“Two years after leaving office, Joe Biden couldn’t resist the temptation last year to brag to an audience of foreign policy specialists about the time as vice president that he strong-armed Ukraine into firing its top prosecutor.

In his own words, with video cameras rolling, Biden described how he threatened Ukrainian President Petro Poroshenko in March 2016 that the Obama administration would pull $1 billion in U.S. loan guarantees, sending the former Soviet republic toward insolvency, if it didn’t immediately fire Prosecutor General Viktor Shokin.

“I said, ‘You’re not getting the billion.’ I’m going to be leaving here in, I think it was about six hours. I looked at them and said: ‘I’m leaving in six hours. If the prosecutor is not fired, you’re not getting the money,’” Biden recalled telling Poroshenko.

“Well, son of a bitch, he got fired. And they put in place someone who was solid at the time,” Biden told the Council on Foreign Relations event, insisting that President Obama was in on the threat.

Interviews with a half-dozen senior Ukrainian officials confirm Biden’s account, though they claim the pressure was applied over several months in late 2015 and early 2016, not just six hours of one dramatic day. Whatever the case, Poroshenko and Ukraine’s parliament obliged by ending Shokin’s tenure as prosecutor. Shokin was facing steep criticism in Ukraine, and among some U.S. officials, for not bringing enough corruption prosecutions when he was fired.

But Ukrainian officials tell me there was one crucial piece of information that Biden must have known but didn’t mention to his audience: The prosecutor he got fired was leading a wide-ranging corruption probe into the natural gas firm Burisma Holdings that employed Biden’s younger son, Hunter, as a board member [in April 2014].

U.S. banking records show Hunter Biden’s American-based firm, Rosemont Seneca Partners LLC, received regular transfers into one of its accounts — usually more than $166,000 a month — from Burisma from spring 2014 through fall 2015, during a period when Vice President Biden was the main U.S. official dealing with Ukraine and its tense relations with Russia.

Joe Biden’s last visit to Kiev, January 17, 2017. (Credit: Genya Savilov/Agence France-Presse/Getty Images)

The general prosecutor’s official file for the Burisma probe — shared with me by senior Ukrainian officials — shows prosecutors identified Hunter Biden, business partner Devon Archer and their firm, Rosemont Seneca, as potential recipients of money.

Shokin told me in written answers to questions that, before he was fired as general prosecutor, he had made “specific plans” for the investigation that “included interrogations and other crime-investigation procedures into all members of the executive board, including Hunter Biden.”

He added: “I would like to emphasize the fact that presumption of innocence is a principle in Ukraine” and that he couldn’t describe the evidence further.” (Read more: The Hill, 4/01/2019)

Mykola Zlochevsky (Credit: Energy Security For the Future)

“In the spring of 2014, the Ukrainian Prosecutor General’s Office opened an investigation at the behest of the UK prosecutors office, which was investigating money laundering allegations against Zlochevsky and had just frozen $23.5 million in assets allegedly belonging to him in early April 2014. Shokin, who wasn’t appointed as general prosecutor until February 2015, wasn’t yet involved in the case.

Ukrainian prosecutors refused to provide the UK with needed documents, and in January 2015, a British court ordered the assets unfrozen. This action was pointedly called out in a speech by Pyatt, who stated, “In the case of former Ecology Minister Mykola Zlochevsky, the UK authorities had seized $23 million in illicit assets that belonged to the Ukrainian people.”

Instead of receiving cooperation from Ukrainian prosecutors, they “sent letters to Zlochevsky’s attorneys attesting that there was no case against him. As a result, the money was freed by the UK court, and shortly thereafter the money was moved to Cyprus.”

Viktor Shokin (Credit: public domain)

On Feb. 10, 2015, Shokin was appointed prosecutor general of Ukraine, and he picked up the investigation into Burisma, which reportedly continued until his formal resignation in February 2016.

Around the same time that Zlochevsky’s assets were being frozen in the UK, Burisma appointed Hunter Biden to its board on April 18, 2014. Hunter’s compensation had never been disclosed by Burisma, which is a private company, but Ryan Toohey, a Burisma spokesman, told The New York Times that Biden’s compensation was “not out of the ordinary” for similar board positions.

However, according to The Hill’s reporting, Hunter Biden’s firm, Rosemont Seneca Partners, was receiving regular payments—“usually more than $166,000 a month”—from Burisma. The payments ran from the spring of 2014 through the fall of 2015 and reportedly totaled more than $3 million.

The Hill article included a written answer from Shokin, who told Solomon that his investigation into Burisma had included plans for “interrogations and other crime-investigation procedures into all members of the executive board, including Hunter Biden.”

