Scandal Surrounding the Firm "Arzinger": Squabbles Between "Grantoids" and Professional Provocateurs Over the Prosecutor General Post

Scandal around the Arzinger firm: clashes of “grant-eaters” and professional provocateurs for the position of Attorney General

The return of the topic of seized property belonging to odious figures from the Yanukovych era instantly became a catalyst for a whole range of processes.

Everything looked like a falling set of dominoes, each pushing the next, all the way to the very end. For example, the court’s actions forced the group of MP Serhiy Pashinsky to look for an answer to the question of where Kurchenko’s oil products went, which they had clamped onto last year. At the same time, they attacked their long-time “enemy” — Deputy Attorney General Vitaliy Kasko. In defense of the latter, close “grant-eater” structures stood up, provoking the start of a whole media war between Pashinsky’s provocateurs and the “younger prosecutors.”

The war is unfolding against the backdrop of competition for positions in the Anti-Corruption Prosecutor’s Office and sharp criticism of the Prosecutor General’s Office from Western partners. All this creates a tangled knot of intrigues, confrontations, and private interests.

Lawyers for Kurchenko and the younger prosecutors

In the second half of October 2015 year, widespread attention was drawn to the Pechersky District Court of Kyiv’s lifting of the arrest from 1180 tons of gas condensate and 65733 tons of various oil products, which were located at the territory of the Odessa Oil Refinery, and arrested in March 2014 year. The case, overall, was more than routine, and the motive for what happened was banal.

The arrest of the oil products was lifted because they were no longer on site. Indeed, as early as November 2014 year the Primorsky District Court of Odesa allowed transferring these evidentiary items from the Odessa plant to the state-owned company Ukrtansnaftoprodukt for storage and subsequent sale, taking into account that they are under customs control and have not been released into circulation on Ukrainian territory.

In essence, the vivid reaction to this event was triggered solely by the fact that the aforementioned oil products belonged to the odious businessman Serhiy Kurchenko. Accordingly, many observers seized the opportunity to use this situation to once again remind about the “crimes of the Regions” and to try to “make a splash” in the information space.

First to activate was MP Tetyana Chornovol, who made a loud statement that the arrest of assets was carried out with Rosneft money. She wrote about this in her blog on Ukrainska Pravda. At the same time, the MP from the People’s Front did not miss the opportunity for a number of political accusations.

The essence of Chornovol’s claims is as follows. The interests of Rosneft and Kurchenko in Ukraine are represented by lawyers from the well-known law firm Arzinger. Since Ukraine, unlike the United States, has not imposed sanctions on Rosneft, this allowed Ukrainian companies to participate in tenders of this business structure. Thus, in August 2014 year (during the heavy fighting near Ilovaisk) Ukrainian law firm Arzinger filed documents for the tender of Rosneft’s subsidiary TNK-Industries Ukraine and 10.10.2014 won it. They committed to lift the arrest from Kurchenko’s fuel, and also cancel the tax authority’s claims to Rosneft’s subsidiary — pay 40 million UAH in overdue taxes to the Ukrainian budget.

The October 2015 year decision proved not the first. 19 June 2015 the Pechersky court also lifted the arrest from Kurchenko’s oil products, arrested by the Ministry of Internal Affairs at the Vasylkiv oil depot.

From the sum of events, Chornovol concluded that Arzinger represents Russian business interests in Ukraine, and thus works for an adversary state. But that’s not the point. Importantly, at the time of signing the contract to defend Rosneft’s interests, several powerful lawyers and partners of Arzinger held key positions in the authorities.

For example, when in October 2014 year the law firm signed a contract with Rosneft’s subsidiary to lift the arrest from Kurchenko’s fuel, managing partner of Arzinger was Serhiy Shkliar. Therefore it is quite possible that his signature is on that contract. Now Shkliar is Deputy Minister of Justice, curator of the executive service. But most importantly, from October 2013 to May 2014, co-founder and head of the criminal law department of Arzinger was Vitaliy Kasko, who is currently Deputy Attorney General and also a candidate for the position of Anti-Corruption Prosecutor.

