Photographer: AFP via Getty Images
pursuits

Politicians in Graft-Plagued Ukraine Reveal Slew of Riches

Updated on
  • Mandatory asset declarations unearth cash, luxury watches, art
  • New system is crucial to maintaining $17.5 billion bailout

Millions of dollars in cash, valuable artworks, luxury watches and giant mansions. That’s just a taste of the riches Ukrainian officials have revealed in asset declarations that international lenders have demanded to help stamp out decades of post-Soviet corruption.

The deadline for officials right up to President Petro Poroshenko and Prime Minister Volodymyr Hroisman to fill out electronic declarations was Sunday. The system is mandatory for government ministers, lawmakers, judges, prosecutors and tax officers, who risk investigation by anti-corruption authorities if they’re not truthful or can’t explain the legitimate origin of what they disclose.

Swept to power in 2014 after a revolution demanding European levels of transparency, Poroshenko and his government have shown scant progress in fighting graft, drawing anger among voters and frustration among Western backers. Progress on eradicating corruption is key to maintaining a $17.5 billion International Monetary Fund bailout and securing visa-free travel to the European Union for Ukrainians.

“Electronic declaration is the starting point,” said Vitaliy Kasko, a Transparency International board member and former deputy prosecutor general who quit in February citing stalled reforms and a lack of progress on tackling graft. “It could be a powerful tool to fight corruption as officials’ assets had previously been hidden by a fog.”

Billionaire President

Poroshenko, who became a billionaire through his candy business, was last to file his declaration late Sunday. In addition to a large mansion and land plots, he has an art collection that includes paintings by impressionists and surrealists, luxury watches, Mercedes-Benz and Jaguar cars and jewelry. Poroshenko -- who owns more than 100 companies in Ukraine, Hungary, Russia and China -- promised during campaigning to sell his main businesses, but hasn’t done so. He has $27 million in banks and 800,000 hryvnia ($31,300) in cash.

Declarations also highlighted an apparent lack of trust in Ukraine’s currency and financial system. Central bank Governor Valeriya Gontareva, a former investment banker, disclosed deposits of $1.8 million compared with local-currency holdings of just 61,934 hryvnia. Hroisman and his wife said they have 2.3 million hryvnia in banks, plus cash holdings of $1.2 million, 460,000 euros ($505,000) and almost 4 million hryvnia.

The premier, who was a businessman before entering politics in 2006 as mayor of the city of Vinnytsia, also revealed a collection of watches by brands including Rolex and Breguet.

Wealth Gap

Despite uproar over corruption inside ousted leader Viktor Yanukovych’s administration, there have been no high-level prosecutions of his allies who didn’t flee Ukraine. What’s more, officials from the group that replaced them sought to delay the launch of the asset-declaration system, tried to hide statements from the public and remove criminal responsibility for false statements.

While those attempts failed, Ukraine’s ranking in Transparency International’s Corruption Perceptions Index has barely budged. The country’s gross domestic product per capita was $2,115 last year, Europe’s second-lowest after Moldova, World Bank data show. The indicator in neighboring Poland, which was almost level with Ukraine in 1990 before the Soviet collapse, was $12,500.

State corruption is the second-top concern for Ukrainians after the two-year Russian-backed insurgency in the nation’s east, a Sept. 28-Oct. 7 poll showed Monday. Poroshenko’s party had just 10 percent backing, lower than the 13 percent support for ex-Premier Yulia Tymoshenko’s party, according to the survey of 2,400 people for the Canadian International Republican Institute. The margin of error was 2 percentage points.

Tax Scrutiny

Prosecutor General Yuriy Lutsenko said Tuesday that officials who declared more than $100,000 in cash or bank deposits would have their tax affairs scrutinized. Lutsenko and his family declared three apartments, two large houses outside Kiev, two luxury watches, collections of old books and paintings and Mercedes-Benz and BMW cars. He cited the businesses of his wife and son as the source of the assets.

The asset-declaration system isn’t water-tight, according to Vitaliy Shabunin, head of the Anti-Corruption Action Center in Kiev, who cites potential loopholes for some property holdings. Indeed, Lutsenko said the embezzlement of some United Nations funding for the program itself is being investigated. But the endeavor may reveal more than some officials are comfortable with.

“This system isn’t a magic wand that will kill corruption immediately,” Shabunin said. “But it’s an instrument that will show a side of politicians’ lives that they’d like to hide.”

(Updates with prosecutor general in penultimate paragraph.)
    Before it's here, it's on the Bloomberg Terminal. LEARN MORE