Ukraine: Investigations Mushroom in Kurchenko’s Wake

yanukovychleaks March 14, 2014

By Anna Babinets (Slidstvo.info)

Serhiy Kurchenko suspected of being a front man for overthrown President Viktor Yanukovych’s family, clearly liked offshore destinations. The young Ukrainian ex-billionaire Serhiy Kurchenko, now widely suspected of being a front man for overthrown President Viktor Yanukovych’s family, clearly liked doing business in offshore tax havens.

Kurchenko’s companies registered offshore are now accused of trading in oil products using a tax evasion scheme that cost Ukraine’s government an estimated US$1 billion in lost revenues.

But he wasn’t just a big-picture, big-money guy, he also understood the importance of generosity and looking good. The offshore companies were also used to buy four US$20,000 Italian suits for a friend, according to documents obtained by journalists from the Slidstvo.info and the Organized Crime and Corruption Reporting Project (OCCRP).

Fuel trade schemes

Interior Minister Arsen Avakov said on March 11 that investigators in Odesa seized some 60,000 tons of fuel that belonged to one of Kurchenko’s companies. “The confiscated fuel we will pass on to the Defense Ministry for safekeeping,” Avakov said.

Police have started 11 criminal cases to investigate the schemes used by one of Kurchenko’s companies, a conglomerate called VETEK. Moreover, the general prosecutor’s office is also investigating Kurchenko’s activities and this week questioned several investigative journalists who had previously researched his activities.

According to the Lb.ua news website, Kurchenko, 28, is currently in Russia, like former president Yanukovych although this information cannot be confirmed.

In his absence, former employees have shared documents showing the movement of cash between VETEK and offshore companies in Belize, Panama, Cyprus and other destinations that can shed light on how his business empire functioned.

Kurchenko shot to prominence in 2012, when the first reports about his business activity – particularly in the energy field -- started surfacing. Last year, his own magazine estimated his fortune to be US$2.4 billion.

The VETEK conglomerate holds assets in energy, banking, media and sports. Odesa Oil Refinery, Kherson Oil Transshipment Complex, Brokbiznesbank, Real Bank, Ukrainian Media Holding and the Metalist football club are its main holdings. However, prosecutors believe Yanukovych’s older son, Oleksandr, may be the actual owner of some or all of these assets.

Some of the papers provided by employees document the activity of Belize offshore company Zevidon Trading Limited, a very active business entity affiliated with Kurchenko.

In February 2013, Zevidon Trading Limited paid US$2.99 million to Simferopol-based TOV Zovnitransgaz. According to the customs declaration, the Ukrainian company sold some 3,000 tons of diesel fuel to the Belize offshore that originated from Russia. The documents stated that a tanker with that load was to leave Ismail port in the Odesa region for Belize.

Both of these companies featured in an inquiry, sent last year by Svoboda deputy Yuriy Syrotiuk, to the general prosecutor’s office and the State Security Service. They were characterized as businesses who allegedly used fictitious export schemes.

It seems that three companies of (Kurchenko’s) Gaz Ukraina 2009 group work as exporters. They are PP Armada-Plus, TOV Zovnitransgaz and a daughter company Petrol. All of them, according to the documents, transport gasoline (of unclear origin) by auto cisterns to tankers that take the fuel to Zevidon Trading Ltd. in Belize.

Syrotiuk wrote in his inquiry

Zovnitransgaz is registered in Simferopol, at 16 Rostovska Street. However, that site on Google Maps turns out to be the address of school #18 in Crimea’s capital.

Kurchenko’s documents indicate that Zovnitransgaz was used to take money out of Ukraine to Belize through fictitious export schemes, but the volume of these operations will not be known until all documents are analyzed.

However, according to the State Statistics Service, between January and May of 2013 alone the value of exported oil products from Ukraine to Belize was close to US$800 million, an unlikely amount for the small Caribbean country to import.

But five days after the Kiev Post investigated and published these expenditures, the numbers at the State Statistics Service were “clarified” by the  Ministry for Taxes and Duties and the numbers plummeted by 90 percent. As a result, at the end of the year the Statistics Service said that full-year oil products trade with Belize stood at US$170 million.

How to look like a million

Belize’s Zevidon Trading Limited also shows up in an Italian transaction. In February 2013, the Italian company Borrelli sent a bill to this company for €30,000 (US$41,595).

The document indicates that the money was to be paid for four tailored suits “for Mister Katsuba.” Each of the suits cost €15,000 (US$20,000) and the advance payment for half the total owed of €60,000 (US$83,000) had already been made.

According to its website, Borelli is a company with Neapolitan roots that specializes in ready-made and custom-made men’s suits and coats.

The document indicates that the money was to be paid for four tailored suits “for Mister Katsuba.” Each of the suits cost €15,000 (US$20,000) and the advance payment for half the total owed of €60,000 (US$83,000) had already been made.According to its website, Borelli is a company with Neapolitan roots that specializes in ready-made and custom-made men’s suits and coats.

The document is further evidence of an inappropriate relationship between Kurchenko and two brothers who ran the powerful state gas trading company:  Oleksandr and Serhiy Katsuba from Kharkiv. The bills indicate that Kurchenko may have paid for expensive suits for one or both of the brothers.

The younger brother, Oleksandr, in December of 2012, became deputy head of the national gas trader Naftogaz Ukraine, at the age of 26. Until then, the same office was held by his elder brother Serhiy.

The appointment of the younger Katsuba, who is the same age as Kurchenko and comes from the same city, coincides with the swift rise in the energy business of Kurchenko himself. In an interview with Forbes Ukraine, Serhiy Katsuba denied any connection with Kurchenko and his Gaz Ukraine 2009, but the document from the Belize offshore may prove a connection with at least one Katsuba.

The mass of leaked documents shows that Kurchenko’s companies conducted regular business with 14 offshore companies. They are still being investigated by OCCRP and Kiev Post journalists.