Main "antioligarch" Ukraine was caught offshore

Ukrainian President Volodymyr Zelenskiy has actively opposed politicians hiding wealth offshore, but was unable to hide his own ties to an offshore firm based in the British Virgin Islands.

Article by a well-known international publication The guardian brought Vladimir Zelensky not only local cinematic, but also real – worldwide fame. But it is unlikely that he is now happy with this glory.

The media around the world came out with articles about offshore and many show off the “bright face” of the main “anti-corruption” and “fighter against the oligarchy” – Vladimir Zelensky.

In the Ukrainian media, there have already appeared (and there will be more) a lot of articles from experts who excuse Vladimir Alexandrovich, saying that this is normal.

But in this everyone, you need to know only one thing: offshore is not just tax optimization, it is the desire not to pay taxes in Ukraine. They will tell you that this is okay, but I will tell you that it is still scary, especially in the context of the fact that this is being done by the President of Ukraine, who has declared himself the main anti-corruptionist and fighter against oligarchs.

Illustration: Guardian Design

For four years, actor and comedian Volodymyr Zelensky entertained the Ukrainian TV audience with his main role in the sitcom Servant of the People. Zelenskiy plays a teacher who, outraged by chronic corruption in his country, is successfully running for president. In 2019, Zelenskiy turned fiction into reality when he took part in the real presidential elections in Ukraine and won.

During the election campaign, Zelenskiy promised to cleanse Ukraine’s ruling system, which is dominated by oligarchs. And he opposed politicians like former President Petro Poroshenko, who hid their assets offshore… The message worked. Zelensky received 73% of the votes and now sits in a huge office in the capital, Kiev, decorated with gilded stucco ceilings. Last month he negotiated with Joe Biden in the Oval Office.

However, Pandora documents leaked to the International Consortium of Investigative Journalists (ICIJ) and leaked to the Guardian as part of a global investigation clearly show that Zelenskiy is very similar to his predecessors.

Leaked documents suggest he had – or has – a previously undisclosed stake in an offshore company, which he appears to have secretly passed on to a friend weeks before winning the presidential election.

Zelenskiy did not comment on this statement, despite numerous attempts by the Guardian and its media partners to contact him. Its official representative Sergey Nikiforov wrote: “There will be no answer.”

A shot from the satirical comedy show “Servant of the People” with Volodymyr Zelensky in the title role – the President of Ukraine. Photo: Quarter 95.

The files show that Zelenskiy was involved in an extensive network of offshore companies co-owned by his longtime friends and partners in the television business. Among them are Sergey Shefir, who produced Zelensky’s hit show, and an older brother Shefira Boris, who wrote the scripts. Another member of the consortium is childhood friend Ivan Bakanov. Bakanov was the general director of Zelensky’s production studio Kvartal 95.

They are all connected to Krivoy Rog, Zelenskiy’s hometown in southern Ukraine. After seizing power, Zelenskiy brought these close allies into government. Bakanov headed the Security Service of the SBU. Zelenskiy made Sergei Shefir his first assistant, an unpaid role tied to the president’s daily routine. The fourth member of this close-knit group is Andrey Yakovlev, film director and producer of Kvartal 95.

Zelenskiy said the appointments were about personal trust, not financial nepotism. “I have several people working with me who have been my friends for a long time … They have nothing to do with business or budget,” he told the Guardian in 2020.

Secret translation

Before becoming president, Zelenskiy declared some of his personal assets. These included cars, property and three jointly owned offshore companies. The first, Film Heritage, which he owned with his wife Elena, the former author of 95, is registered in Belize.

But the Pandora documents show other offshore assets that Zelenskiy did not appear to disclose. Film Heritage owned 25% of the Cypriot holding company Davegra. That, in turn, owns Maltex Multicapital Corp, a previously unknown company registered in the tax haven of the British Virgin Islands (BVI). Zelensky, brothers Shefir and Yakovlev each owned 25% of Maltex shares.

According to the documents, on March 13, 2019, two weeks before the first round of voting in the elections in Ukraine, Zelenskiy transferred a quarter of the stake to Maltex Sergey Shefir… It is unclear whether Shefir paid Zelenskiy. Bakanov witnessed this secret transfer and signed the offshore papers.

