Corruption that has corroded the National Anti-Corruption Bureau of Ukraine is an epidemic worse than coronavirus, which has been attested by the case of Andrew Favorov—a second-in-command at Naftogaz of Ukraine NJSC—who, for the time being, has self-quarantined due to getting COVID-19. Favorov, a citizen of Russian Federation and the U.S., caught this virus overseas, which on March 20, 2020 was revealed by his father Mikhail Favorov (by the way, an epidemiologist by occupation) on Echo of Moscow.
“While I was in Turkey, my son stayed here at our home, in Atlanta, and then flew to Ukraine for work. He works in Ukraine. We cannot say precisely, in which of the two planes, in which airport or where he caught the disease, but he arrived to Kyiv on Wednesday, and on Saturday, he felt sick, felt feverish; he took the temperature, it was around 38 centigrade, and this characteristic dry cough started, like barking.”
Scared Favorov Jr. took the test that confirmed coronavirus infection, and a day hence, his wife got sick as well.
In fact, the reason for Andrew Favorov’s condition is not pandemic per se, but rather his love of Artem Sytnyk’s money (Sytnyk is a Director of the NABU). Under direct supervision of the latter, for almost a year now, from March 20, 2019 detectives of the National Anti-Corruption Bureau of Ukraine have been conducting a pre-trial investigating within a criminal proceeding 42019000000000611, registered by the Special Anti-Corruption Prosecutor’s Office on the basis of a criminal offence under Part 5 of Article 191 of the Criminal Code of Ukraine—regarding grand theft of state funds by Favorov.
The case is very simple. Naftogaz of Ukraine NJSC has a subsidiary—Gas Supply Company Naftogaz Trading LLC. More precisely, this company, together with six other subsidiaries, two departments, and two divisions of Naftogaz of Ukraine NJSC constitutes the Integrated Gas Business Division, headed by Andrew Favorov, the citizen of Russian Federation and the U.S.
Anyway, in November-December of 2018, this Gas Supply Company Naftogaz Trading sold 101 million cubic meters of gas to another subsidiary of Naftogaz of Ukraine NJSC—Ukrtransgaz JSC. But what a surprise: it sold the gas not directly but using a “middleman”—a private ERU Trading LLC. At that, ERU Trading received gas from the state company Gas Supply Company Naftogaz Trading at a discount, but resold it to the state company Ukrtransgaz at a regular price, “making” USD 2.2M in profits just by doing a little paperwork (because trading gas located in storages is nothing more but exchanging documents). But miracles don’t stop even here: at the time of entering a gas sale contract, that very Favorov was an owner of ERU Trading LLC, and left the “middleman” only to get appointed a Head of the Integrated Gas Business of Naftogaz of Ukraine NJSC in December of 2018, and to head the Gas Division of this company and—in combination—UkrGasVydobuvannya JSC in January of 2019.
Let’s ponder: how much time does a detective of the NABU need to send files in criminal proceeding to court, along with an indictment against Favorov and a director of Gas Supply Company Naftogaz Trading LLC? Two months would be more than enough, because one needs to investigate only the fate of those very USD 2.2M that were left in the account of ERU Trading LLC after selling gas by one state company to the other one. Well, there are only two possibilities: either the money was transferred to a conversion center and encashed afterwards, or it was transferred to an offshore account.
To conduct investigation and send the case files to court, a detective of the NABU would only need to carry out the following steps:
- Request an investigative judge to provide temporary access to the founding and organizational documents of ERU Trading LLC, Naftogaz of Ukraine NJSC, Gas Supply Company Naftogaz Trading LLC, and Ukrtransgaz JSC (to obtain evidence of Favorov handling organizational functions of Naftogaz of Ukraine NJSC and, at the time of trading gas between two subsidiaries, being a manager and founder of ERU Trading LLC);
- Request an investigative judge to provide temporary access to documents of ERU Trading LLC containing bank secrecy (to establish the fate of USD 2.2M, or, to be precise, UAH 59.4M, that constitute the difference between the selling and buying prices of gas);
- Question witnesses—employees of Gas Supply Company Naftogaz Trading LLC and Ukrtransgaz JSC;
- Question a suspect Favorov and his accomplices (management of Gas Supply Company Naftogaz Trading LLC), formally notifying him of suspicion;
- Request an investigative judge to determine restraint measures for the suspects;
- Request an investigative judge to suspend the suspects for the period of pre-trial investigation;
- Request an investigative judge to order examination to determine the extent of damage caused by the crime;
- Write an indictment.
And now let’s see what the NABU managed to investigate over the course of this year.
As was expected, instead of investigating gas trading, the NABU only engaged in passing gases and imitated lots of activity. In particular, the Unified State Register of Court Decisions doesn’t contain a single decision by an investigative judge within this criminal proceeding. In other words, Volodymyr Vitkovskyi, a senior detective of the First Detectives Division of the NABU, who investigates this extremely complicated case, didn’t apply a single request to the court. And the only investigative action carried out by Volodymyr Stanislavovych was sending a letter to Naftogaz of Ukraine NJSC in April of 2019, in which he asked, in an act of out-of-court communication (i.e. without an investigative judge’s decision granting temporary access to documents), to send copies of gas trading agreements between subsidiaries to the NABU. And he rested his case there.
And if only the NABU detectives hit the ground running with this criminal proceeding, they would immediately find out that as of summer of 2018, Andrew Favorov, the manager and founder of ERU Trading LLC, had his own office at Naftogaz of Ukraine NJSC and even a personal secretary, a Naftogaz of Ukraine NJSC employee named Olena Rozhkova. At that, Favorov, being an outsider, on appropriate instructions, held meetings at Naftogaz of Ukraine NJSC and de facto managed all gas sales. It was Favorov who, still working at ERU Trading LLC, on December 12, 2018 held a meeting at Naftogaz of Ukraine NJSC where he prohibited extending gas sales agreements that expired on December 10, 2018 and demanded to enter into new agreements in the interest of ERU Trading LLC. Of course, only Kobolyev could provide an outsider with office space and let Favorov issue orders and hold meetings. And detectives of the NABU won’t investigate Kobolyev’s activities at any price—Riaboshapka shouldn’t cherish any illusions.
However, a recent scandal involving bugging offices of judges of the Kyiv District Administrative Court by Sytnyk’s subordinates attested to the fact that there are people, not necessarily with big names, who can put in a good word with the NABU for Favorov. In particular, it can be concluded from the released wiretaps that Andriy Fedorchuk, one of the KDAC judges, covertly cooperates with the National Anti-Corruption Bureau of Ukraine. Moreover, Fedorchuk is the very same judge who, in his decision of February 2, 2017, prohibited the State Tax Service from enforcing collection of UAH 137.7M of tax debt from Favorov’s Energy Resources of Ukraine company (ERU Trading LLS is its “subsidiary”), citing harm to company’s economic activity that could be potentially caused by paying the taxes.
However, the most likely reason that nudged honest and incorruptible Sytnyk to impede investigations of Favorov’s scams is Artem Sergiyovych’s craving for currency. At the very least, if a person has been taking bribes on a regular basis for 10 years of his tenure at the prosecutor’s office, there seem to be no reason as to why he would stop doing so after having been appointed a Director of the National Anti-Corruption Bureau of Ukraine.
Had Sytnyk not pursued fresh money and not prohibited detective Vitkovskyi from notifying Favorov of suspicion in embezzlement, the Head of the Integrated Gas Business Division would have been in the dock, would have not been able to go home overseas, and would have not put at risk neither his own life nor life and well-being of other employees of Naftogaz of Ukraine NJSC.