Archive for October, 2018

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Let the regional SBU leadership changes begin?

October 27, 2018

Changes to the parameters surrounding the scope of the SBU have long been advocated by the blog.  There is no need for the SBU to be so actively involved in what otherwise would be classed as normal policing.  Unless directly related to national security, there is no need for SBU involvement in financial crime other than a watchful oversight for economy threatening issues – and so on.

In short a far more watchful and a far less hands on approach to many of the current areas in which the SBU operates that would/should/could fall to standard policing.

As such the forthcoming (though who knows exactly when) changes to the role and responsibilities of the SBU due to be clarified by new/amended statute will be both keenly awaited and robustly scrutinised.  Until then, for many the SBU will continue to be perceived as a generally unaccountable presidential tool with far too broad a scope that is occasionally employed for political expedience rather than national security purposes.  (A matter of here is my problem/offender so go find me his/her crime, and let’s see how he/she can the be manipulated.)

Ergo the new/amended laws need concentrate on both oversight and accountability as well as placing robust yet responsible/sensible parameters upon SBU.  After all, care need be taken to allow the SBU to effectively accomplish their necessary national security role.

In the meantime however, for many the SBU remains an instrument of the president when it functions in what are perceived to be political rather than national security circumstances.

It is perhaps notable with presidential elections upon the immediate horizon that over the past few days there have been several changes to regional SBU Chiefs.

On 25th October, Volodymyr Pakhnyuk was removed as SBU Chief of the Vinnitsa region, being replaced by Oleh Zozulyu, and on 26th October Oleksandr Karpenko assumed the role of the SBU Chief of Luhansk and Donetsk region, replacing Olexandr Kuts – all by Presidential Decree.

Perhaps the beginning of an SBU leadership reshuffle prior to the new/amended laws for any number of reasons?  (Be those reasons reason as logic, reason as motive, or reason as a way of life.)

Maybe a politically expedient move prior to the elections due in late March 2019?

Something else?  A sensible move to rotate to prevent SBU management getting too cosy with the corrupt local fiefdoms?  (Such a policy of regional leadership/management rotation being something that policing, customs, prosecutors etc would also benefit from.)

Is it too soon to interpret these changes?  When all is said and done, two dots on a chart (or two SBU management related Presidential Decrees in two days) do not yet make a trend.

Something to monitor over the coming weeks and months.

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“Persistent hierarchical association” – A euphemism for “organised crime”

October 20, 2018

Currently underway in Odessa is criminal case 420170000000001712 relating to over UAH 4 billion in tax avoidance and money laundering – with money laundering being given the euphemism of “legalising funds obtained by criminal means”.

Roughly translated it states charge reads “Unidentified persons created a persistent hierarchical association of several persons (5 or more) whose members or structural parts were arranged by prior agreement for joint activities with the aim of directly committing serious or especially grave crimes by members of this organisation, leading or coordinating the criminal activities of other persons, or ensuring the functioning of the criminal organisation itself or other criminal groups, that is, they have created a criminal organisation with the aim to achieve tax evasion in especially large amounts, and further legalisation of funds obtained by criminal means.”  The charge goes on to state specific regions of Ukraine (obviously including Odessa) and across the territory of Ukraine more broadly.

So who are the “Unidentified persons” who “created a persistent hierarchical association” (organised crime group)?

The case centers around the activities of Olympus Group International (with whom the EBRD recently became a partner) – a company that was involved in notably expanding the grain handling capacities of Odessa grain shipment infrastructure several years ago.  However, if the Prosecutor’s Office is to be believed, those that invested in this infrastructure either had nefarious motive from the start, or decided that the ROCE/ROI required an expedited (almost immediate) return.

The tale of criminality naturally involves Cypriot offshores (fronted by Gregoriu Andreas and Elena Fotiou but in reality were controlled by Sergei Groza and Volodymyr Naumenko, a director of Olympus Group International), and also Czech and British companies per the above pictured charge.

