Monday, May 23, 2016

How Can Ukraine Recover Its Plundered Assets

KIEV, Ukraine -- Ukraine has suffered from a negligent and criminal administration, then revolution, war, invasion, annexation and a situation close to economic collapse.


Former Ukrainian President Viktor Yanukovich gives a wink to Vladimir Putin at the Kremlin in Moscow on December 17, 2013. The author writes that it is unclear how much senior officials stole during Yanukovych’s four years in office. However, the numbers are substantial. Because officials of the former Ukraine regime have little trust in the Russian legal system, most of their assets are located in Western or offshore jurisdictions.

One can argue that turning to legal solutions for recovery of some of the losses that Ukraine has suffered is not realistic or practical.

While it is true that Ukraine cannot frogmarch members of the previous regime or Russian officials immediately into court and make them pay for Ukraine’s losses, there are legal processes with real-world consequences that are worthwhile to initiate.

At a minimum, pressure can be brought through legal mechanisms to recover assets and encourage payment.

In a recent paper for the Atlantic Council, I look at how Ukraine can potentially recover from the losses it has suffered from kleptocrats and Russia over the last few years.

It is unclear how much senior officials stole during former President Viktor Yanukovych’s four years in office.

However, the numbers are substantial.

(I focus on VAT and public procurement fraud, as these tend to be more traceable in terms of how the fraud was committed and we can more easily put a number on the amount of much of potential plunder; for example, the annual procurement budget was approximately $12 billion.)

Even taking a conservative estimate of the scale of fraud for just VAT and public procurement, one ends up with a figure of $30 billion.

Of course, there were many other forms of state-sponsored fraud.

At first sight, it looks difficult to do much about the stolen state assets and resources.

The former officials are all beyond the reach of the Ukrainian courts, largely on Russian Federation territory, and few of the assets are in Ukraine.

However, the situation is not as bleak as it first appears.

Because the officials of the former regime have little trust in the Russian legal system, most of their assets are located in Western or offshore-related Western jurisdictions.

The location of those assets potentially provides significant leverage with which to bring about asset recovery.

One approach worth considering is deploying a plea bargaining procedure, and Georgia offers a precedent.

In Georgia after the Rose Revolution, former officials were given a choice between criminal prosecution and returning stolen assets.

Approximately $1 billion was recovered.

Ukraine’s legal system is much more heavily compromised than in Georgia after the Rose Revolution.

It would be difficult to create an effective Ukrainian procedure that would permit such recoveries quickly.

However, it may be possible to start with U.S. (and possibly U.K.) procedures being deployed to assist Ukraine since many of the assets of former regime officials are held in Western jurisdictions.

Western states, most notably the United States, may have jurisdiction where assets have been stolen or otherwise illegally obtained.

In plea bargaining procedures, the aim is to first create a credible threat.

This would involve opening up criminal investigations against former officials; seeking red notices making it impossible for them to leave Russia and running in parallel a civil asset recovery operation. 

Having established a credible threat, then a credible offer would be made.

That would involve dropping charges and giving former officials visa rights in the EU and the United States.

In return, the former official would have to surrender at least 80 percent of the illegally obtained assets in his or her possession.

For a former official living in Moscow wondering how long the Putin regime will survive, such a plea bargain may make good sense.

While it is unpalatable that former officials are not held accountable, it may be better for Ukraine if the assets are substantially returned and can be used for the good of the Ukrainian people.

While plea bargaining procedures can work, relying on U.S. procedures is not enough.

At the very least, U.S. officials will need Ukrainian cooperation in providing evidence of stolen assets.

Another concern is whether Western states would be willing to help given the danger that returned assets will only be stolen again.

The underlying problem is a Ukrainian one: the extent to which the Ukrainian political and bureaucratic class is still substantially controlled by individuals who continue to steal.

This Ukrainian reality has to be faced if Western cooperation is going to be extended and be effective. 