Thus, it turns out that this whole story about “Kurchenko’s oil” was raised only to pour a substantial amount of kompromat on one of the main “younger prosecutors,” tying him to the “hand of Moscow” and the protection of the enemy’s interests.

But if Chornovol only hinted, another well-known provocateur — Andriy Zyndzia — directly attacked Kasko on his own page on Facebook, where he accused the deputy attorney general of protecting, for big money, the interests of Ahmetov and Kurchenko, persecuting patriots, but somehow not subjected to the troubles faced by Viktor Shokin.

In general, Zyndzia launched a real “anti-Kasko” campaign on his social media page.

By the way, next to Kasko criticism on the page you can also find quotes from Shokhin’s chief, which again indicates who is behind all this.

Interest of Pashinsky’s group

The oil-products story began in October 2014 year, when property was seized by taking over the Odessa Oil Refinery by a number of security forces. Further, the evidentiary objects found there drew the attention of Serhiy Pashinsky and his long-time business partner Serhiy Tyshchenko (they studied in the same school where the director was Pashinsky’s father, so he never denied knowing him). And they wanted to obtain (in the best traditions of the Green Van characters) these valuable evidentiary items for “temporary use.”

In June 2014 year the director of Ukrtansnaftprodukt changed — it was him the government entrusted to conduct the auction for selling the “Kurchenko” oil products. The new head became businessman Volodymyr Havrylov (Pashinsky’s quota). 15 October 2014 year Ukrtansnaftprodukt documentedly obliged to transfer all arrested evidentiary items to one of the firms of the Factor group — Ukroylprodukt (owned by Tyshchenko) — with no auctions or competitions, to a single buyer. Thanks to such a simple operation, Pashinsky and his friend “ripped off” the state of 33 million hryvnias.

Now, after the court’s decision to lift the arrest from the evidentiary items, a completely logical question might arise: where did they go? And whose greasy hands did the millions stick to?

And here we should recall another figure representing Serhiy Pashinsky’s business clan. It is Olena Tyshchenko (ex-wife of Serhiy Tyshchenko), who surfaced during the first competitions for the leadership of the Anti-Corruption Bureau. Then Pashinsky decided that having her own person in charge of such a structure would be, to put it mildly, useful. Tetiana Chornovol dropped out immediately over educational censorship, and Tyshchenko’s candidacy surfaced. It didn’t hurt that she was considered one of the key leaders of the Ozero criminal group created by former head of the largest private Kazakh BTA Bank Mukhhtar Ablyazov, and the investigative department of the Russian MIA suspected her of organizing operations to legalize assets in Russia for more than $3,3 billion.

However, Tyshchenko’s foray into “anti-corruptionists” ended without result, but in Pashinsky’s circle she undoubtedly remained, surfacing from time to time for various reasons.

The scheme of a “comparably fair” selection of evidentiary items evidently appealed to Pashinsky’s group so much that they decided to put it on a conveyor. The interior minister Arsen Avakov lobbied for Olena Tyshchenko to be appointed head of a specially created department within the Ministry of Internal Affairs to ensure the return of assets obtained through criminal activity. And in September 3 on the initiative of MPs Tetiana Chornovol and Oleh Barna, a bill No. 3025 “On a special regime of special confiscation of property” was registered in the Verkhovna Rada. The document provided for confiscation in favor of the state of property of Viktor Yanukovych, Serhiy Arbuzov, Mykola Azarov and more than 19 other persons of the “criminal regime” (the full list of these persons is given in the law). Thus, a legal basis for a broad reallocation of property was supposed to emerge, and it was evident that Tyshchenko and Pashinsky’s firms should have been at the forefront of these schemes.

This caused a large scandal, which provoked a strong public reaction. Among critics of the bill was deputy-journalist Serhiy Lishchenko, justly characterizing Tyshchenko as a swindler. 17 September 2015 year she was fired, after which a criminal case for “official forgery” was opened against the former official.

By the way, Lishchenko received the letter about the Tyshchenko case from the GPU signed by Kasko.

Thus Vitaliy Kas’ko earned powerful enemies in the form of Pashinsky’s group, and the deputies immediately started showering the GPU with angry appeals.

