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17 May, 2018  ▪  Andriy Holub

Shadow-boxing: Kramer vs Lutsenko

NYT’s Andrew Kramer claims that “Four cases involving Paul J. Manafort have been effectively frozen by Ukraine’s chief prosecutor. Ukrainian officials are wary of offending President Trump.” How true is this?

On May 2, the on-line version of the New York Times posted an article by Andrew Kramer stating, “Ukraine, Seeking U.S. Missiles, Halted Cooperation With Mueller Investigation”. The piece caused quite a stir, placing, as it did, responsibility for blocking investigations on the Office of the Prosecutor General of Ukraine, which denies this. On May 4, three Democrat senators, Bob Menendez, Dick Durbin and Patrick Leahy turned to PG Yuriy Lutsenko with an open letter about the claims made in Kramer’s article. Their request for clarification ended with three questions, quoted from the letter:

  • Has your office taken any steps to restrict cooperation with the investigation by Special Counsel Robert Mueller? If so, why?
  • Did any individual from the Trump Administration, or anyone acting on its behalf, encourage Ukrainian government or law enforcement officials not to cooperate with the investigation by Special Counsel Robert Mueller?
  • Was the Mueller probe raised in any way during discussions between your government and US officials, including around the meeting of Presidents Trump and Poroshenko in New York in 2017?

The main fact that is at the core of the Kramer article is an April order from the PGO that supposedly forbade the carrying out of any investigation in a case in which Paul Manafort figured. This would, of course, mean that any international cooperation in investigations would also become impossible. The situation would have been convenient for the current US President and the PGO order oddly coincided with the start of deliveries of Javelins to Ukraine.

Robert Mueller’s investigative team is the main topic overseas. In May 2017, he was appointed to investigate whether there was evidence of cooperation between the Russian government and Donald Trump’s election headquarters during his 2016 campaign for president of the United States. The investigation extended to possible Russian interference in the US election. One of the key individuals in the case is Paul Manafort, who was Trump’s campaign manager for several months. At the end of 2017, Manafort was accused of a slew of crimes, including money-laundering and tax evasion.

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For a significant period, Manafort’s activities were closely tied with Ukraine. Before he found himself at the peak of his career as a public relations professional, running the campaign of a future US president, he worked as a consultant for many years for Ukraine’s ex-President Viktor Yanukovych and his Party of the Regions. This kind of cooperation, according to Ukrainian press, took place at least between 2006 and 2014, when Manafort helped what was then the Opposition Bloc, a party based on what was left of Yanukovych’s PoR.

Some episodes in this relationship have been picked up by the radar of Ukraine’s law enforcement agencies, which are investigating the crimes of the Yanukovych regime. The NYT refers to four criminal investigations that involve Manafort. All four are being handled by the PGO’s Special Investigations Department, headed by Serhiy Horbatiuk.

One involves a payment of US $750,000 to Davis Manafort, a consultancy founded by Paul Manafort. The money was transferred through offshore accounts for the delivery of computer equipment that never happened.

A second case involves the whitewashing the Yanukovych Administration after Yulia Tymoshenko was jailed. Yanukovych officials used the services of Skadden Arps, a law firm, to tidy up their reputation. The company was paid more than UAH 8 million, worth over US $1 million at the time the contract was signed, out of the Ukrainian budget to prepare a report claiming that there was no political motive behind the jailing of the opposition leader. This case has already gone to court, with the suspect being former Justice Minister Oleksandr Lavrynovych. According to press reports, Manafort himself put together Yanukovych’s strategy for lobbying his interests in the US and EU and organized the contract with the well-known law firm.

The third case involves payouts made from Party of the Region’s cash stash, known as a “black cash register” in Ukrainian. In this case, the suspects are the Kaliuzhniy brothers, ex-MP Valeriy and MP aide Yevhen, who law enforcement says personally signed the Party’s illicit accounting books about money used for various expenditures. In essence, they acted as middlemen for the paying out of bribes or laundering of money. One of the items for which the brothers received cash was recorded as “Paul Manafort”. Today, the Kaliuzhniys are officially wanted for their crimes and, according to some information from investigators, are hiding in Russia.

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It’s important to understand that Paul Manafort himself is not a suspect in any of these three cases, although he will certainly be a key witness.

