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Ukraine Urges West's Support of Reform as It Seeks Stolen Billions

  • Henry Ridgwell

Ukrainian President Petro Poroshenko speaks before an audience at policy institute Chatham House, in London, April 19, 2017. (Source - president.gov.ua)

Ukraine is urging the West to back its efforts at reform, despite accusations the government has failed to tackle corruption three years on from the revolution that toppled the regime of president Viktor Yanukovych.

Visiting with British Prime Minister Theresa May in London Wednesday, Ukrainian President Petro Poroshenko implored the West to back his efforts to tackle corruption.

Speaking at London policy institute Chatham House, the Ukrainian president said, “What is in need is your firm support of Ukraine's reform,” adding that “…it is not easy to make a transformation during the time of war, and against Russia's attempt to destabilize my country. Yet we proceed and deliver because that's what these last three years have been about - becoming a better nation.”

Critics say three years after the Maidan revolution, however, corruption remains rampant in Ukraine - and the West is not doing enough to crack down on corrupt money flowing through its financial centers and offshore tax havens.

Weeks after the 2014 uprising, Britain hosted a conference on recovering money embezzled from the Ukrainian state. Proving its commitment, the government announced during the meeting that its Serious Fraud Office had ordered a freeze on the attempted transfer of $30 million from a bank in London to Cyprus.

Watch: Ukraine Urges West to Back Its Reform Work

Competency questions

The money belonged to Mykola Zlochevsky, Ukraine’s former Minister of Natural Resources, who had fled Ukraine following the revolution. The funds were held in a series of anonymous companies based in tax havens.

Zlochevsky contested the case in a London court. The judge ruled that evidence presented by Ukrainian prosecutors failed to prove the money was stolen, and ordered the millions of dollars to be handed back.

FILE - Activists throw tomatoes at portraits of lawmakers, who were absent during voting on anti-corruption laws, outside the Ukrainian parliament in Kyiv, Oct. 7, 2014. Some observers say incompetence is partly to blame for the lack of progress in Ukraine's efforts to root out corruption.
FILE - Activists throw tomatoes at portraits of lawmakers, who were absent during voting on anti-corruption laws, outside the Ukrainian parliament in Kyiv, Oct. 7, 2014. Some observers say incompetence is partly to blame for the lack of progress in Ukraine's efforts to root out corruption.

Anti-corruption journalist Oliver Bullough followed the trail, observing, “The Ukrainian prosecutors essentially undermined the Serious Fraud Office’s case, made it impossible. It isn’t just corruption. It’s also deep-seated incompetence,” he told VOA.

Zlochevsky has consistently denied any wrongdoing. He was cleared of corruption charges in Ukraine and settled on a case of tax evasion. Even if the case against him had proceeded, the odds are stacked against the prosecution, argues Bullough.

“The Serious Fraud Office, in order to confiscate this money, would have required cooperation not just from Ukraine, but also from Cyprus, from Latvia, from the British Virgin Islands. So essentially you have a chain of law enforcement agencies that all need to be working strongly for anything to happen. And if one of them is weak, then the whole thing falls apart,” he said.

'Dirty money'

Government figures show 92 percent of Ukraine’s outward investment flowed into Cyprus in 2014, a well-known tax haven.

Meanwhile, an estimated $100 billion of so-called "dirty money" is laundered through London every year. Many tax havens are British overseas territories. New, so-called "beneficial ownership" laws aim to prevent criminals from hiding their wealth.

Nick Kochan, a prominent author on corruption, doubts they’ll be enforced. “This would be an excellent thing if one felt and knew that the authorities had the resources to do the digging that gets them to the ultimate beneficial owner. It’s a task way beyond our authorities’ grasp,” he said.

In Ukraine, reform efforts appear to have stalled. Kyiv campaign group, the Anti-Corruption Action Center, claims that in the first nine months of 2016, the government managed to recover just $6,000 of stolen assets - a tiny fraction of its $320-million target.

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