Yuriy Lutsenko (Credit: Reuters)

According to Ukrainian Prosecutor General Yuriy Lutsenko, following Shokin’s forced dismissal, the Burisma investigation was transferred to Sytnyk’s NABU, which then reportedly closed the investigation sometime in 2016.

The Kyiv Post on March 27 published an editorial written by three members of the Anti-Corruption Action Center in Kyiv that disputed Lutsenko’s interview with The Hill. They claim that two cases relating to Burisma are still being investigated by NABU:

“Two cases regarding the extraction of licenses by Zlochevsky’s companies and embezzlement of public funds at the ministry’s procurements during Zlochevsky’s Ministerial tenure remain active and are investigated by NABU.”

They also claim that “none of the criminal proceedings against Burisma were closed by NABU.” They acknowledged that the case concerning illegal issuance of licenses to extract natural resources were transferred to NABU in December 2015, but claim that SAP missed procedural deadlines for a lawsuit on canceling those licenses.

The politics within Ukraine are extremely complicated, and corruption is endemic, often leading to conflicting accounts of events. (Read more: The Epoch Times, 4/26/2019)

The State Department misplaced and lost some $6 billion due to the improper filing of contracts during the past six years, mainly during the tenure of former Secretary of State Hilary Clinton, according to a newly released Inspector General report.

The $6 billion in unaccounted funds poses a “significant financial risk and demonstrates a lack of internal control over the Department’s contract actions,” according to the report.

The alert, originally sent on March 20 and just released this week, warns that the missing contracting funds “could expose the department to substantial financial losses.”

The report centered on State Department contracts worth “more than $6 billion in which contract files were incomplete or could not be located at all,” according to the alert.

“The failure to maintain contract files adequately creates significant financial risk and demonstrates a lack of internal control over the Department’s contract actions,” the alert states.

The situation “creates conditions conducive to fraud, as corrupt individuals may attempt to conceal evidence of illicit behavior by omitting key documents from the contract file,” the report concluded.

The State Department’s inability to properly file its paperwork is causing most of the losses, according to the report.

The IG “found repeated examples of poor contract file administration” over the years, the report said.

Contracts related to the U.S. war in Iraq, for instance, could not be produced in 33 out of 115 instances, according to the report.” (Read more: Washington Times, 4/04/2014)  (Archive)

“In the weeks before he landed a deal with a Ukrainian gas company in 2014, Hunter Biden strategized with his business partner on how to leverage an upcoming official trip to Kiev by his father, then-Vice President Joe Biden, to clinch the lucrative arrangement, according to emails obtained a year ago by the FBI.

The communications reviewed by Just the News show that the younger Biden referred to his father as “my guy” and took credit for “adding value” because the vice president made comments to Ukrainian leaders about natural gas production that might benefit his new client.

The memos also show how Hunter Biden pressed to get Burisma Holdings to sign some sort of consulting deal with him and his business partner Devon Archer before the U.S. vice president visited Ukraine on April 21-22, 2014.

“The contract should begin now — not after the upcoming visit of my guy,” Hunter Biden wrote Archer in a detailed strategy email on April 13, 2014, a week before his father’s high-profile visit.

The memo shows Hunter Biden already knew he was going to be appointed to Burisma’s board along with Archer in mid-April 2014 — a month before it was announced — and that he also wanted Burisma to pay an additional consulting fee to him or his law firm Boies Schiller Flexner, referred to in the emails as “BSF.”

The deal with Burisma “should include a retainer in the range of 25k p/m w/ additional fees where appropriate for more in depth work to go to BSF for our protection,” Hunter Biden wrote. “Complete separate from our respective deals re board participation.” (Read more: Just the News, 12/23/2020)  (Archive)

(Credit: New York Post)

“Hunter Biden discussed leveraging his connection to his father in a bid to boost his pay from a Ukrainian natural gas company, according to an email he sent around the time he joined the firm’s corporate board.

In a lengthy memo to his then-business partner, Devon Archer, who already sat on the Burisma board, Biden repeatedly mentioned “my guy” while apparently referring to then-Vice President Joe Biden.

Under President Barack Obama, the elder Biden was the point person for US policy toward Ukraine, and he held a press conference there with Prime Minister Arseniy Yatsenyuk on April 22, 2014.

Hunter Biden’s email to Archer is dated a little more than a week earlier.

“The announcement of my guys [sic] upcoming travels should be characterized as part of our advice and thinking- but what he will say and do is out of our hands,” Hunter Biden wrote on April 13, 2014.

