Eastbook

We have a great pleasure to present the winner of the Eastern Partnership Journalistic Prize, organized by the Polish Reporters Foundation – the article authored by Serhyi Leshchenko. The text, revealing questionable dealings of the Ukrainian head of state, was chosen from 800 works sent in for the competition. Awarding Leschchenko is undoubtedly also a way to honour the whole Ukrainian journalism, whose development the Orange Revolution – and its most enduring achievement: media freedom – made possible. This article is an example of the advancement of investigative journalism in Ukraine, whose local elites are a constant source of topics. Our portal Eastbook.eu has also the honour to introduce the English and Polish versions of the article published originally in Ukrainska Pravda.

Enjoy the reading.

Artur Kacprzak

The tax haven of Yanukovych and Kluyev

The infamous book authored by Viktor Yanukovych “Opportunity Ukraine” – recently exposed as plagiarism – mentions scarcely anything about Ukrainian companies but with one exception, contained within two pages. It seems that the presidential ghost writers did not bother about a thorough edition of this part and simply put a press release of Active Solar, an Austrian company, whose Ukrainian plant produces semiconductor materials for solar systems in Zaporizhia. President Yanukovych wrote in his book:

“…The long-awaited event took place last October, but escaped notice of media and society. On the Crimean Peninsula, a solar plant was built and opened by the Austrian company Activ Solar in Rodnikovoye… I present this project as an example illustrating the interest Ukrainian authorities take in alternative energy sources…”

Not long ago, on 7 October 2011, during his visit to Greece, Viktor Yanukovych addressed local businessmen: “Ukraine is also interested in deepening cooperation with Greece in the sphere of renewable energy sources … I have made a proposal to Mr President about the building of solar power station in Greece on a turnkey basis –we have such an opportunity and we are willing to do so at any time if such proposals come from our partners”. Yet in the book, the real owner of the company and stated conditions for development do not appear.

In fact, the whole story is a textbook example how business merges with politics and creates optimum conditions for one of the most influential Ukrainian entrepreneurs of our times – Andriy Kluyev. Last year, Ukrainska Pravda reported how Kluyev, after being appointed as the First Deputy Prime Minister, headed the State Agency in investments and national projects of Ukraine and, therefore, helped his own family business. Then, one of the first decisions of this institution was granting the “semiconductor producer” the amount of UAH 200,842,000 from the state funds for developing solar plant production in Zaporizhia.

The main shareholder of this Zaporizhian “semiconductor producer”, having a 75 percent stake, is a company registered in Vienna – Active Solar. This information is available in the database of the Securities and Exchange Commission, after registering on the website of this state institution. During Kluyev’s stay at the conference of the Yalta European Strategy (YES), Ukrainska Pravda asked him whether he or his family had any connections with Activ Solar. “No, there are no connections”, Kluyev ensured.

Why Austria?

Why is it beneficial to start holding companies in Austria? It is simple – because dividends of their subsidiaries are tax-free (functioning as a flow-through entity)! This way, the country is supplying its banking system. Thus, profits of Kluyev’s Ukrainian energy company can be freely conveyed, as dividends, to Austria, without additional charges. In effect, the money could be later used anywhere in the world – also back in Ukraine as Austrian investments. Ukrainian business had been behind the entire process, supplied by the Ukrainian state budget and still no one would have been any the wiser.

There is more – registration in Austria allows to present a company as a Western project with a clear business history. This move has been already made by Activ Solar, which presents itself as “an international group of companies headquartered in Vienna (Austria), specializes in designing and manufacturing solar technologies.” Ukrainska Pravda, through the website of Vienna Commercial Court (an institution keeping register of all companies), acquired founding documents of Activ Solar GmbH. They revealed that it is functioning as a limited liability company, meaning a simplified reporting system.

The management

The CEO of Solar Active is Kaveh Ertefai. This son-in-law of Ukrainian deputy Serhiy Kluyev, the brother of Andriy, comes, according to the documents, from Dubai, United Arab Emirates. The spectacular scale of the wedding reception held in one of the Vienna palaces for the deputy’s daughter Olga Kluyev, immortalized in impressive photos, has recently rocked the Ukrainian Internet. Nevertheless, Ertefai is not the only one relative of Kluyev who works for the company. The son of the deputy PM, Bohdan, is, according to the company website, the business development manager in Activ Solar. However, Serhiy Kluyev still denies there are any connections to his family.

The wedding of Serhiy Klujev’s daughter:

The location

The address of headquarters of Activ Solar is 35 Wipplingerstraße, Vienna (the map below the text – ed. note). The information board near the entrance to the business centre reads that the company building solar plants financed by the Ukrainian government is located on the fourth floor, the same as Slav AG, belonging to brothers Kluyev (see: the following chapter). Furthermore, Activ Solar does not even have a separate doorbell for clients who must pass by the office of Slav AG to get there.

The founders

The first founder of Activ Solar in 2008 was Austrian Slav Beteiligung GmbH, which the 100 percent shareholder was the company under a resembling name – Slav AG, owned in turn by brothers Andriy and Serhiy Kluyev, either having a 50 percent stake. This information is common knowledge available on the Austrian website of the company. At the end of 2008, as a result of a decision on a change of the founder, present director of Activ Solar Kaveh Ertefai, Kluyev’s son-in-law, became the sole owner of the company. Yet this state of matter did not last for long.