Already 10 October 2015 year on the Prosecutor General’s Office website appeared a statement that “the Internal Security and Protection of Prosecutors’ Staff together with other structural units of the GPU conduct an audit at the request of Deputy Prosecutor General Tsighovol concerning allegedly improper actions by Kasko.” In his statement, which was partially quoted by the earlier “Prosecutor’s Truth,” Chornovol accused Kasko of involvement in the scam of moving abroad and withdrawing arrested 27 million euros, the ex-minister of ecology during Yanukovych’s presidency, Mykola Zlochevsky, from Britain to Cyprus, as well as blocking procedural actions to recover 80,5 million dollars illegally moved out of Ukraine by Serhiy Kurchenko and arrested in Latvia.

Accordingly, new “revelations” from Tetiana Chornovol should be understood ambiguously. First, they are a continuation of the attack on Kasko, who targeted one of the pillars of Pashinsky’s group and, accordingly, got into someone else’s financial matters. Second, this is an attempt to distract attention from the fact that Tyshchenko and the company have already managed to “consume” Kurchenko’s oil reserves, and did so not in the state’s interests.

The “grant-eaters” enter the fray

Surprisingly, an entity called the International Amnesty entered the game. The corresponding statement has two main components. First, it contains accusations against GPU leadership.

“With apparent coordination with the country’s top leadership, Shokin is trying to make the newly formed Special Anti-Corruption Prosecutor’s Office as dependent as possible. For this, Mr. Shokin delegated to the commission forming the prosecutor’s office Yuri Sevruk, Yuri Grischenko, Roman Balita, and Mykola Sadovyi. All these people, during the era of ex-president Viktor Yanukovych, held high positions in the prosecutor’s offices.”

Second, it states that “with the knowledge of the Prosecutor General and the country’s top officials, there is now a targeted campaign to discredit representatives of the reformist wing of the Prosecutor General’s Office. A number of sponsored articles and pseudo-investigations have appeared against these people, allegedly proving their ties to corruption clans and Russian establishment. Among the individuals named in these articles are Transparency International and members of its board, associated with the well-known law firm Arzinger.”

Thus, it turns out that the attack on Kasko is part of the “discrediting of the reformist wing of the GPU.” Accordingly, Pashinsky’s faction thereby directly confronts International Amnesty. Maidan fighters oppose the grant-eaters and “friends of the United States.” Each side actively publishes materials against the other. Chornovol accuses International Amnesty and Kasko, who allegedly “ripped off” the state of 80 million. Olena Tyshchenko also joined the accusations. She states that the Ukrainian International Amnesty has nothing to do with the world-renowned organization and only “uses its credibility.”

Another interesting piece of information is that the aforementioned Arzinger represents in court the interests of Active Solar, owned by the Kluev brothers. During Yanukovych’s time, they built a real business empire based on solar power plants and the so-called “green tariffs” for electricity. After the change of power, this special “ecological scheme” was canceled, but now Arzinger successfully represents the Kluevs’ interests in court, extracting compensation from the state for canceling the green tariffs. In this context, supporters did not miss the chance to mention Kasko’s connection to the law firm, and that Andriy Kluyev disappeared from justice precisely while the “young prosecutor” was in the GPU.

Of course, for such a favorable topic, Tetiana Chornovol could not miss. She hurried to develop the topic in a related publication. In it, she claims that the “green tariff” allows siphoning 2 billion hryvnias a year from the budget. It continues with a government resolution No. 598-r dated 18 of June 2014, which proposed lowering the coefficient of the “green tariff” for electricity from 1,8 to 1,01, which would reduce budget expenditures and, accordingly, Kluev’s income. However, it never took effect, and with Minister Pavlo Pttrenko’s efforts the resolution was deemed not consistent with domestic law.

Further, the Chairman of the National Energy Regulatory Commission, Serhiy Titienko, entered the case, not allowing the renewed tariffs to move forward. Later, however, he was replaced, and the “green tariff” began to be gradually reduced, in response to which Kluev’s firms successfully satisfied their claims thanks to the efforts of Arzinger’s lawyers.