The fourth case that is mentioned in the NYT article merits a separate discussion. According to Kramer, there are not one but two cases involving Skadden Arps, but he does not provide any details. Some information can be gleaned from the PGO’s response to Kramer’s enquiry, which was only made public in Ukrainian media after the article came out in the US. However, the PGO press service did not mention the questions asked by the journalist. In the text of the response, in addition to the three cases mentioned above that are directly linked to Manafort, there is also mention of a criminal case “on suspicion that the former Minister of Justice embezzled public funds worth UAH 2,523,000 or about US $315,000 at the time, to pay TOV Yevropeiska Pravova Hrupa [European Law Group] without justification.” In fact, Olena Lukash is the suspect in this case. In December 2013, after the Euromaidan had already started, Lukash ordered YPH to analyze certain parts of the Ukraine-EU Association Agreement. But this case is not connected to Skadden Arps or Manafort in any way. At any rate, there is no information pointing to a link in any publicly available source at this time.

To understand why the NYT article refers to four cases while the PGO’s response mentions the Lukash case, we have to go back half a year to November 20, 2017. On that day, the PGO investigators lost their authority to investigate any case whatsoever. Some of these cases were turned over to NABU, the national anti-corruption agency, mainly those involving corruption in the higher corridors of power.

On December 15, the law changes to return certain powers to prosecutors. However, the day before, Prosecutor General Lutsenko issues an order to transfer cases that fall under NABU’s remit to the Bureau.

The press has speculated about the reason for his decision. Among others, they interpret it as the latest battle in the war among law enforcement agencies, which reached its peak just about then. One opinion was that Lutsenko was trying to “bury” NABU with over 2,000 cases from all over Ukraine and to thus block the nascent watchdog agency’s work. Among those 2,000 there were about 30 criminal cases that were being handled by the PGO’s Special Investigations Department headed by Horbatiuk. However, soon after this, Special Anti-Corruption Prosecutor Nazar Kholodnytskiy issued an order to return those cases back to the PGO’s Special Investigations Department. The PGO leadership indicated that it was against this, once again. This kind of ping-ponging of the criminal cases went through several rounds until the spring, when they were ultimately not returned to the Special Investigations Department.

“The PGO should have once again given the powers to investigate these cases to our department,” says Horbatiuk. “It did this in most cases, except for four cases, that have not been delegated to anyone, and no one can continue investigating them.”

And these are the four cases that Andrew Kramer was writing about in the NYT. Lutsenko’s avoidance of delegating these cases to specific investigators is what the article refers to as “an order to stop them.” All of this did, indeed, happen in April, just before the Javelins came to Ukraine, and since Manafort is involved in most of the cases, it’s been interpreted as an attempt to please Trump.

However, the logic of this argument doesn’t really follow. Firstly, the Lukash case bears no relation to Manafort, let alone to Trump. Secondly, the circus with the investigation of the cases affects a lot more interests in Ukraine, not really those abroad, especially as it started long before the delivery of the Javelins. Thirdly, the selectiveness of the PGO in its approach to individual cases is obvious and suggests that the PGO is playing in the court of individuals who are connected to those cases. But Lutsenko has shown this kind of selectivity more than once in the past: he also tried to take the Lukash case away from SID before and he succeeded in removing the case against former Minister of Revenues and Taxes Oleksandr Klymenko. Even when it handed cases over to NABU, the PGO did this selectively and not en masse, leaving individual cases in its own hands, including one against Serhiy Kurchenko, the money man for the Yanukovych Family. In other words, whatever he has done, there’s no real evidence that Lutsenko stopped certain investigations to appease President Trump.

A separate issue raised in the Kramer article is about a Ukrainian prohibition on cooperation between American and Ukrainian law enforcement agencies. “Neither American law enforcement agencies, nor the FBI nor Mueller have turned to the PGO with any requests for legal assistance in relation to the Manafort case,” Yevhen Yenin, Assistant Prosecutor General for International Cooperation, wrote on his Facebook page. “In other words, there was nothing there to ‘halt’ in the first place.” In commenting for The Ukrainian Week, Yenin said that he meant that there were neither queries nor letters from the US side: “On the contrary, Lutsenko himself sent a letter to the US in February proposing closer cooperation and we never even got a reply.”

SID Director Horbatiuk says that no requests have come to his department from the US side, either. Back in 2014, his department sent two official requests to the US Department of Justice, followed by five reminders about the requests, and, last year, some additional information to the original request. These requests were, in fact, for documents and to interview for individuals material to certain cases, including Manafort. The DoJ provided the documents but did not hold any interviews. The last time, Horbatiuk wrote a letter to Special Prosecutor Mueller himself, earlier this year, but so far there’s been no response.

According to Horbatiuk, on May 5, the PGO finally handed all four of the cases mentioned here to his department to handle—a day after Lutsenko received the letter from the three US senators and three days after the Kramer article was published. The hope is that the PGO will react equally quickly to publications in the Ukrainian press in future.

Translated by Lidia Wolanskyj

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