Ukraine Day 778: LIVE UPDATES BELOW.
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An Invasion By Any Other Name: The Kremlin’s Dirty War in Ukraine
Today sees another revelation from the Panama Papers – the vast trove of documents leaked from the Panamanian Mossack Fonseca offshore service firm – is that the head of Ukraine’s National Bank (NBU), Valeriya Gontareva, may well have financial links with the Russian state-owned VTB bank.
Gontareva was appointed head of the NBU, on President Poroshenko’s recommendation, in 2014. From 2007 until her appointment to the NBU, she had been the head of the ICU financial group, which now includes the Avangard bank and the Investment Capital Ukraine asset management group. Gontareva’s husband, Oleg, is a former shareholder and co-founder of ICU.
The main holding company of the ICU group is registered in the British Virgin Islands (BVI).
Notably, President Poroshenko hired ICU as his financial managers to arrange the sale of his Roshen confectionery company through a network of offshore firms in 2014.
According to a report by the Organised Crime and Corruption Reporting Project (OCCRP), another BVI-registered offshore firm, Keranto Holdings Ltd, shares the same mailing address and at least one member of staff with the ICU:
Keranto is connected to Ukraine’s ICU. The loan documentation contains Keranto’s mailing address in downtown Kyiv at the upscale Leonardo Business Center, where ICU’s office is located. According to the loan agreement, Keranto was represented by Dmitriy Nedelchev. There is a man with such a name on ICU’s website in the firm’s operations management team. He also serves as a member of ICU’s investment committee. At the time of the loan, Gontareva was running ICU and owned a quarter of the company.
In December 2013, Keranto was the recipient of a $10 million loan, with an annual interest rate of 3 percent, from Quillas Equities S.A. – an offshore firm owned by Yuri Soloviev, first deputy chairman of VTB.
This in itself would raise questions about the potential influence of VTB, which was at the heart of yesterday’s Panama Papers story on President Putin’s childhood friend, Sergei Roldugin.
But following the chain of ownership actually takes us full circle.
According to documents from the NBU disclosing the ownership structure of Avangard, 22.74% of ICU’s BVI-registered holdings company is owned by another BVI offshore – Cordova Management Ltd.
Cordova Management lists the person “Ulyutina, G.O.” from Moscow as its sole owner. This matches the name and initials of Soloviev’s wife: Galina Olegovna Ulyutina. Such a listing, using just the initials of a bank’s beneficiary, violates the Ukraine National Bank’s regulations which require a full name. Those regulations are supposed to be enforced by Gontareva’s National Bank.
Since 2014, both Gontareva and Soloviev have, officially at least, disposed of their assets in these schemes. Gontareva, on because of her assumption of office at the NBU; Soloviev, who owns a multi-million pound house in London’s Thornwood Gardens, to avoid sanctions imposed on VTB.
In December 2014, five months after sanctions were imposed on VTB, Soloviev gave Quillas Equities to Natalia Ulyutina, a 65-year old pensioner from a small Ukrainian town, Nikopol.
Reporters for OCCRP visited Nikopol in eastern Ukraine where the new “millionaire” Ulyutina lives on the fourth floor of an old building, her flat distinguished from the neighbors’ only by a new metal door. A neighbor confirmed that Ulyutina was a permanent resident of the apartment.
The pensioner was not home. However, her sister-in-law who heads the town’s pension fund confirmed that Ulyutina has a daughter named Galina who is married to “some businessman from Moscow” and that Ulyutina had been gone for quite some time “staying with her grandchildren in Moscow.” Neither her relatives, nor neighbors had any information on when she would come back.
In the gift deed, Soloviev said that he handed over all his right and shares in Quillas Equities to his mother-in-law out of his “natural love and affection.”
But while VTB has been sanctioned by both the USA and the European Union, the bank has actually seen remarkable success in Ukraine, despite the hostilities between that banks state owners and Kiev.
VTB has done relatively well in the universally disastrous Ukrainian banking sector which suffered record losses in 2015 of Hr 66.6 billion (US$ 2.7 billion). It recently decided to increase the capital of its Ukrainian subsidiary by a sizeable Hr 8.9 billion (about US$ 340 million), showing a continued commitment to the Ukrainian market. VTB bank has pared its losses lately from 14.5 Hr (US $556 million) in 2014 to 4.5 Hr billion to (US $170 million) for 2015.
The OCCRP report notes that VTB’s security in Ukraine may well have something to do with Gontareva:
In fact, Ukraine’s top banking regulator, Valeriya Gontareva, the head of the National Bank of Ukraine, has defended and supported VTB, making sure the political problems have not become banking problems. That includes sanctions by the US and EU levied in July 2014 against VTB’s Ukrainian subsidiary.
“These are banks with Russian capital, but these are Ukrainian banks where our citizens keep their money, the banks that give loans to our firms and keep accounts of Ukrainian individuals and companies,” Gontareva said. She noted in December 2015 that the bank had been monitored by Ukraine’s National Bank since 2014 and said she has no complaints about its activities.