“In other words it could be a really good thing or it could end up creating too great an expectation. We need to temper expectations regarding that visit.”

The email, labeled from Robert Biden — Hunter’s first name — is among a trove of messages, documents, photos and videos purportedly recovered from a MacBook Pro laptop that a Delaware computer shop owner told The Post was brought in for repair in April 2019 and never picked up. (Read more: New York Post, 10/14/2020)  (Archive)

“Previously unseen e-mails on Hunter Biden’s “Hard Drive from Hell” point to never-before-seen evidence of involvement by Joe Biden in his son’s lucrative business dealings in Ukraine with natural gas conglomerate Burisma Holdings, The National Pulse can exclusively reveal.

In a previously unreported email reviewed by The National Pulse, Rosemont Seneca Partners employee Joan K. Peugh advises Hunter Biden – who is addressed by his given name, Robert – that he is scheduled for a White House meeting on April 16th, 2014.

Prior to today, it was known that Devon Archer had attended the meeting in the West Wing, and corporate media outlets excused the matter as an “art project” discussion. Today, that version of events ends.

Just days after this meeting, then Vice President Joe Biden visited Ukraine, and both Hunter and Archer would start receiving whopping checks from energy company Burisma, an industry in which they had zero experience.

Hunter Biden recently admitted the previously dismissed “hard drive from hell” actually “could” be his.

The line item of the e-mail, itself dated April 15th 2014, reads: “1115AM- Meet Devon and Luke @ Peet’s Coffee and head to WH (Jamie Lyons is ####### if anything comes up).”

Lyons, at the time, was an assistant to Joe Biden’s chief of staff Steve Richetti, which indicates attention by the Vice President himself into the visit of the two soon-to-be Burisma board members.

Significantly, this April 16th meeting occurred only five days before Joe Biden took his second vice presidential trip to Ukraine to deliver a substantial package of assistance to Ukraine, including energy security, some of which directly benefitted the company – Burisma – which would simultaneously start fattening his son’s wallet.” (Read more: The National Pulse, 4/07/2021)  (Archive)

(…) In April, Biden would get personally involved, as would his son, Hunter. On April 18, 2014, Hunter Biden was appointed to the board of directors for Burisma–one of the largest natural gas companies in Ukraine.

VP Joe Biden addresses the Ukrainian parliament, April 22, 2014. (Credit: The Associated Press)

Four days later, on April 22, 2014, Vice President Biden traveled to Ukraine, offering his political support and $50 million in aid for Yatsenyuk’s shaky new government. Poroshenko, a billionaire politician, was elected as president of Ukraine on May 25, 2014.

Biden became close to both men and helped Ukraine obtain a four-year, $17.5 billion IMF package in March 2015.

In October 2016, Foreign Policy wrote a lengthy article, “What Will Ukraine Do Without Uncle Joe,” which described Biden’s role in the removal of Ukraine’s general prosecutor, Victor Shokin. Shokin, the choice of Poroshenko, was portrayed as fumbling a major corruption case and “hindering an investigation into two high-ranking state prosecutors arrested on corruption charges.”

The United States pushed for Shokin’s removal, and Biden led the effort by personally threatening to withhold $1 billion in loan guarantees. In an interview with The Atlantic, Biden recalled telling Poroshenko: “Petro, you’re not getting your billion dollars. It’s OK, you can keep the [prosecutor] general. Just understand—we’re not paying if you do.” Shokin was removed by Poroshenko shortly thereafter, in early 2016.

But according to reporting by The Hill, at the time of his firing, Shokin had been investigating Burisma. Shokin’s investigation into Burisma had previously been disclosed in June 2017, by Front News International.

Burisma is owned by Nikolai Zlochevsky (also known as Mykola Zlochevsky), the former minister of ecology for Ukraine. According to Front News, Zlochevsky issued a “special permit for the extraction of a third of the gas produced in Ukraine” to his own company, Burisma.

According to the Ukrainian nonprofit Anti Corruption Action Center, Zlochevsky owns 38 permits held by 14 different companies—with Burisma accounting for the majority with 33 of the permits. Zlochevsky left Ukraine after Yanukovych fled to Russia during the Ukrainian Revolution known as Euromaidan.” (Read more: The Epoch Times, 4/26/2019)

Vice President Joseph R. Biden Jr. told members of Ukraine’s parliament that the United States was ready to support them in securing a unified Ukraine but warned against the “cancer of corruption.” 

WikiLeaks email from Hillary’s campaign saying “It’s out there.”

