Sergey Belous 21st Century Wire
“Are we going to be sending massive amounts of money to a country and they’re corrupt and they steal the money and it goes into everybody’s bank account?”
This was the infamous rhetorical question posed by President Donald Trump which set off a hurricane of criticism from his political opponents on Capitol Hill. Immediately, the President was accused of “exaggerating” Ukrainian corruption, which, let’s remind ourselves, has triggered the Democrat-led House impeachment proceedings against Trump.
According to Democrats, Trump is alleged to have pressured the newly elected President of Ukraine, Volodymyr Zelensky, in order to urge Kiev authorities to start an investigation into American Hunter Biden and his involvement in corruption schemes – in exchange for prompt military and financial aid.
This wouldn’t normally have garnered so much attention, if not for the fact that Hunter Biden is the son of the ex-US Vice President and 2020 Democratic Party presidential candidate Joe Biden. Hence, Trump is being accused of soliciting a ‘Quid Pro Quo’ from a foreign government in order undermine his supposed political rival in the upcoming 2020 election. But it’s only part of the story.
For some reason, many in the US remain unaware that this very same investigation was actually initiated three years earlier by the General Prosecutor’s Office (GPO) of Ukraine, who had been forcibly backed-off looking into Ukrainian gas and energy firm Burisma Holdings as a result of an ultimatum laid down by none other than Joe Biden. Back in 2016, during one of his many official visits to Kiev in 2016, former US Vice President Biden threatened to revoke the decision to allocate $1 billion of credit and loan guarantees if then General Prosecutor Viktor Shokin, who initiated the investigation, was not fired immediately.
Amazingly enough, Joe Biden himself had no scruples about meddling in such a direct and harsh way into Ukrainian government affairs, and even openly bragged about it during a Council on Foreign Relations discussion panel in Washington on January 23, 2018:
“And I went over, I guess, the 12th, 13th time to Kiev. And I was supposed to announce that there was another billion-dollar loan guarantee. And I had gotten a commitment from [the President of Ukraine] Poroshenko and from [ex Prime Minister of Ukraine] Yatsenyuk that they would take action against the state prosecutor. And they didn’t. So they said they had—they were walking out to a press conference. I said, nah, I’m not going to—or, we’re not going to give you the billion dollars. They said, you have no authority. You’re not the president. The president said—I said, call him. I said, I’m telling you, you’re not getting the billion dollars. I said, you’re not getting the billion. I’m going to be leaving here in, I think it was about six hours. I looked at them and said: I’m leaving in six hours. If the prosecutor is not fired, you’re not getting the money. Well, son of a bitch. He got fired. And they put in place someone who was solid at the time.”
Why is this case so important? The original corruption inquiry three years ago was focused on the illicit activities of one of the biggest private gas-producing companies in Ukraine – Burisma Holdings, owned by Mykola Zlochevsky, the former Minister of Ecology, under the gaze of then President Vikor Yanukovich, where the licenses for new gas deposit developments had been issued by the very ministry headed by Zlochevsky.
However, the most significant fact here is this: soon after the February 2014 Maidan coup’ d’etat in Ukraine, Hunter Biden was installed on to the Board of Directors of Burisma Holdings, supposedly as the head of its legal department, taking home the tidy sum of $83,000 per month. Note that this sum is four times more than the salary of his father as US Vice President.
Another amazing coincidence: at the same time son Hunter is moved into position at Burisma, father Joe comes to Kiev for an official visit, where he urged Ukrainian government to reduce its dependence on Russian natural gas supplies. For whatever reason, the Obama White House chose to ignore what was an obvious conflict of interests. As is obvious from the recent Impeachment Hearings, this denial of any conflict of interest continues to this day by Democrats.
Nevertheless, it was not only the Vice President’s son, who had his finger in the pie of Burisma Holdings. A close friend of John Kerry’s stepson, Devon Archer, was also in the company’s Board of Directors.
If what Serhiy Leschenko, a journalist and former Ukrainian MP, wrote, is anything to go by, after the shift of power in Ukraine the coterie of the General Prosecutor, Yuri Lutsenko, handed over to Trump’s personal attorney Rudolf Guiliani, a document that claimed that in March of 2014 the ex-Minister of Ecology Mykola Zlochevsky suggested to then US Secretary of State John Kerry and Vice President Joe Biden, that the profits from Burisma Ltd were to be shared by them and the payments received via Hunter Biden and Devon Archer. In return Zlochevsky actually obtained patronage of the top US officials, and the reputation of his company owing to such “respectable” composition of its Council of Directors, as its reputation rapidly grew in the eyes of its partners, competitors and state bodies.
