As a public official, a member of Parliament of Ukraine, I consider it my duty to inform the US government of a crime committed in the US jurisdiction, which constituted laundering of $ 7.5 billion worth of corrupt assets resulted from crime, committed in Ukraine. This letter is intended to initiate a procedure for seizure of criminal proceeds in the United States.
Below I am disclosing facts known to me about the origin and money laundering of $ 7.5 billion in the US jurisdiction.
In particular, the Prosecutor General’s Office of Ukraine is currently conducting an investigation of a criminal case, based on the facts that in February 2010 the ousted President of Ukraine Viktor Yanukovych set up a criminal organization in order to obtain corrupt income.
It is revealed that from March 2010, after being elected President of Ukraine, Viktor Yanukovich took a leading role in the criminal organization, which included individuals from his immediate circle, in particular, the ex-Prime Minister of Ukraine Azarov M.Y, the ex-Prosecutor General of Ukraine V.Pshonka, their sons, who at that time were members of the Ukrainian Parliament, former Ukrainian notorious criminal Ivanushchenko Y.V. (during the Yanukovych regime also a member of Parliament), ex-First Deputy Prime Minister of Ukraine Arbuzov S.G., ex-Minister of Income and Tax Collection of Ukraine Klimenko O.V. and other persons who were charged with performing the functions of the heads of separate structural subdivisions of a criminal organization.
Mentioned Ukrainian citizens were appointed by former President of Ukraine Viktor Yanukovych to the most important positions in the supreme bodies of state power and facilitated the election of their trusted people as deputies of Ukraine, thus creating a system of governance by which Viktor Yanukovych personally and other leaders of the criminal organization had an influence on making fundamental decisions regarding the activities of the highest bodies of state power and the law-enforcement system.
As a result, the criminal organization of Yanukovych, during the period from March 2010 to February 2014, freely existed on the territory of Ukraine, allowing its leaders to plan and arrange a commission of a number of serious and especially aggravated economic offences including crime against state property, for a total amount of more than 40 billion US dollars.
At the same time, while committing those offences, participants of the criminal organization realized that since assets they acquired had a criminal origin, they organized and secured the legalization of the proceeds of their crime. Namely, the purchase of Ukraine’s external and internal government loans i.e domestic and external state bonds.
For the purchase of government bonds they business entities under their control – non-residents, in particular: Wonderbliss Ltd. (registration number: HE290170, address: 4 Diagora, Kermina Building, flat / office 202, Nicosia 1097, SY), Sabulong Trading Ltd. (registration No.HE 281148, address: 82 Marinou Geroulanou, Kato Polemida, Limassol 4153, CY), Opalcore Ltd. (registration No.HE 319982, address: Spyrou Kyprianou 61, SK House Limassol, 4003, CY), Baleingate Finance Ltd. (registration No.HE 285076, address: 48 Themistokli Dervi, Athienitis Centennial Build, 1st floor, flat / office 104 1066, CY), Akemi Management Ltd. (registration No.HE 319477, address: Kennedy, 12 Kennedy Business Center, 2nd floor Nicosia 1087, CY), Wellar Investments Inc. (registration number 98453, address 2236 Albert hoyStreet, Belize, Belize), Exvale Business AG (registration number F679144D1668320, address 50th Street, Global Plaza Tower, 19th Floor Suite H. Panama City, Panama), Quickpace Ltd. (registration No.HE 290165, address: 4 Diagora, Kermia Building, flat / office 202 Nicosia 1097, SY), Loricom Holding Group Ltd. (registration No.HE 288464, CY, address: 1-3 Boumpoulinas Street, 3rd floor, flat / office 34 Nicosia 1060, CY), Folkbrook Incorporated at AT PrivatBank (registration number 730099-1941966, address 50th Street, Global Plaza Tower, 19th Floor, Suite H, Panama City, Panama), Japelion Ltd. (registration number: HE321894, address: Spyrou Kyprianou, 61 SK House, Limassol, 4003, Cyprus), Katiema Enterprises Ltd. (registration number: HE232221, address: Kennedy, 12 Kennedy Business Center, 2nd floor, Nicosia 1087 CY), Kviten Solution Ltd. (registration No.HE290146, address 4 Diagora, Kermia Building, flat / office 202 Nicosia 1097, CY), Raytech Commerce Ltd. (registration number 106420, address: 35 New Road, Belize, Belize), Aldoza Investments Ltd. (registration number: HE319315, address: Kennedy, 12 Kennedy Business Center, 2nd floor Nicosia 1087, CY), Canyon Capital Inc. (registration number 156853, address: Road Town, Tortola: post office 3483), Foxtron Networks Ltd. (registration No.NU 272238, address: 1 Apriliou, 52 Athienou Larnaca, CY), Manningford Trading Ltd. (registration number: HE315432, address: Aisopou, 23 