Tony Podesta lobbied #UraniumOne when Clinton was Secretary of State. pic.twitter.com/8UHOZHYVG0

— Ryan Saavedra (@RealSaavedra) October 30, 2017

The Daily Caller article  linked and highlighted above:

Chalk it up to a small world or to a tangled web, but Uranium One, the Russian-owned uranium mining company at the center of a recent scandal involving the Clintons and a close Canadian business partner, has lobbied the State Department through a firm co-founded by Hillary Clinton’s 2016 presidential campaign chairman.

Senate records show that The Podesta Group has lobbied the State Department on behalf of Uranium One — once in 2012, when Hillary Clinton was secretary of state, and once in 2015.

Uranium One paid The Podesta Group $40,000 to lobby the State Department, the Senate, the National Park Service and the National Security Council for “international mining projects,” according to a July 20, 2012 filing.

(Credit: Open Secrets)

 

Clinton left the State Department on Feb. 1, 2013.

And according to a disclosure filed April 20, Uranium One spent $20,000 lobbying the Senate and State Department on the same issue.

The Podesta Group was founded in 1988 by brothers Tony and John Podesta. Tony Podesta now heads the group while John Podesta, who has not worked for the family business for years but has been involved in plenty of other projects, leads Hillary Clinton toward a Democratic nomination.

Uranium One is significant because it fell under the corporate control of Rosatom, Russia’s atomic energy agency, through a series of transactions approved by Hillary Clinton’s State Department. Rosatom’s acquisition of Uranium One effectively gave Russia control of 20 percent of uranium in the U.S.

How all of that came to pass has fostered questions about how the Clintons operate their charity, the Clinton Foundation.

The Uranium One story starts in 2005 when Canadian mining magnate Frank Giustra and several business partners came to own a small mining company called UrAsia Energy.

Clinton flew with Giustra in September 2005 on a private jet to Kazakhstan. There, the mining tycoon negotiated with that nation’s mining agency, Kazataprom, for rights to three mines. After Clinton appeared publicly in support of Kazakhstan’s president, Nursultan Nazarbayev, who had just allegedly won an election with more than 90 percent of the vote, the mining deal was approved.

Months later, Giustra donated $31 million to the Clinton Foundation with a pledge of $100 million more.

In 2007, UrAsia Energy, with its access to Kazakhstan’s lucrative mines, merged with South Africa’s Uranium One in a $3.5 billion deal.

Giustra sold his stake in the company soon after, pocketing a tidy profit. But other investors and executives with close ties to Giustra maintained their interests and donated millions more to the Clinton group.

As money was flowing to the Clinton Foundation, the State Department, which came under the control of Hillary Clinton in January 2009, approved a series of transactions that allowed Russia’s Rosatom to buy up shares in Uranium One. By June 2009, Rosatom had a 51 percent stake in the company.

With that majority hold, the Russian energy company effectively gained control of 20 percent of the uranium in the U.S.

Rosatom has since taken complete control of Uranium One. And while there is little risk that the metal being pulled out of U.S. soil poses a direct threat to U.S. national security, it does give Russian President Vladimir Putin control of a major source of energy amid cooling diplomatic relations.

Though Uranium One’s corporate progression has the appearance of pay-for-play, the Clintons and Giustra have denied doing anything wrong. In his capacity as Clinton’s campaign chair, John Podesta has gone on the offensive, dismissing the notion that the Clintons have done anything illegal or unethical as a conspiracy theory.

But as evidence of just how complex the Clinton Foundation’s activities are, the website Vox.com published an exhaustive list of 181 Clinton Foundation donors who also lobbied the State Department during Hillary Clinton’s tenure there.

Uranium One is not on the list. Neither is Giustra. Nor is Ian Telfer, one of Giustra’s Canadian associates who is the former chairman of Uranium One. He donated $2.35 million through his Fernwood Foundation to the Canadian wing of the Clinton Foundation, which is set up as a partnership with Giustra.

After it was revealed that the Clinton Foundation had not disclosed some of its foreign donations — such as Telfer’s — the organization announced it would be refiling some of its tax forms. (The Daily Caller, 4/29/2015)

Igor Kolomoisky (Credit: public domain)

“The Ukrainian revolution has been very bad for business in the country. But for Igor Kolomoisky’s Privatbank there has been compensation of almost a billion dollars in state funds: publicly, rival Ukrainian commercial banks call that favouritism; privately, Ukrainian business as usual.

