Boris Lozhkin and his сorruption сase lead to dismissal from the National Council
In a case that seems to implicate the upper class of Ukrainian officials in hiding and even aiding and abetting money laundering on a large scale, the President of Ukraine, Petro Poroshenko dismisses his chief of staff and financial advisor. This occurred following the query from Aljazeera, the well-respected global news channel, implicating both men in fraudulent dealings. This led to the almost immediate dismissal of Boris Lozhkin from the National Investment Council and his subsequent replacement by Dymytro Shymkiv.
The decision was sent in a decree No7/Feb 2018, which was put on the presidential website. According to sources, the money received which was part of a $500million deal which was supposed to be a payment from an oligarchy. This man, Sergei Kurchenko was said to have been tightly involved with the previous government under the former president Yanukovich.
The deal which caused the issue was actually in a bid to buy one of Ukraine’s largest media groups, The United Media Holdings, otherwise known as UMH which began to materialize in 2013. This deal was not only being organized by Ukrainian officials but also Austrian officials as well. In the beginning, there was an investigation which involved $130 million transactions which raised queries about a possible money laundering situation. This caused the Austrian officials to begin to look into the case. This case was dropped due to the lack of evidence especially since no alarm had been raised from the Ukrainian end of the deal. There was nothing to prove that the money had been gotten using dubious means and also that there was the likelihood if it not being used for dubious purposes.
The Involvement of Aljazeera and the Boris Lozhkin’s implication
Aljazeera, a state-funded global broadcasting network based in Doha Qatar received wind of a possible illegitimacy of the money based on the fact that the money may have been part of a loan which was actually being secured using stolen assets. The President of Ukraine was implicated as a shareholder in the transaction, based on the British Virgin Islands registry. President Poroshenko has since denied every involvement with the funds and the assets.
Using the facts gained from the investigations of the Boris Lozhkin – Kurchenko deal, a call was placed to the President of Ukraine and the following day, there was a statement from Boris Lozhkin talking about his leaving the National Investment Council where he formerly held a position as the presidential financial advisor and the head of the Organisation. Boris Lozhkin also worked as the president’s chief of Staff in the year 2016. The action was so quick that it raised several suspicions and gave several reasons for the information received to be true.
Shortly following the dismissal, there was news about the President’s working visit to Austria where several talks concerning financial and economic issues such as trade, and security were being held. The meeting was said to be held with the Federal President and the chancellor.
The implication of Boris Lozhkin in this deal was of great embarrassment to the government officials especially following his close involvement with the president Poroshenko. It was indeed a blow to Ukraine’s integrity especially at such a crucial time which is being signified by Ukraine’s insistence to eradicate corruption.
A Call to Reopen the Case following Boris Lozhkin’s expulsion
Currently, there is a call to the Ukrainian and Austrian officials to reopen the investigation into the case which began in 2013 and was closed due to a lack of evidence. This is the case regarding the United Media Holdings which was dropped due to the lack of evidence.
Daria Kalenuik, who is from Ukraine’s Anti Corruption Action Centre (ANTAC), made a statement that it was mandatory that strong evidence on the illegal origin of the funds used to buy the media holdings in the year 2013 be found. The involvement of the 28-year-old buyer, Sergei Kurchenko in many of the previous government’s corruption schemes before the uprising in February 2014 makes the information received all the more believable. Kurchenko is an oil and gas tycoon who previously was central to several of the financial decisions of the Yanukovich’s government. There was information which suggested he benefitted greatly from many of the transactions and holdings that were undertaken during that time.
Unfortunately, it was not only Ukraine that got implicated in this. The Forbes corporation, which sold its franchise based in Ukraine to the Boris Lozhkin UMH, also by extension became interested in the case. The deal was supposed to be the dawning of a new era and the bringing of new opportunities to the country and the corporation as a whole. Top Forbes official, Miguel Forbes, after the sake of United Media Holdings to Kurchenko, took the time to give advice it the younger man about the development, as well as the management of media businesses and all of the other external activities. Boris Lozhkin decision to sell and his little involvement in the sale implicated the Forbes corporation should evidence be brought suggesting foul play.
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Boris Lozhkin’s statement on the 2013 deal
Lozhkin dismissed the questions raised on the 2013 deal saying that it was simply the insistence of Kurchenko to have access to the asset that caused the quick closure of the deal. In his statement, no foul play occurred and none should be suspected. Boris Lozhkin also said that every oligarch does indeed have issues in the past which needed to be sorted out, and each of them might have been implicated in a deal or another. But does their past nullify any possibilities of fair and transparent deals in the future? Boris Lozhkin thinks not. In his statement, he went on to say that if that was the case, then the world would constantly be in a vicious cycle of cold wars, civil wars, and unlawful property redistribution. The arrest of certain events that occurred in the past means that currently people had the ability to change and should be given that opportunity. The concerns and transactions of today had nothing to do with the previous years’ skeletons.
