This investigation is based on documents from the company Mossack Fonseca (Panama, BVI) obtained by the German Süddeutsche Zeitung and shared with its colleages from the International Consortium of Investigative Journalists (ICIJ) and OCCRP, whose Ukrainian partner is Slidstvo.Info
In August 2014, Ukrainians were afraid of hearing the news. It was especially so for those, whose relatives fought in the Donbas. “Four soldiers were killed, 23 wounded,” “12 soldiers were killed, 19 wounded.” The news started with reports like these from the war zone. There were killed, wounded and missing every day.
LETTER FROM CYPRUS
In Nicosia, the capital of Cyprus, there were also worries about Ukraine those days. On Monday, Aug. 4, George Ioanno, an employee of the Cyprus Company Dr. K. Chrysostomides & Co, started his day with a letter to a sunny Tortola in the British Virgin Islands.
Ioannou proposed his colleagues at Mossack Fonseca & Co, a company that registers firms, to cooperate in the creation of a new company at the British Virgin Islands. He mentioned that the owner of the company will be a person involved in politics:
“This firm will be a holding company for his business and will have no relation to his political activity.”
The firm Mossack Fonseca & Co, which is one of the largest mass registrars of offshore companies, answered to Ioannou that it was ready for cooperation and required details about the shareholder.
Daniel Bilak, managing partner at Kyiv office of CMS Cameron McKenna LLC:
– Offshores are in a nutshell the companies in the following jurisdiction – the British Virgin Islands, Panama, Malta – where very flexible and simple laws on property management, company registration exist and minimum disclosure and tax exposure remains.
AUGUST DECISIONS
In August 2014, Ilovaisk was the hottest spot in Donbas. Located to the east of Donetsk, this large railway junction supplied reinforcement and arms for separatists from Russia.
After the loss of Ilovaisk, the separatist-controlled territory would have been divided. Donetsk and a large part of Donetsk Oblast would have been cut from the supplies.
So the Ukrainian commanders decided to start the so-called Ilovaisk operation.
ANATOLIY “GAL” VYNOHRADSKY, commander of Donbas battalion:
– Ilovaisk had to be taken over. By and large, it was possible to take over Ilovaisk.
The fighter with by the nickname Gal remembers every single hour of the storming of Ilovaisk. On Aug. 18, his volunteer Donbas Battalion mopped up its part of the city and moved to a school building. The Donbas fighters also helped other Ukrainian units to find a location for themselves.
ANATOLIY “GAL” VYNOHRADSKY, commander of Donbas battalion:
Well, the Donbas Battalion was placed in a school. I don’t remember exactly – it was either on 20 or 21st… We gathered our forces, mopped up the territory by the railway and placed all of the newly arrived battalions in a kindergarten. They spent one day there. The separatists drove them away and they returned to the school. After that, the fight continued for about six hours and, unfortunately, it was done only by the forces of Donbas Battalion.
More pleasant news was coming from offshore Tortola those days. On Aug. 21, a new firm with Ukrainian roots appeared in the records of the British Virgin Islands.
It was called the Prime Asset Partners Limited. The sole owner of the company was indicated as a Ukrainian national Petro Poroshenko, registered at the following address: Kyiv, Hrushevskoho Street 9, apartment 37. A foreign passport attached to the letters leaves no doubt that it is President of Ukraine Petro Poroshenko.
Behind my back, there is a house on Hrushevskoho Street in Kyiv, which is indicated in the registration papers of the company at the British Virgin Isles. We will check if it’s really the president’s home address.
I’m ringing at the door. It looks like one apartment was made out of two here, because the doors are similar and it’s no way to ring there. Nobody’s answering. The president is probably at work.
– We came to flat 37. Is anybody there?
– No.
– Does anybody come there?
– No!
– Do you know who lives there?
– Yes, of course. They used to live there, but don’t live anymore.
– Who used to live here?
– Well, you know if you’re here.
PRESIDENT’S TASK
From Aug. 25 by Sept. 1, letters were exchanged between Tortola and another island – Cyprus. As a result of that a Cyprus national Olga Georgiou was appointed as CEO of the newly created company of Petro Poroshenko.
Company registrar Mossack Fonseca is finding out the details, asking many questions. The employees are worrying as such an important client is a rare event. Petro Poroshenko is being mentioned either as president or prime minister of Ukraine in the letters.
In the last days of August, the tragic events are happening in eastern Ukraine. Later they will be called the Ilovaisk Pocket. The Ukrainian soldiers are being surrounded by the Russian troops.
