AMBER FROM MEMBERS OF UKRAINIAN PARLIAMENT: How the NABU, the SAPO and the FBI exposed the corrupt schemе

07.07.2017 13:34

What happened?

On analyzing social, economic, legislative and regulatory processes in Ukraine, the NABU identified that among spheres that are the most susceptible to top-corruption is extraction and realization of amber on the territory of Rivno, Zhytomyr and Volyn Regions. Clearly these processes have illegal character, and it would be impossible to conduct them without support of representatives of state authorities, including some of the representatives of the Parliament. Having collected the data both from open and confidential sources, electronic databases and keeping in mind possible illegal involvement of law enforcement and controlling agencies, the National Anti-Corruption Bureau of Ukraine decided to initiate a special operation to disclose a criminal activity of participants of an organized group. The National Anti-Corruption Bureau of Ukraine has the right to take such actions according to Article 8 of the Law of Ukraine «On Special Investigative Techniques».

Following her cover story, the NABU Detective «Kateryna», acting as a person cooperating with foreign construction company interested in investing in legal extraction and exports of amber, established and developed trustworthy relations with possible participants of illegal operations with amber. «Kateryna» shared with these persons the company's plans to invest funds if the legislation on extraction and export of amber is changed. The longread helps to find out what have happened next...

Episode I. How Members of Parliament help business

Characters in the scene

Maksym Poliakov — Member of Parliament of Ukraine

Boryslav Rosenblat — Member of Parliament of Ukraine

Vadym P. – Head of the Inter-Fragmental Deputy Association of the Verkhovna Rada of Ukraine Parliamentary Control

Tetiana L. — assistant-consultant of Maksym Poliakov

Boguslav Y. — bodyguard of Boryslav Rosenblat

Kateryna — representative of the Arab non-resident company Fujairah, under cover agent of the National Anti-Corruption Bureau of Ukraine


First act. The criminal plan
 

September-October 2016
Member of Parliament Maksym Poliakov is being addressed by the Head of the Secretariat of Inter-Fragmental Deputy Association of the Verkhovna Rada of Ukraine «Parliamentary Control» Vadym Rudenko with a request to «facilitate» a foreign company in starting amber mining operations in Ukraine. A foreign construction company, represented by Kateryna, declared intentions to invest money in organization of legal extraction and exports of amber. However, the realization of such intentions, from the company's point of view, was possible only upon amendment of legislation. Tetiana L., assistant of Member of Parliament Maksym Poliakov, got in touch with Kateryna and informed her of his readiness to assist in adopting necessary amendments to the legislation. In particular, the request was for amending the Draft Law «On Extraction and Realization of Amber» (theauthor of the Law is another Member of Parliament Boryslav Rosenblat).

 

 
About the Draft Law «On Extraction and Realization of Amber» 
The Draft Law №1351-1 "On Extraction and Realization of Amber, was registered in the Verkhovna Rada of Ukraine on December 26, 2014.

The accompanying note to the document stated that «it is aimed to create favorable conditions for development of a new economic activity in Ukraine connected with extraction, realization and processing of amber, to attract new investments and technologies, to increase the level of life of population living in the amber mining region, to provide for environmental protection during extraction of minerals and reclamation of disturbed lands, to stop illegal amber extraction, etc».

23.04.2015 the Draft Law was approved at the first reading. During February - August 2016 it was being included into Parliamentary Agenda numerous times, however, it never came down to voting.

07.02.2017at the plenary meeting of the Verkhovna Rada of Ukraine this Draft Law was rejected.

 

October — November 2016
Maksym Poliakov approached the author of the Draft Law Boryslav Rosenblat. Instead of amending the Law, they jointly decide to register two more Draft Laws on Amendments to the Customs Code of Ukraine. The MPs offer Kateryna as a representative of the company Fujairah to pay for their «services» 15 thousand USD (7.5 thousand USD each).

 

About the Draft Laws on Amendments to the Customs Code prepared by the Members of Parliament Rosenblat and Poliakov
 
On 22.11.2016 the Draft Law №5436 "On Amendments to the Tax Code of Ukraine (on the specifics of taxation of activities related to amber extraction)" (now awaiting consideration by the Verkhovna Rada of Ukraine) and the Draft Law №5437 "On Amendments to the Customs Code of Ukraine (on dismissal from the taxation of operations for the import of equipment for the industrial production of amber into the territory of Ukraine)" (considered by the Committee, included to agenda, decision hasn't been taken), initiated by Poliakov and Rosenblat, were registered in the Verkhovna Rada of Ukraine.
 

Since Kateryna and the assistant of Maksym Poliakov, Tetiana L., made friends, the Member of Parliament decided to engage the latter into realization of the plan.

 
 

Second act. Realization of the plan «Draft Laws for Illegal Advantage»

November 2016

Due to excessive media attention, the Members of Parliament demand and receive funds from Kateryna using their assistants and bodyguards. Particularly, on November 22, and November 28, 2016, the assistant of the Member of Parliament Maksym Poliakov, Ms. Tetiana L., received from Kateryna 5 and 2.5 thousand USD respectively. On November 24, 2016, the bodyguard of MP Boryslav Rosenblat, Boguslav Y, received 7.5 thousand USD upon the order of Boryslav Rosenblat.

