How to Return to Ukrainians Money Withdrawn by Ex-officials Abroad?
Galina Yanchenko, MP, the Deputy chairman Faction of the political party "Servant of the People" in The Verkhovna Rada of Ukraine, The Deputy chairman of the Verkhovna Rada Committee on Anti-Corruption Policy
In April 2020, Ukrainian parliament reconsidered the government budget and cut some spending. It was a necessary step to find additional funds for health care and fight against the COVID-19. At the same time, billions of dollars, which had been once a part of the state budget and were illegally withdrawn from Ukraine in recent decades, are still hidden in banks abroad. These funds might become an additional resource for our country if a number of amendments to the legislation are introduced.
It must be admitted that in the matter of recovering assets withdrawn by ex-officials abroad, the successes of Ukraine leave much to be desired. That is money of the former Prime Minister Mykola Azarov, ex-MP Yuri Ivanyushchenko or escapee president Viktor Yanukovych and his inner circle. Moreover, besides already familiar surnames, there are a lot of lesser-known «doers» who have been parasitizing on public money for years. That money is still hidden in foreign jurisdictions.
We are talking about billions of dollars have been withdrawn from Ukraine over the years. To date, Ukrainian law enforcement knows where the money is hidden. Hundreds of criminal proceedings are being investigated. Despite that direct confiscation of money is still almost impossible because of the long duration and complexity of the criminal procedure and information collection in the framework of international cooperation.
Just an example: researching a single operation in a foreign jurisdiction in the framework of international legal assistance takes about 1 year. Banking information is stored for 5 years. As a result, the work of Ukrainian law enforcement often turns into tilting at windmills.
Therefore, together with MP colleagues and experts of Ukrainian Institute of the Future, we have developed the draft law No. 3304 that will allow to reactivate this work. It will open up a possibility for Ukrainian law enforcement to file civil suits in foreign jurisdictions.
We offer providing such authority to the National Agency of Ukraine for finding, tracing and management of assets derived from corruption and other crimes (abbr. - Asset Recovery and Management Agency or ARMA). In addition to filing civil suits, we empowering ARMA:
- Represent Ukrainian Interests in foreign jurisdictions.
- Hire judicial advisers (Litigation Funds) and funders to accompany these claims. It’s a well-established practice of the Ministry of Justice for representing Ukraine in courts abroad, but not for our law enforcement yet.
Financing of adviser’s work will be carried out as a part of assets returned by them. Thus, no additional funds from the state budget are needed for these purposes. Moreover, the draft law expressly prohibits financing of expenses for funders in any other way. The selection procedure of candidates as advisers will be determined by the Cabinet of Ministers of Ukraine.
The practice of civil suits for recovering of withdrawn assets is valid in many countries. And while Ukraine isn’t actively conducting such work, the withdrawn assets of Ukrainian taxpayers that were illegally taken abroad become confiscated into state incomes of other countries.
So, it is worth reminding that in 2016 a part of ex-Prime Minister Pavel Lazarenko’s money, hidden in Antigua and Barbuda, confiscated into a state income of this Caribbean country. Namely, $66,7 million. The local government argued that the confiscation was based on the fact that Lazarenko’s money had been derived from corruption.
It's unlikely that Pavel Lazarenko will ever come back to Ukraine, where he is personally the subject of numerous criminal proceedings. However, we, as a country, could claim and fight for returning money that he had stolen and transferred abroad.
That same year Latvia replenished the state budget 49.3 million dollars by a court decision. That money was arrested as part of a criminal proceeding for laundering funds withdrawn from Ukraine. It owned by the former first Vice Prime Minister of Ukraine Sergey Arbuzov.
These funds were in the account of the Latvian branch of PrivatBank. In addition, in the framework of this case, smaller amounts of money were also arrested in a number of offshore jurisdictions owned by Sergey Kurchenko and former Minister of the Environment Nikolai Zlochevsky.
Another recent example is Latvia again. In 2019 money withdrawn from Ukraine by Yuri Ivanyushchenko were confiscated into a state income of this country. It's about $30 million.
Unfortunately, our country’s activity for recovering stolen assets is carried out rather slowly. At the same time, this draft law will allow to intensify this work, provide Ukrainian law enforcement more opportunities for asset tracing and recovering them for the benefit of Ukrainian taxpayers. This is essential for current economic realities. If the law is passed, all Ukrainians will benefit.