ANATOLIY “GAL” VYNOHRADSKY, commander of Donbas battalion:
– At that time, we were shelled initially by the automatic grenade launchers, then by mortars. Then Grads, heavy artillery started shelling at us… The situation was so hard that we even didn’t pick up those killed. We were unable to pick up our dead. Many burned inside the cars.
The Donbas Battalion demanded an immediate involvement of President Poroshenko. The alarming messages were sent to Kyiv through the all possible channels; in the end, even through the open channels. But while the Ukrainian soldiers kept on dying, the command center remained silent.
– These appeals, did they have any result? Did the president pay attention to what was going on?
– Yes, of course. A parade was held.
ANATOLIY “GAL” VYNOHRADSKY, commander of Donbas battalion:
– The troops that participated in the parade, they could have been in Ilovaisk. Do you know who was sent for breaking of the encirclement? 350 young fighters who perished there. So what was it? It was just a massacre. Do you understand?
On the morning of Sept. 1, an important letter with attachment goes from Cyprus to the British Virgin Islands. This is a paid bill for 14 hryvnias and 85 kopeks for the electricity consumed by Petro Poroshenko at Hrushevskoho 9, apartment 37. This receipt proved that the beneficiary’s address was correct.
The registrars from the British Virgin Islands also asked to submit two letters regarding the trustworthiness of Petro Poroshenko. The first one from the bank, where the owner of the newly created offshore was a client for at least two years. The second one from a lawyer who services Poroshenko. The registrars from Mossack Fonseca had to remind about these letters several times.
Thus early in September 2014, Petro Poroshenko had two problems. The first was the business one — how to issue the letters proving his trustworthiness. The second was the state one: how to solve what happened in Ilovaisk.
The official data of Ilovaisk tragedy will appear in six months – 459 killed, 478 wounded and 180 captured. The release will last for two long months. The letters on trustworthiness will be issued earlier, of course.
ANATOLIY “GAL” VYNOHRADSKY, commander of Donbas Battalion:
– Did the president control the situation, how do you think? Did he know what was going on in Ilovaisk?
– I think he’s so distant from life in this country… He lives in his own country, do you know what I mean?
GAINS AND LOSSES
On Oct. 2, a Cypriot George Ioannou finally sends to the employees of Mossack Fonseca a note from Avellum Partners, a Ukrainian law firm, with confirmation that the company has known Petro Poroshenko since 2012 and is satisfied with their cooperation. We will come back to this law firm to find out how much the president trusts them.
On Oct. 17, the registrars at the British Virgin Islands receive a note from a bank regarding the trustworthiness of the Ukrainian president.
“Petro Poroshenko is a client of the public joint-stock company the International Investment Bank since Feb. 25, 2009… We confirm that this individual carried out all the assets according to the bank requirements,” Konstantin Ludvik, the bank’s chairman of the board wrote in the letter.
This is the main office of the bank which guaranteed the trusworthiness of businessman Poroshenko. We didn’t receive any reply to our request from there. It was probably a bit uncomfortable to respond to the journalists’ request when it goes not only about bank’s client but also its owner. According to the official information by the National Bank, Petro Poroshenko still owns the International Investment Bank.
On Oct. 17, when the lawyers at the British Virgin Islands received the much-anticipated letter, Yulia Tytarchuk from Chernihiv received very bad news.
– There was a mortal shelling. There was a wound – both lungs were pierced, I mean… stomach, and liver, and intestines – it was a lot, almost everything … I received a call on the 17th, they told me there was no need to go anywhere because at 6 in the morning his heart had stopped.
Yulia’s husband was 46. He died defending Donetsk airport. Volodymyr Tytarchuk was one of those, who were called “cyborgs” for their bravery.
YULIA TYTARCHUK, widow of dead soldier:
– Honestly, I’m so much fed up with this war, there are so many losses and there’s no end to them. (…) So many children were left without fathers.
In a few days after Volodymyr Tytarchuk’s death President Petro Poroshenko awarded posthumously the killed “cyborg” with a medal.
SPECIAL ATTENTION
Late on Feb. 20, 2015, Petro Poroshenko spoke to the relatives of the Heavenly Hundred and lit the “rays of dignity.”
– No matter how hard it will be, no matter what tests befallen us, I will do everything so that the big sacrifices which our nation suffered over the last year would not be for vain.
Also of Feb. 20, at Tortola the employees of Mossack Fonseca decided to change the status of Poroshenko’s company Prime Asset Partners Limited “considering the high status of the company’s director.” From now on it will be attracting more attention.
