Europe
4:07 pm
Thu February 27, 2014

With Billions In Looted Cash, What Ukrainian Politician Isn't Corrupt?

Originally published on Thu February 27, 2014 7:57 pm

Transcript

MELISSA BLOCK, HOST:

Public outrage at corruption in Ukraine was a driving force behind the protests that lead to the ouster of President Yanukovych. Ukraine is considered among the most corrupt countries in the world. The transparency international index, which measures how corrupt the public sector is perceived to be, ranks Ukraine 144th out of 177 countries. Taras Kuzio joins me to talk about corruption in Ukraine.

He's with the Canadian Institute of Ukrainian Studies at the University of Alberta. Welcome to the program.

TARAS KUZIO: Hi.

BLOCK: When did corruption in Ukraine become so entrenched?

KUZIO: The last two decades of the Soviet Union was one of disintegration of Communist ideology and the growth of the shadow economy and corruption in all facets of Soviet life. That, in turn, provided the groundwork for the massive stealing of the state in the 1990s where anything went.

BLOCK: Well, if you look at grand scale corruption, corruption at the industrial level, are there certain industries that are especially problematic in Ukraine?

KUZIO: Yes. The energy sector - not surprising, that's true probably throughout the world - is the one where the greatest amount of money could be stolen and made in a very short period of time. Individuals involved in this so-called gas lobby in Ukraine could be making $6-, $7 billion a year for basically doing nothing.

And also, another area of theft has always been government contracts, government deals. In the last four years under Viktor Yanukovych and the president's immediate family as it was called, including his eldest son, Alexander Yanukovych, were given preferences in terms of government contracts and that was also a massive way of laundering money and just bleeding the budget dry, which has lead to the disastrous state of Ukraine's finances.

BLOCK: Well, after Yanukovych fled, there have been thousands of Ukrainians who have poured onto the grounds of his opulent estate and they are marveling at the excesses of what they found, his luxury car collection, a personal zoo, a replica Spanish galleon that was used as a restaurant. What's known about his own take and his family as well?

KUZIO: Well, from the mid 1990s, he established a working relationship with emerging tycoons such as Rinat Akhmetov. In return, they became fabulously wealthy and when he became president, he served notice that it was time for him to see some kickback as it were because he had insured they lived a life of Riley for 15 years and now it's time for him.

So they had to provide a lot of the huge amounts of cash for his various palaces. Of course, some of the money was also stolen from the budget. And Yanukovych began developing his own particular clan. It was dubbed The Family in Ukraine, headed by his elder son, Alexander, and they began demanding 50 percent of various businesses, which, in effect, was corporate raiding.

And so, the whole system was, as U.S. diplomatic cables talk about Ukraine as a mafia state. This was that, where tribute and percentages had to be paid to the leader and if you fell out of line, everything was taken.

BLOCK: That $70 billion figure that Peter Kenyon mentioned of money drained into offshore accounts, does that sound like a realistic number? Do you assume it's higher? And where's that money going?

KUZIO: Well, it's probably an underestimate because I guess it can never be totally found how much was re-exported. The worst aspect of this is not only that this was probably a lot of it stolen from the Ukrainian budget, but the worst aspect of this is that there's complicity amongst European countries in this. This money was usually sent to places like Cyprus, Lichtenstein, Monaco, Austria is a (unintelligible) nation and, in particular, my own country, Great Britain.

So the irony is is that the European Union as an institution would be demanding of Ukraine, as part of the association agreement it's about to sign, that it fight corruption and on the other hand, many of the EU member states would tremendously financially gain from this corrupt money flowing into their countries.

So there's complicity here on the part of Europe in this process because the money had to go somewhere.

BLOCK: Taras Kuzio with the Canadian Institute of Ukrainian Studies at the University of Alberta, thank you so much.

KUZIO: Thank you. Transcript provided by NPR, Copyright NPR.