New page: In many countries presidents live in an official residence which is built and maintained at the taxpayers' expense. Usually the right to enjoy that luxury is limited by the limits of the p...
New page
In many countries presidents live in an official residence which is built and maintained at the taxpayers' expense. Usually the right to enjoy that luxury is limited by the limits of the presidential term in office. On the face of it, similar rule exists also in Ukraine where the head of the state, as in Soviet times, is entitled to a special dacha (typically a small villa), maintained by the taxpayer, in a posh leafy suburb of Kyiv, from there the presidential cavalcade commutes every day to the presidential office in the centre of the capital and back. But in a twist of that old Soviet rule, presidents of independent Ukraine received a right to keep occupying their dachas even after their term in office has expired as well as a right to "renovate" their dachas, which provides a loophole to de-facto privatisation of the state property on the cheap.
All three previous presidents of Ukraine have to various degrees made use (or perhaps move appropriately: abuse) of those rules.
But the fourth one, the currently serving president Victor Yanukovych, seems to have taken this abuse to a whole new dimension. Partly in a literal sense: the former government residence located near the Ukrainian capital Kyiv in the area called Mezhyhirya is huge – it measures up to 150 hectares (370 acres).
But partly because of the way how the ownership right to the residence was transferred from the state to a string of foreign shell companies with clear links to Mr Yanukovych. And also because of the frantic construction activity, financed from intransparent sources, which has taken place within the residence since the president came to power in 2010.
All this factors taken together explain why residence Mezhyhirya became a byword for high-level corruption in Ukraine.
A museum of kitsch almost the size of a smallish European state
As widely known in Ukraine, the main building in Mezhyhirya is a mansion built by a Finnish company Honka which specialises in custom-made log homes.
It is this wooden palace – three-storeyed on one side, five-storeyed on the other – what is said to be the true home of Viktor Yanukovych after its completion by the end of 2010.
The Honka-palace is surrounded by a park with exotic plants and artificial lakes. The Google Maps' satellite view provides evidence that all the construction works have been completed within one year after the president had taken office.
Around the main building there are an underground shooting range, a bowling and an indoor tennis court as well as wellness facilities.
Currently, beyond the area where Honka-palace is located there is a huge empty space covered by sand. As recently as last year it was covered by vineyards but they have been axed away. Now a golf course is being speedily constructed here.
This golf course is surely going to be one of the most prominent landmarks on Mezhyhirya's proper. Mr Yanukovych once admitted to the journalists that he loves golf and showed his collection of golf clubs.
Golf is an aesthetic amusement requiring big investments. According to the specialist website golf.ru the average construction cost of an 18-hole golf course range from two to three million Euros. Complementary infrastructure is going to cost roughly the same amount once again.
During 2011 a helipad and a hangar have emerged on a hitherto empty patch of land. The helicopter itself, according to a previous investigation by Ukrainska Pravda, is being rented from a company called Tsentravia. Interestingly, this company is interlinked with entities which pose as nominal owners of Mezhyhirya. The rental payments for the helicopter are made out of the public purse.
Close to the helipad another large white building has sprung up since last year – a parking to house a collection of cars belonging to the president. The parking is said to have a capacity of up to 70 vehicles.
A yacht marina is also being built nearby. Interestingly, the yacht hangar is being constructed on the land plot adjacent to the residence. This means that the residence's owners have got their hands onto another plot of state land, but already outside of the residence – just next to the reservoir of Kyiv Hydro-Accumulating Power Station.
Next to the yacht hangar a new fire station has also been built.
Initially the yacht marina was planned at another site – a small artificial bay at the residence's shore. But now that bay is occupied by a "palace on water". This is a barque with finishing of gold leaves, crystal, marble and rare sorts of wood.
It is in this "palace on water" where the president has all he needs to show off his talent as a karaoke-singer, according to one story told by a former bodyguard.
Close to the (relatively small) two-storeyed building, where Mr Yanukovych used to live until the construction of Honka-palace has been finished, a horse stable and a riding range are being completed.