Turning to the losses from occupation by the Russian Federation, Ukraine should do two things.

First, Ukraine should properly account for its losses.

While Ukraine is unlikely to obtain recovery immediately, it is worth fully accounting for the losses of invasion and occupation, loss of life, property, destruction of businesses and infrastructure and losses of internally displaced people.

At some point, there will be a settlement.

By establishing the losses that that Ukraine has suffered, Kiev will have a number to negotiate with in future settlement negotiations.

To underpin the credibility of the process, Ukraine should establish an international accounting board which will verify and certify the losses.

Second, Ukraine should focus on proceedings before the European Court of Human Rights (ECHR) in Strasbourg, France.

The European Convention on Human Rights gives Ukraine the means to account for its losses before an international tribunal.

Furthermore, there is relevant and helpful case law as a result of a series of cases over the occupation of northern Cyprus.

Ukraine has already launched two cases before the ECHR, but the country should take a more strategic approach.

As the international accounting process gets under way, it should launch a series of cases, including ones for internally displaced persons in the Donbas and small business owners in Crimea, and have a rolling series of cases.

This approach allows cases to move speedily toward the ECHR, generates case law, and builds pressure for a settlement.

None of these solutions is immediate, but it does build pressure on former officials and the Russian Federation and it moves Ukraine forward to a point that recovery becomes possible.

Source: Newsweek

Sunday, May 22, 2016

European Security Group Mulls Police Mission To Ukraine

WASHINGTON, DC -- The Organization for Security and Cooperation in Europe is considering sending an armed police mission to help conduct elections in conflict-torn eastern Ukraine, if there is agreement on all sides.


Lamberto Zannier

OSCE Secretary General Lamberto Zannier told the Associated Press in an interview Thursday that his group was ready to send hundreds of policemen, potentially armed, to ensure the vote takes place in a secure and safe atmosphere.

"It would be a police operation to help maintain law and order in this area and ... to help provide a safe environment for the elections to take place," Zannier told the AP.

As part of an internationally brokered peace agreement, Ukraine must hold local elections in two eastern regions controlled by Russian-backed rebels, but progress on ending the two-year conflict that has already killed more than 9,300 people has been slow.

Moscow says Ukraine must pass the necessary legislation to conduct the vote.

Kiev insists the separatists must first cease all hostilities and pull back weapons and Ukraine must restore control over its border with Russia.

The sides are also at odds over the degree of autonomy that will be granted to the separatist regions and the details of a prisoner exchange and amnesty for the rebels.

Zannier said the mission, which has been requested by Ukrainian President Petro Poroshenko, could work alongside the local police force in the Donetsk and Luhansk regions to prevent criminal activity and help international observers monitor the vote.

The mission would only be able to deploy after both sides fully commit to a ceasefire.

"It is a complicated scenario, but it's certainly something that we can do if, as I say, everybody agrees," Zannier said.

Russia, however, has spoken against such a mission, with Foreign Minister Sergey Lavrov calling the issue "an artificial problem" and saying unarmed monitors of OSCE would be enough for the vote. 

Ukranian Ambassador Valeriy Chaly told the AP, "As of today, it is impossible to conduct normal elections."

Chaly added: "Russia will continue playing its game and try to do what it wants to do — for Ukraine to have this cancerous tumor. ... This position is unacceptable."

Source: AP

Australian Law Firm Sues Russia For Downing Of Flight MH17 Over Ukraine In 2014

SYDNEY, Australia -- An Australian law firm has filed a claim against Russia and President Putin seeking millions for each passenger killed in the downing of Malaysian Airlines flight MH17 over Ukraine in 2014.


All 298 people on board died.

Relatives of MH17 victims intend to seek compensation before the European Court of Human Rights, according to Saturday's edition of the Sydney Morning Herald newspaper.

The Malaysian Airlines plane was shot down while en route from Amsterdam to Kuala Lumpur in 2014, with 298 people on board.