Privatbank is Ukraine’s largest commercial bank. Since the replacement of the Ukrainian Government in February, and the start of the International Monetary Fund’s (IMF) financial aid programme in April, Privatbank has been the largest beneficiary of what the IMF and the Ukrainian Ministry of Finance are calling Emergency Liquidity Assistance (ELA) to the country’s banks. Published measurements of Privatbank’s share of ELA range from 36% to more than 40% of the additional financing which has flowed out of Ukrainian state funds into the commercial banks. Just how much Kolomoisky benefits, along with related companies to which Privatbank lends much of its loan book, is one of the control operations being performed this week, as the IMF’s Ukraine mission starts its first inspection since the IMF transferred $3.2 billion to the National Bank of Ukraine on May 7.

This is the first tranche of the $17.1 billion committed to Kiev by the IMF. The next tranche of $1.4 billion, according to the IMF’s published schedule, is due to be paid on July 25. The complete inspection and payment schedule looks like this:

The IMF mission leader in Kiev this week is Nikolay Gueorguiev. Two weeks ago, he indicated that he will be discussing with his counterparts at the National Bank of Ukraine (NBU) and the Ministry of Finance what reports the IMF expects to gather by next month on stress testing of the condition of Privatbank and the fourteen other major domestic banks, which are the IMF’s priority targets. The technical criteria, selection of independent auditors, and the deadlines for reporting stress test results Gueorguiev says he is hoping to finalize in Kiev by the weekend. For Gueorguiev’s remarks, read this.

According to Gerry Rice (right), the spokesman for the IMF’s managing director, Christine Lagarde (left), there’s no telling how much of the IMF payments will be transferred to the Ukrainian banks. “Those funds,” said Rice, “are not assigned to specific budget line items, but the package ensures, or tries to ensure that the government can stabilize the public finances, and remain current on all its payment obligations…On the question of the disbursement, as you probably know, our disbursements are made for budget support, and then we review the budget support on a fairly rigorous basis and assessment in the context of the reviews of the program. In this case, as you know, it’s bimonthly reviews, so at that time we will be looking at how expenditures are being used, and how the budgetary support indicators are being tracked, the budget deficit indicators and so on.”

In its package of agreements and technical understandings with the Ukrainian government, the IMF defined the bank bailout programme ELA as “ an emergency liquidity assistance (ELA) facility that lends at a high penalty rate against nonstandard collateral (corporate and household loans) at a 65–75 percent haircut.” — page 8. To keep tabs, the IMF is requiring the central bank (NBU) to “provide the IMF, on a two weekly basis, with daily data on the total financing (including refinancing) issued by the NBU to commercial banks, broken down by types of instrument, original maturity of the financing, interest rate as well as transactions to absorb liquidity from the banking system.”

The IMF has also ordered the Ministry of Finance to “provide, no later than 15 days after the end of each month, monthly data on the budgetary costs associated with the recapitalization of banks and SOEs. This cost includes the upfront impact on the cash deficit of the general government of the recapitalization of banks and SOEs as well as the costs associated with the payment of interests.”

Because the technical terminology used by the IMF, NBU, Finance Ministry, and the English-language markets can be imprecise and slip from one balance-sheet line item to another in translation, the NBU was asked to confirm what volume of NBU financing for the Ukrainian commercial banks has been provided for February, March, April, May, and the first two weeks of June? Also, what value has been received by Privatbank and its associates?

The National Bank of Ukraine (Credit: Wikipedia)

The NBU issued a wordy answer. “In accordance with Article 7 of the Law of Ukraine ‘On the National Bank of Ukraine’, the National Bank of Ukraine acts as lender of last resort for banks and arranges a refinancing system to support liquidity in the event of unforeseen factors that may affect the activities of the bank, and if they have exhausted other options, refinancing. At present, the policy of the National Bank of Ukraine is aimed at ensuring transparency and equal conditions of access to refinancing instruments for the various banks”.

On the other hand, the NBU said it refuses to disclose what liquidity assistance it has been paying to Privatbank because “information on banks or customers, collected during banking supervision, is a bank secret.”

Because the IMF rule requires it, the Finance Ministry was asked what its record-keeping shows of how the ELA cash is being spent. The ministry responded that it’s up to the NBU to answer.

The headquarters of Privatbank, Dnipro, Ukraine in 2010. (Credit: Wikipedia)

Public reporting by the NBU for the January-May period indicates that a total of UAH 104.8 billion (about $8 billion) in public funds, including part of the May payment from the IMF, has been given to the Ukrainian banks under ELA to support their liquidity. The handouts started to accelerate when Stepan Kubiv was appointed by the new government to be governor of the NBU on February 24. Before he arrived, the NBU had been spending an average of UAH15.4 billion on ELA per month. After Kubiv took over, the average monthly outlay jumped to UAH 24.7 billion; that’s a growth rate of 62%. Kubiv’s career record in doing things like that before, and what IMF officials knew of it, can be followed in this report of June 6.

