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Offshore Companies of Petro Poroshenko: Decent Goal, Questionable Methods

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Offshore Companies of Petro Poroshenko: Decent Goal, Questionable Methods TABLE OF CONTENTS Overviews of political events of the week Analytical report REFERENDUM IN THE NETHERLANDS: CHALLENGES FOR UKRAINE AND THE EU OFFSHORE COMPANIES OF PETRO POROSHENKO: DECENT GOAL, QUESTIONABLE METHODS Overviews of political events of the week April 4 President of Ukraine Petro Poroshenko informed that he signed a decree on the dismissal of Prosecutor General Viktor Shokin and intends to hold consultations with the parliamentary factions regarding the candidacy of the new head of the PGO. The offshore scandal due to the leak of information from the database of the Panamanian company MossackFonseca flared up in Ukraine. According to investigation by Ukrainian journalist Anna Babinets made public within the framework of the project Organized Crime and Corruption Reporting Project (OCCRP), President Poroshenko did not convey the confectionary Roshen into a trust fund as he promised, but instead formed three offshore companies for restructuring.. Commenting on the “offshore scandal”, Poroshenko stated that when he was elected president he gave up the management of assets, including those of the Roshen company. The legal council of the president justify the creation of such a group of firms by the fact that “it corresponds to market practice in Ukraine for enterprises that are subject to sale to strategic investors. April 5 Nadia Savchenko went on a dry hunger strike. Such was the reaction of the Ukrainian pilot to the sentence of the Russian court, which took effect today. Savchenko’s defense attorneys informed that their defendant out of principle does not accept the court sentence of 22 years in prison and will remain on her hunger strike until she is allowed to return to Ukraine. Leader of the Batkivshchyna faction in the Verkhovna Rada Yulia Tymoshenko announced the withdrawal of her political force from the negotiating process regarding the formation of a new coalition. She informed that her political force is making a transition to “a democratic, pro- European opposition”. April 6 A referendum was held in The Netherlands on the issue of the agreement between the EU and Ukraine. According to the results of exit polls, the majority of citizens of The Netherlands (61%) voted “against” the Association Agreement with Ukraine. The turnout at the referendum was 32% of the voters and although the final results will be announced on April 12, Prime Minister of The Netherlands Mark Riutte already announced that the government of Ukraine cannot extend the ratification of the Association Agreement and will advise with its parliament and then with its European partners. April 7 The Ministry of Justice began talks on the release of four Ukrainians from imprisonment in Russia – Oleh Sentsov, Oleksandr Kolchenko, Hennadiy Afanasiyev and Yuriy Soloshenko, Deputy Minister of Justice of Ukraine Serhiy Petukov informed. He said Russia accepted the request of Ukraine to review this matter. Despite the negative results of the referendum in The Netherlands, leaders of the EU expressed their support of Ukraine. In particular, German Chancellor Angela Merkel said Ukraine’s path to European standards must be uninterrupted. President of Lithuania Dalia Gribauskate fervently supported Ukraine partially in the Ukrainian language. President of France Francois Hollande also expressed his support of Ukraine. April 8 Ministry of Justice of Russia instructed the penitentiary service to prepare documents in order to resolve the issue of transfer four incarcerated Ukrainians back to Ukraine, in particular film producer Oleh Sentsov to serve the rest of his time in prison in his native country. At the same time, the ministry underscored that the final decision will be made by the federal courts of Russia. April 10 Premier Arseniy Yatsenyuk tendered his resignation, he announced during his traditional address on the TV show “10 Miniutes with the Premier”. He also informed that he is ready to convey his powers to Speaker of the Verkhovna Rada Volodymyr Groisman. Analytical report REFERENDUM IN THE NETHERLANDS: CHALLENGES FOR UKRAINE AND THE EU The negative results of the referendum in the Netherlands regarding the Association Agreement between Ukraine and the EU “prolongs the list of unique traits in the process of signing of this agreement its being put into effect”. The European Union never had a similar experience in relations with a country that is not a candidate for EU membership. Although the results are consultative in nature, the Maria Zolkina nationwide referendum puts number of questions and challenges for both the EU, Ukraine and its course of Euro- integration on political agenda. Ignore or support: what will be the choice of Dutch politicians? The negative results of the referendum were quite anticipated where the difference between the proponents and opponents of association turned out to be inconsistent: the preliminary results were 38.1% and 