The aircraft was flying above eastern Ukraine at a time of heavy fighting between pro-Russian rebels and Ukrainian forces.

A Dutch-led team of international investigators concluded that it was shot down by a surface-to-air missile.

The Dutch Safety Board, however, was not able to say who fired the missile.

Many Western officials and experts have blamed pro-Russian rebels in eastern Ukraine for shooting down the civilian plane.

Damages as deterrent 

According to the report, the Sydney-based law firm LHD named Russian President Vladimir Putin and the Russian Federation as respondents for their damages claim.

The firm represents 33 relatives of victims, including eight from Australia and one from New Zealand.

The lawyers intend to seek 10 million Australian dollars ($7.2 million) per victim.

"My clients want accountability for the deed," said LHD co-associate Jerry Skinner.

"They want enough money to reflect that the Russians take this seriously and it serves as a deterrent," he told the Herald.

No contact from Moscow 

The lawsuit claims that Russia attempted to hide its involvement in the tragedy.

The Kremlin failed to conduct an internal investigation, refused to help in cockpit reconstruction and allegedly had a hacker group attack the website of Western investigators, according to papers filed by LHD.

Skinner added that he had urged Russia to discuss the terms.

However, he has heard "nothing from Russia, from their embassy or from the contact points ... to indicate they are willing to talk about negotiating."

'Pointless to comment' 

Responding to Saturday reports, Kremlin said that it had no information about the claim targeting the country and the president.

Deputy Justice Minister Georgy Matiushkin said during an interview with radio station Echo of Moscow that it was "pointless to comment" on the issue at this point.

Any lawsuit addressed to the European Court of Human Rights would only exist "when communicated officially, and that hasn't happened so far," said Matiushkin, who also serves as Moscow's envoy at the Strasbourg court.

Source: Deutsche Welle

Russian Performance Artist Convicted Of Vandalism For Pro-Ukraine Protest

MOSCOW, Russia -- Russian performance artist Pyotr Pavlensky was convicted in a Moscow court of vandalism for a 2014 pro-Ukraine protest in St. Petersburg.


Russian performance artist was convicted thursday of vandalism during a 2014 pro-Ukraine protest in St. Petersburg, and awaits a trial for allegedly setting the doors of Moscow's Federal Security Service on fire.

Pavlensky, 32, and several other artists, built a barricade using found material, then set it afire, on St. Petersburg's Tripartite Bridge while hoisting Ukrainian flags.

Their performance was in emulation and support of pro-Western demonstrators in Kiev who burned tires to create smokescreens against snipers while protesting the government of eventually deposed president Viktor Yankovich.

 Pavlensky was sentenced to a 16-month prison term Thursday but the case's statute of limitations had expired.

He remains in custody, awaiting another trial in which he is accused of setting fire to the main doors of Russia's Federal Security Service, or FSB, in 2015.

He was arrested and charged with damaging an object of cultural heritage; the maximum penalty for the crime is three years' imprisonment.

The artist is regarded as a provocateur in a country where politicized art is often met with government censorship.

Pavlensky sewed his lips shut in 2013 after members of the band Pussy Riot were imprisoned, nailed his testicles to the pavement in front of Moscow's Lenin Mausoleum in 2013 and wrapped himself in barbed wire at St. Petersburg's Legislative Assembly.

Each act was a protest against the government's limitations on citizen's rights.

After the attempted burning of the FSB doors, Pavlensky said in a statement, "The FSB acts using a method of uninterrupted terror, and maintains power over 146 million people. Fear turns free people into a sticky mass of uncoordinated bodies."

Source: UPI

Orbita, A Ghost Of Chernobyl In The Heart Of Ukraine

ORBITA, Ukraine -- Missing from maps, a ghost town hides in the pine forests of central Ukraine, abandoned after the Chernobyl nuclear disaster but now filling with families fleeing the pro-Russian eastern separatist war.