Could Gontareva’s defence of VTB have anything to do with the financial relationship between Soloviev and ICU?
— Pierre Vaux
Representatives of both the Donetsk and Lugansk separatist ‘republics’ (DNR and LNR) have rejected a proposal from Ukrainian President Petro Poroshenko for an armed OSCE police mission to be deployed in the Donbass.
Poroshenko made this proposal at the Nuclear Security Summit in Washington on Saturday.
Poroshenko: Armed OSCE mission would secure local elections
Local elections are a requirement of the Minsk ceasefire agreement Armed police could be deployed with OSCE's observers in Ukraine , under a proposal by President Petro Poroshenko. He says such a force would provide the necessary security during future local elections in the Donbas region.
Poroshenko said on television on Sunday:
“In the near future, I am going to raise this issue at the ‘Normandy format’ talks, and OSCE armed police posts need to guarantee the run-up to (local elections in separate districts of the Donetsk and Luhansk regions) elections, the holding of elections and the regime of transfer of power to the leadership elected in line with the Ukrainian legislation at free, transparent and democratic elections.”
Today the pro-separatist Donetsk News Agency ran statement by Denis Pushilin, chairman of the ‘People’s Council’ of the DNR, and deputy of the LNR Council, Vladislav Deynego.
In the statement, Pushilin and Deynego said that the introduction of such an armed international police force would directly contravene the Minsk agreements.
Attempts to introduce an international armed contingent to the territory of the Donetsk and Lugansk Peoples’ Republics will not only fail to improve stability – on the contrary, they will lead to massive clashes. They will result in a real war, in which Western countries will be directly involved. Apparently, this is precisely what Poroshenko is striving for. This is his favorite tactic – make total headache for himself and then pass on the responsibility for all his problems to others.
— Pierre Vaux
Two Ukrainian soldiers have been killed and ten wounded over the last day, as Kiev reports 61 attacks across the front line.
According to Colonel Andriy Lysenko, military spokesman for the Presidential Administration, one of the soldiers was killed near the Butovka mine on the outskirts of Donetsk, the other died in a mortar attack near the village of Novozvanovka, in the Lugansk region.
The press office of the Lugansk Regional Military-Civil Administration reported that the attack, which left three other soldiers from the 59th Brigade wounded, took place at 13:10 yesterday.
The Ukrainian military ATO Press Center claimed this morning that Russian-backed fighters had “used mortars of various calibre” along “almost all of the front line.”
In the Donetsk and Gorlovka areas, the military reports four shelling attacks near Avdeyevka, three near Novgorodskoye and two near Zaytsevo.
Eduard Basurin, deputy commander of the armed forces of the self-declared Donetsk People’s Republic (DNR), claimed todaythat a civilian man had been wounded by Ukrainian shelling in a separatist-controlled area of Zaytsevo.
Basurin said that the man, born in 1992, had received multiple shrapnel wounds.
In the south, Russian-backed fighters reportedly shelled positions near Talakovka, just outside Mariupol, with 120 mm mortars, while using 82 mm shells to hit defensive positions close to the seaside village of Shirokino.
To the northeast of Mariupol, the Ukrainian military claims that Russian-backed fighters attempted to storm a position near the village of Granitnoye.
According to the report, the attack was repelled after Ukrainian troops opened fire with small arms and machine guns.
Military press officer Aleksandr Kindsfater told the 112 television channel this morning that the attackers had suffered casualties during the assault.
Kindsfater also reported attacks near Vodyanoye, east of Mariupol, as well as Novotroitskoye, on the Donetsk-Mariupol highway, and Marinka and Krasnogorovka, west of Donetsk.
The last recorded attack, Kindsfater said, was at 7 this morning in Marinka, when Russian-backed fighters opened fire with rocket-propelled grenades.
In addition to the attack near Novozvanovka, the Lugansk Administration reports that Russian-backed fighters last night shelled the area around a pedestrian bridge across the Seversky Donets river, outside Stanitsa Luganskaya.
Later this morning, Vyacheslav Abroskin, head of the Donetsk regional police, reported on Facebook that Russian-backed fighters had shelled a residential area of Avdeyevka with artillery at 10:30 today, damaging a house on Nakhimova street.
According to the ATO Press Center, Russian-backed forces in separatist-held Mineralnoye have been shelling the Avdeyevka area with 120 and 82 mm mortars since 7:30 this morning.
Meanwhile the DNR ‘defense ministry’ reported 49 Ukrainian attacks over 24 hours, with 442 shells fired from mortars and tanks.
According to the DNR, most Ukrainian attacks were directed at the northern outskirts of Donetsk and Gorlovka, as well as the villages of Kominternovo and Sakhanka, east of Mariupol.
— Pierre Vaux