Not surprisingly, the activities of Burisma Holdings had soon attracted the attention of Ukrainian law enforcement agencies. The company was suspected in tax evasion, money laundering and embezzlement of state funds. Soon after, in January of 2015 the General Prosecutor’s Office, headed by Vitaliy Yarema, put the company’s owner Mykola Zlochevsky on the wanted list. Later, Yarema’s successor in office, Viktor Shokin, continued with the Burisma case, with the aim of mounting an inquiry into corruption allegations, and even started a separate investigation into the activities of the firm’s Board of Directors, which included Hunter Biden.
However, you already know the end of the story: after Shokin was fired, the search for Zlochevsky was ended on September 13, 2016, and the criminal cases closed by Yuri Lutsenko. Everything was settled with a payment of $7.5 million in taxes and penalty charges. Thus, Zlochevsky’s initial plan to hire Biden and Archer to provide “cover” worked: his patrons fulfilled his expectations.
Readers should be reminded here, that Washington’s supposedly “solid” nominee for General Prosecutor has made a notorious reputation for himself in Europe due to his drunken brawls in German airports, and who did not even have a law degree, normally a requirement for the country’s top legal enforcement position. The Verkhovna Rada (Ukrainian Parliament) even had to adopt a specific law annulling this job requirement in order for him to assume the post. How this passed by the supposed ‘anti-corruption’ mavens at the US Embassy in Kiev would have been a good question for Congressman Schiff’s panel of inquisitors.
There has been a new development in this case recently in Ukraine – with the General Prosecutor’s Office filing new charges against the owner of Burisma on November 14th. Non-aligned MP Andriy Derkach presented the issue (with colleague Oleksandr Dubynsky from the ruling Servant of the People Party) at their joint press-conference on November 20th. Particularly, Derkach said, “According to the charges filed by the GPO against Zlochevsky, Biden and his partners received $16.5 million for their services in regard to Burisma activities. Biden was given money that originated not from successful activities of Burisma, and not from any brilliant business ideas or recommendations. It was obtained by criminal means. This is what GPO claims.”
Indirectly, the MP’s claim were confirmed by prosecutor Kostyantyn Kulyk, who was in charge of Burisma investigation, who stated in one of his recent interviews:
“The funds that entered Burisma’s accounts, had illegal origins. Those two companies were managed, used, by a man close to Taras Kozak. So, the funds that entered Burisma’s accounts had illegal origins, and later, according to the evidence we have, they were transferred to the accounts of four persons, including Hunter Biden’s.”
More interestingly, in an earlier interview with The Hill newspaper in April of 2019, Kulyk revealed another key piece of information: at the time, when the Burisma investigation was underway, then US ambassador Marie Yovanovitch had blocked the visas of GPO officers, in order to disrupt their working visits to the USA where they hoped to share the case files with their American colleagues. “We were supposed to share this information during a working trip to the United States,” said Kulyk, before adding, “However, the [U.S.] ambassador blocked us from obtaining a visa. She didn’t explicitly deny our visa, but also didn’t give it to us.”
More specifically, they had evidence of illicit dealings on the part of Ukrainian businessmen from the inner circle of former Ukraine President Viktor Yanukovich. According to prosecutors, these businessmen had siphoned off embezzled Ukraine state budget funds with the help of an American financial firm – a firm with connections to high-ranking members of the US Democratic Party establishment.
“This bridge between Burisma and Biden demonstrates to us the ways of siphoning off money: Zlochevsky laundered it for several Yanukovich’s companies at once via his three companies in the Baltic states”, Dubynsky said, which appears to back-up Derkach’s story of how the money laundering operation was being run. “On the whole, it was a global operation which initially looting the money from Ukrainian budget, then transferring it to offshore companies, and finally investing it into Ukrainian state bonds.”
Derkach claims reflect the charges brought against Zlochevsky – that he is accused of “legalization (laundering) of the funds obtained illicitly by way of purchase by Franklin Templeton Investments of state bonds to the total sum of $7.4 billion USD.” The MPs pointed out to the findings of the GPO investigations, according to which the criminal money that belonged to Yanukovich’s family and inner circle was transferred to offshore jurisdictions during 2013-2014, and then via Franklin Templeton Investments the money made its way back into Ukraine where it was spent on state bonds. Thus, as Dubynsky emphasizes, the beneficiaries of the scheme had first stolen funds from Ukrainian people, and then returned them to the country in the form of sovereign debt which paid bond holder a very high interest payment. This way, Ukrainian citizens were robbed twice, and all with the help of one criminal scheme with Burisma Holdings at the center of it.