(…) An international bank source has applied what he believes to be standard stress tests to Privatbank’s published 2013 accounts. He calculates that in 2015 “Privatbank would fall below capital adequacy levels which markets and regulators consider necessary. In 2016 it would be insolvent.” These forecasts, the source said, are warranted by the bank’s “large exposures to other entities of its owners. It has significant industry concentrations in Oil & Gas and Steel, likely due to the bank’s owners’ interests in these industries. Both factors have historically been associated with high levels of losses in stressed conditions.”

The source also concludes that because of Privatbank’s importance in the Ukrainian bank sector, the “risks of contagion and the direct effects to the Ukrainian economy from one of its largest lenders collapsing, it is likely that public assistance of Privatbank would be required in a stress.” (Read much more: John Helmer, 6/24/2014)

(Credit: John Helmer)

“When Igor Kolomoisky (lead image, centre) financed anti-Russian units operating with the Ukrainian Army in the Ukrainian civil war, he was a staunch ally of Petro Poroshenko’s government in Kiev and the Obama Administration’s chief Ukraine policymakers, Secretary of State Hillary Clinton (left) and her Assistant Secretary for European Affairs, Victoria Nuland (right).

They in turn dominated the voting on the board of directors of the International Monetary Fund (IMF), led by managing director Christine Lagarde. Following the US regime change which installed Poroshenko’s regime in the spring of 2014, the IMF voted massive loans for the Ukraine to replace the Russian financing on which the regime of Victor Yanukovich had depended.  More than a third of the fresh IMF money was paid out by the National Bank of Ukraine (NBU), the state’s central bank, into PrivatBank controlled by Kolomoisky and his partner, Gennady Bogolyubov.

At the time, investigations of Kolomoisky’s business and banking practices, and the special relationship he cultivated with the NBU, reported he was stealing the money through a pyramid of front companies lending each other the IMF cash which was not intended to be repaid. Clinton, Nuland, Lagarde and the IMF staff and board of directors ignored the evidence, as they continued to top up Kolomoisky’s pyramid. Criminal investigations by the US Department of Justice and the Federal Bureau of Investigation (FBI) were also reported at the time; they were neutralized by their superiors.

A new Delaware state court filing a month ago, triggering new US media reports, appears to signal a shift in US Government policy towards Kolomoisky. Or else, as some Ukrainian policy experts believe, it is a move by US officials to put pressure on the new Ukrainian President, Volodymyr Zelensky, whom Kolomoisky supported in his successful election campaign to replace Poroshenko.

In the new court papers, front company names and the count and value of US transactions between them,  which PrivatBank has dug out of its own bank records,  is published for the first time. But the scheme itself is not new. It was fully exposed in 2014-2015 in this archive.  Nor is it news, as subsequent US media reports claim, that the FBI is investigating Kolomoisky and his US associates for criminal racketeering. The FBI investigation was first reported here.

(Credit: Steve Bell, August 28, 2014)

What is missing is an explanation of why it has taken so long for the PrivatBank case against Kolomoisky to surface in the US courts and in the US press. Also missing is a list of the accomplices and co-conspirators in the scheme. These include officials of the IMF,  the US and Canadian Governments who knowingly directed billions of dollars into the NBU,  from which, as they knew full well at the time, the money went out to Kolomoisky’s PrivatBank, the largest single Ukrainian recipient of the international cash. At the top of the list of accomplices, immediately subordinate to Clinton, Nuland and Lagarde, are David Lipton, the US deputy managing director  at the IMF, and the head of the IMF in Ukraine until 2017, Jerome Vacher.

The plaintiff in the Delaware Court of Chancery is PrivatBank; it is represented by the Quinn Emanuel law firm of New York and Washington, DC.

In addition to Kolomoisky and Gennady Bogolyubov, his business partner and co-shareholder in the bank, three other individuals are named as defendants – Mordechai Korf, Chaim Schochet, and Uriel Laber. They are based in the US where they have run the US trading, production, management and investment companies which Privat now alleges were on the receiving end of the embezzlement from the bank and the onward money-laundering chain.

The story of Kolomoisky, Korf and Schochet was first reported in April 2015 here.

Left to right: Mordechai Korf; Chaim Schochet, Korf’s brother-in-law; and Uriel Laber.  Because Korf, Schochet and Laber all live in Miami, the local newspaper has investigated some of their other schemes; here’s an investigation of the environmental damage of their manganese mine in Georgia. A catch-up investigation was reported by the Kyiv Post in May 2019.

