During Revolution of Dignity began to systematically work on blocking of western accounts, transactions and assets of state corrupt authorities responsible for the violation of the rights and freedoms of citizens, killing peaceful Euromaidan activists, financing of separatism and the outbreak of war in the East of Ukraine.
We have always been deeply convinced that the authoritarian regime of Viktor Yanukovych, and now – terrorist groups and militants, mercenaries are fed by his corrupt business assets that are laundered and legitimized by the international financial system, with a network of shell companies and professional intermediaries.
Our goal is to thoroughly describe the business interests and business schemes of officials who should be blocked from access to the international financial system and later – to return their criminally acquired assets back to the Ukrainian people.
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Oleksandr Yankovych, a dentist by training, was born in Donetsk in 1973 and, is currently one of the wealthiest businessmen in Ukraine and the second richest person in Donetsk after Rinat Akhmetov. As of November 2013 Oleksandr Yanykovych’s assets are estimated by Forbes to total $510 million .
The exponential rise of Oleksandr Yanukovych’s business empire occured in 2010–2013, when his father held the post of President of Ukraine. Prior to 2010, Mr. Oleksandr Yanukovych owned only the Management Assets Corporation, LLC (MAK, LLC) with a statutory capital of 55 million UAH (less than $7 million).
The business interests of Oleksandr Yanukovych are concentrated in the Closed Joint Stock Company Ukrainian Bank of Development andthe Closed Joint Stock Company Mako Holding.
Ukrainian Bank of Development (UBD)
CJSC Ukrainian Bank of Development was founded on April 23, 2009 by Donsnabtara LLC, with a statutory capital of 80 million UAH.
Donsnabtara LLC, which was founded in 1995, was at the time headed by Mrs. Valentyna Arbuzova, mother of the incumbent Vice Prime Minister of Ukraine.
Since January 27, 2011 Oleksandr Yanukovych has aquired 100% ownership over the statutory capital of UBD. This happened fewer than two months after Serhey Arbuzov, a close friend of Mr. Oleksand Yanukovych, was appointed head of the National Bank of Ukraine. The mother of Mr. Serhey Arbuzov, Mrs. Valentyna Arbuzova has served as Head of the Executive Board of UBD since its creation.
Since its establishment in April 2009, UBD has increased its capital 10 times over. In 2013, UBD doubled its capital over the previous year. Interestingly, on December 24, 2012, Mr. Serhey Arbuzov, a son of head of UBD Mrs. Arbuzova, became the First Vice Prime-Minister of Ukraine.
The chronology of UBD’s capital growth:
- April 2009 — capital totaling 80 million UAH
- December 2010 — capital totaling 111,7 million UAH
- December 2011 — capital totaling 332,2 million UAH
- December 2012 — capital totaling 409,3 million UAH
- September 2013 — capital totaling 799,032 million UAH
UBD’s capital was increased through the issuance of additional stock, which was all bought with cash by Oleksandr Yanukovych. Specifically, in May 2013 UBD issued additional stock worth 412 million UAH. Mr. Oleksandr Yanukovych bought the stock with his personal funds.
Meanwhile, in 2011 UBD’s increased net profit increased 17 times over 2010.
It is unclear what the origin is of the hundreds millions of cash invested by Oleksandr Yanukovych into his bank over the last three years. It could perhaps be from activities of Mako Holding, which are described below.
The closeness of Mr. Oleksander Yanukovych to the President of Ukraine allowed UBD to get an array of extremely profitable contracts in 2010–2013 to serve and credit state institutions.
In February 2012, all employees of the central department of the Tax Service of Ukraine stopped receiving their salaries via the state-owned Ukreximbank and began receiving them via the relatively new UBD.
The head of the Tax Service of Ukraine, Mr. Klymenko, is known to be a good friend of Mr. Oleksandr Yanukovych and Mr. Arbuzov, the latter who at that time was head of the National Bank of Ukraine.
Each of the more than one thousand employees of the Tax Service received a «salary card» and a «deposit card» at the UBD. Each employee receiving their salary on a«salary card», had a fixed amount of their salary transferred to deposit card. The employee had no choice about the transfer of the funds to the deposit card. In 2013 UBD became one of several banks receiving a large portion of the «salary projects» for government employees, including those at the Ministry of the Interior and, court administrations in Kyiv and Donetsk.
According to the Head of the Association of Ukrainian Banks, civil servants are forced to use the services of UBD by imposition.
In 2013 UBD won a series of public procurement contracts to provide credit to state-owned railway enterprises totaling 978 million UAH. In particular, on November 14, 2013, the state-owned Odesa Railway signed a contract with UBD to receive a line of credit in U.S. dollars of 55,61 mln UAH with a 10.5% interest rate.
On November 8, 2013 the Donetsk railway signed a similar contract with UBD to receive a credit line for 55,64 million UAH.
UBD serves Mako Holding company and its subsidiaries, which are either controlled or belong to Mr. Oleksandr Yanukovych.