“In addition to the usual stuff we should check the situation in the country, whether there are any corruption scandals.”
The lawyer also insisted that the papers indicate what kind of business Prime Asset Partners Limited will conduct. A Cypriot George Ioannou quickly answered:
“Prime Asset services the holding of companies from Cyprus and the Ukrainian companies of Roshen Group, one of the largest confectionery producers in Europe.”
In December 2015, Cypriot George Ioannou asks his colleagues from Tortola to urgently collect all the available papers and send them by courier to Switzerland. Martin Bustle of Rothschild Trust was mentioned as the recipient. It was the end of the letter exchange. So we don’t know whether these papers were delivered to Zurich and what was the purpose of it. But in early 2016, Petro Poroshenko claimed he transferred his assets to a “blind trust.”
Petro Poroshenko, President of Ukraine:
– This month I signed a contract to pass my stake in Roshen to an independent trust based on the model of a blind trust.
For over the month, we tried to receive an official comment from the president. While the Presidential Administration was preparing the answers to our requests, we were making attempts to talk to the president at public events. Unfortunately, in vain.
Meanwhile, we received a letter from the presidency. They advised us to address all our questions regarding the offshore at the British Virgin Islands to Avellum Partners, which we already knew about from the letters. Initially, the firm’s employees were surprised, but later they gave us a response…Unfortunately, it didn’t vindicate the president.
First, there’s not any trust – either blind or any other. When President Poroshenko claims he signed an agreement for transferring his assets there, he lies. According to the lawyers’ response the trust is still only a plan because it is being discussed only in the future tense.
“The actual transfer of assets to trust requires compliance with a large number of legal formalities. A legal advisor is ensuring the compliance with these formalities at the moment.”
Second, Poroshenko created a company at the British Virgin Islands in order to finally sell Roshen.
“Prime Asset Partners Limited was founded in the summer of 2014 during corporate restructuring, which was a preparatory stage for the sale of Roshen … In fact, the use of structures like this is typical for the Ukrainian business … In this structure, the Prime Asset Partners Limited is only a technical company.”
The lawyers explain that allegedly everybody does so in Ukraine. So the president also transfers his assets to an offshore zone, where the sales taxes are zero percent.
Third, the lawyers proved that Mr. Poroshenko is the only assets holder of the offshore at the British Virgin Islands and explained what is going to be done with it.
“A share in Roshen will be brought into the trust after all the legal formalities are finished.”
We asked an international lawyer to comment on the details of the information we received.
– Is it possible to transfer a Ukrainian asset to the foreign trust?
Daniel BILAK, managing partner at Kyiv office of CMS Cameron McKenna LLC:
– Well again, it depends on the situation. In fact, I don’t see any problems here…
– Are there any taxes paid when the assets are being transferred to the management by trust?
– Well, otherwise there was no point of creation the trust.
– So the main idea for creation of a trust is tax evasion?
– In fact, it actually is allowed as the money is not being taxed.
When it comes to the money the president of Ukraine is ready to openly violate the law. In his 2014 tax declaration he didn’t mention at all the creation of company abroad. In the response of his lawyers we read the following:
“The assets of Prime Asset Partners Limited have no nominal value. According to the requirements for declaring of property in 2014, the information regarding stocks with nominal value had to be declared.”
Poroshenko’s lawyers are lying. Here’s the paper which proves that the president is the owner of 1000 stocks, each of them worth $1. Here’s his declaration, where there is a blank space in the “Size of contributions to the charter capitals of the company, including contributions abroad.”
So now we have the documented proof that an agreement about the entity, where Ukraine’s president allegedly transferred his confectionary assets hasn’t been signed yet. Poroshenko’s beloved “blind trust” exists only in his fantasies. In real life the president created a company in offshore zone at the British Virgin Islands, where he withdrew the assets of Roshen in order to avoid paying sales taxes in Ukraine. The wrap in a form of trust would cover the entire process. Apparently, according to the plan, nobody would have known which Roshen was being sold – the Ukrainian one or the island-based one.
We still don’t understand why the most active period of reconstructionof his business coincided with the most tragic events in modern Ukrainian history. We also don’t know if this process prevented the head of the state from executing his duties. But two parallel lines are definitely seen inthese events. The first one is of Ukrainians who were giving their lives to defend Ukraine. The second one is of the president who was creating sophisticated financial structures to avoid paying taxes to this state.
ANNA BABINETS, Slidstvo.Info