Due Diligence

‘New’ Panama Papers documents show Poroshenko’s offshore firm targeted in money laundering case


By added on 25/06/2018

(Kyiv Post) -- The Financial Investigation Agency of the British Virgin Islands has investigated President Petro Poroshenko’s Prime Asset Partners offshore firm, which is registered there, suspecting it of money laundering, according to a leak of documents from Panama’s Mossack Fonseca registrar known as the Panama Papers.

The new documents were obtained by Süddeutsche Zeitung, shared with the Organized Crime and Corruption Reporting Project, a Kyiv Post partner, and published by Ukraine’s Slidstvo.info investigative team on June 20.

Poroshenko’s representatives said they didn’t know of any investigation against his offshore firm.

“As far as we know, the state agencies of the British Virgin Islands, including the Financial Investigation Agency, have not carried out any actions regarding Prime Asset Partners and have not sent any requests to companies, their directors or shareholders asking to get additional information,” Poroshenko’s lawyers from the Avellum firm told the Ukrainska Pravda online newspaper on June 22.

In April 2016, the British Virgin Islands’ Financial Investigation Agency asked Mossack Fonseca about documents from Prime Asset Partners as part of a money-laundering investigation, according to the documents published by Slidsvto.info.

In 2017, the tax department of the Finance Ministry of the British Virgin Islands also asked Mossack Fonseca about Prime Asset Partners’ documents, the leak shows.

The Financial Investigation Agency and Finance Ministry of the British Virgin Islands did not respond to requests for comment.

Poroshenko’s lawyers previously argued that the president did not have to declare Prime Asset Partners’ shares in his 2014 and 2015 asset declarations because the shares had no face value, although some lawyers argued that he had to declare them regardless of that.

However, the new leak shows that in February 2016 Poroshenko’s lawyers sent to Mossack Fonseca a new share certificate according to which the shares did not have any face value and canceled the 2014 certificate according to which they had a face value. Previously the OCCRP had published the 2014 certificate according to which the shares did have a face value.

Despite this, Poroshenko did not declare the shares in his 2014 and 2015 disclosures.

Commenting on the Slidstvo.info report, Avellum told Ukrainska Pravda that “the transfer of Prime Asset Partners shares and other actions were carried out according to a plan outlined in line with Ukrainian and foreign law and approved by the trustee.”

In late March – several days after the OCCRP and Slidstvo.info published documents on Poroshenko’s offshore firm, Poroshenko’s lawyers also asked Mossack Fonseca to increase the number of shares to 50,000 from 1,000 and transfer the shares from Poroshenko to Poroshenko’s Ukraine-registered Prime Asset Capital foundation. However, the changes do not appear to have been implemented because Poroshenko remained the owner of the British Virgin Islands firm.

Poroshenko, who promised to sell his assets before being elected president in 2014, has failed to deliver on his promise and has faced mounting accusations that he is putting his business interests above those of the state.

The Panama Papers, first published in 2016, led to suspicions that Poroshenko was seeking tax benefits when setting up Prime Asset Partners in the British Virgin Islands in 2014, shortly after being elected president. The Paradise Papers, a major leak of documents about offshore companies published in November, added to those suspicions.

Poroshenko and his lawyers vehemently deny any tax-minimization plans and argue that their aim was to pay as much in taxes in Ukraine as possible.

Meanwhile, Poroshenko and his companies still haven’t explained a 4 million euro offshore transaction in Cyprus carried out in March 2016, made when the National Bank of Ukraine had banned cash payments abroad. According to a form filed with the local registry, the transaction constituted a combined payment of cash and shares of his company.

The president’s representatives insist that no transfers of cash were involved. But they have failed to publish annual reports of Poroshenko’s Cyprus company, which would document the details of the transaction.

In April 2016 Poroshenko said he transferred his assets to a blind trust run by Rothschild Trust. But the nature of the trust remains a mystery, since the president has so far refused to explain the trust’s terms, citing confidentiality rules.

As many as 643 Ukrainians feature in the Panama Papers. These include Valeria Gontareva, ex-head of the National Bank of Ukraine; Odesa Mayor Hennady Trukhanov, tycoon Rinat Akhmetov’s brother Igor, ex-lawmaker Borys Kolesnikov, Poroshenko’s former Chief of Staff Boris Lozhkin, ex-Prime Minister Mykola Azarov’s son Oleskiy and others. They deny the accusations of wrongdoing.