UBD uses the following intermediary banks for transfers in USD and Euros:
- Deutsche Bank Trust Company Americas, New York, USA
- PJSC Commercial Bank KHRESCHATYK
- Deutsche Bank AG, Frankfurt am Main, Germany
Closed Joint Stock Company Mako Holding
Mako Holding is the parent company of about 20 spectacularly successful companies in Ukraine, the Netherlands and Switzerland, most of which significantly expanded in 2010–2013, during the presidency of Mr. Viktor Yanukovych.
Oleksandr Yanukovych is the sole owner of Mako Holding CJSC, which was established on February 25, 2011 with statutory capital of 55 million UAH. The company is the successor of the now defunct MAK LLC. MAK LLC was registered on June 7, 2006 and was wholly owned by Oleksandr Yanukovych.
Once established in 2011 Mako Holding had a negative profit on its balance sheet. In a year the company showed an official net profit totaling 197 million UAH.
On November 22, 2011 Mako Holding issued an additional 450 000 shares with a total value of 225 million UAH. In January 2012 Mr. Oleksandr Yanukovych officially purchased all of this stock with cash.
In September 2013 Oleksandr Yanukovych issued an interest-free loan to Mako Holding worth 150 million UAH.
Mako Holding is the parent company of a series of energy, coal and development companies, which significantly expanded in 2011–2013, specifically:
CJSC Edelveis was registered on January 20, 2010 in Donetsk by MAK LLC. In 2012 Mako Holding invested 1,56 million UAH in CJSC Edelveis, receiving a 99% share of Edelveis. During 2010 — 2012 the company was not profitable.
In 2011 Edelveis received 15,02% of Artemivsk Winery CJSC, which appeared to be quite profitable; Artemivsk Winery reported net profits of 13,2 million UAH, 17,7 million UAH, and 13,1 million UAH in 2010, 2011 and 2012, respectively.In June 2013 Edelveis transferred its stock in Artemivsk Winery to the Netherlands’ based company ARTVIN Holding BV.
Edelveis since 2011 has 25% shares of Corporation Management Assets Company.
Architecture-Engineering Company Constructiv LLC was registered in 2010. Mako Holding owns 70% shares of the company; in 2012 Mako Holding invested 248,200 UAH in the company.
Mako Invest LLC was registered on November 24, 2011. Its statutory capital is 5 million UAH divided between Mako Holding (51%) and Oleksandr Yanukovych (49%); in 2012 «Mako Holding» invested an additional 4,04 million UAH in Mako Invest LLC.
Mako Trading LLC was registered on December 7, 2011. Its statutory capital is 5 million UAH divided between Oleksandr Yanukovych (49%) and Mako Holding (51%); in 2012 Mako Holding invested 43,2 million UAH in Mako Trading LLC. During the first quarter of 2013 Mako Trading exported 370 thousand tons of energy coal with a price of 835 UAH per 1 ton (totaling 308,95 million UAH).
The key beneficiary of the exported coal became Swiss MAKO Trading SA, which is controlled by Mako Holding as well. Additionally, in 2013 Mako Trading exported coal to Italian Energy Coal SPA, Croatian Nasicecement DD and Portuguese Carbol LDA.In 2012Mako Trading exported 200,000 tons of coal, which was received from state-owned enterprises Shakhterskantratsyt,Snezhnoyeantratsyt and Torezantratsyt.
Mako Activ LLC was registered on March 14, 2012. Its statutory capital is 180 million UAH and is 99% controlled by Mako Holding; in 2012 Mako Holding invested 20 million UAH in Mako Activ LLC.
Management Assets Company Corporation was registered on March 31, 2009. Its statutory capital is 4 million UAH, which is equally shared by Mako Holding, Edelveis LLC, Capital Building Corporation CSJC, and Ryatuvalnyk LLC.
Ryatuvalnyk LLC shares are 99% controlled by Capital Building Corporation.
Eastern Business Centre, LLC was established on August 13, 2010. In 2012 Mako Holding invested 127,3 million UAH in the company; on April 25th, 2013 Mako Activ LLC became the successor of Eastern Business Centre.
Capital Building Corporation, CJSC was established on December 9, 2005. Since 2010 the company had been controlled by MAK LLC; in 2012 Mako Holding invested 45,7 million UAH in Capital Building Corporation receiving 96,8% of its shares. In August 2013 Mako Holding issued an interest free loan totaling 20 million UAH to the Capital Building Corporation.
MAKO Holding B.V. was established on October 27, 2011 in the Netherlands by LiFe Holding AG, which was its sole shareholder until December 23, 2011, when Mako Holding bought all shares of the company. The statutory capital of Mako Holding B.V. is currently 10 million Euro. In 2012 Mako Holding invested 105,3 million UAH in MAKO Holding B.V., which as of December 31, 2012 didn’t have any employees in the Netherlands, or abroad. Mako Holding B.V. is the sole shareholder of ARTVIN Holding BV, which owns 19% of Artemivsk Winery. MAKO Holding B.V. is the sole shareholder of the Switzerland based MAKO Trading SA.
