The Yankovsky Files
Stirolbiofarm is drug factory located in Horlivka, Donetsk region, an area controlled by Kremlin-backed militants. Leaders of the self-proclaimed Donetsk People’s Republic (DNR) visited the plant in early 2016.
Ukraine’s Security Service (SBU) days later opened a criminal investigation pursuant to Part 3 of Article 285–5 (suspected financial terrorism). SBU officials said special attention was being paid to ties between Stirolbiofarm’s partners and counteragents.
The story triggered this months-long investigation into the current and former co-owners of Concern Stirol — Mykola Yankovsky and his son Igor — who became billionaires exporting fertilizers from Ukraine during the 2000s.
Copies of publicly available audits of shell companies owned by the Yankovsky family outside of Ukraine were leaked to the Organized Crime and Corruption Project, based in Sarajevo, Bosnia, as well as to the Kleptocracy Initiative based in Washington, D.C. They were also made available to leading English-language media outlets, including the EUObserver, Bloomberg, The Wall Street Journal, the Ukrainian bureau of Radio Free Europe/Radio Liberty and Transparency International’s Ukrainian branch.
The brief is an ongoing attempt to understand and explain how Mykola and Igor Yankovsky became fabulously wealthy following the collapse of the USSR.
nb. Ukraine’s Prosecutor General’s Office (PGO) opened a criminal investigation into tax evasion in excessive amounts by Concern Stirol on August 19, 2016 based on this investigation. I was deposed on September 27, 2016 by PGO investigators about the case.
The invitation to testify followed the July 16, 2016 publication of the Russian-language version of the brief (http://bit.ly/2bCpS30) in the Ukrainian weekly newspaper Zerkalo Nedeli.
Other versions of the investigation have appeared here, here, here and here. It’s a work in progress.
What Ukraine will do next with Igor and about the washing machine is a mystery. Sources for used for this investigation are listed and linked at the end.
Igor and the Hungarian Washing Machine
This is not a story about transit price fee fixing
Mykola Yankovsky in 1988 was appointed general director of Concern Stirol in Horlivka, eastern Ukraine. The enterprise is one of the five flagship chemical producers bought by Group DF in 2010 to form Ostchem.
OSTCHEM is a part of Group DF owned by the Ukrainian businessman Dmytro Firtash.
Fertilizer production is one Group DF’s core businesses. OSTCHEM enterprises during the 2010s produced about 3% of nitrogen fertilizers in the world.
Concern Stirol’s former owners — the Yankovsky family — were key political allies and supporters of disgraced former Ukrainian President Viktor Yanukovych, who fled to Russia in early 2014. Kremlin leaders in March organized the annexation of Crimea. Russian special forces in April began seizing government buildings in Donetsk and Luhansk. The shenanigans fueled Pro-Russia rallies in Kharkiv and Odesa and Russia’s armed invasion of eastern Ukraine during the summer of 2014.
Before Concern Stirol was overrun by combined Russian-separatist militant groups in early 2014, Mykola Yankovsky was one of the top leaders of Yanukovych’s Party of Regions.
Yankovsky in this video clip swears allegiance to Yanukovych, pledging to fulfill any task put before him.
Mykola Yankovsky is the epitome of a Red director, the name given to Communist Party managers who took control of gigantic enterprises as USSR collapsed at the turn of the 20th century.
Yankovsky accumulated wealth by siphoning off Concen Stirol profits from hard currency exports. The proceeds were deposited in shell companies registered abroad.
Finding Yankovsky’s offshore shell companies in Europe was a simple task. The first two countries searched — the UK and Netherlands — hosted Friston LLP, Chemo Invest Trade LLP and Doeterbloem Holding B.V.
Mykola and Igor Yankovsky were listed as the beneficial owners of the three limited liability partnerships. Father and son also founded several companies in Hungary and Ukraine.
Ukraine’s unified customs database lists all Concern Stirol contracts from 2003 to 2008 when the enterprise was run by the Yankovsky family and the managers they employed. It includes all contracts, amounts, delivery conditions and counteragents.
The database shows ammonia and urea exports from Concern Stirol were made to Interprofit 2000 KFT, a company registered in Hungary, and resold to/or via an interrelated UK-based limited liability partnership, Friston LLP.
Friston LLP is a public company under UK jurisdiction and was obliged to conduct and make public annual audits. Matthew Edwards & Co. conducted these audits.
The audits list Mykola and his son Igor Yankovsky as the beneficial owners of Friston LLP, which “loaned” funds to its beneficiaries for the purchase of expensive houses and cars.
The only Ukrainian-registered company mentioned in the Friston LLP audit reports is Kamia — which received more than USD 10 million. The Kyiv-based company (Kamia Security Service — KSS) was headed by former SBU colonel Pavlo Alekseevich Komirchiy, who invited readers of his Facebook page to join the Holy March organized by the Ukrainian Orthodox Church (Moscow Patriarchate) to Kyiv in late July 2016.
Matthew Edwards & Co. audits also lists the interrelated company Chemo Invest Trade LLP, which in 2006 replaced Friston LLP in the chain of sales of ammonia and urea.
