EU sanctions against Ukraine's former president have been in place for five years. As criminal investigations drag on, the chances of returning the millions in stolen money to its rightful owners are rapidly dwindling.
The European Union has extended the sanctions against Viktor Yanukovych and his confidants for another year. On March 5, 2014, the Council of the European Union froze the accounts of Ukraine's former president, his sons and 15 other people from his inner circle.
The EU blames Yanukovych and his allies for human rights violations in Ukraine and has accused him of illegal enrichment. Those sanctioned fled to Russia after the bloody crackdown on Euromaidan protesters, but experts say the majority of their secretly amassed fortune is located in the West. That is why Western state authorities are working to find the money and restore it to its rightful owners in Ukraine. In addition to the EU, Switzerland and Liechtenstein have also placed sanctions on Yanukovych and his allies.
List of sanctions getting shorter
Only a fraction of the suspected Yanukovych millions have been found thus far. Most of the money was frozen in accounts in Switzerland — around 145 million Swiss francs (€128 million, $144 million), the Swiss Office of Justice told DW. But these funds can only be seized and returned to Ukraine once its illegal origins have been proven in Ukrainian courts. So far, not a single case of alleged illegal enrichment has resulted in charges. In many cases, as DW's searches in the Ukrainian court register show, it took two to three years for Ukrainian investigating authorities to even ask their Western European colleagues for any information about cash flows and accounts.
As the investigations in Ukraine have dragged on, it has given several of those affected the opportunity to successfully file suit against the account freezes before the European Court of Justice. Indeed, the EU sanctions list has shrunk by a third over the past five years.
The Ukrainian judiciary likely also shares some of the blame for the sluggish investigations. Court documents evaluated by DW show that Ukrainian judges, who were appointed under Yanukovych, rejected several applications by the public prosecutor's office for access to bank documents abroad or for account freezes, sometimes with outlandish justifications. In one such instance, an investigator was denied access to bank documents in Switzerland because his application was apparently accompanied by illegible copies of documents.
Another hurdle standing in the way of Ukrainian authorities is the dwindling amount of Yanukovych money that is left. Holders of blocked accounts can use frozen funds to pay their lawyers assisting them in legal challenges to the sanctions. Yanukovych and his son Olexandr have hired a whole team of British lawyers charging 1,500 pounds (€1,745) per hour, DW's examination of files from the European Court of Justice has shown.
Yanukovych money in Germany
Some EU countries, including Germany, are finding it difficult to track down any Yanukovych money at all. Since 2014, DW has reported several times on transactions that could be linked back to Ukrainians on the EU sanctions list, such as oligarch Serhiy Kurchenko and Oleksiy Azarov, son of Yanukovych's prime minister, Mykola Azarov, and a former member of parliament. The two men purchased the petrol station network Sparschweingas in Germany in 2012.
According to company registers, they hid their names as owners behind a construct of shell companies in the Netherlands, Austria and various tax havens. It took German investigators more than two years to find out who the owners behind the company network were.
By this time, the European Council had already removed Azarov's name from the sanctions list, as Ukrainian investigators had long been unable to provide any indication that his funds had criminal origins. The money laundering investigations in Germany were stopped for this reason as well. Things only picked up again in 2017.
Millions from post trading in Kyiv?
Ukrainian investigators learned about the ties that Yanukovych's allies had to German business via clues from Switzerland. According to a decision reviewed by DW, a court in Kyiv ordered the blocking of 10 accounts in Switzerland on August 15, 2017, to which almost $18 million had been paid via Oleksiy Azarov's shell companies. Investigators suspect he received this money as a bribe from another confidant of Yanukovych, Andriy Klyuyev.
Klyuyev was named deputy prime minister in the cabinet of Oleksiy Azarovs father, Mykola, in 2010. The day before his appointment, according to the files, a Cypriot shell company owned by Oleksiy Azarov bought one of Klyuyev's Ukrainian companies for roughly $5,000. Two months later, Oleksiy Azarov sold the company back to another shell company owned by Klyuyev for $17.8 million.
When the court order to freeze these funds was issued, only $600,000 was available in the Swiss accounts. Investigators later learned that Oleksiy Azarov had used the rest of the funds to buy real estate in the EU and, together with the oligarch Kurchenko, Sparschweingas in Germany. Kurchenko's money, according to investigators, came from illegal fuel deals. The Ukrainians involved were not available for comment.
Tricks against EU sanctions
Today Kurchenko's and Oleksiy Azarov's German companies are bankrupt. Nevertheless, the petrol station business is flourishing — it just runs through other companies. The business was partly taken over by Kurchenko's friend Kostyantin Pivovarov. As can be seen from the company books, the business runs through Garda Handels- und Beteiligungs GmbH, a Pivovarov company in Austria.
Five years ago he received this company, together with numerous properties belonging to it in Austria and Italy, as a gift from Oleksiy Azarov. The handover, according to a Ukrainian court file reviewed by DW, took place on February 21, 2014 — one day after the crackdown on Maidan protesters and just a few days before the EU imposed sanctions on Oleksiy Azarov.