 
 

Episode II. Business for the Member of Parliament

Characters in the scene

Boryslav Rosenblat — Member of Parliament of Ukraine

Boguslav Y. — bodyguard of Boryslav Rosenblat

Viktor A. — bodyguard, assistant-consultant of Boryslav Rosenblat

Kateryna — representative of Arab non-resident company Fujairah, under cover agent of the National Anti-Corruption Bureau of Ukraine

Officials of the State Agency for Forest Resources, State Service for Geology and Mineral Resources, prosecutor's offices, courts, local authorities of Zhytomyr Region

 


First act. Contacts «pursuant to the Decree»


December 2016 – March 2017

At the meeting with Kateryna Boryslav Rosenblat refers to complexity and continuance of the process of legislation approval, necessaty to start the legal work on amber extraction. At the same time, he explains, that amber can be extracted in Ukraine under different conditions. He informs that he himself and a group of other officials lobby the adoption of a governmental decree that would allow, under the guise of reclamation of damaged land, the extraction of amber.

 

About the Decree of the Cabinet of Ministers on Reclamation of Lands damaged as a result of illegal amber extraction

On November 30, 2016, the Cabinet of Ministers of Ukraine adopted a decree №1063 "Some aspects of realization of a pilot project on reclamation of forestry lands damaged as a result of illegal amber extraction" which approved the Order of Realization of a Pilot Project on Reclamation of Forestry Lands damaged as a result of Illegal Amber Extraction. On February 16, 2017, the decree entered into force.

 
Pursuant to this decree, Boryslav Rosenblat offers Kateryna not to wait until Draft Laws, previously submitted to the Verkhovna Rada of Ukraine, are considered, but to create a legal entity in Ukraine that would start amber extraction on the territory of Zhytomyr Region using a subsidiary enterprise of «Ukrburshtyn» - PJSC «State Joint-Stock Company «Ukrainian Polymetals».
 
 

 

Kateryna supports Rosenblat's plan: relevant LLC was registered on January 28, 2017. A Member of Parliament convinces Kateryna that he is capable to provide for a five-year contract between the abovementioned LLC and one of the state enterprises-executors of a pilot project on land plots of Zhytomyr Region. Along with this, 60% of the extracted amber will go to the state, 40% — would stay with the enterprise, and they will share between each other the income from sales of amber at market prices using an intermediary. After extraction, the amber will be exported to Arab countries at low price and the income formed as a difference between the price of Amber in Ukraine and its price to the final buyers will be accumulated on the banking account of a company registered in the off-shore jurisdiction — free economic zone of the United States of America - which Boryslav Rosenblat told Kateryna to create.


Second act. Land plots for «reclamation»

March — May 2017

At the beginning of March 2017, the State Agency for Forest Resources adopts a decision on allocation of forestry land plots in Zhytomyr region, necessary for further extraction of amber. However, later it turned out that special permissions to use mineral resources on some of those land plots have already been issued to other legal entities.
However, Boryslav Rosenblat convinces Kateryna that for a certain «encouragement» he will be able to influence officials of the prosecutor's offices and courts in order to cancel the previously issued permissions to use mineral resources on the above mentioned land plots for them to be later used in the interests of Kateryna's company.

 
 

Third act. A turnkey project

May-June 2017

Due to impossibility to conclude a contract between the LLC and the State Enterprise «Ukrburshtyn» PJSC «SJSC «Ukrainian Polymetals» luded, Boryslav Rosenblat offers Kateryna to give him an advantage in the amount of 200-250 thousand USD for a so-called «turnkey project». It went about purchasing a land plot with a total area of 30 hectares. Later with the help a Member of Parliament it was supposed to influence the adoption of decision by officials of the State Service for Geology and Mineral Resources of Ukraine and local authorities (Zhytomyr Regional Council) and toreceive a special permission to use mineral resources in order to be able to start the extraction of amber.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
On June 19, 2017, Boguslav Y. in the building of Kyiv restaurant «Three forks» received from Kateryna 200 thousand USD FFOR FURTHER TRANSFERRING TO BORYSLAV rosenblat.

Episode III. Enticement by contraband

Characters in the scene

Boryslav Rosenblat — Member of Parliament

Boguslav Y. — bodyguard of Boryslav Rosenblat

Kateryna — representative of Arab non-resident company Fujairah, agent of the National Anti-Corruption Bureau of Ukraine under cover

 


First act. Purchase a ton of amber

March — June 2017

Boryslav Rosenblat offered Kateryna to purchase an illegally extracted amber through an off-shore Scottish company that allegedly bought stones in Poland. The agreement had to be accompanied by the partner of the Member of Parliament Roman Kudenko. On June 19, 2017, at the searches in one of the apartments in Kyiv, the Detectives of the National Anti-Corruption Bureau of Ukraine and prosecutors of the Specialized Anti-Corruption Prosecutor's Office found and seized more than