| Pavel Lazarenko received $25 million from Itera in 1996 As expected, the trial of former Ukrainian Prime Minister Pavel Lazarenko, which started in the United States two weeks ago, brought new scandalous details about the history of the formation and development of business in Ukraine. One of the first “victims” was Itera, whose founder, shareholder and top manager Ted Cavalieros admitted to American justice that in 1996, on behalf of the company, he transferred $25 million to Mr. Lazarenko’s offshore Bainfield Company Ltd. He, of course, denied that he knew to whom and for what he was transferring this amount. Although it is no secret that in the same year, Itera, in agreement with the management of Gazprom and the leadership of Ukraine, received the right to become the main supplier of gas to this republic. And the large-scale Ukrainian sales market became the basis for the company’s 7-year prosperity. Itera declined to comment on the situation.
The United States Attorney's Office accuses Pavel Lazarenko of laundering $114 million through private American financial institutions. In Ukraine, charges have also been brought against Lazarenko for financial fraud and a number of other crimes. In Switzerland, he has already been found guilty of money laundering and sentenced by a Geneva court to 18 months of suspended imprisonment.
Mr. Cavalieros, a US citizen who owns 2% of Itera, testified before a jury in San Francisco on April 1. He said that in the summer of 1996 he transferred $25 million in seven tranches to the Bainfield Company Ltd account in the Swiss bank SCS Alliance, without knowing what kind of company it was or what exactly it was receiving the money for. It should be noted that at that time he was the executive vice president of Itera Holding and such “ignorance” seems anecdotal. And according to the former deputy chairman of the Swiss bank through which the money passed, Guyon Krug, 51% of the shares of Bainfield Company Ltd belonged to Pavel Lazarenko, the remaining 49% belonged to Ukrainian businessman Peter Kirichenko. The prosecution in the case of Pavel Lazarenko regards this episode as a bribe that the ex-prime minister received from the Itera company for the right to access the Ukrainian gas market. Mr. Lazarenko's lawyers say their client was a shareholder in Itera and the money he received was his share of the firm's profits. But Cavalieros, who testified, did not confirm this, telling the court that Lazarenko did not have shares in Itera. At the same time, according to him, he does not know the owners of Itera-Ukraine, which is a separate company.
Throughout 1996, according to Cavalieros, he received payment orders from the company Omrania Trading Ltd, which is one of the companies of the Itera group. Thus, he transferred more than $200 million, not knowing to whom and why this money was going.
Although Lazarenko was dismissed from the post of prime minister a year later, Itera gained a foothold in the market for many years. From 1996 to 2002 inclusive, Itera occupied from 40% to 15% of the Ukrainian market (the share gradually decreased). In the first year of operation, the profit from the company’s operations in this direction amounted to at least $200 million. Now Itera has been completely ousted from the Ukrainian gas market, which has been occupied by NJSC Naftogaz of Ukraine as a monopoly since last year.
In his testimony, Mr. Krug noted that in July 1997, almost immediately after Pavel Lazarenko left the prime minister's chair, he asked to transfer his money from Switzerland to the Bahamas. The defendant said that the political situation in Ukraine was unstable and he needed additional protection for his $96 million and asked him to give the money in cash. “I've never seen so much cash, but it would probably take several truckloads,” the banker said. To avoid drawing attention to the transaction and not to violate banking regulations, SCS Alliance issued two checks to Lazarenko for $48 million, which he deposited into the bank's Nassau, Bahamas, branch account on the same day.
It is difficult to say what consequences the $25 million episode will have for Itera and its management. It is unlikely that the US authorities intend to pursue this case. Moreover, the company’s shareholders have far-sightedly invested in American politics, in particular, they are sponsors of Ms. Brown, a member of Congress from Florida. Although, theoretically, Itera, a company registered in this country, could easily be prosecuted for giving a bribe. Alexey GRIVACHS |
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