Ukraine Prosecutors Carry Risks for Both Trump and Critics

(Bloomberg) -- Ukrainian President Volodymyr Zelenskiy faced months of U.S. pressure to drum up a very particular corruption investigation. Zelenskiy repeatedly responded vaguely, to the clear frustration of President Donald Trump’s circle, that he is committed to investigating corruption..Zelenskiy’s efforts to retool his country’s law enforcement are now taking form, with Ukrainians watching whether the latest anti-corruption drive will fare better than the largely failed efforts over three decades. From Trump’s vantage point, the moves may reinvigorate a line of investigation he’s dearly sought, touching on Ukrainian natural gas company Burisma -- while also spurring a look into areas he might prefer left unexplored..“The prosecutor general’s office has been plagued by corruption, incompetence and bureaucracy,” Vitaliy Kasko, who was appointed first deputy prosecutor general in September, said in an interview. The changes are designed to tackle deep rooted corruption within Ukraine’s law enforcement agencies, he said..As part of Zelenskiy’s plan to restore public confidence in law enforcement, Kasko and his colleagues are dismissing prosecutors, reorganizing investigatory bodies and reassigning cases. Prosecutors must reapply for their jobs, and overall staffing for the central prosecutor general’s office may be cut in half from the 2,200 people it employed in August..As it loses people, the office is also losing authority. Most of the open corruption cases against former officials, including probes into some $40 billion allegedly looted from Ukraine by officials under former president Viktor Yanukovych, are being transferred to the National Anti-Corruption Bureau, an independent body set up in 2015..The moves could spur a fresh look into the owner of Burisma, the gas company where former Vice President Joe Biden’s son Hunter sat on the board. It could also revive cases linked to Trump’s former campaign manager, Paul Manafort. The latter probe could reveal new details of his financial dealings with Yanukovych, who fled to Russia in 2014. It’s unclear what collateral damage, if any, Democrats might suffer from a reexamination of Burisma and it’s founder Mykola Zlochevsky..Ukrainian Claims.Claims about Ukrainian corruption are at the heart of the House impeachment inquiry into Trump. Democrats have alleged that Trump withheld military aid and a White House meeting from Ukraine’s new president unless he publicly announced that his government was reopening a probe into Biden and his son’s involvement with Burisma, as well as over unfounded accusations that Ukraine meddled in the 2016 U.S. election..After Zelenskiy took office in May, his government inherited a political system where graft and bribes were endemic, and a legal apparatus overseen by a series of prosecutors general accused of corruption. Politically motivated prosecutions raised international alarms..Vitaliy Shabunin, head of the Anti-Corruption Action Center, a non-governmental organization in Kyiv, said he was optimistic Zelenskiy would succeed where previous leaders had failed because he appointed independent, competent lawyers to run the prosecutor general’s office..“It’s clear that there is political will to reform the prosecutor’s office,” he said. “When there is political will, any reform can be successful.”.One of the biggest tests of Zelenskiy’s commitment to tackle corruption is whether his government will take legal action against oligarchs who are suspected of looting billions of dollars from Ukrainian banks..In 2016, Ukraine’s previous government nationalized Privatbank, accusing its billionaire owner Igor Kolomoisky and his co-founder of stealing billions of dollars. Kolomoisky denies the claim. What makes it a current political issue is that Kolomoisky is widely considered to be close to Zelenskiy. The businessman’s television channel broadcast Zelenskiy’s popular show, “Servant of the People.”.Read More: Giuliani Sought Role in Ukraine Bank Case While He Dug for Dirt.Kolomoisky is challenging the nationalization of Privatbank in Ukrainian courts and has demanded compensation for the move. A ruling is due in December. The International Monetary Fund has said it is watching the Privatbank case closely to see if Ukraine is serious about prosecuting corruption in the banking sector..Reviewing Cases.The new prosecutor general, Ruslan Ryaboshapka, said last month that he was reviewing more than a dozen cases handled by his predecessors, including the Burisma case, but that no decision had been taken on whether to launch new investigations..Also as part of the revamp, the National Anti-Corruption Bureau will take charge of the probe into the so-called black ledger, a handwritten list of millions of dollars of payments allegedly from Yanukovych’s Party of Regions to top Ukrainian officials -- as well as to Manafort, who provided political consulting there years before moving to Trump’s campaign..Cases the bureau brings will go to a new High Anti-Corruption Court, whose independent judges began working in September. Probes into Yanukovych-era officials had previously failed to advance..“Unfortunately the investigations so far have yielded no results, and not a single penny has been returned to the budget” in international cases, said Kasko, who is in his second stint at the prosecutors’ office after resigning in 2016, citing corruption issues. “The big question is why the Ukrainian courts didn’t rule on a single case involving a return of assets that were frozen abroad.”.The anti-corruption agency has been attacked by Rudy Giuliani, Trump’s personal lawyer, and others who have alleged the black ledger was fabricated as part of Ukraine’s attempt to undermine Trump in the 2016 election. Prosecutors involved in the investigation have maintained that the ledger is authentic..Ukraine’s ability to reform its law enforcement system is uncertain after previous attempts to tackle corruption failed. Marie Yovanovitch, who was recalled as U.S. ambassador to Ukraine earlier this year, testified in impeachment hearings this month that the State Department had been hopeful that former Prosecutor General Yuri Lutsenko, appointed in 2016, would clean up the agency..Lutsenko, who has no formal law education, brought no high-level corruption cases during his time in office. Earlier this year, he worked in tandem with Giuliani to try to get Ukrainian officials to announce an investigation into Burisma and the Bidens that would benefit Trump politically, according to multiple testimonies in the impeachment investigation. Lutsenko has denied acting improperly and didn’t respond to requests for comment..Bringing Charges.Although the anti-corruption bureau is responsible for investigating cases, only the country’s Special Anti-Corruption Prosecutor’s Office can bring charges. The head of that office is Nazar Kholodnytsky, who said he met with Giuliani at a conference in Paris in May. He has declined to say what they discussed and didn’t respond to requests for comment. Kholodnytsky’s term ends in late 2020 and he can’t easily be dismissed before then..A new government body, the State Bureau of Investigation, will take charge of all probes into murders and violent crime, including the killing of as many as 100 protesters during Ukraine’s 2014 Maidan revolution that led to Yanukovych’s ouster. The prosecutor general’s office lost investigative functions last week and be solely responsible for bringing charges, in keeping with Council of Europe guidelines, Kasko said..Some prosecutors have been let go because they didn’t reapply for their jobs. Konstantyn Kulyk, who met with Giuliani in Paris earlier this year and has said he was investigating the founder of Burisma, didn’t show up for his reapplication exam and would be let go, according to people familiar with the matter..Kulyk compiled a seven-page dossier on Burisma, which he gave to Giuliani earlier this year, coordinating with Yuri Lutsenko, the prosecutor general who was replaced in August. Kulyk didn’t answer calls to his mobile phone seeking comment..Kasko said the prosecutor general’s office is working on several cases unrelated with the U.S. “We have at least a couple of cases with the U.S. every week,” he said. “And they are not linked to what is now so heavily discussed in the media.”.To contact the reporters on this story: Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net;Stephanie Baker in London at stebaker@bloomberg.net.To contact the editors responsible for this story: Alan Katz at akatz5@bloomberg.net, Jeffrey D Grocott.©2019 Bloomberg L.P.

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Ukraine Prosecutors Carry Risks for Both Trump and Critics

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