Former Ukrainian President Petro Poroshenko Secretly Controlled Offshore Companies Banking At Raiffeisen In Austria

In the early 2010s, Petro Poroshenko – a billionaire who had just served as Ukraine’s foreign minister and would later be elected president – built himself a lavish palace outside of Kiev. He just needed furniture to match the size of his new home.

Using an offshore company based in the British Virgin Islands called Vernon Holdings, Poroshenko and his wife, Maryna, proceeded to purchase more than $ 100,000 of plush upholstery from luxury Italian furniture makers between 2009 and 2012, according to invoices and other documents consulted by the OCCRP. .

According to documents leaked in 2019 by anti-corruption “hacktivists”, Poroshenko’s family controlled the company. He was also the beneficiary of an insurance policy issued in Vernon. But you would never know by looking at the records of Raiffeisen Bank International in Austria, where the offshore kept its accounts. Instead of Poroshenko, the bank appointed its employee and long-time associate, Sergiy Zaitsev, as beneficiary.

It was just the start. Relying on bank records, correspondence, invoices and other documents, an OCCRP investigation revealed that Raiffeisen – Austria’s second-largest bank in terms of assets – had authorized Poroshenko to use Zaitsev to hide his control of at least six offshore companies used to finance business and personal activities. transactions, including multi-million dollar art purchases.

Raiffeisen identified Zaitsev as the beneficial owner of most of these companies, and he signed corporate documents for others – even as they managed tens of millions of dollars for Poroshenko before and during his presidency, according to emails and documents obtained by OCCRP.

In 2018, the Austrian Securities and Markets Authority (FMA) fined Raiffeisen € 2.75 million for “insufficient verification of the identity of the beneficial owner and failure to regularly update documents, data and information necessary to be able to understand the ownership and control structures with respect to high-risk clients in specific individual cases. But the FMA did not specify which of Raiffeisen’s high-risk clients had been misidentified. In December 2019, the Austrian Supreme Administrative Court overturned the fine.

Poroshenko has held various political positions since 1998 – including Member of Parliament, Chairman of the Board of the National Bank of Ukraine and Minister of Foreign Affairs – while building a business empire and fortune estimated at over $ 1 billion.

After becoming president following the Euromaidan revolution in late 2013 and early 2014, Poroshenko sought to present himself as a reformer transforming one of the most corrupt countries in Europe. But he has been criticized for failing to tackle Ukraine’s entrenched oligarchy and – even before these revelations – for personal corruption as well.

In response to an email request for comment from OCCRP, Poroshenko’s legal advisers said he had nothing to do with any of the companies.

“Petro Poroshenko is not and was not a shareholder, UBO or officer of any of the companies,” they said in a signed response, “Petro Poroshenko’s group of legal advisers for the protection of reputation against spreading fake news and biased surveys. “

Zaitsev did not respond to requests for comment, but in an interview in 2016 with Interfax Ukraine, he denied owning Intraco Ltd on behalf of Poroshenko. “Put simply, I had, I have and God willing, I will have my own business interests and projects, for which I have created a number of companies,” he said.

Raiffeisen Bank said in a statement that the banks’ due diligence can only go so far. “Additional investigations and research are reserved exclusively [for] the relevant state bodies, ”the bank said.

“After a thorough internal assessment and after an external inspection / validation by the Austrian Financial Market Authority of the commercial relationships made public in connection with the Panama Papers leaks, we are able to rule out the possibility that Raiffeisen Bank International has illegally makes false statements about the beneficial owners of companies on the basis of documents made available to us, ”the statement continued.

Elephant in the room

In 2017, as part of the Panama Papers investigation, OCCRP linked Poroshenko to Intraco Management Limited, another shell company registered in the British Virgin Islands and holding an account with Raiffeisen, while Zaitsev was the beneficial owner. declared.

Intraco, Vernon, and 15 other companies that processed tens of millions of dollars in transactions a year related to Poroshenko and his business empire held accounts with Raiffeisen. Most were registered in the British Virgin Islands and Cyprus.

In the case of six of these companies, the OCCRP was able to establish by electronic correspondence and other documents that they were personally controlled by Poroshenko. The others carried out transactions related to Poroshenko’s activities, but the OCCRP did not find clear evidence that it was in control of them.

These transactions were often extravagant. In May 2012 – just two months after being appointed Minister of Trade and Economy under the controversial former pro-Russian President of Ukraine Viktor Yanukovych – Poroshenko purchased a surreal sculpture of a leggy elephant by Salvador Dali for $ 338,500 at an auction at Sotheby’s in New York. using an offshore company called Linquist Ltd.

Raiffeisen listed Zaitsev as the beneficial owner of Linquist. According to documents obtained by OCCRP, Poroshenko held a power of attorney for Linquist, who then sold the statue to one of Poroshenko’s Ukrainian media companies for $ 342,500.

In April 2013, after stepping down as Ukrainian Minister of Economy, Poroshenko went even further, using Vernon to buy 4.8 million pounds of art. These pieces, mostly by Russian masters, included the classic Ilya Repin painting Cossacks on the Black Sea.

The company then transferred legal ownership of this work to Poroshenko at the premises of the Seychelles Honorary Consulate in Kiev – which was also inside the headquarters of one of Poroshenko’s companies. The Seychelles consul at the time, Oleh Gladkovsky, was Poroshenko’s friend and business partner. Ukraine’s State Investigation Bureau issued an injunction on the art collection last year, barring it from being sold or removed from Ukraine, after saying it had been smuggled into the country, without pay customs duty.

Email correspondence and other documents obtained by OCCRP also show that Poroshenko made executive decisions on behalf of Vernon, Linquist and the Cypriot company Chartomena Ltd.

Emails written by Volodymyr Demchyshyn, an investment banker who became Energy Minister in the Poroshenko administration in 2014, make it clear that Demchysyn consulted Poroshenko about the agreements using Chartomena and Proktoremo related to the Poroshenko shipyards. in Kiev and the Crimea. In June 2013, Poroshenko ordered Demchyshyn to draw up a contract allowing Chartomena to buy out debt held by its Crimea-based shipyard Sevastopol. In December 2013, on Poroshenko’s instructions, Demchyshyn arranged for Proktoremo to transfer a plot of land from the Poroshenko shipyard in Kiev to a new structure that will be turned into a recreation complex.

Demchyshyn also arranged another deal with Poroshenko in 2013: the sale of his minority stake in an influential Ukrainian media group, UMH, to Boris Lozhkin, the majority shareholder who later became Poroshenko’s chief of staff. Lozhkin then sold the whole company to Sergiy Kurchenko, a notorious leader of Viktor Yanukovych. Again, lawyers consulted Poroshenko directly on the deal, which was structured with the help of Linquist – held on paper by Zaitsev.

In 2013, Ukrainian investment banker Igor Mazepa wrote directly to Poroshenko to offer his personal guarantee for a Linquist loan, once again stating that the offshore company was controlled by Poroshenko.

Finally, spreadsheets from offshore financial records show that companies were linked to each other by debt agreements used to distribute funds. In May 2014, around the time Poroshenko took over as president, for example, Chartomena loaned $ 21,650,200 to another of the companies, Manoushag. Soon after, Manoushag loaned $ 10 million to another such company, Proktoremo.

Martin Woods, managing director of AML Woods consultancy and financial crime expert, said that while a bank “is to be a strong advocate for customer privacy, it should never respect customer secrecy.”

In cases involving so-called ‘politically exposed persons’, a term which generally includes officials in high-profile public functions,’ secrecy can literally cost lives when governments, as a result, lack the resources to fund the process. health and public services, ”he said.