Yet the charge mentions 5 or more people, and perhaps the Cypriot fronting individuals should be removed from that list.  If so, those involved are apparently Sergei Groza and Volodymyr Naumenko plus others.

So who?

Time, and perhaps court proceedings will tell conclusively.  Perhaps not.

Yet the more educated of guesswork might point toward Viktor Ratushnyak (currently wanted and on the run since the Yanukovych regime collapsed), and two “assistants” to the infamous Odessa criminal/politician Leonid Klimov – Messrs Anatoly Khovansky (Maryland Universal LLP) and Ihor Kadinov (owner of the Black Sea Transport Company) both of which remain close to Klimov.

Naturally, due to the scale of this criminality, some within the Batkivshchyna Party cannot be excluded, for it is the political party with the greatest and most integrated reach into every city and town across the nation – and therefore not only acts as a political party, but also as both a national intelligence gathering and criminal fraternity too.

There was no lack of derision when Batkivshchyna’s Ruslan Tabunshchik managed to get himself appointed to become the head of the “Commission of legal policy, law and order and the fight against organised crime and corruption” in Odessa Regional Council.

Shortly afterward his “assistant” Vladislav Repula was appointed to the “Police Commission of Odessa Region”.

Thus the last name being associated with this nefarious affair (so far) is indeed Vladislav Repula (owner of British Milestone Investments Ltd, Czech Biz-Empire and Romanian Spol.S).

More names to be associated with the organised crime euphemism that is this particular “persistent hierarchical association” (among many)?

Quite possibly.

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A new home for the SVR (or a barracks for an SVR Cyber Troop)?

October 19, 2018

Almost a year ago an entry was published pondering the much rumoured creation of a “Cyber Troop” within the SVR (Foreign Intelligence Service) of Ukraine.

As the outward operating SVR, perhaps somewhat gratefully, gets little media spotlight compared to the inward focused SBU, when there is occasion to mention it, then the opportunity is usually (but not always) taken by the blog.

The above linked entry concludes (having asked many questions previously) – “Also of note, the rumour circulating once again relates to the long muted “Cyber Troop”, to be built around the FISU (Foreign Intelligence Service of Ukraine) and Military Intelligence (HUR MOU) – both being proactive/offensive agencies active beyond the borders of Ukraine.

Should the “Cyber Troop” become a structural reality (regardless of any unofficial realities currently), whether or not, and to what extent, it would be involved with the CRC remains unclear.”

19th October 2018 witnessed the formal (rather than real) ground breaking of a new and/or refurbished SVR building complex by Secretary of the National Defence Council, Alexander Turchynov.

“In the current conditions of tough opposition, the intelligence community should have modern technologies for implementing the tasks set by the state. The Foreign Intelligence Service (SVR) is confidently moving in this direction, advanced technology of space intelligence using the groundwork of domestic specialists is being developed, serious steps have been taken in cybernetic and other components of intelligence activities” – A Turchynov

Prima facie, the plans displayed (perhaps a little unwisely) do not appear to be large enough for an entirely new SVR headquarters – thus a reader will perhaps hope that bot the refurbished and new areas meet the NATO standards to a minimum of TEMPEST specifications (If not exceeding them) and that the entire building will run a very strict “clean desk” policy.

Whatever the case, if as is claimed, Ukraine is now moving toward a more effective (or at least technologically advanced) SVR in the field of foreign spookery, will the construction of refurbished and new SVR buildings be sufficient (or deliberately) large enough to accommodate the long-rumoured “Cyber Troop” that was to be subordinated to the SVR per the framework document “Principles of providing cyber security for Ukraine” brought into legal being one year ago.

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The resurrection of the late and lamented Dmitry Malinovsky

October 17, 2018

The late and lamented Dmitry Malinovsky has been resurrected – or more accurately found living in a castle he had bought in Dijon, France – together with a classic Rolls Royce and a few Salvador Dali paintings.

