U.S. Firms Hired For Probe

KIEV, Ukraine -- Ukrainian President Viktor Yanukovych's administration has hired a “dream team” of U.S. lawyers and private investigators with a track record of defending the country’s oligarchs and even ex-President Leonid Kuchma.

Criminal defense lawyer Plato Cacheris.

Their current mission: To uncover proof of massive abuse by the government’s No. 1 foe, former premier and opposition leader Yulia Tymoshenko, whom top administration officials have already accused of misspending billions of dollars in state funds.

The government hired high-profile U.S. law firm Trout Cacheris on May 5 to audit Ukraine’s spending under Tymoshenko’s management between 2008 and 2010. Trout Cacheris’s star is criminal defense lawyer Plato Cacheris. In addition to defending Monica Lewinsky in ex-U.S. President Bill Clinton’s sex scandal, Cacheris has also represented Aldrich Ames, the CIA agent who was caught passing on secrets to the Soviet KGB spy agency.

For its part, Trout has brought in two other U.S. firms to help produce results for Prime Minister Mykola Azarov. Leading global detective company Kroll has been contracted to assist, as has top-notch international law firm, Akin Gump Strauss Hauer & Feld, LLP.

None of the firms would talk to the Kyiv Post about their contract with the Ukrainian government or what instructions they were given about how to conduct the investigation.

Back on the payroll

Kroll has previously tracked down hidden assets of former Haitian President Jean-Claude Duvalier and disclosed Saddam Hussein’s siphoning of Iraqi money.

Their work in Ukraine has involved the highest ranks of power as well.

In 2001, the U.S. detective agency was hired by the Labor Ukraine party, then backed by billionaire Viktor Pinchuk, the son-in-law of then President Kuchma. The investigation was supposed to focus on who killed journalist Georgy Gongadze on Sept. 16, 2000. Its results were widely dismissed as an attempt to whitewash the case and absolve Kuchma from suspicion.

According to a report by the Jamestown Foundation, an American think tank, on Oct. 2, 2001, Kroll “failed” to conduct a fair and full investigation.

Kroll summed up its investigation then by saying that it was impossible to state whether secret recordings made by Kuchma presidential bodyguard Mykola Melnychenko were authentic, and that it had found no other circumstances that might show Kuchma’s complicity in the Gongadze murder.

The tapes allegedly recorded hundreds of hours of conversations between Kuchma and associates in which they plotted various crimes – accusations they have denied steadfastly and for which Ukraine’s corrupt law enforcers have found no corroborating evidence.

Akin Gump has 14 offices around the world and employs a team of multilingual lawyers and political insiders. Its co-founder, Robert S. Strauss, has advised and represented three American presidents: Jimmy Carter, Ronald Reagan and George H.W. Bush. Under the elder Bush, Strauss served as an ambassador to the Soviet Union and then Russia.

In Ukraine, Akin Gump lawyers had for years represented the interests of two of Ukraine’s richest oligarchs and strongest backers of Yanukovych: Party of Regions deputy, Rinat Akhmetov, and gas tycoon Dmytro Firtash.

The law firm has defended the reputations of these men, who got rich in the years of crony capitalism that followed Ukrainian independence. Sometimes the firms pressured or threatened lawsuits against journalists who wrote critical reports.

Tailor-made results?

The hiring represents yet another of many instances in which Ukraine’s government has turned to outsiders to solve problems it could not do alone. It has happened in criminal cases, in budget matters and in the acceptance of billions of dollars in foreign aid.

This time, the outside help is supposed “to identify any areas that may have hindered the country’s ability to realize its economic potential,” according to a statement by Trout on May 12.

The results of the investigation are expected by Sept. 1.

Even before the investigation is done, however, Azarov has already alleged that his predecessors misspent $12.4 billion in state money. Administration officials allege mismanagement at state monopolies, in government purchases of goods and services and in how value-added taxes were refunded to companies during the last two years.

Hryhoriy Nemyria, one of Tymoshenko’s top aides, dismissed the hiring as “a tailor-made audit” and “an instrument to scare and persecute political opponents.”

The scope of the probe suggests political motivations. Investigators, evidently, will not probe any government actions when Yanukovych was prime minister, from 2002-2004 and 2006-2007.

Trout is responsible for investigating how Tymoshenko’s team spent foreign loans from the International Monetary Fund, according to Serhiy Lyovochkin, head of the presidential administration.

The use of proceeds from the sale ofUkraine’s emission quotas under the Kyoto protocol -- $375 million -- will also be scrutinized.

None of the companies contracted have auditing services among their specialization, and it is not clear what local firms they will hire to assist.

Serhiy Vlasenko, a lawyer and a lawmaker in Tymoshenko’s party, also finds fault with the arrangement.

“Lawyers don’t do audits,” Vlasenko said. “It’s the same as hiring builders to do an audit.”

But Lyovochkin defended the government’s actions. “The audit will be conducted not just by this firm [Trout Cacheris,] but also by someone from the Big Four [international audit moguls] and relevant international organizations,” Lyovochkin said. He also suggested that “their style of audit is more investigative, unlike the financial audit conducted by the Big Four.”

Many experts contacted by the Kyiv Post agreed with Vlasenko’s assessment that the findings of the foreign firms won’t, by themselves, have legal standing in Ukraine.

“It will bear a psychological and moral aspect,” said Vasyl Yurchyshyn, head of the economy section at Kyiv’s Razumkov think tank. “Because it has this politicized undertone, it’s unlikely to have legal consequences for anyone. But the current government should be prepared that when the next one comes in power, they will do the same against them.”

No senior politician, apart from convicted ex-Ukrainian Prime Minister Pavlo Lazarenko, has ever been prosecuted and convicted in a nation that reeks of corruption at all levels of government and business. While political rivals routinely accuse each other of wrongdoing, they appear to adhere to an informal rule of mutual protection from criminal prosecution.

And Lyovochkin even suggested that no criminal prosecution would result from the probe.

“Their [Trout Cacheris] task is not to catch someone red-handed, but to assess where we are at and make recommendations to avoid the same mistakes in the future and devise the most effective anti-crisis program.”

Another source close to Yanukovych, who asked for anonymity because of views that run counter to official administration policy, said that investigators already have enough information against Tymoshenko’s government.

“We need Trout so Yulia [Tymoshenko] doesn’t run away,” the source said. “They will provide enough information to issue Interpol’s ‘red cards,’ [calling for immediate arrest] so that she could be detained anywhere apart from Russia and China.”

Source: Kyiv Post