw the Draft Bill.  It will then take its time submitting another one in order to run down the clock.

A swifter approach perhaps, would be to make the necessary amendments within the Verkhovna Rada – or perhaps not.

The Bankova has sufficient influence within the relevant Verkhovna Rada committees to make that a slow process, notwithstanding delaying its subsequent submission for the parliamentary agenda and any plenary vote.

The entire legislative process within the Verkhovna Rada has to be strung out for as long as possible.

Thereafter the selection process too must also drag on.

This will be one of the most important legislative acts of the year (although perhaps the most interesting for defence and national security wonks will be the creation of the National Bureau of Financial Security – for that will probably herald the long awaited and very necessary reform of the SBU).

The question is when this year the law will finally be passed – and subsequently just how snugly it will fit with the Venice Commission Opinion as well as the expectations of, and perceived commitments to, external supporters and international institutions.

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