He was promptly arrested during a joint Europol, Franco-Ukrainian investigation.  Ukraine has already requested his extradition.

Mr Malinovsky is accused of stealing Euro 12 million (or so) when he worked at the Odessa Port Side plant and then subsequently fraudulently creating his own death bureaucratically – thus disappearing to Dijon, France in 2014/15 ne’er to be seen again (as Dmitry Malinovsky, citizen of Ukraine).

Naturally the crime and particularly the efforts to fake his death on paper have caused some headlines – especially when caught in a French castle he’d bought with stolen funds.

But when, why, how and in what circumstances – and why bother to fake a death on paper when so many in Ukraine steal far more and do not go to such bureaucratic lengths as faking their own death?

Euro 12 million is, after all, small beans in comparison to many other thefts of funds in Ukraine by officials in office.

Perhaps an empirical look at the circumstances and vested interests would shed some light?

A reader need return to late 2014/early 2015 when Mr Malionvsky is suspected of his theft.  Odessa is witnessing the swapping of leadership of institutions and SOEs, not for the sake of combating corruption, but for the sake of redirecting corrupt money flows.  Organised criminality has long withstood the changing of political power in Odessa, but this time things are a little more fluid in certain quarters.  The Rubicon of Ukrainian blood has been spilled during the Revolution of Dignity.  All previously existing agreements with Tatar criminal gangs and Crimean authorities are off due to annexation by Russia and the Russian mob slowly moving in.  The additional attention of dealing with Crimea is not welcomed.  De facto, organised crime in Odessa becomes “patriotic” as a result.

Outside, or on the periphery of organised criminality, opportunities arise for those that know how things work during this period of flux.

At this time (and currently) Odessa Port Side is a State Owned Company that has long been scheduled for privatisation and that still has not been privatised.  In is in huge debt – with a considerable amount (over $200 million) owing to Dmitry Firtash, oligarch in exile in Vienna.

Like most SOE, there are also small shareholders of minority stakes.

There is also a long list of creditors beyond Dmitry Firtash, including OdessaEnergo.

Indeed OdessaEnergo was quite content to allow Odessa Port Side to run up huge debts – the plan being to make OPS bankrupt and seize it as an asset to repay the debt.  Among those behind OdessaEnergo were Alexander (Angel) Angert, Odessa’s most influential organised criminal (associated with Mayor Trukhanov, Leonid Minin, Alexander Zhukov, Alexander Galanternik etc, etc) and also Alexander Babkov, a Russian “businessman” currently under sanctions and the driving force behind VS Group (And VS Energy as a result).  There is also a certain Mr Granovsky, close to President Poroshenko, with “fertilizer interests”

Throw into the mix also the Surkis brothers and behind them Igor Kononenko who seemed determined to prevent the OdessaEnergo plan of claiming Odessa Port Side as payment for accumulated debts via the corrupt courts of Odessa.

In short organised criminality was strong if also in flux, political interest was that of assuming control of corrupt cash flows, the oligarchy and criminal hierarchy were fighting for the future of Odessa Port Side – and so opportunity arises for those with a one-off plan for personal enrichment as all eyes are elsewhere and looking at a bigger picture.

It would appear that Mr Malinovsky took the opportunity to redirect a pre-payment for fertilizer to the tune of Euro 12 million (or so) and redirected it to an offshore.  With or without any assistance or encouragement from those listed above (or others unlisted) is currently a matter of speculation.   Also a matter for speculation is quite whose Euro 12 million pre-payment it was.

Whether it was with tacit approval of any one of the above, it was clearly not done with the approval of all as they were engaged in a battle for control – and who was temporarily holding power over Odessa Port Side at the time is also subjective in judgement.

Whatever the case, the accusation that this theft is from “State Funds” is somewhat legalistic in its nature, for assuredly that Euro 12 million would not have been delivered to “State Funds” but rather redirected elsewhere anyway.