The central allegation of the new court case is: “From at least 2006 through December 2016, the UBOs  [Ultimate Beneficial Owners – Kolomoisky, Bogolyubov] were the majority and controlling stockholders of PrivatBank, one of Ukraine’s largest privately-held commercial banks. During that time period, the UBOs used PrivatBank as their own personal piggy bank—ultimately stealing billions of dollars from PrivatBank and using United States entities to launder hundreds of millions of dollars’ worth of PrivatBank’s misappropriated loan proceeds into the United States to enrich themselves and their co-conspirators.”

Gennady Bogolyubov (l) and Igor Kolomoisky (Credit: public domain)

The racket – called the Optima schemes in the court papers after the names of several of the Delaware-registered companies used as fronts for moving the money into US assets – was this: “Through the Optima Schemes, the UBOs [Kolomoisky and Bogolyubov] exploited their positions of power and trust at PrivatBank to cause PrivatBank to issue hundreds of millions of dollars’ worth of illegitimate, inadequately-secured loans to corporate entities also owned and/or controlled by the UBOs and/or their affiliates (the “Optima Scheme Loans”). To facilitate and fraudulently conceal the Optima Schemes from discovery, the UBOs created and utilized a secretive business unit within PrivatBank’s operations (the “Shadow Bank”) to fund the fraudulent loans and launder those loan proceeds through a sophisticated money laundering process.”

“The stated purpose for each loan involved in the Optima Schemes was typically for financing the activities of the ostensible corporate borrower. The Optima Scheme Loans, however, were sham arrangements and the proceeds were not in fact used for that purpose. Instead, sometimes within minutes of being disbursed, the loan proceeds were cycled through dozens of UBO-controlled or affiliated bank accounts at PrivatBank’s Cyprus branch (“PrivatBank Cyprus”) before being disbursed to one of multiple Delaware limited liability companies or corporations (or other United States-based entities), all of which were [controlled by the UBOs].”

“In effect, the UBOs utilized a Ponzi-type scheme: old loans issued by PrivatBank would be ‘repaid’ (along with the accrued interest) with new loans issued by PrivatBank, and those new loans issued by PrivatBank would then be repaid with a new round of loans. The UBOs and their co-conspirators continuously carried out this process to conceal their frauds. Thus, proceeds from new PrivatBank loans were used to give the appearance that the initial PrivatBank loans (along with the accrued interest) were repaid by the borrower when in fact there was no actual repayment.”

“The proceeds from the new PrivatBank Ukraine loans were then laundered through various accounts at PrivatBank Cyprus to disguise the origin of the funds (i.e., a new loan from PrivatBank), and then used to purport to pay down the initial loans plus accrued interest. On paper, this appeared to be a repayment, but in reality, it was a sham and fraud, as PrivatBank was repaying itself and increasing its outstanding liabilities in the process. This process was carried out over and over again, over a period of many years, giving the appearance that PrivatBank’s corporate loan book was performing when, in fact, new loans were being continually issued to new UBO-controlled parties to ‘pay down’ the prior, existing loans. As a result, the size of the ‘hole’ in PrivatBank’s corporate loan book grew and grew, with each iteration of a loan plus interest being ‘repaid’ through the issuance of a new loan, which accrued interest itself before being ‘repaid’ through the issuance of yet a further new loan.

(…) Most of the fresh evidence presented in Privatbank’s court papers has been gathered from Cyprus. There, according to the bank’s case, 41 front companies were used to move money. “Even though the Laundering Entities had billions of dollars moving in and out of their accounts, in reality, the entities had no business, assets, operations, or employees and were shell entities deployed for money laundering purposes.”

When the money was moved to the US,  it was then spent on real estate – four commercial buildings in Cleveland, Ohio;  two in Dallas, Texas;  one in Harvard, Illinois – together with six ferro-alloy and steel production and trading companies operating in several US states.  The court papers report the value of the real estate at acquisition at just over $287.5 million; the value of the metals companies, $468.7 million.

In addition, there were miscellaneous financial transfers with no clear end-purpose or investment target. “Based on information analyzed to date, Defendants laundered approximately $622.8 million worth of fraudulently obtained loan proceeds into the Optima Conspirators, including $188.1 million to Optima Group, $162.3 million to Optima Ventures, $153.7 million to Optima Acquisitions, $103 million to Optima International, $9 million to Warren Steel Holdings, and $6.7 million to Felman Trading. PrivatBank received no consideration in exchange for these transfers and the loans associated with the transfers were not repaid in full.”

Grand total, $1,379 million.