Agiamzia, Nicosia, post office 213, CY), Yorkfield United LLP (registration No.OC365631, Suite 1 the Sludia, St. Nicholas Close Elstree, Hertfordshis, WD6 3EW), Erosaria Ltd . (registration No.HE320554, address: Spyrou Kyprianou, 61 SK House, Limassol, 4003, Cyprus), Fincorp Resources LLP (registration No.OC363406, Suite 1 the Sludia, St. Nicholas Close Elstree, Hertfordshis, WD6 3EW), Pialesko Ltd . (registration number 101.509, Driftwood Bay, Belize, 1885, Belize), Anrado Group Ltd. (registration number 105.054, address: 35, New Road, Belize, 1708, Belize), Lomond Management, Vestar Management SA, LLC Strim, LLC Bisoft, LLC Capital 2008, LLC Diona Group, LLC Investresurs-2010, LLC Kaulvyur, LLC Asunta, PE Ivanych, Fendvord Project LLP, Zalika LTD, Fendvord Project LLP, Ebold Finance Holdings AG, Lomond Management LTD, Farrell Marketing Inc., Vestar Management SA, Larkin Alliance, Grand & Rend LLC, LLC Strim, LLC Talion-2008, LLC Celis Consulting, LLC VKF Amos, LLC Klimbers, LLC Dekaunt, Crumlin Corporation SA, Celestia LTD, Elaine Group Invest Ltd., Bold Finance Holdings AG, Bitkeep Development LLP, Trafenfor LLP, Destu Capital LLP, Lexford Systems, which had accounts in Latvian and Ukrainian banking institutions, and other companies.
According to the judgements of the Ukrainian courts, more than 40 members of Yanukovych’s criminal organization have been found guilty of committing the above-mentioned crimes. For other participants, the investigation is still ongoing. In particular, certain individuals were found guilty of legalizing (laundering) the funds through the purchase of the state bonds and those assets have been subject to a special confiscation procedure of over $ 1.5 billion.
Also, an investigation is being carried out on the involvement of the former President of Ukraine Viktor Yanukovych and the key members of the then government to legalize $ 7.5 billion in 2012-2013 with the help of intermediary, the investment fund Franklin Templeton Investments, USA, through the purchase of external government loan bonds (ODP). It was established that during 2012-2013, two meetings of the representatives of “Franklin Templeton Investments” and officials of the government of Yanukovych VF, aimed at structuring the investment portfolio through the controlled by his criminal organization offshore legal entities, were held. As a result of these meetings representatives of “Franklin Templeton Investments” and officials of the government of Yanukovych VF entered into a criminal conspiracy regarding the legalization of criminal assets, as a result of which from the offshore accounts controlled by Viktor V. Yanukovych organization, $ 6 billion was transferred to Franklin Templeton Investments accounts for the purchase of Ukraine’s external loan state bonds. Franklin Templeton Investments directly owns the specified $ 6 billion worth state bonds.
In addition, according to the agreements reached, “Franklin Templeton Investments”, received $ 900 million for which it was allowed to buy more state bonds which was in fact, a reward for structuring and participating in the said laundering scheme
In order to execute the said laundering scheme, the government officials Arbuzov S.G. and Kolobov Y.V., acting under conspiracy with President Viktor Yanukovych, and chairman of the Government Azarov M.Ya. organized the adoption by the Cabinet of Ministers of Ukraine (the government) of a number of decisions that led to the release of the state bonds, namely:
– in August 2012, in accordance with the Resolution of the Cabinet of Ministers of Ukraine dated August 27, 2012 No. 648 “On State External Borrowing in 2012”, a USD 1.0 billion state bonds was issued in 2014 at an interest rate of 7.95% per annum;
– in November 2012, in accordance with the Resolution of the Cabinet of Ministers of Ukraine dated November 14, 2012 № 1058 “On the implementation of state external borrowings in 2012”, state bonds were issued for the amount of USD 1.25 billion with maturity in 2022 at an interest rate of 7.8% per annum;
– in February 2013, an issue of the state bonds was made in the amount of USD 1.0 billion with maturity in 2022 at an interest rate of 7.8% per annum (in accordance with the Decrees of the Cabinet of Ministers of Ukraine dated November 14, 2012 No. 1058 “On State External Borrowing in 2012 year “and dated 06.02.2013 No 78 “On the implementation of additional issue of bonds of foreign state loan in 2012”);
– in April 2013, in accordance with the Resolution of the Cabinet of Ministers of Ukraine of 10.04.2013 No. 242 “On State Foreign Borrowing in 2013”, state bonds were issued in the amount of USD 1.25 billion with maturity in 2023 at an interest rate of 7.5% per annum;
– in December 2013, in accordance with the Resolution of the Cabinet of Ministers of Ukraine of 18.12.2013 No. 904 “On State External Borrowing in 2013”, a $ 3,0 billion bond issue was executed with a maturity date in 2015 at an interest rate of not higher 5.0% per annum.