Nevertheless, turning over that stone and peering at what is underneath is unlikely to occur in any subsequent court hearing.  Officially the theft is from OPS and thus “the State”.  Assuredly that is all that will be declared in open court.

A reader therefore might (perhaps rightly) assume that the bureaucratic desire (and accomplishment) of Mr Mlinovsky to fake his own death and produce fraudulent death certificates etc., was not to escape Ukrainian justice – but rather to escape the justice of any number of those named above (or perhaps omitted but with an equal reputation for “robust business”).

Another question is why Mr Malinovsky appeared upon the Europol, Franco-Ukraine radar now?

Odessa Port Side is up for privatisation still.  Mayor Trukhanov at the end of August 2018 appointed Ivan Donchenko in charge of its privatisation locally.  It was something of a surprise (cyncism) that the previous appointee resigned unexpectedly.

Mr Donchenko is a share holder in the minority company within Odessa Port Side.  He is also a small share holder in OdessaEnergo (and thus indirectly associated with VS Energy, VS Group and the sanctioned Russian “businessman” Alexander Babkov) who are hotly tipped to actually purchase Odessa Port Side this time.  Clearly there is no small amount of vested interest at play – and certainly a tacitly turned blind eye by a State wanting to get this loss making asset off of the books.

And it is “of the books” that perhaps sealed the fate, the identification and location of Mr Malinovsky, for there are few able to fake their death without somebody knowing they are still alive and Odessa is a small place the higher up the greasy and nefarious pole an individual climbs.

It was perhaps decided that for the sake of “the books” or a new owner with a penchant for French castle’s in lieu, that Mr Malinvsky was identified to law enforcement.

That said, perhaps the Europol flags were simply raised via standard procedures and protocols – but if so, Euro 12 million is a fairly low bar considering that scale of corruption.

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General Poltorak quits the military to remain Defence Minister

October 13, 2018

As highlighted long ago, General Stepan Poltorak, the current Minister of Defence since the adoption of Law 8068 “On National Security” was faced with the decision to remain in the military and vacate his position of Defence Minister by 1st January 2019, or to leave the military in order to retain his position as Defence Minister.

“In effect, the current Defense Minister, General Stepan Poltorak, will be obliged to vacate the post he has held since October 14th 2014, or to retain it, he will be obliged to leave the military.

Article 16 is devoted to the restructuring of the General Staff and the armed forces.  The positions of Chief of the General Staff and Commander of the Armed Forces of Ukraine are both filled by General Viktor Muzhenko.  The new statute when in force requires two separate individuals to hold the two posts.”

It appears that after 35 years of military service General Poltorak has decided to remain in politics and retain the position of Defence Minister.  He has thus, with effect of 13th October, left the Ukrainian military with immediate effect.

“Stepan Timofeevich Poltorak filed an appropriate report and I, frankly, with a very heavy heart, accepted the report about the dismissal of Ukrainian Army General Poltorak Stepan Timofeyevich from military service.  I appreciate the contribution of Stepan Poltorak to the revival of the Armed Forces of Ukraine, and before that to the restoration and establishment of the National Guard of Ukraine, I decided that he should continue to lead the defense department as a civilian minister.” – President Poroshenko

Quite how long Gen (now Retired)/Mr Poltorak will remain as Defence Minister (and by default in politics) remains to be seen – for his position is quite probably directly associated with how President Poroshenko fairs in his re-election campaign.

No doubt should President Poroshenko manage to get re-elected then Mr Poltorak will soldier on (now metaphorically) and maintain his position as Defence Minister.  It seems unlikely that he could or indeed would want to continue under a different president – particularly under certain other candidates.

T’will be interesting to see whether the two Deputy Defence Ministers will change for they too must become and remain civilians with effect from 1st January 2019 per statute.

It must have been a difficult decision for Gen (now Retired)/Mr Poltorak as his future is now as uncertain as that of President Poroshenko in Ukrainian politics – and it is always difficult to leave an institution that requires a certain commitment and mentally.