Orbita, a town whose existence was never registered by the Soviet authorities, was meant to house 20,000 workers at a nuclear power plant whose construction was abandoned after the Chernobyl disaster of April 1986.

The road through the woods that leads to the site is dilapidated, the sign marking the town’s entrance covered with rust, but two small playgrounds next to the abandoned buildings are clean and tidy.

Alina, a blonde 10-year-old with a grin and few worries on her mind, is playing next to her grandfather Vladimir Limarchenko, a man who has lived through many hard times.

Her family left their home in the former Soviet republic’s industrial heartland almost as soon as the fighting erupted two years ago, in a conflict which has since killed more than 9,300 people and forced 1.7 million from their homes.

“We did not know where to go. We just took a train to central Ukraine, where our relatives live. And by chance our fellow traveller at the station told us about Orbita,” said Limarchenko, who worked as a mechanic before retiring.

His new neighbour Vasiliy came to Orbita from the pro-Russian separatist city of Luhansk a few months ago and is now renovating a damp apartment in a five-storey building that stood empty for many years.

“My home was seized by the rebels so I have nowhere to return to.

Life is very expensive everywhere, but here I took an apartment on credit for a very low price,” said the 36-year-old, who lives on a disability pension.

“It is better to live in the forest than under fire,” he added.

Eight families from various parts of the war-scarred east have relocated to Orbita, attracted by its cheap prices and calm.

It costs less than $1,500 (1,300 euros) to buy one of the Soviet-era apartments, a pittance compared to the average $40,000 that people pay in the capital Kiev.

Orbita’s tale is tightly intertwined with that of Chernobyl, whose explosion spewed radiation across nearly three-quarters of Europe and left several thousand people dead or dying.

Plans for the town were initially drafted in 1970, the year ground was broken for the Chyhyryn nuclear power plant, whose construction was never completed.

Authorities of then-Soviet Ukraine planned to make Orbita the home of engineers from the plant – in what was intended to be the equivalent of Pripyat, a city of 48,000 built three kilometres (two miles) from Chernobyl.

In the 1980s, two nine-storey and two five-storey apartment buildings, a department store and all the necessary infrastructure were built.

But the disaster at Chernobyl, the world’s worst nuclear accident, meant plans to complete the Chyhyryn plant were quickly abandoned and because the Communist party had not yet opened an outpost in the town, it was not considered to exist officially and was not included on maps of the region.

Residents of Orbita employed to make preparations for the opening of the power plant lost their jobs and the town was quickly deserted, becoming a silent monument to the shock and terror caused by Chernobyl that reverberated through corridors of power in the Kremlin and around the world.

“There has been no heating or drinkable water here for a very long time,” Alina’s grandfather said. “We are similar to Chernobyl, except that there is no radiation. On the contrary – we have clean forest air,” he added.

The town, which is proving a draw for the poor from other parts of Ukraine, is currently home to about 50 families who are living in the two five-storey apartment blocks.

Most are elderly, live without heating and gas and have to trek to a nearby village for water.

They survive, for the most part, on meagre pensions and vegetables grown in their gardens.

But their hardscrabble existence is not made any easier by another nuisance – curious tourists who come to snap pictures of the peculiar town and who have decided to make it their home.

Kristina, a 19-year-old student from Uzhgorod, a city near Ukraine’s western border with Slovakia, came with a group of friends looking for a thrill.

“We wanted to visit Chernobyl, but it is very expensive. You can get here for free and there is no radiation,” she said.

“I was intrigued by the atmosphere of this ghost town,” she admits.

“It is like being in a post-apocalyptic movie.”

But Limarchenko is hardly impressed.

“Do we look like ghosts?” he asks glumly.

“The real ghost towns are now in the separatist east, in the places we came from.”

