How politicians launder money in government bonds

Как политики отмывают деньги на государственных облигациях

Public officials use operations with the state bonds for the artificial creation of legal income, then to specify them in the declarations. This was in early March, according to the national Bank. Specialists of financial monitoring, the NBU found a number of transactions with government bonds, which testify to the legalization of funds obtained through corruption.

How does it work? The # 1 broker on behalf of a legal entity in the Bank buys bonds and resells them at a lower price, but within market fluctuations, broker No. 2, which acts on behalf of the individual. Next, the # 1 broker, who acts from the legal person that buys this package back, but at a higher price. And re-sells the bonds to a broker №2, again at a price below the previous purchase.

At the end of the chain broker No. 2, which acts on behalf of individuals, this package sells government bonds to the Bank at the market price. In the result, the person receives investment income and a legal entity – investment loss.

NBU describes this scheme: “This scheme produce investment income is used, including national public figures, relatives and related persons, with the aim of generating revenue, and subsequent display of the legality of the income received during their Declaration”.

The national Bank does not disclose the names of the officials and the politicians who use government bonds for money laundering. However, information about the purchase of bonds of internal state loan (government bonds) to public entities can be found in the declarations which they filled.

Not to say that someone from the members of the list were engaged in fraud, which said the NBU. But some policies very quickly after the purchase, sold the bonds at higher prices.

For example, 18 October 2018, the President of Ukraine Petro Poroshenko bought your International investment Bank (IIB) government bonds of 27.46 million UAH and in the same month, declared 28,82 million UAH of income. Profit from the quick resale of these bonds amounted to 1.35 million UAH of net.

Why it is profitable to buy government bonds?

– The government gives 100% guarantee of return of investment.

The yield on government bonds is higher than interest rates on Bank deposits.

– In contrast to deposits, income from government bonds, no tax is paid. Only 1.5% military tax.

Bonds may be prematurely sold in the market, or for a loan.

The politicians who bought government bonds in 2017-2018

Using the service Declarations we have selected politicians and officials who carried out operations with government bonds in the years 2017-2019. There are 12 MPs, six managers of the NBU, two officials of the National Commission on securities and stock market, the President and one official from the Deposit guarantee Fund, the General Prosecutor’s office, the Verkhovna Rada and acting President of “Ukrinterenergo”.

The most active buyers were the deputies and managers of the National Bank.

The President of Ukraine Petro Poroshenko twice in the past year bought government bonds in the “International investment Bank” – UAH 103 million, on 17 October and on of 27.46 million UAH 18 Oct 2018. The last President sold in the same month for 28.8 million UAH.

Other officials from the list was doing a one-time investment in government bonds.

NameStatus/positionIn total
operations with government bonds, th
Poroshenko Petr Alekseevichthe President of Ukraine130894
Andrienko V. N.acting Director of “Ukrinterenergo”2965
Limp Timur Z.the Chairman of the securities Commission1813
Yaremchuk, Viktor Alexandrovichacting head of Department of building of the Verkhovna Rada1355
Panchenko Alexandera member of the securities Commission574
Eleiko Taras YaroslavovichDirector of the Department of the DGF342
Stanislav Toropchin O.the attorney General’s office134

Managers of the National Bank

Most government bonds among managers of the National Bank in the 2017-2019 years have become the Director of the Department of public markets Serhiy Ponomarenko. During the reporting period, he acquired debt securities of the state at 10.15 million UAH.

Head of Department of Legal Department Alexander Waldichuk purchased government bonds by 3.2 mln.

The head of the Department of monetary policy Vladimir Lepeshinsky purchased government bonds at UAH 1.4 million, and the Director of risk management Department Igor Budnik – 1.37 mln.

People’s deputies of Ukraine

Still the most active buyers of government bonds are the people’s deputies of Ukraine, especially from the bloc of Petro Poroshenko. They bought government bonds, sold them, and received money again reinvested in debt securities.

The largest number of government bonds acquired by the MP from the PPO Ruslan Demchak. In November and December 2017 he purchased government bonds at UAH 615 million and then sold them for 645,6 million UAH.

In politics Demchak came from business he was a shareholder of Ukrainian Business Group: “ERDE Bank”, a network of clinics and insurance company “Dobrobut” AMC “Initiative” and channel Business.

The first hike Demchak in politics ended with the arrest in 2012. After that, the assets of Demchak was for sale. However, the “ERDE Bank” was liquidated by NBU and the Business TV channel came under the control of Alexander Yanukovych.

Demchak was released from prison in January 2013 and in February 2014 sold the clinic “Dobrobut” Concorde Capital investment company and the shareholder of a network “Luxoptica” Oleg Kalashnikov. In the Parliament of the VIII convocation Ruslan Demchak, was elected in constituency No. 18 in Vinnytsia region with the support of the “block of Petro Poroshenko”.

In the past year, Deputy Demchak had problems with law enforcement. The NAB suspected him of illicit enrichment.

The member of “Vidrodzhennya” Vladimir zubik in 2017-2019 years, are also actively buying government bonds. In total he has made of such operations by 40 million UAH.

Tooth professional MP, was a member of the party BYUT and Party of regions. The last two times he was elected to the Rada on a mazhoritarka. With his name associated with the company Livela, which during the Premiership of Yanukovych received the right to duty-free import of fuel to Ukraine.

Today, the main asset of the tooth is a construction company “Integral-Bud”. This is one of the largest developers in Kiev. Officially it is recorded on assistant tooth – Valeria Kulakova.

The third largest buyer of government debt securities was the Deputy-a mazhoritarshchik from BPP Maxim Efimov. In November-December of 2017, it purchased government bonds at UAH 426 million. Note that the MP bought government bonds and sold them, and received money again reinvested in bonds.

Efimov – the buyer of the assets of the entourage of former President Viktor Yanukovych. He acquired the generating company “Donbassenergo” and the company that owns the Congress and exhibition centre “Park” in Kiev. This complex is known as the “helipad of Yanukovych”. His Deputy wrote the mother.

A major asset of the Deputy is metallurgical plant “Energomashspetsstal”, “starokramatorsky machine-building plant”, a plant producing equipment for windmills “Furlender Fintehnology” and agro “Crop”. Most of its assets concentrated in the city of Kramatorsk in Donetsk region.

Efimova colleague on fraction – Gennady Tkachuk in 2018 purchased government bonds for a total of 102 million UAH. Debt securities the MP bought in February and in October last year and then sold them at a higher price. Overall sold 107.3 million UAH.

In politics Tkachuk came from Vinnytsia, where for a long time was a member of the city Council. In 2016 HONESTLY wrote like Tkachuk, his relatives, friends and surrogates in violation of the law received the land in the floodplain of the river cherry the winery.

Another Besnik Gleb zagoriy in 2018-2019 made transactions with government bonds in total 77.9 mln. He is the owner of the pharmaceutical company “Darnitsa” and “borshchahivskiy chemical-pharmaceutical plant”.

The MP from the “Will of the People” and owner of the Kharkov market “Barabashovo” concern AVEC Alexander Feldman in the November-December 2017 invested in government debt securities in total 71.5 million UAH.

His former colleague in the parliamentary group – Deputy of Volodymyr Lytvyn in 2018 and 2019 first months bought government bonds to 24 million.

Litvin has been the speaker of Parliament under President Yanukovych. His son Ivan owns a large producer of organic dairy and meat products – Organik Milk and Organic Meat. The production facilities are located in village Baranovka of Zhytomyr region. This is the territory of the electoral district of Volodymyr Lytvyn.