Latvia may keep further €25m of stolen Ukrainian funds

Latvia may keep a further €25 million thought to have been stolen in Ukraine, but the move has been contested at the highest level by a Ukrainian off-shore firm, reported LTV's De Facto on November 26.

A year ago, frozen bank assets of €50 million believed stolen from Ukraine were transferred into Latvia's budget. According to De Facto, some of the cash in question was in accounts held at Latvia's PrivatBank (a subsidiary of Ukraine's PrivatBank Group) and two other banks.

The matter culminated into a visit by the Ukrainian deputy Prosecutor General and was discussed at the UN by the countries' presidents. 

Ukrainian officials wanted the money back but were unable to prove the money came from its state coffers.

It has now emerged a further €25 million have been frozen at the Riga-based Regional Investment Bank and investigators want it to be transferred to the Latvian state budget. A court agreed to this in the spring but the ruling to transfer the money has been contested. 

The funds are located on the accounts of three offshore companies, of which one, Imex Provider, earlier turned to the Supreme Court which partially granted the company better access to case files and allowed it to resume proceedings over retrieving the funds. 

According to De Facto, Imex Provider is registered at the British Virgin Islands. It is believed to have ties to Yuriy Ivanyushchenko, a former MP with reported ties to ousted former Ukrainian president Viktor Yanukovych. 

Funds were also frozen on the accounts of Industry East Europe Investments, which belong, via intermediaries, to Ivanyushchenko's wife and daughter, as well as his business associate Ivan Avramov.

Ukrainian journalist Dmytro Gnap told LTV that Ivanyuschenko was the subject of an investigation over the embezzlement of money that Ukraine obtained via emission quotas. 

"Ukraine and Japan penned an agreement over the sale of emission quotas. Japan paid Ukraine €300 million with the provision that it will be used to fit homes with heating. We uncovered in a journalistic investigation that the money was funneled to suspicious companies that had neither offices nor phone numbers. The money disappeared. Ivanyuschenko and his associates stole at least €200 million," he said.

Nevertheless the case against Ivanyushchenko was discontinued this year and his name was removed from the EU list of sanctioned individuals. 

While Latvian investigators have not been able to prove that Ivanyushchenko or any other individual are tied to laundering the money on Latvian bank accounts, they insist that the funds were obtained with criminal means and should therefore be seized.  

"The court, both in the first instance and in the appeals, said the money has been obtained criminally, and as no one has proven it belongs to them, it should be transferred to the state budget," said Inese Gise, an investigator at the financial crimes department at the State Police.

"We know the companies. Their representatives attended court meetings and wrote complaints. However they were not able to prove neither to the investigators, nor the court that the money belongs to them," said Gise.

The court meetings were closed and any decisions are still kept secret. Lawyer Alfrēds Voroņko did not reveal to De Facto the persons that are behind the company.

The court decision has not been implemented and that the court is still reviewing claims submitted by the lawyer.

Investigators say Ukraine has not filed any complaints over retrieving the money. 

In Latvia, funds can be seized before the actual conviction, but this has been ruled to go against the Constitution, therefore the company still hopes it may recover the frozen assets. 

It is expected the Saeima is to adopt law amendments to change the way assets are seized in the country. 

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