Also during the last year a three-storeyed office building has sprang up near the main entrance to Mezhyhirya. It shelters a plethora of companies responsible for facility-service: construction, landscaping, taking care of security and cleaning.
The obscure owners of the residence continue working on it. Most recent information which Ukrainska Pravda obtained from trustworthy sources provides an insight of what is still going on behind the residence's huge fence. Last summer a barge of crushed stone has been ordered for the residence's needs from a Poltava region stone-pit. Such stone is usually being used in shore-protecting and hydro-engineering works.
Guarded like a fortress
The land borders of the residence are shielded off by a six-meter (!) fence (that's almost 20 feet!). The journalists were able to estimate the height of the fence by measuring it up against a police bus "Bogdan".
This police bus so close to the fence of Mezhyhirya is a conundrum of its own. That is because Yanukovytch maintains he has nothing to do with the whole residence and privately owns only an (already mentioned above) small house on a small patch of land within it (1.76 hectares or 4.35 acres; although the price he supposedly has paid for this property is still a closely guarded secret).
Nevertheless for some reason the special police troops inside the bus do not concentrate on that small patch of land, but guard the whole outline, which runs for many kilometres of the supposedly privately-owned residence. The Ministry of Internal Affairs of Ukraine responded to the official request by saying that special police troops "guard the civic order and road traffic safety around the place where a person requiring safeguarding by the state lives".
The waterfront of Mezhyhirya is thoroughly guarded too.
In a yacht club on the opposite side of Kiev water reservoir (also known as Kyiv sea) the correspondent of Ukrainska Pravda was told that after the election of Mr Yanukovych to the presidency, they were visited by the representatives of the Department of State Guard who forced them to sign an obligation not to approach the shores of Mezhyhirya and not to take any journalists on board.
However such restrictions on water do not compare to those in the air.
Ukrainska Pravda found out that the space above Mezhyhirya was recently assigned the status of a no-fly zone.
The Ukrainian State Air Traffic Service Enterprise in response to a request by Ukrainska Pravda maintained that the no-fly zone status of the area is not related to Mezhyhirya but to the Kyiv Hydroelectric Station (Kyiv HES) nearby.
But this statement contradicts the facts: a close look at the aeronautical map reveals that the no-fly zone is centered not on Kyiv HES, but precisely on Mezhyhirya.
Moreover, according to the sources of Ukrainska Pravda, initially flying was indeed prohibited only above the HES, but after Mr Yanukovytch has taken the presidential office the no-fly zone was extended to include Mezhyhirya and, apparently for additional safety, even a couple of kilometres beyond it.
This again discredits the official version according to which Mr Yanukovych has nothing to do with Mezhyhirya and just owns a small house inside it.
Murky intermediaries providing cover to the true owners of Mezhyhirya
Viktor Yanukovych continues to vigorously deny any link to the "8th Wonder of the World" sprawling on the shore of Kyiv sea in the village of Novi Petrivtsi. When questioned about residence Mezhyhirya at a media conference in July 2011 he recommended addressing this question to Mezhyhirya's owners "who live abroad".
"...If you want [to talk to] the landlords – search for them. I am sure they will turn up. Sometimes they visit Ukraine..." – said Mr Yanukovych.
Heeding the president's advice Ukrainska Pravda started its investigation into the nature of those "foreign landlords". The results obtained were unsettling – all of the "landlords" have attributes of shell entities and their only purpose seems to be to hide the true owners.
Pointing out that the owners of Mezhyhirya come from abroad, Mr Yanukovych simply stuck to the official version that the residence belongs to Tantalit Ltd., a Kyiv company, 99.97% of which are owned by Euro East Beteiligungs GmbH, an Austrian firm.
So in fact the president himself indirectly admitted that Tantalit is just a formal paper entity.
Yet judging by its balance sheet Euro East Beteiligungs GmbH also hardly looks like a respectable company: its cash holdings are much smaller than its debt which, in turn, is 600 times larger than its equity! And according to its annual report it has not a single employee.
So this company is just a letterbox which channels money and conceals the real owners.