Kurchenko currently has fled to Moscow and is now based there, where he is facing and fighting several western sanctions. An arrest warrant from Ukraine has also been sent to him and assets worth hundreds of millions of dollars have been seized by the government. During this investigation, there are several plans to take him into custody upon his presence on Ukrainian soil.
Last year in December, the corporate rights of the Boris Lozhkin’s United Media Holdings was seized by a Kiev Court. The basis for the seizure of the rights revolved around an argument by prosecutors that the $160 million loan deal obviously had several signs of money laundering and the cash was made out of proceeds of crime.
Boris Lozhkin’s United Media Holdings and Aljazeera
This prestigious media house was owned by Boris Lozhkin during the time of the revolution and it seemed to have benefited a great deal from the change in government during the time. It was during that period that the head of the large media house, Boris Lozhkin, had been appointed as the presidential chief of staff by his friend and business partner, the soon to be president Petro Poroshenko.
Aljazeera’s paper which was an investigation titled ‘the Oligarchs’ was released by its investigation unit this year, bringing more truths about the sale of the United Media Holdings. The document included another document which talked about the existence of the 160 million dollar loan received by Kurchenko to close the Boris Lozhkin - Kurchenko UMH sale deal. $50 million was placed as security on the loan. A Ukrainian court order resurfaced during the investigation which stated that the money had been held in three Cyprus companies. These companies were actually part of a large criminal franchise which was made for the embezzlement of up to $1.5 billion for the previous Ukrainian government.
With the points brought out, it could suggest that almost one-third of the money that was raised to pay Boris Lozhkin for the deal was made fraudulently. The money was traced to be picked from a loan which was secured with fraudulent money, thus, the whole transaction was based on illicit funds. The stakeholders in the fight against corruption believe that this is good enough grounds to order a more in-depth investigation into the true source of the money in both Ukraine and Austria.
This blunder, however, is not being blamed on the sellers of the franchise and it is not being assumed that the sellers knew exactly where the money was being brought from. But as is expected, due diligence and protocol are expected to be followed when dealing with large assets such as this one. As a result, questions are being raised about the meticulousness of the background checks done by UMH before its decision to sell.
The president’s involvement in Lozhkin’s deal
President Poroshenko has made it clear that the three percent of the shares that he held in United Media holdings had been sold prior to the sale of the company, thus denying any allegations that he must have benefited from the sale. The information received by Aljazeera stated, however, that on the day of the sale, the President still held his shares in the UMH using a company inside the BVI. The only way that he didn't stand to gain anything from this deal is if Boris Lozhkin removed himself from the British Virgin Islands company before the sale of the UMH. Anything other than that, the president stood a chance of gaining up to $15million from the deal. This amount is three times his initial investment.
Daria Kalenuik continues to ask questions about the failure of the prosecutor general to confiscate the funds received from the UMH deal of 2013 due to the fraudulent nature of the deal. It however seems as if the president's possible involvement is what is delaying the action of the Prosecutor General of Ukraine.
Petro Poroshenko dismisses Boris Lozhkin as part of anti-corruption fight
The President of Ukraine, possibly in a bid to reinforce his stance against corruption went on to dismiss Boris Lozhkin as the head of the National Investment Council following the allegations raised up against him. The president might just be losing many of his previous followers because although he is standing against corruption, several pieces of information regarding his possible involvement in these oligarchic deals have revealed him to be untrustworthy and his stance shaky. The Ukrainian and Austrian prosecutors have refused to comment however on the allegations regarding the president's possible involvement. The president's spokesperson however emphatically stated and continued to state that the president of Ukraine did not own any shares either directly or indirectly in the United Media Holdings at the time of the Boris Lozhkin sale.
The rest of the information by the spokesperson stated that the sale of the president's shares took place in 2012, and then in May 2013, a whole five months before the deal was closed. This, therefore, releases the President from any further investigation, however, Lozhkin remains implicated for the possible part he played in receiving stolen money.
Boris Lozhkin's final statement
No information has been formally sent in regarding Boris Lozhkin and Aljazeera has not received any statement from the said person since his dismissal. Reports that further implicate Boris Lozhkin were released saying that he acquired back 'Our Radio' in 2014 following the unfreezing of Kurchenko's assets received from the sale. There are reports that state that the reacquisition could be payback from Kurchenko following the release of his assets.
Boris Lozhkin's spokeswoman, however, has denied all these accusations, saying that the sale of UMH was supervised and has been cleared by several law firms. She went off to say that currently, a Lozhkin does not own any media assets. Unfortunately, Kurchenko has also said that no taxes have been paid from the money Boris Lozhkin received for the sale of the company which brings up newer charges of possible tax evasion. Boris Lozhkin continues to deny these allegations.