The placement of external government bonds in the international capital market took place with the participation of the leading banks under the conditions approved by the Cabinet of Ministers of Ukraine. Upon completion of the placement of bonds, their owners freely conducted transactions on the international bond market. The Issuer of bonds did not have access to information about bondholders.
The Order of the Cabinet of Ministers of Ukraine dated 04.04.2015 № 318-r “Some Issues of Enactment of Laws Concerning the Modification of Conditions of Borrowing under Foreign Debt Obligations” approved the list of external debt obligations in respect of which it was decided to make changes of the borrowing conditions: state bonds 2005, 2006, 2007, 2010, 2011, 2012, 2013 (maturity years, respectively, 2015, 2016, 2017, 2020, 2015, 2021, 2016, 2017, 2022, 2023, 2015).
In order to complete the restructuring of the state and guaranteed by the state external debt and partially write-off the debt, the Resolution of the Cabinet of Ministers of Ukraine dated 11.11.2015 No. 912 “On the implementation of transactions with the state and guaranteed state debt for the purpose of its restructuring and partial write-off” in 2015, the list of external debt obligations was approved which dealt with changes in borrowing conditions; conditions of issuing and placing (including additional issues and placements) of Ukraine’s foreign state debt bonds in 2015; terms of issue and placement (including additional issues and placements) of state derivatives.
As a result of the exchange, 13 issues of Eurobonds totalling $ 15 billion were cancelled, and 9 series of new Eurobonds worth $ 11.954 billion and government derivatives were issued for a par value of $ 2.916 billion.
The pre-trial investigation found that part of the profit on the state bonds was received by the above mentioned 23 offshore companies under the control of Viktor Yanukovych and Sergiy Arbuzov. The said bonds were then confiscated by the Ukrainian courts.
The said facts were confirmed by the testimonies of witnesses in the proceedings, which in particular showed that in 2013 Franklin Templeton Investments acquired State Treasury Bonds worth $ 7,5 billion with the nominal value of 50%.
Also in early 2013, a group of Ukrainian officials headed by S. Arbuzov had a meeting with representatives of “Franklin Templeton Investments” office, which resulted in the agreement that a number of non-resident companies would invest in Franklin Templeton Investments, provided that all investments would be directed towards the purchase of OSDP and that they would be provided with the most convenient conditions for their acquisition. For this purpose, a number of offshore companies were created that were “hidden” by offshore management funds. The companies received the necessary funds through schemes involving the issue of domestic government bond bonds, as well as by obtaining substantial loans from the state banks to acquire government bonds which were secured by the government guarantees. Besides, the nominal value of the bonds was lower than the amount of the loans. Extra funds were embezzled by the said offshore companies. Subsequently, these companies invested funds through Franklin Templeton Investments. Among those companies were related to Arbuzov, such as Quickpace Limited, Aldoza Investment Limited, Loricom Holding Group. But these companies invested funds indirectly, through others – such companies as Largos World Limited, JP Finance Limited, whose accounts were opened at Merrill Lynch. The funds to the accounts at Merill Lynch came through the banks of Austria and Liechtenstein, which were engaged in their legalization.
The pre-trial investigation into the circumstances of the withdrawal of public funds and their investment in reliable investment instruments, including through the purchase of treasury securities and government-guaranteed bonds, is continuing.
I hope that the US government will join Ukraine in combating the international money laundering of the criminal proceeds of Yanukovych’s corruption regime and initiate a $ 7.5 billion confiscation procedure of assets acquired through Franklin Templeton Investments. It should be noted that top management of this fund is well aware of the origin of these funds and deliberately commit continuing criminal acts of laundering of criminal assets for the remuneration of $ 900 million. Operative intervention by the US government, in particular the confiscation of $ 7.5 billion of corrupt funds of Ukrainian origin, will deprive criminals of the possibility of using them as a means to commit other crimes including financing military confrontation in the East of Ukraine with support of Russian Federation. As Ukraine not only lost part of its territory, which is now occupied by the Russian Federation, it is also under constant threat to the chosen Euro-Atlantic course. The Russian Federation is conducting a hybrid war on the territory of Ukraine which purpose is the overthrow current government and to bring pro-Russian forces back into the country. Accordingly, Yanukovych’s criminal funds will be directed to support the pro-Russian anti-NATO forces in Ukraine to assist Russian military and aggression if not confiscated.
Open sources used for information:
People’s Deputy of Ukraine