61.1%, respectively. However, even in this situation the low turnout of voters (32%) could have been used by the government as an argument for a repeat ratification of the Association Agreement notwithstanding these results, meaning the absolute majority of citizens of The Netherlands simply did not come out to vote as was recommended. Nevertheless, while such an argument is sufficient the government of The Netherlands brought on itself such a low turnout of voters. It appears that the parliament and government of the Netherlands is not planning a repeat ratification of the Association Agreement with Ukraine. In light of this, the legal solution to this confrontation will be sought jointly with institutions of the EU. Most likely The Netherlands will simply be excluded from the list of EU member- countries implementing the whole agreement, meaning that it will be granted “permission” to not execute certain provisions of the agreement if they relate to the competency at the national level of EU member countries. The section of the agreement that applies to the competency of supranational bodies of power (this accounts for the majority of provisions of the agreement – namely, the Deep and Comprehensive Free Trade Area and sectoral cooperation) – will continue to be in effect: the Netherlands as a member of the EU already the latter part of its competency in these sectors. Blockading the agreement in general or a qualitative review of its content also seems to be an unrealistic scenario: the government of The Netherlands will not oppose the other 27 EU member countries, though the review of the text will require holding new talks and ratification, which other members of the EU and European institutions will not agree to. As such, the government and parliament of the Netherlands has ended up in a precarious and delicate situation: they already promised to take into account the voting results, but the problem is that after this protracted consultations and the search for a legal solution to the situation that in form will satisfy skeptics in Europe and will allow the European Union to de facto change the order of the days in relations with Ukraine and continue to implement the Association Agreement will be protracted. What could be the consequences for Ukraine of the “negative” reaction of the Netherlands? How will this affect Ukraine’s relations with the EU? Generally speaking, Ukraine and the Association Agreement became forced “hostages” to the rhetoric of Euro-skepticism among certain part The Netherlands’ society. However, perhaps the negative results of voting are not likely to lead to radical changes in the relations between Ukraine and the EU. Nevertheless, it is critical that Ukraine draw certain conclusions and understand the potential consequences. The Association Agreement will remain in effect, even in its current format – provisional application of a number of its clauses, which can be implemented over an unlimited period of time. So, while institutions in Europe and the Netherlands and national governments of other EU member countries seek a legal solution to the situation, the agreement will be implemented in its current format. The results of the referendum cannot have a negative impact on the decisions of the EU regarding the visa-free regime for Ukraine. At the very least, there are no grounds for this. The issues of association and visa liberalization are not directly linked – they are different dimensions of bilateral relations. They are politically intertwined – for this very reason the EU did not make any favorable assessments of fulfillment of visa liberalization action plan until April 6. As paradoxical as it may seem, after the Netherlands gave a “no” vote from a political vantage point, the final decision regarding the visa-free regime for Ukraine may be approved rather easier and smoothly in June 2016 already. Though it is not mandatory, debates in the Council of the EU and the European Parliament may be smoother and de facto inure to the benefit of Ukraine as compensation for the results of the referendum and the new circumstances in the process of ratification of the agreement. The problem of the level of corruption was a key issue in the talks regarding Ukraine. While prior to this mainly European civil servants or functionaries and politicians were concerned about the issue of corruption in Ukraine, now this issue has gained greater public and political publicity. It is clear that the skeptics in Europe and populist forces of different points of view will continue to focus their attention on corruption as a systemic problem in Ukraine. As such, the real not declarative fight against corruption in the state apparatus, resounding cases regarding corruption at the highest level and reform of the judicial body and the prosecutor general’s office is the only solution for Ukraine. In a situation where corruption in Ukraine is rampant the motivation in the camp of opponents to association in The Netherlands, it can easily be predicted that without an anti-corruption policy this wave of information cannot be leveled in any way.
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