About six weeks later, after Zelensky’s convincing victory, a lawyer from the Kvartal 95 group signed another document. It stipulated that Maltex would continue to pay dividends to Zelenskiy’s Film Heritage, although it no longer owns a stake in the company. According to the Maltex client profile, its main income comes from operations in Ukraine, Russia and Belarus.

Volodymyr Zelenskiy and his wife Elena at a polling station during the parliamentary elections in Kiev, Ukraine, in July 2019. Photo: Valentin Ogirenko / Reuters / Alamy

The Pandora filings do not indicate whether or not dividends were ever paid or how much they were paid. They also do not disclose how many payments may have been made. Zelenskiy’s wife Elena is now the declared beneficial owner of Film Heritage, which means any payments from 2019 would go to her.

A key document dated April 24, 2019 states that Maltex owns shares in companies that produce and distribute television films. One of the reasons for the creation of Maltex was “tax-efficient accumulation of business profits”; the other was allegedly “legal protection”. Boris Sheyfir said Bakanov mainly set up offshore “financial schemes” to protect the company from “authorities and bandits.”

“Honestly, I’m not ready to answer you. It could be that I am the owner [из Maltex]”, – said Chief in an interview with OCCRP, one of the media partners of the Pandora paper. He said he was trying to get rid of his offshore interests, but that it was a slow and difficult process. Sergei Shefir, Bakanov and Yakovlev declined to comment, as did their lawyer.

The Maltex exposure embarrasses Zelenskiy, who has pledged to crack down on those who send wealth abroad. Last month, the Ukrainian parliament passed anti-oligarch bill… The voting took place the day after the unknown tried to kill Shefira. The killer opened fire on his car on the highway outside Kiev. He was not injured, but his driver was injured. The attempt could have been motivated by opposition to the bill.

In the recent interview for the Atlantic Council, Zelenskiy said his ultimate goal as president is to destroy the “traditional oligarchic order” and replace it with a “just system.” However, critics say Zelenskiy has failed to reform the state and has followed the same dark paths as his predecessors. EU auditors warned in last month that “major corruption and state takeover” is still widespread in Ukraine.

Since becoming involved in politics, Zelenskiy has been haunted by claims that he is under the influence of a billionaire. Igor Kolomoisky, whose TV channel aired Zelenskiy’s show. During the campaign, Zelensky’s opponents claimed that 41 million dollars from Kolomoisky’s structures in the period from 2012 to 2016 fell into the offshore companies of Zelensky and his entourage, including Film Heritage.

Connection with Russia

The Pandora docs show that at least some of the circuit details, to which the Poroshenko party refers, correspond to reality. They show that part of the 95 Quarter network was operated by Fidelity Corporate Services, an offshore consulting company and one of 14 firms whose documents were in the leaked data. The files show that Zelenskiy and his business partners used companies based in the British Virgin Islands, Belize and Cyprus.

The assets held by these offshore companies are very diverse. These include real estate in London. Shefir owns two luxury properties: a three-bedroom apartment in an Edwardian mansion in Regent’s Park, bought in 2016 for £ 1.575 million, and another three-bedroom apartment on nearby Baker Street, opposite the Sherlock Holmes Museum, bought for £ 2.2 million according to inventory data.

Meanwhile, Yakovlev’s Candlewood Investments in the British Virgin Islands owns a luxury condo in a Victorian mansion in Artillery Row, Westminster. The property was acquired around the time that Zelenskiy’s show was being turned into a feature film and re-commissioned for the second episode. It is unclear if these three apartments are rented out or used from time to time. They are run by Russian company, which positions itself as “personalized service for high status customers.”

Zelenskiy’s apparent business ties with Russia through Maltex are likely to prove controversial. Poroshenko has been criticized for owning a chocolate factory in Russia as Ukraine waged a war against “Russian troops and their henchmen” following the Kremlin’s “annexation” of Crimea in 2014. The conflict, which killed 14,000 people, continues in eastern Ukraine, with Moscow-backed insurgents in Donetsk and Luhansk. Previously, Russia was the main market for Kvartal 95, where Russian television broadcast his comedy shows.

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