In addition to all of the above, Chornovol released at a press conference documents indicating a link between Arzinger and the Center for Combating Corruption, led by Vitaliy Shabunin. The latter was recently elected to the commission for selecting the Anti-Corruption Prosecutor, and has already earned a reputation for scandals in its work.

The situation is getting more and more interesting. Kasko, the candidate for head of the Anti-Corruption Prosecutor’s Office, and Shabunin, who selects the prosecutor, are connected to the same structure that simultaneously helps legalize funding for grant-eater structures in the fight against corruption and protects notable figures from Yanukovych’s era. It is unlikely to be a coincidence, just as the fact that another Arzinger partner — International Amnesty — opposes Shokin’s candidacies in the competition commission and desperately pushes other people onto its roster. It is clear that all this is part of one plan to seize the Anti-Corruption Prosecutor’s Office by one clan that has influential partners abroad. And now someone, by the efforts of another clan connected with Serhiy Pashinsky, is trying to break their monopoly. By the way, they are doing this rather effectively.

On the other hand, there were counter-claims that Pashinsky was siphoning off Kurchenko’s assets. Probably the “old-prosecutors” were quietly smiling, watching this circus.

It should be recalled that recently Viktor Shokin became a major target of criticism by Western partners of Ukraine. Jeffrey Pye­t said he directly accused him of refusing to fight internal corruption and of slowing reforms of the entire state mechanism. In further development of this topic, Victoria Nuland demanded a full overhaul of the GPU, to “drain it to the foundations,” and then rebuild. At the same time, as cited by P تصريحات, the main hopes for reform in the GPU in the United States are tied to Vitaliy Kasko and Davyd Sakvarelidze.

The situation for Shokin looks almost hopeless, despite the fact that those in higher echelons of power still support him. The president cannot go against the Western partners, and this is understood by everyone, so the question of reforms in the GPU is as urgent as ever. In this context, one should recall the recently started process of forming the governing bodies of the specialized Anti-Corruption Prosecutor’s Office. This body, assigned a key role in “American-style” reforms, immediately found itself in the crosshairs of GPU leadership. Shokin and his comrades quickly weeded out most of the “appointees of the younger prosecutors” from the prosecutor’s inspection. Then Kasko, considered one of the main contenders for the anti-corruption prosecutors, also “went under.”

Naturally, Vitaliy and Davyd can seek support in the United States, where there was such a ceremonious talk about full support, but there is one point. If you thoroughly discredit Kasko, they may not come to his defense.

Accordingly, the leakage of kompromat against the “younger prosecutors” is advantageous, first of all, to Shokin and his circle. Thus, the idea of “update of the bodies” is discredited, candidates for higher positions are eliminated. And when other candidates appear? Who knows?

And there is nothing surprising that all this is being done by the “Pashinsky group,” since its opponents in the conflict are such Maidan activists as Tetiana Chornovol or Oleh Musiy. Accusations from their side no longer look like exonerations from old corrupt officials. And the longer the “grant-eaters and younger prosecutors” fight with the “Maidan provocateurs,” the more advantageous it is for Shokin, since this delays his inevitable dismissal, which he himself has not openly pegged to a date such as May 2016 year, and allows him to keep the “anti-corruption process” in his hands and maintain influence. Moreover, each side believes it is pursuing its own interests.

The “Pashinsky group” takes revenge and tries to cover up its own dark schemes, also possibly hoping to seize the position of “fighters against corruption.” The “younger prosecutors and grant-eaters” fend off attempts to take away their cozy spots promised by the State Department. But in reality, seasoned GPU clerks are running the game.

Based on what has been laid out, journalists have several questions:

- If Arzinger is affiliated with International Amnesty and protects Kluyev and Kurchenko’s interests, does this mean that Yanukovych’s regime pillars simply bought impunity abroad?

- Will Shokin be able to “sink” the younger prosecutors with other people’s hands, and how long can Kasko and Sakvarelidze count on support from the United States?

- What is the Pashinsky group aiming for in the anti-corruption arrangements, and when will law enforcement agencies seriously deal with the schemes of “relatively honest confiscation of evidentiary items,” in the form of the oil products worth millions of dollars?

Prosecutor’s Truth