Can Lazarenko Hurt Tymoshenko's Bid?

KIEV, Ukraine -- Behind almost every successful politician and businessperson is a mentor who helped put the person on the path to fame and fortune. Yulia Tymoshenko had one too: Pavlo Lazarenko, convicted U.S. felon.

Pavlo Lazarenko, convicted U.S. felon.

Lazarenko served under ex-President Leonid Kuchma as prime minister from 1996-1997. He is now serving an eight-year prison sentence in America for laundering money, part of the ill-gotten fortune he amassed in the nation that he allegedly ran like a mafia boss.

In the early 1990s, Lazarenko helped make Tymoshenko, the current prime minister, a big-time player in the lucrative gas-trading business and also gave the rising star a political boost.

Now, as Tymoshenko is one of two front-runners in the Jan. 17 presidential election, the question is: Can the ex-prime minister hurt the current prime minister politically?

Lazarenko has hinted that he can, telling leading Inter TV channel in 2005 that he could “turn much in the arrangement of political forces in Ukraine upside down.” But Tymoshenko has kept her distance and dismissed attempts to tie her to his wrongdoing as merely more scurrilous attacks on her from her enemies.

The consensus seems to side with Tymoshenko – that Lazarenko is harmless to her now -- even among those who might wish otherwise.

“Lazarenko cannot significantly influence the course of political events in the country,” Oleh Lytvak, who coordinates law-enforcement activities for the Presidential Secretariat, told UNIAN news agency on Dec. 1.

Lytvak would be in a position to know more than most. As acting prosecutor general during 1997-98, Lytvak worked on the Lazarenko case.

“Much has changed during his absence,” Lytvak told UNIAN. “Lazarenko today is correctly associated with past criminal acts. The only thing he could do if he returned would be to start talking about his unpunished accomplices. He has that right. But then the Prosecutor General’s Office would be obliged to open an official investigation, a full, all-encompassing and objective one.”

Taras Berezovets, a political analyst at the Kyiv-based Politech think tank and a campaign adviser for Tymoshenko’s eponymous bloc in parliament, is even more certain.

“Many young voters don’t even know who Lazarenko is,” Berezovets said. “Tymoshenko’s relationship with Lazarenko is not a stain on her political career. She has proven that over and over again during the years as an opposition leader and running in parliamentary elections.”

A third voice echoing this sentiment is that of Serhiy Taran, director of the International Democracy Institute, a Kyiv-based think tank. He said Tymoshenko’s business and political dealings with Lazarenko took place too long ago to matter today. “If there had been documented evidence of wrongdoing between Lazarenko and Tymoshenko, state prosecutors would have used it against her during the early 2000s,” Taran said.

The decade-long court battle between American law enforcers and Pavlo Lazarenko came closer to an end on Nov. 18, when a U.S. appeals court judge shaved 11 months off the ex-prime minister’s prison sentence.

The presiding U.S. judge hasn’t decided whether the convict will spend an additional 18-32 months in a prison or confined at his San Francisco Bay Area home, wearing an electronic bracelet. Lazarenko also has yet to cough up millions of dollars he accumulated in Ukraine.

One thing is clear: Tymoshenko and Lazarenko go way back.

Tymoshenko earned a fortune during the crony capitalist 1990s, when she headed a natural gas trading company, United Energy Systems of Ukraine. The company profited handsomely from state contracts awarded by then-Prime Minister Lazarenko.

Documents leaked by Ukrainian prosecutors over the years suggest that Tymoshenko’s companies made payments to Lazarenko-controlled companies in return for lucrative gas contracts. And it was precisely for laundering dirty money from such dealings that U.S. officials convicted Lazarenko, whose activities extended into U.S. jurisdiction.

U.S. prosecutors are proud of the conviction. “The sentence against Lazarenko should send a strong message to corrupt foreign public officials,” said First Assistant U.S. Attorney David Anderson in a statement issued by the Justice Department on Nov. 19.

Lazarenko has vowed over the years to return to Ukraine in order to clear his name. He said so again on Nov. 18. “After my release I will go to Ukraine to work hard and work honestly,” Lazarenko said. “In the past 10 years I have come to a full understanding. Every way that I personally could punish myself, I have punished myself.”

Some doubt he will ever come back, noting that he is wanted for serious crimes, including murder.

Ukrainian prosecutors in 2000 said they suspected Lazarenko of being involved in the 1996 murder of parliament deputy Yevhen Shcherban, the 1998 slaying of central bank chairman Vadym Hetman, abuse of office, extortion, fraud, embezzlement and theft of state property. Lazarenko has denied all the charges, claiming they are politically motivated.

Lazarenko served as energy minister and deputy first prime minister years before Kuchma tagged him to become premier in June 1996. Lazarenko had by then amassed a fortune buying and selling energy contracts and arranging trades with state enterprises buying natural gas at state-government-subsidized rates.

Lazarenko was able to leverage illegally procured gas into virtually any commodity through unregistered barter transactions; he could then trade the goods on the open world market.

Kuchma, Lazarenko and Tymoshenko are from Dnipropetrovsk, where in the 1990s, businessmen and bankers teamed up with public officials to devise ways for bankrupt state and commercial enterprises to purchase cheap Russian gas. Regional suppliers set up payment in whatever way the former Soviet plants could: cash, goods or shares.

Tymoshenko has for years denied wrongdoing in her business and political relationship with Lazarenko.

The topic of Tymoshenko’s business dealings with Lazarenko has not been an issue during the years-long trial, where the star witness had been former Lazarenko associate, Petro Kyrychenko, the Ukrainian businessman from California who, in the early 1990s, helped Lazarenko set up foreign bank accounts. FBI agents recreated the web of Lazarenko’s bank transfers from evidence found in Kyrychenko’s garbage.

With Kyrychenko’s help, U.S. prosecutors untangled a complex series of transactions involving banks in Poland, Switzerland and Antigua, and ending up in banks in San Francisco. The money laundered had been extorted by Lazarenko, prosecution lawyers said.

Lazarenko timeline

May 1996 – appointed prime minister

July 1997 – resigns under pressure

Dec. 1998 – detained in Switzerland

Feb. 1999 – arrested in New York

June 2000 – convicted in Switzerland (in absentia)

June 2004 – convicted in the United States of money laundering and fraud

Aug. 2006 – sentenced to nine years in prison

Nov. 2009 – resentenced to eight years in prison

Source: Kyiv Post

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