Source: AFP

Thursday, May 19, 2016

Ukraine Conflict: More Cases Of Trafficking And Torture Than Previously Thought

KIEV, Ukraine -- Human rights groups have received thousands of reports of ill treatment from both the pro-Russian and Ukrainian sides in the ongoing conflict.


Representatives are due to meet in Minsk for the first time in weeks.

German broadcaster "Deutschlandfunk" reported on Wednesday that more than 4,000 cases of ill treatment and trafficking have been documented by human rights organizations during the ongoing Ukrainian conflict.

The figure is likely to be even higher, however, with civilians as well as members of military associations among the victims.

"We can show that 4,000 people have been held hostage last summer," said Oleksandra Matwitschuk of the Centre for Civil Liberty.

According to the report, the vast majority of disappearances and ill treatment took place at the hands of pro-Russian separatists.

Russian citizens - 58 of whom were identified by name - were also arrested and suffered ill treatment, the Center said.

Enforced disappearances and torture by the Ukrainian side were also reported, although there is no systematic recording process in place.

Converted torture prisons 

Interviews with victims and witnesses, which were recorded by a composite of 17 Ukrainian human rights organizations, will be forwarded to the International Criminal Tribunal in The Hague.

At least 79 torture prisons have been identified by human rights organizations in the so-called people's republics of Luhansk and Donetsk, with the engineering institute of the University of Luhansk also being converted into an illegal prison.

Social Democrat (SPD) and Russia representative for the German government, Gernot Erler, responded to the figures, saying he hoped for a legal line of action.

"Exemption from punishment must be avoided," Erler told "Deutschlandfunk."

Contact Group meets in Minsk 

The report on Wednesday came as Minsk prepared to hold another round of meetings on settling the Ukraine crisis.

The Contact Group, which consists of representatives from Ukraine, Russia, the Organization for Security and Co-operation in Europe (OSCE) and the self-proclaimed republics, last met in the Belarusian capital on April 29.

More than a year has passed since Ukraine and pro-Russian separatists from Donetsk and Luhansk agreed to a settlement in Minsk which contained 13 provisions.

The settlement is actually known as Minsk II, because the first ceasefire lasted only a few months.

Although there are currently no large-scale battles being fought, there is also no total ceasefire.

Two-year conflict 

The crisis first erupted following a deadly popular uprising that started in the winter of 2013.

The revolt ultimately ousted former pro-Russian President Viktor Yanukovych, sparking a pro-Russian separatist insurgency in eastern Ukraine.

Russia followed up by annexing the Crimean Peninsula in March 2014.

Western allies have repeatedly accused Moscow of supporting pro-Russian separatists in the region with troops and weapons - claims which Russia continues to deny.

According to UN figures, almost one million people have been internally displaced by the conflict and more than 500,000 children directly affected.

Source: Deutsche Welle

Memo To Ukraine And The West: Beware Of Unrealistic Peace Plans. The Kremlin Will Outplay You Every Time

WASHINGTON, DC -- The latest Normandy Four meeting on May 11 in Berlin did not result in any major breakthroughs to end the stalemate in Ukraine.


Russian President Vladimir Putin takes live questions on April 14.

Russia and Ukraine agreed to create demilitarized zones in separatist-held areas of eastern Ukraine, enhance information-sharing, and halt military exercises along the contact line, but these steps will not break the current deadlock in implementing the Minsk ceasefire agreement.

No progress was made on the most controversial issues, namely holding local elections and inserting armed police to accompany OSCE observers in the Donbass.

In recent months, the idea of sending an OSCE armed police mission to the Donbass has become Kiev’s idée fixe in the same way that holding local elections in the Donbass has become the West’s.

Both believe that their proposals can give the stalled Minsk agreement a boost, or at least provide strong arguments to extend sanctions against Russia, which are set to expire in July.

Minsk stipulates that Kiev must hold local elections in the separatist-controlled areas of Ukraine, which Ukraine has resisted for a number of legitimate reasons.