Dubious owners from Vienna, London and Vaduz
Until recently the equity stakes of Euro East Beteiligungs GmbH were divided up between two owners: 65% of it belonged to Euro Invest Bank AG, also from Austria, and the remaining 35% – to Blythe (Europe) Ltd., incorporated in London.
Euro Invest Bank is a family business of Johann Wanovits. In exchange for a fee they offer to act as nominal owners for customers who want to preserve their anonymity. For example, it was also Mr Wanovits who helped another pair of Ukrainian politicians – the Klyuev brothers, to set up their business in Austria.
Lately however life has not been easy for Mr Wanovits – he stands accused of price manipulations of Telecom Austria shares.
Perhaps this is the reason why Euro Invest Bank AG is no more one of the owners of Euro East Beteiligungs GmbH – the company which through Tantalit Ltd. owns Mezhyhirya.
Now all 100% of Euro East Beteiligungs GmbH belong to British Blythe (Europe) Ltd.
Its address is: Suite B, 29 Harley Street, London. But no company sign is visible at the entrance.
Yet there is another company which is physically located here – a firm called Formations House. It is specializing in creation of shell entities which provide fictitious storefronts for anonymous customers.
As it seems, Blythe (Europe) Ltd. is just one of such shell entities – a letterbox created with a single purpose to hide its real owners.
Blythe (Europe) Ltd. was founded by an attorney from Liechtenstein DDr. Reinhard J. Proksch who is an Austrian citizen. Mr Proksch is also the firm's director. His Liechtenstein trust company P&A Corporate Services Trust is also a single owner of Blythe (Europe) Ltd.
Ukrainska Pravda has recently reported that P&A Corporate Services Trust is also a nominal owner of Austrian company Activ Solar GmbH, which is linked to the already mentioned Klyuev brothers and is building solar power plants in Ukraine.
Yanukovych family stooge
As described above the nominal owner of residence Mezhyhirya is Kyiv company Tantalit Ltd., which in turn is 99.97% owned by Austrian Euro East Beteiligung GmbH.
The owner of the remaining 0.03% in Tantalit is its director Pavlo Lytovchenko who, like Mr Yanukovych, also comes from Donetsk. And the only reason, it seems, for him to hold those paltry 0.03% is to make him eligible, under Ukrainian law, for the director's post.
Mr Lytovchenko's person is one key evidence proving the link between president Yanukovych and residence Mezhyhirya, the link which Mr Yanukovych is trying so hard to conceal.
Would Mr Yanukovych be completely unrelated to Mezhyhirya why then would he keep Mr Lytovchenko, a director of the residence's owner and its minor shareholder, so close to his family?
In 2004 to 2007 Mr Lytovchenko worked at Association "Donbass Financial Settlement Center". This entity belongs to the older son of the president Oleksandr Yanukovych. Coincidentally, after the president came to power this company suddenly started to win government contracts to supply clean coal worth billions of hryvnias.
In parallel to his job at Association "Donbass Financial Settlement Center" Mr Lytovchenko from 2005 to 2007 also moonlighted as deputy CEO of Capital Building Corporation Ltd. Again, this company is directly linked to the oldest son of the president: the founder of Capital Building Corporation is another company – MAKO, who's CEO and owner is Oleksandr Yanukovych himself.
Besides common business with the president's elder son, Pavlo Lytovchenko has things in common with his younger offspring as well.
For instance, the 2011 tax statement of Victor Yanukovych-junior was filled-in and submitted to the Tax Administration by Mr Lytovchenko.
Ukrainska Pravda discovered that the letter of attorney from Victor Yanukovych-junior to Mr Lytovchenko, giving the latter power of attorney, is valid until 2013. The president's younger son in a recent interview with Ukrainska Pravda confirmed that Pavlo Lytovchenko is "the man who takes care of certain legal matters".
All those facts, in a view of Ukrainska Pravda, give enough reason to think that Pavlo Lytovchenko acts like a "consigliere" to Mr Yanukovych's family. In other words he is a confidant who has knowledge about the family's deepest secrets and tries to white-wash the family's ill-gotten property with help of a myriad of shell entities.
And the crown jewel among all the family property holdings is residence Mezhyhirya.