Petro Poroshenko arrives for dinner at the White House last week. Photo: Olivier Douliery/ AFP/ Getty Images
Poroshenko was elected in May 2014, promising to clean up Ukraines chronically corrupt politics.
His predecessor, Viktor Yanukovych, fled to Russia after his security forces shot dead 100 protesters on the street of the capital .~ ATAGEND This followed months of anti-government rallies. Russias president, Vladimir Putin, responded by seizing Crimea and kickstarting an armed separatist insurrection in the Donetsk and Luhansk regions of industrial eastern Ukraine.
A self-made tycoon, Poroshenko vowed before the election to divest himself of his extensive business interests. He promised to wipe the slate clean by selling his Roshen chocolate factory, telling the German tabloid Bild: I will and want to only focus on the wellbeing of the nation.
So far, however, the president still controls Roshen. He also owns a major Tv channel. His private assets are larger than those of any other European leader, with his fortune put by Bloomberg at about $720 m .
Poroshenkos spokesman said the president had fully disclosed all his assets in accordance with Ukrainian law. His offshore company was set up as part of the process of transferring his assets to a blind trust. He said the trust was managed by independent professional advisors without any relation to any political and miliary events in Ukraine.
The Panama Papers show that Poroshenko utilized a Cypriot agent to register his new BVI firm. It is not illegal to open an offshore account. The chairman rendered a utility bill and a reference from the International Investment Bank( IIB) in Kiev.
The letter, dated October 2014 and marked confidential, says Poroshenko has been a client of the IIB since 2009 and conducted his accounts to our satisfaction. It fails to mention one detail: Poroshenko owns the bank.
In emails to Mossack Fonseca, the agent describes Poroshenko as a person to participate in politics. He says the new firm will have nothing to do with Poroshenkos political activities and calls it a holding company of Cyprus and Ukrainian companies of the Roshen Group, one of the largest European manufacturers of confectionery products.
Poroshenkos company in Ukraine has a similar name, Prime Assets Capital investment.
According to Ukraines media, it co-owns the IIB. Other bank stockholders include Poroshenkos close ally Ihor Kononenko, the influential deputy chief of the presidents parliamentary party, widely seen as the grey cardinal of Ukrainian politics.
The fact that Poroshenko was setting up new offshore structures while chairwoman, at a time when his country was embroiled in a conflict in which at the least 9,000 people have been killed, is likely to raise eyebrows. It comes amid rising domestic and international criticism over his governments failure to carry out reforms.
The Kyiv Post on Monday reported that the arrangement may have saved the president millions of dollars in Ukrainian taxes . It noted that Ukraines government is actively fighting the use of offshore companies, which are estimated to cost Ukraine $11.6 bn a year in lost revenues.
Poroshenkos professional consultants, Investment Capital Ukraine, said the presidents offshore company was merely a technological vehicle. The financial consultants Rothschild have been trying to sell Roshen, they added, but have struggled to find a buyer. Efforts are continuing, they said. They added that Prime Assets Partners was put in in the course of corporate restructuring prior to the Roshen sale.
In February, the International Monetary Fund said it would halt its $40 bn( 28 bn) bailout programme to Ukraine unless the country took immediate action to tackle widespread corruption. The IMFs managing director, Christine Lagarde, said she was concerned about Ukraines slow progress in improving governance and reducing vested interest in policymaking.
Her comments followed the dramatic resignation of Ukraines finance minister, Aivaras Abromaviius. He accused Kononenko, Poroshenkos friend and business partner, of corruption analogous to that practised by the former Yanukovych regime.
Last year, Ukraines media reported that Kononenko was linked to an offshore company called Intraco Management Ltd. It alleged the firm transferred hard currency to Kononenkos daughter Darya, and also preserved a private airplane used by the president. The BVI company was founded in 2002, leaked documents reveal. Its Cyprus-based agent, Geoffery Magistrate, is linked to Poroshenko. In a 2008 email, Magistrate refused to say who owned Intraco, adding: Stockholder not needed its[ sic] fine thank you.
Kononenko denied that he was a beneficial owner or director of Intraco, and said he was the vctim of a made to order tale repeated in articles and on TV. Their one aim is to discredit a person in the eyes of viewers and readers, he said, adding that the phenomenon is particularly active during elections.
The Panama Papers reveal that Yanukovychs government colleagues most of them now in exile were prolific users of offshore companies. Oleksii Azarov the businessman son of Yanukovychs prime minister, Mykola Azarov set up 26 BVI firms in 2012, while his father ran the government. They include a hub firm, Lazonby Group Holdings Ltd, administered by Bridgewaters, a financial services company in the Isle of Man.
In April 2014, the EU sanctioned the Azarovs and states members of Yanukovychs inner circle. They were accused of involvement in crimes in connection with the larceny of Ukrainian state funds and their illegal transfer outside Ukraine, the EU said. In January 2015, Oleksii Azarov who lives in Vienna got the sanctions overturned .~ ATAGEND His offshore accounts, held with Julius Baer bank in Switzerland and the Hellenic Bank of Cyprus, were unfrozen.
Lawyers for Azarov argued that the EU had relied entirely on what they described as questionable evidence provided by Ukrainian prosecutors. An EU court ruled that a letter from Ukrainian attorneys did not provide proper proof. The court concluded that it did not fulfill EU criteria for freezing the assets of the men.
Critics say Poroshenko has been reluctant to investigate former members of the Yanukovych government, few of whom have been prosecuted. They suggest that the president is aware he may not win a second word in office and thinks that Yanukovychs friends could at some point come back. Meanwhile, they are in a position to help or hinder any peace deal between the government and rebels in Ukraines east.
Another of Yanukovychs close allies, Yuriy Ivanyushchenko, had secret offshore companies, the papers reveal. Ivanyushchenko is a former MP from the ex-presidents Party of Regions. The EU and Switzerland have sanctioned him.
Ivanyushchenkos wife Iryna shows up as the owner of Ireton Commercial Ltd, registered in the BVI. His son Arsen owns the Skyrose Group, a stockholder in Ukraines biggest outdoor market near Odessa.
Ivanyushchenkos whereabouts are unknown. He was on Interpols international wanted list, together with other Yanukovych allies, until January. Emails from Mossack Fonsecas compliance department cite adverse results against the MP. They include allegations that Ivanyushchenko was a crime boss in the 1990 s and has links to Ukrainian criminal groups, and that he formed and financed groups of young people who in 2014 kidnapped, beat up and killed opposition Euromaidan protesters.
In February 2016, Ukraines deputy prosecutor general, Vitaly Kasko, quit his job, accusing his boss Viktor Shokin of sabotaging investigations.
Kasko complained that Shokin had thwarted his efforts to prosecute ex-regime figures including Ivanyushchenko, who is accused of larceny. Ukraines parliament voted last week to sack Shokin. On Monday, Poroshenko said he had signed a decree rejecting Shokin from his chore .~ ATAGEND Shokin denies wrongdoing.
Bridgewaters, Azarov and Ivanyushchenko did not respond to requests for comment.
Panama Papers reporting squad: Juliette Garside, Luke Harding, Holly Watt, David Pegg, Helena Bengtsson, Simon Bowers, Owen Gibson and Nick Hopkins
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