PM BACKER ACCUSED OF MONEY LAUNDERING, VOTE BUYING

C O N F I D E N T I A L KYIV 000007

SIPDIS

E.O. 12958: DECL: 01/03/2020
TAGS: PGOV PREL UP
SUBJECT: PM BACKER ACCUSED OF MONEY LAUNDERING, VOTE BUYING

Classified By: Ambassador John Tefft for reasons 1.4(b,d)


1. (C) In a meeting with the Ambassador on December 29,
Ukrainian Security Services (SBU) head Valentyn Nalyvaychenko
accused Prime Minister Tymoshenko's largest financial backer,
businessman and MP Konstantyn Zhevago, of running a large
money laundering operation and financing a vote buying scheme
for the January 17 presidential election. Nalyvaychenko said
that the SBU had discovered and shut down a 500 million UAH
(approximately 62.5m USD) per-year money laundering operation
based in the Eastern Ukrainian city of Donetsk that was being
run by Zhevago's Finance and Credit Bank. He claimed that
Zhevago has been involved in financial fraud since at least

2001. SBU spokesperson Marina Ostapenko in a press
conference on December 9 said that the SBU had discovered a
money laundering operation by an unnamed "large Ukrainian
bank and Ukrainian businessman" and that indictments had been
forwarded to the Prosecutor General's office for prosecution.



2. (C) Nalyvaychenko also told the Ambassador that Zhevago
was involved in a vote buying scheme on behalf of PM
Tymoshenko in Donetsk and Luhansk oblasts. He said that the
SBU stopped a Finance and Credit Bank vehicle carrying
500,000 UAH (approximately 62,500 USD) and the official seals
for 300 fictitious companies based in the Donetsk region.
Nalyvaychenko said that money was funneled through local
banks to the accounts of fake companies, where it is
withdrawn and used to bribe voters and local officials to
support PM Tymoshenko's presidential campaign. He said that
it was difficult to prevent vote buying, but that the SBU was
closely watching regional banks for suspicious inflows of
money that could be used to facilitate the practice.

COMMENT:
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3. (C) Nalyvaychenko's intention to pursue criminal charges
against Zhevago could be a sign that the SBU chairman is
serious about combating corruption or could be motivated
purely by politics. Convincing the Rada to lift Zhevago's
parliamentary immunity to allow the case to move forward,
however, will be a significant hurdle. The Rada has only
lifted immunity in the past for extreme cases, such as the
case of Tymoshenko bloc MP Lozinskiy accused last year of
murdering a man in front of a group of witnesses. Zhevago's
role as Tymoshenko's largest financial backer does raise red
flags that the charges could be an effort to cut off her
financial resources or embarrass her before the election, but
neither the SBU nor the Prosecutor General's office has
publicly accused Zhevago by name.
TEFFT