In leaving the military, Mr Poltorak thanked the soldiers, sergeants, officers and generals with whom he served. “Especially those with whom I served the last four years, because these were the most difficult years in the life of the state and my life.”

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A play within a play (or diplomatic gamesmanship) NATO-Ukraine & the SBU

October 11, 2018

It’s been a while since there was a public exhibition of diplomatic gamesmanship between the current Ukrainian leadership and the more solid of Ukraine’s external supporters.

Another play within a play – such as those within The Bard’s Midsummer Night’s Dream, or Hamlet, or Love’s Labours Lost.

The current issue of contention is the rehashing of the laws surrounding the SBU and its parameters/terms of reference.

A public game of political and diplomatic gamesmanship is now being played.

There is no doubt whatsoever that the SBU, its activities and the laws and regulations outlining the agency’s scope is long overdue.  The SBU gets far too involved in acts that the police should be dealing with on a daily basis.  In some arenas it is far too publicly active, and generally there is a need for more macro and less micro involvement across many domestic issues.

Ukraine has long promised to address this particular issue.  All year President Poroshenko has stated that the revamp of the agency and the laws that proscribe its responsibilities will be overhauled as a matter of priority.

However making good on such promises does not exist in a vacuum – regardless of official electioneering some months away from starting, unofficially it has long been going on.  As the ever-turning calendar brings the election ever closer, so do opportunities to revamp the SBU and associated legislation prior to those elections diminish.

Depending upon the outcome of the elections, the chances of accomplishing this longstanding obligation by Ukraine, are also far from uncertain.  Indeed, this is not lost on any interested party (which includes the SBU and its own vested interests, powers and budget).

On 10th October, the NATO Deputy Head in Ukraine stated: “It is not expedient for Ukraine to postpone the reform of the Security Service of Ukraine, as this could undermine the trust of its allies.  

The reform of the Security Service of Ukraine was emphasized as a key priority, both in the comprehensive package of assistance to Ukraine, which was agreed at the NATO Warsaw Summit in 2016, and in the annual national program of Ukraine.

So, a blunt message with “undermined trust” at its core to President Poroshenko that NATO (and allies) are not going to be seen to tacitly (as it can never officially) support his reelection/release communiques inferring support if he doesn’t force this through the Verkhovna Rada before the year end?

Is it a reluctant recognition that there is no guarantee that whoever wins the March presidential election may have trouble controlling the current sitting Verkhovna Rada until those elections in October 2019 – and possibly beyond?  A matter of forcing it through now (or perhaps never)?

For sure Yulia Tymoshenko’s voting history within the Verkhovna Rada is not particularly impressive when it comes to laws that reform the system – in fact for a self-proclaimed reformer it is quite dismal, as all major external supporters of Ukraine will be very aware.

So is President Poroshenko presenting himself as an “if not me, then who?” to Ukraine’s supporters?  At the time of writing that is a particularly prickly question given the declared runners thus far.  Being President is not enough, there is a need to control the Verkhovna Rada to get things done (be they good, bad or indifferent).

If so does he feel he has the political capital to force it through the Verkhovna Rada at a time most politically expedient for his reelection – and reap the publicly expressed nods of approval at the most appropriate electioneering hour?

Will there be such an hour of political expedience before the elections when controlling the SBU provides him with a powerful tool during the electioneering process?

Can he so misjudge matters that he will have lost sufficient political power that when or if he does try it will be too late?

Can it be timed, as the anti-corruption court and Bureau of Special Investigations have been, that any such changes made would prove to be impotent until after the elections?  If so would the external supporters of Ukraine accept such an outcome – all interests met, but not with politically expedient immediate effect?

If a reader were faced with such a dilemma, what to do?  And when?  And how will it affect the bigger plot in the bigger play?

