Ukrainian Top Officials Involved in Secret Offshore Deals
- Published: Tuesday, 04 October 2016 09:00
A number of high-ranking Ukrainian officials used a complex web of offshore companies and bank accounts to conduct property deals in multiple countries, according to a cache of leaked documents obtained by OCCRP.
The officials in Kyiv used what is known locally as a “ploshchadka” or a “conversion center,” meaning a turnkey solution for money laundering, tax evasion and hiding assets that includes companies in offshore havens, secret bank accounts and “proxies” who act as front men for the people behind the scenes who really benefit.
Among those who benefited are former members of Parliament, top members of law enforcement and sons of top officials in both the defense sector and a leading anti-corruption organization.
The Second Generation
In December 2014, Oleksandr Tereshchenko, then a 19-year-old Ukrainian student with no known businesses, sent an email to a real estate agent in London regarding his purchase of a bachelor pad within walking distance of the Houses of Parliament.
“Please ask Graham [Wilson, a lawyer] to create a [client service agreement] with his signature and stamp,” the email said. “The owner of the account that did the wire transfer just called me. If they don’t get this document within the next hours, then they will request the payment be returned as an error.” The owner of the account likely needed the paperwork to explain the wire in order to satisfy money laundering regulations.
Oleksandr Tereshchenko is the son of a top Ukraine defense sector official, Yury Tereshchenko, who had spent his entire career in Ukraine’s state-owned arms trading sector. In 2014, the elder Tereshchenko was the temporary acting head of Ukroboronprom, the sprawling state arms producer and exporter.
Apparently there was no time to get the document from the English lawyer, and the ploshchadka operators simply slapped together a crudely improvised invoice for the apartment, structured like those typically written in the Russian language.
According to the improvised invoice and documents detailing the wire transfers from the ploshchadka, the £106,670 initial one-third payment for the apartment was wired to the lawyers’ account from Berly Trade Ltd., a Seychelles company with opaque ownership and a bank account at ABLV, Latvia’s leading offshore bank.
An earlier letter from the lawyers to their young client warned that “to comply with current Money Laundering Regulations we can only accept funds from you or a third party of which we have full details.” Lawyer Wilson declined to comment, citing client confidentiality. But if the English lawyers had ever received full details of the company that wired them more than £100,000, they might well have turned pale.
Berly Trade is clearly a newly formed paper company likely designed to be part of a ploshchadka. It had been incorporated less than six months previously, in July of 2014. That September, it opened an account at ABLV. Funds started to trickle through the accounts in October 2014, according to a redacted bank statement among the leaked documents, which covers only the first three weeks of Berly’s activities.
The statement shows that $190,000 was paid into Berly’s accounts in those three weeks, much of which flowed out to other firms with accounts at the same bank. The payments do not look like normal business transactions. For example, around $42,000 was paid in six separate wires. The paperwork shows that the money was used to buy flowers from suppliers in Ecuador. Larger sums were paid to and received from other firms with accounts at ABLV.
By December 2014, millions were moving through the accounts. Besides the funds moved to London for the Tereshchenko apartment, in December 2014 Berly paid a total of around $800,000 in seven wires to another offshore firm in the Marshall Islands with a bank account at the Julius Baer bank in Switzerland. The money was „for marketing services“ according to payment orders found among the documents.
In subsequent months, Berly received and wired millions more from and to other offshores, as well as from and to firms and individuals from countries including Tunisia, Turkey, the Czech Republic, Hungary, and the US.
Source of the funds
Where did young Tereshchenko find the money to buy his London bachelor pad? According to his correspondence with the London lawyers facilitating the transaction, the £332,000 for the one-room apartment came from his family.
In March of 2014 Oleksandr Tereshchenko’s father, Yury Tereshchenko, wrote an op ed in the Kyiv Post on taking over Ukroboronprom. The elder Tereshchenko said that corruption had been sapping revenues from Ukraine’s defense industry, but that this would stop under his watch.
„We must ensure we have zero tolerance for corruption,“ he wrote.
Later in 2014, the senior Tereshchenko headed the State Service for Export Control, which licences exports of military and dual-use goods (which can be used for either military or commercial purposes).
Despite Yury Tereshchenko’s vow to end corruption, in December 2015 Ukraine’s SBU security service arrested one of his deputies, Serhiy Golovaty, just after he received the final installment of a $250,000 cash bribe for providing an export license to a local company. According to the SBU, some of the funds were found in Yury Tereshchenko’s home. The elder Tereshchenko was suspended and then fired in June 2016 from his job.
An OCCRP reporter interviewed Oleksandr Tereshchenko in London. „My father has been fired now, although it was not him who took the bribe,“ the younger Tereshchenko said in English honed by four years at Malvern College, an elite British public school. He did not refute the authenticity of the lawyer’s emails.
Oleksandr Tereshchenko said that it was not his father who bought him the apartment despite what the paperwork says. „I’m 20 years old and don’t have any access to this kind of funds. Why do you think [this money] comes from my father? He’s not the only relative I have.” He would not name the relative he said bought the apartment.
Yury Tereshchenko failed to respond to attempts to contact him directly.
The Deputy Prosecutor General’s foreign property deals
Like Yury Tereshchenko, Mykola Gerasimyuk, Ukraine’s first deputy prosecutor general between June 2014 and December 2014, used the same ploshchadka to move funds to Europe to buy real estate.
He acquired the properties in the name of his wife, Kateryna, who in turn gave a power of attorney to two agents to act on her behalf, according to documents, contracts and emails from Gerasimyuk’s inbox seen by OCCRP reporters.
The contracts say that Gerasimyuk transferred at least $150,000 via Itaco Alliance S.A. to one of the authorized agents. Itaco Alliance was established in the Seychelles in July 2014, along with Berly Trade. It shares a director with Berly Trade: Viktoria Gaidai, a cleaning lady from Kyiv. Like Berly Trade, Itaco Alliance has an account at Latvia’s ABLV.
The agent was businessman Oleg Zasidkovych, who was authorized to represent Kateryna Gerasimyuk in Slovakia. The transfers were ostensibly for construction equipment, according to the contracts.
Gerasimyuk and his wife transferred another $500,000 to Slovakia and Croatia for real estate acquisitions, wiring funds via other companies in the ploshchadka, the UK firm Smartus Business and a Belize firm, Old World Management Ltd.
Gerasimyuk also transferred up to $100,000 via the ploshchadka to pay for his daughter’s university tuition fees and living expenses in the UK in 2013-14. Ploshchadka operators routed these payments via Smartus Business, the Belize firms Eyand Ltd. and Donberg Ltd. and Panama’s Wiorex Trade, all of which had accounts at Latvian banks.
„My daughter is now back studying in the US,“ Gerasimyuk said, in a brief impromptu interview that interrupted his English lesson in his luxurious Kyiv apartment. Standing by an outsized ‚Home Sweet Home‘ wall hanging in the hall, Gerasimyuk refused to look at the emails shown to him.
„I have no personal email address,“ he said.