France and Germany, both eager to ease EU sanctions on Russia and get back to business as usual, have pressed Kiev to hold the elections this summer.

The idea that Kiev should adopt a law on local elections to undercut the arguments of those who would like to lift Russian sanctions finds support not only in the EU, but also from former US Ambassador to Ukraine John E. Herbst.

He argues that Kiev can prescribe all the necessary safeguards into law, including those that require the withdrawal of Russian troops and that ensure robust OSCE and Ukrainian election monitoring.

“If these conditions are not met, Ukraine is under no Minsk-related obligation to hold elections,” he writes.

In this scenario, Russia would either hold elections in accordance with Ukrainian legislation and OSCE standards, or take full responsibility for the failure of Minsk and extension of the sanctions.

In the world of common sense, such a plan should work, but Ukraine’s experience proves that common sense often doesn’t work when Russia is involved.

And no safeguards will work if the guarantors lack political will.

Ukraine has been down this road before.

In 1994, Ukraine included a safeguard in the law on accession to the Nuclear Non-Proliferation Treaty.

The sixth paragraph states that the treaty comes into force after the nuclear powers signed corresponding international legal documents providing security guarantees to Ukraine.

Only then Russia, the United States, and the United Kingdom signed the Budapest Memorandum, and it is well known how ineffective this safeguard turned out to be.

Any safeguards in the local elections law will likely suffer the same fate.

Moscow needs the electoral law as an excuse to schedule sham elections to be held by its proxies.

As for the West, the United States and the EU may criticize the fraudulent elections, but Ukraine cannot be sure that its Western counterparts will be resolute enough to admit that Russia disrupted the peace process.

Plus, there is no guarantee that Ukraine’s adoption of a local elections law will help extend sanctions against Russia.

On the contrary, if pseudo-elections are held, Putin verstehers in the EU may more insistently call for sanctions relief, pointing to the alleged “significant progress” in the Minsk implementation.

In fairness, Kiev’s idée fixe won’t facilitate the Minsk process any better than the West’s.

For several months, Ukraine’s authorities have been actively promoting the idea of deploying a new OSCE armed police mission "aimed at ensuring control over the ceasefire, withdrawal of Russian troops and Ukraine-Russia border.”

Such a mission is also expected to “guarantee preparation and holding of elections," as well as transfer "power to officials chosen by democratic, fair and transparent elections under the Ukrainian legislation.”

This is nonsense.

First, the functions that Kiev expects from the OSCE police mission match those of a UN peacekeeping mission.

The OSCE doesn’t have the relevant mandate, experience, or resources in this case.

Second, the Kremlin has agreed to consider only the option of providing light arms to OSCE monitors at the contact line.

Third, even if Moscow agrees, it may backfire.

It is possible that Russia and its satellites from the Collective Security Treaty Organization will want armed representatives in the Donbass.

France, Germany, and other EU member states will hesitate to send thousands of their own armed men to the Donbass, so they may readily accept the CSTO’s proposal.

If Kiev disagrees, it may be accused of sabotaging the initiative and disrupting Minsk.

If it agrees, it may get CSTO peacekeepers under the guise of an OSCE police mission.

Kiev’s initiative will most likely result in a "hybrid" compromise—some reinforcement of the current OSCE mission with light arms.

Insufficient to provide actual security, but sufficient for Berlin, Moscow, and Paris to say that Ukraine’s demand has been satisfied, and it’s now safe enough to hold local elections.

The West and Ukraine should be cautious not to fall into the traps created by their own efforts by insisting on their current idées fixes.

Rather than promoting unrealistic plans aimed at outplaying such an experienced trickster as the Kremlin, the West and Ukraine would be better served by insisting on step-by-step implementation of the Minsk agreements, starting with the comprehensive ceasefire.

And if it fails, then together they must develop a realistic alternative.

Source: Atlantic Council