It’s important to note here that Zlochevsky managed to pull it all off owing to his influential American “friends” and Board of Directors mentioned earlier. Complex financial operations were carried out with the help of Valeria Gontareva, the then head of the National Bank of Ukraine, now residing in London – she had negotiated amnesty for bonds which had been previously frozen following the regime change in 2014.
In fact, the scheme was happily picked up by Petro Poroshenko, who kept on increasing Ukraine’s sovereign debt.
The algorithm of the corrupt scheme is as follows: with the help of American investment firms, the funds siphoned-off from the state budget were effectively ‘legalised’ by investing into state bonds, with pay-outs of 6 to 8 percent interest in dollars, and 15 to 17 percent in UAH (Ukraine Hryvnya currency). As a result, the sovereign debt has snowballed. Ukraine has to loan more in order to service the old debts. As a result, nearly 40 percent of the current state budget is spent on the reimbursement of the sovereign debt, including inflated state bonds interest rates. “A system of siphoning-off the country’s financial resources has been created by payment of colossal interest sums – 14 to 16 percent annually.
That is, we are paying interest for money which was stolen from us. The payment of 440 billion UAH (18.3 billion USD) from state budget annually may be our final step towards default. Ukraine is being turned into a bankrupt country. This can happen either in the end of 2019, or in the early months of 2020,” Dubynsky concludes.
“We will reveal the information about the financial pyramid scheme that was created in Ukraine and developed by everyone beginning with Yanukovich and later by Poroshenko. This system is still working under the guidance of the current managerial board of the National Bank, ensuring that money flows in the interest of people who stole millions of dollars, took it offshore and bought Ukrainian public bonds turning them into the Ukrainian sovereign debt,” said Dubinsky, before adding that, “in both cases of Yanukovich and Poroshenko, Ms. Gontareva and companies she controls were investing the stolen funds.”
A Battle of the Oligarchs you might say, although this narrative was conspicuously absent in the mainstream media and during US House impeachment proceedings. In the context of Trump-Ukraine scandal that is being built-up by the Democrats and their loyal media, the connection between the above mentioned Franklin Templeton fund and the Democratic Party deserves special attention:
“The son of the Templeton’s founder, John Templeton Jr., was one of the biggest donors of President Obama’s electoral campaign,” Derkach explained at the joint press conference. “One more figure with connections to the fund is Thomas Donilon, the chairman of the BlackRock Investment Institute, the biggest shareholder of Franklin Templeton Investments. It is significant that he (Donilon) had previously served as National Security Advisor to President Obama.”
Based on this, the partisan conflicts of interests extend far beyond the Bidens. “President Zelensky should pick up the phone, dial Trump and ask for help and cooperation in the fight with corruption, or he should fly to Washington. The issue of fight with international corruption in Ukraine with involvement of US citizens, businessmen and officials should become the key issue at the meeting of the two presidents,” Andriy Derkach emphasizes. That is exactly what the Democrat-led impeachment inquiry appears to be trying to prevent.
In actuality, the previous phone conversation with Zelensky proved to be costly for Trump, although, judging by the above listed facts and competent accounts, the concerns of American president in regard to the corrupt character of Ukrainian state system were well founded. Ukrainians themselves are far more pessimistic though, a daily reality which is illustrated in this statement with a quote from a sarcastic Facebook post by popular Ukrainian blogger and TV host Oleksiy Durnev, written back in 2015:
“A thought is torturing me in the course of the last several days – that I cannot phone our handlers there in Europe and say: Guys, do not give us money! Our government resembles a hopeless junkie, who is telling his mom that it is better for him to hit up than to suffer from withdrawals. If you want to help us, build factories here, get us employed, pay taxes here, give our agriculture new technologies, give us experts, let our students go for your training courses, but do not give us money, please!” ***
Writer Sergey Belous is an independent journalist, photo correspondent and filmmaker. He has covered the war in Donbass since 2014, as well as worked in former Yugoslavian countries. READ MORE UKRAINE NEWS AT: 21st Century Wire Ukraine Files