(…) Lawyers for the defendants are not commenting on the Delaware allegations. It can be anticipated that Kolomoisky will argue the Privatbank loans weren’t shams, and that they were repaid to the bank.  Kolomoisky has already won counter claims against PrivatBank in courts in London and Kyiv; he is now negotiating with the Kiev government to recover a 25% stake in the bank. “We have always said that we are open to negotiations. We believe that we are the injured party, that we have been robbed,” Kolomoisky has told Reuters. “Kolomoisky calculates he is due a 25 percent stake in the bank because of the capital he had put into it. Give us then our 25 percent and keep 75, we will have a joint-stock company. There will be a 25 percent participation and 75 percent by the state, as one of the options.”

Reuters also reports the Ukrainian central bank and the IMF believe Privat “was used as a vehicle for fraud and money-laundering while Kolomoisky owned it, and said the government was forced to inject $5.6 billion of taxpayers’ money into the lender to shore up its finances.” For more detail, click to read this.

The work on the transactions detailed in the Delaware court papers was commissioned by PrivatBank and the NBU from Kroll, a due diligence firm as well known for white-washing the affairs of its clients as for investigating fraud. Kroll’s report was then leaked to Graham Stack. In his report, published on April 19, Stack concludes: “The money was moved through a PrivatBank subsidiary in Cyprus. The arrangement helped hide the fact that cash was disappearing because the National Bank of Ukraine treated the Cyprus branch of PrivatBank the same as it would domestic branches. This designation meant officials never detected that cash transferred to Cyprus was leaving Ukraine. Meanwhile, Cypriot regulators either failed to detect that the various bank transfers totalling $5.5 billion were backed by bogus contracts, or didn’t take the necessary action to stop them.”

The IMF’s staff head for Ukraine, Nikolai Gueorguiev,  claimed that in March 2015 he had ordered “a new wave of  bank diagnostics” to monitor related-party lending, liquidity and capital adequacy at PrivatBank; he was dissembling.

Graham Stack (Credit: public domain)

Stack (right) also reports Kolomoisky’s response to the Delaware case: “‘I categorically deny the allegations made by the National Bank of Ukraine,’ Kolomoisky said, adding that regulators had all the access they needed to monitor his bank’s activities. He painted the authorities’ nationalization of his lending business as an asset grab. ‘Management of the [Ukrainian central bank] had as its main purpose not the support of the country’s largest bank, but its nationalization and the expropriation of the assets provided as security, together with the persecution and pressuring of the former shareholders,’ Kolomoisky said.”

Stack is an independent researcher and reporter of Ukrainian business and politics. Anders Aslund is an employee of Victor Pinchuk, a Ukrainian oligarch with bank, media and steel interests who has long been a rival of Kolomoisky’s. Aslund, a former Swedish government official, has worked for US think-tanks funded by Pinchuk. Aslund is now at the Atlantic Council in Washington, DC. The council lists Pinchuk’s foundation as having giving it up to $500,000 in financing for research, including Aslund’s pay.  The US State Department, the British Foreign Office, and George Soros’s foundations are also listed as large donors.

[Anders] Aslund (left) reported on the charges on June 4. Aslund claims to be reading about the stealing scheme for the first time. “The money trail is surprisingly simple. To begin with, the ultimate beneficiary owners collect retail deposits in Ukraine by offering good conditions and service. The money then flows to their subsidiary, PrivatBank Cyprus. In Cyprus, they benefit from the services of two local law firms. Untypically, the ultimate beneficiary owners did not take the precaution to establish multiple layers of shell companies in Cyprus, the British Virgin Islands, and Cayman Islands, as is common among Russians with seriously dirty money. Instead, they operated with three US individuals in Miami, who helped them to set up a large number of anonymous LLCs in the United States, mainly in Delaware, but also in Florida, New Jersey, and Oregon.”

Aslund expresses surprise that among Kolomoisy’s investments there were US ferro-alloy and steel plants and traders. “More remarkable is that Kolomoisky and Bogolyubov, according to the suit, purchased several ferroalloy companies in the United States, Felman Production Inc., in West Virginia; Felman Trading Inc. and Georgian Manganese, LLC; Warren Steel Holdings in Warren, Ohio; Steel Rolling Holdings Inc., Gibraltar, Michigan; CC Metals and Alloys, LLC, in Kentucky; Michigan Seamless Tubes, Michigan. These appear to be medium-sized companies in small places. Real people worked in these enterprises. Why didn’t anybody raise questions about the dubious owners?” (Read much more: John Helmer, 6/30/2019)  (Archive)

(Republished in part, with permission)