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Deactivating activists – Odessa

October 7, 2018

When the blog first began a decade or so ago, it fairly regularly decried and lamented the dysfunctional and often distinctly uncivil society that was Ukrainian civil society.  While that still remains here and there, The Rubicon was crossed with the “Revolution of Dignity/EuroMaidan” when blood was spilled.

The wise and sage among civil society immediately recognised that the election of President Poroshenko was not about to swiftly bring a “new Ukraine”.  A battle remained to be joined to keep on occasion glacial movement toward a “new Ukraine”, for too many of the “old guard” remained in positions of power.  Nevertheless, Petro Poroshenko was acknowledged as the least worst option.

Perhaps President Poroshenko still is the least worst option among those who have declared their intentions to run for president in March 2019.  When a full list of runner and riders is known then that will become clearer – even if a subjective assessment.

However, there are also the activists – some of which are a plus for a civil society and generally law-abiding and then there are the activists who would be turned away from any civil society organisation with a modicum of civility.  There are then the activists who hide behind the label to deflect from their more dubious and occasionally distinctly criminal undertakings.

Not long ago an entry appeared in which an incident surrounding another well-known local activist from Odessa was seriously injured.  A thorn in the side of the local city governance he most certainly is.  Those from the relevant organisation were swift to point the finger at Mayor Gennady Trukhanov and City Hall when it came to those ultimately responsible.

Despite the history of Mayor Trukhanov and several others within City Hall being littered with more than a fair share of grave and gratuitous violence (not to mention organized criminality) during their rise to prominence, these particular allegations are yet to be proven – or as is more often the case where successful prosecutions and incarceration are almost always lacking, circumstances are yet to sufficiently persuade a reader with a high level of confidence.  Time however will tell – as it invariably does.

However, the activists in Odessa do not only have City Hall to contend with.

No differently to Ukrainian civil society prior to the “Revolution of Dignity/EuroMaidan”, there is a good deal on incivility and distrust among some of the local activists – not to mention some dubious and nefarious activities.

Several incidents over the last week in Odessa seemed to highlight the point – so perhaps that point should be made.

Currently the key irritant among the activist community in Odessa is a group called “Self-Active Youth”/Самостійна активна молодь (SAM) who during the summer months engaged in a physical confrontation with an activist group called “Ukraine All” – an event that gathered few headlines and no prosecutions.

In September SAM rose to prominence for trashing a “lotto market” on Dobrolovsky Avenue – again with no prosecutions.

A reader will understand that many “lotto markets” are a euphemism for illegal gambling establishments. Activists have been known to target such unlawful establishments under the justification of police inaction – albeit there are rumours that such acts are for the raising of funds for the activists and the embryonic beginnings of a protection racket.

SAM appears not to be entirely of Odessa but rather Kyiv – which is perhaps why there is friction.  Alternatively it may be that SAM has a modus operandi that simply irritates the activists of Odessa.  Perhaps it is both.

Whatever the case, approximately 25 armed men arrived at a hotel in Odessa and were promptly searched by police – and released and sent home after the police had given “advice” to those concerned and seized whatever unlawfully held weaponry they could.  Rumour would have it that these men arrived at the behest of SAM.

Is a reader spotting pattern of escalation?

All of which leads a reader to the events in Odessa of the 6th October when there was a very ill-tempered meeting between activists of SAM and the Odessa AutoMaidan in a hotel room on Lustdorf.  The main protagonists/leaders involved were Messrs Yevgeny Rezushkin (Odessa AutoMaidan) and Ivanov.

This ill-tempered encounter then led to car chases and shooting, damaged vehicles and gunshot injuries to Mr Rezushkin.

As the winter draws in, darkness falls earlier and earlier, and bulky jackets, hats and scarves are commonplace to hide both weapons and identifying features, a reader may rightly ponder just how this current tiff will further escalate.

Naturally the police will be aware and cautious of public opinion/perception when dealing with activists (and rightly so), but how will the authorities deactivate activists if they are so far only prepared to detain, advise and release?

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