Marinaservice CJSC, was registered on May 26, 2010 by LLC MB Service with an initial statutory capital of 55 million UAH. The initial statutory capital of Marinaservice CJSC was increased to 64 million UAH in November 2012. Since the third quarter of 2011, Oleksandr Yanukovych became the sole owner of the company.
In 2010 Marinaservice bought four historical buildings in Balaklava Bay and received from the Ministry of Transportation an open-ended lease of hydro-technical facilities.
In 2011 the company bought floating pantones, wave-breakers, administrative buildings and two apartment buildings. In total, all of the buildings in Balaklava Bay costMarinaservice 54,6 million of UAH.
In 2010 the Minisrty of Defence of Ukraine allowed the privatization of 8.4 hectares of land belonging to ship yard Metalist near Balaklava Bay and 1.8 hectar of Cape Aya, which were leased by Marinaservice.
In 2011Marinaservice leased 1.8 hectares of Balaklava Bay. On July 16, 2013 the Sevastopol city administration gave 1.32 hectares of Balaklava bay land to Marinaservice. Thus in total, Marinaservice acquired more than 10 hectares of precious access to the water near Sevastopol.
Donbass Rozrahunkovo Finansovyi Centr, DRFC
While UBD, Mako Holding and Mako Holding’s subsidiaries officially belong to the business empire of Mr. Oleksandr Yanukovych, there remain a number of corporate structures with no direct legal ownership links to the son of Viktor Yanukovych.
However, dozens of journalistic investigations provide evidence that Oleksandr Yanukovych is their beneficiary owner. Thus, allegedly Mr. Yanukovych is a beneficiary owner of highly profitable DRFC LLC, which is one of the leading businesses in the coal and energy sector in Ukraine.
The Association Donbass Rozrakhunkovo-Finansovyi Centre (DFRC) was established in 1997 and until 2010 was controlled by Eduard Prutnik, an MP from the Party of Regions and close friend of Mr. Viktor Yanukovych.
In June 2012 the Association was reorganized into the Public Joint Stock Company Central Enrichment Factory Comsomolska, the ownership of which is divided between 3 companies:
- DRFC LLC, which invested 200,1 million UAH giving it 74,18% shares
- Eastern Transport Company LLC, which invested 0,02 million UAH giving it 0,01% shares
- Regional Department of State Property Fund (State), which invested 69.6 million UAH giving it 25,81% of shares
Since November 26, 2013 DRFC LLChas bought all the shares which previously belonged to the other parties.
In turn, DRFC LLC officially belongs to Sarone Holdings Limited, a company registered in BVI, where the beneficial owner is hidden.
According to a number of journalistic investigations Mr. Oleksandr Yanukovych has controlled the company since 2010.
In 2011 DFRC LLC won state tenders totaling to 949,3 millions UAH.
In summer 2012 DFRC privatized five state-owned factories that enrich coal, specifically Uzlovskaya, Chervona Zirka, Komsomolskaya,Ukraine and Russia.
The factories provide services to dozens of state-owned coal mining companies and win multimillion UAH tenders.
Enrichment of excavated coal improves its quality and often coal-mines work with enrichment factories, each of which enriches an average of 2–2.5 million tons of coal per year.
In November 2012 the Ministry of Energy and Coal Mining contested the privatizations, claiming that it was illegal to issue more than 50% of state-owned factories’ shares to a private company DFRC. The commercial court in Donetsk, however, issued a decision in favor of DFRC,relying on changes in legislation adopted in March 2012, a few months before the privatization by legislative initiative of the President Viktor Yanukovych.
DFRC has been actively buying coal from so-called «little mines» or «coal pits». According to the data of the Ministry of Energy and Coal, at least 9 mln tons of coal are produced at coal pits, which neither have safe working conditions nor provide social benefits to miners. The coal from pits is cheaper and can be purchased for 300–400 UAH per ton, versus what the regular coal mines sell for 800–1000 UAH per ton. Taking into consideration that DFRC sells its coal to the electric stations for 925 UAH per ton, the difference in is a pure profit for DFRC, which when combined with heavy state subsidies enables DFRC to be one of the leading companies in the coal business in Ukraine.
According to journalistic investigations conducted since April 2012 Mako Trading is acting as a guarantor of export operations conducted by the Chervona Zirka coal enrichment factory, which belongs to DRFC. During the first quarter of 2013 Chervona Zirka exported about 4300 tons of coal to Poland and the Czech Republic at a price of 820 UAH per ton.
Finally, there is one more company called LE MARE, LLC, which could be included in the list of the Yanukovychs’ business structures. Olena Yanukovych, the wife of Oleksandr Yanukovych, is owner of the company with 20 mln UAH of statutory capital. The company allegedlyowns a luxurious fitness centre in Donetsk called LE-MAREE.