Since July 2009, the founder of Activ Solar has been an inconspicuous agency – P&A CORPORATE TRUST, headed by Reinhard Proksch. And perhaps at this stage our investigation would have ended, had we not noticed the address of the trust: Stöcklerweg 4, Vaduz, Liechtenstein. Ukrainska Pravda had already dealt with this address while investigating the privatization process of Mezhigore where the incumbent president is currently living.

The very same P&A CORPORATE TRUST, located at the same address in the Principality of Liechtenstein, appears as a shareholder of Blythe (Europe) Ltd, a British company. This London-based company has a 35 percent stake in Kiev’ Tantalit, the real owner of the presidential residence. There is another company in Yanukovych’s orbit of which Blythe (Europe) Ltd is the ultimate owner: Dim Lisnyka, controlling local forestry activities in the region of Dnieper- Teterev near Suholuchya village. Technically, the company owns 17.5 hectares of land where the presidential hunting lodge – under protection of special Unit Berkut – is located. The surrounding land of 30,000 hectares was transformed into a security zone with an antitank trench and control points system which make it quite unavailable.

Both Activ Solar (a company constructing solar plants) and the firm belonging to Yanukovych’s family (owning Mezhigore and Suholuchya) are registered to one legal entity – P&A CORPORATE TRUST in Liechtenstein. Its official website informs that the executive director is Proksch. Certainly, not by accident – it could mean that Kluyev and Yanukovych are close enough to employ the same lawyer from Liechtenstein and a front organization – a trust. Otherwise, the solar business of Kluyev is in fact shared with the presidential family. The answer is hidden in the agreement which, according to Liechtenstein’s regulations, has not been made public, secured in a lawyer’s safe.

Why Liechtenstein?

Registering companies of prominent Ukrainian officials in Liechtenstein solves several problems at once. First – it is anonymous. At the exact moment of transferring money to this country and establishing a trust under one’s name, the owner becomes invisible. The only available information regards the trust itself, which is allowed to set up companies, to control them and to manage their resources. Additionally, such a trust has a registered settlor. The other advantage is taxation. If assets of a trust are outside this mini state, as it is in our case, then there is no tax to pay in regard to profit and dividends. At the same time, and in contrary to companies established in Belize or Virgin Islands, a Liechtenstein trust is more respected.

Wikileaks helps

Taking under consideration the circumstances regarding presence of the same trust within the solar business of Kluyev and land activities of Yanukovych in Mezhigore, one more document should be discussed: a ciphertext of the US Embassy in Kiev published on Wikileaks website in September 2007. William Taylor, the US Ambassador to Ukraine, reported to Washington on his meeting with Donetsk oligarchs Sergey Tarut and Vitaly Gayduk. During the three-hour long discussion, as the ambassador informed, the businessmen were talking about leaders of the Party of Regions. They raised the subject of relations between Kluyev and Yanukovych:

“Gayduk and Andriy Kluyev were both working under Yanukovych as deputy governors. Then, Kluyev provoked a change in the relationship by making Yanukovych his business partner, so he would get preferences. Taruta did not know if they were still business partners, but said they have a special relationship.

„Taruta thought Kluyev was smart enough to implement reforms. Unfortunately, he had learned early that he could make money from holding a senior position, now he was abusing his office for self-enrichment. For example, according to Taruta, Kluyev was smuggling huge amounts of chicken through a Special Economic Zone. Taruta thought Yanukovych might be getting a taste of the chicken smuggling as well, although he wasn’t sure.”

Another significant example of business shared by the politicians concerns dealings between Serhiy Kluyev and Viktor Yanukovych while the former bought an apartment of the latter, paying the apparently inflated price of USD 7 million. The transaction seemed to be an attempt to make the income of the future head of state legitimate.

PS During our investigation, Ukrainska Pravda made several attempts to uncover what Andriy Kluyev’s and Serhiy Kluyev’s points of view are, in regard to the gathered facts. The former refused to discuss activity of Activ Solar and all the questions conveyed to his press secretary remained unanswered. The latter announced he did not want to speak with Ukrainska Pravda at all. Furthermore, Pavel Litchenko, the actual director of Tantalit and official owner of Yanukovych’s residence Mezhigore did not react to a request for information sent by Ukrainska Pravda.

Original title: Офшорний дах для Януковича та Клюєва

Published in Українська правда on 21 October 2011

The Author: Serhyi Leshchenko was born in 1980 in Kiev, at that time the capital of the Ukrainian Soviet Socialist Republic. In 2003, he graduated from the Taras Shevchenko University (Institute of Journalism). Since 2000, Serhiy has been working for Ukrainska Pravda, the leading information portal founded by Georgiy Gongadze, a journalist murdered by Ukrainian special services during Leonid Kuchma’s governance. Leshchenko, whose area of interest is investigative journalism, was awarded several times for his articles. Among others, there are: Oleksandr Kryvenko’s Prize, the second place in investigative journalism competition organized by French Embassy and nomination for “Journalist of printed media” in 2006 in categories “People of the Year” and “Person of the Year”, according to Internet.ua. In 2011, he was chosen the best journalist in the competition organized by Polit Club of Ukraine.

This article is excluded from the Creative Commons license. All rights reserved by the Author and portal Ukrainska Pravda.