The next step in this investigation was to find out who owned Interprofit 2000 KFT, which had several times re-registered its address and directors. A Hungarian legal firm obtained company documents from the registrar, which lists Igor Yankovsky and Svetlana Sukhina (Igor Yankovksy’s wife) as its beneficial owners.
One can make the following conclusion with 100 percent certainty:
The chain of offshore shell companies through which Concern Stirol’s ammonia and urea exports were conducted belonged to one family — the Yankovsky family.
Historical Monday prices (Profercy journal) were used to determine the market value of ammonia and urea traded on world markets during the 2000s.
The comparison between world market prices for ammonia and urea (Profercy) with volumes/price for Concern Stirol sales of ammonia and urea (Ukraine’s Customs Service database) is the basis for calculating the hundreds of millions of USD the Yankovsky family put in their pockets. The margin exceeds USD 300 million.
From 2003 to 2006 the Yankovsky family laundered more than USD 500 million in the Hungarian washing machine: 2003 (USD 124 million), 2004 (USD 116 million), 2005 (269 million) and 2006 (23 million).
It took about three months to dig up enough information to illustrate the “tolling” operation involving the network of offshore shell companies set up avoid taxation and pool hard currency profits.
The last — and perhaps most interesting part of the investigation — deals with the sale of Concern Stirol to Group DF for more than USD 700 million in July 2010.
How the Yankovsky family sold Concern Stirol
The official biography of Igor Yankovsky says he began working at Concern Stirol as head of the Audit Committee of the Supervisory Board of the Group in 2008. Mykola Yankovsky remained honorary president.
Group DF in 2009 began consolidating ownership of Ukraine’s five largest chemical producers, combining them into Ostchem holding. Igor Yankovsky hatched a plan to “cash out” around this time.
With the active participation of Concern Stirol security department head Pavlo Komirchiy, almost all middle and upper-level managers at the plant were forced to officially resign their positions “for personal reasons,” according to former employees of the enterprise.
Igor Yankovsky, who had previously held positions in shell companies registered in Hungary, the UK, became Concern Stirol President. Yuri Mironenko was appointed Concern Stirol’s financial director.
Friston LLP concentrated 14% of Concern Stirol shares and bought 76.3% of Stirolkhiminvest using credit extended by Friston LLP and Chemo Invest Trade LLP. The transactions are listed in the annual audit reports filed by Matthew Edwards and Co.
Audit reports point directly to the purchase price of the shares. Since the securities are not addressed directly in the report, the auditor referred to the “carrying value” of the shares, i.e. the actual purchase price.
The cost of the overall package of 90.3%, concentrated in Yankovsky’s two companies (Friston LLP and Chemo Invest Trade LLP) is approximately USD 75 million. Open sources — and the official press release of Group DF — reported a USD 700 million sale price of Concern Stirol to Group DF.
The sale of Concern Stirol netted the Yankovsky family about USD 600, in addition to the more than USD 500 million margin collected from export sales via shell companies during the 2000s. This adds up to more than USD 1 billion.
The deliberate understatement of the value of Stirolkhiminvest shares constitutes tax avoidance on a spectacular scale.
In the civilized world it is called “tax evasion” or “illicit enrichment” when one and the same person sells shares at 10 times below their market price to their own company, which resells same for tenfold more. That’s exactly what Igor Yankovsky did.
Such wheeling and dealing under Ukrainian law falls within the definition of Part 3 of Article 212 of the Criminal Code of Ukraine (tax evasion in excessive amounts), a transgression Igor Yankvosky (Concern Stirol President 2008–2009), along with Yuriy Mironenko, may have committed.
The investigation has not been able to establish the personal accounts Mironenko. Evidence that his efforts were richly rewarded surfaced accidentally in early 2014. He is the owner of a luxury villa outside Kyiv adjacent to disgraced former Ukrainian Interior Minister Vitaliy Zakharchenko, who fled to Russia.
Mironenko these days is fashionable technocrat who appears on various TV talk shows. He is today the director of the Institute for Social and Economic studies (http://ises.org.ua/). There is no mention of his affiliation with the Yankovsky family or Concern Stirol in his official biography posted on the site.
Conspicuous consumption
It hasn’t exactly been a secret that the Yankovsky family owns real estate in southern France, but journalists couldn’t document this fact. Until now.
The Yankovsky family agreed to put up their villa for rent September — June for USD 20,000 a month, while they lived there themselves in July and August. That’s how photos of the digs appeared on the Internet.
Just Google it: http://bit.ly/29sqHf1. It used to belong to Dolce and Gabbana. Today, Igor Yankovsky’s Top Estate shell company managed by Vitaly Volsky oversees the property. Volsky, a Ukrainian citizen, is a former employee of Concern Stirol and worked in Yankovsky’s offices in Budapest during the 2000s. Volksy’s name pops up in several other shell companies.
Igor Yankovsky, 42, spends most of his time these days outside of Ukraine, often appearing at receptions of charity events or as a philantropist who helps children and aspiring artists.
Igor bought one barrel of rare French wine for eur 270,000 at charity auction in 2012. The expense reportedly got him a lunch date with former French President Nicolas Sarkosy and his wife, Carla-Bruni Sarkozy, who delivered the beverage in person. A year earlier Igor shelled out USD 22 million for a NYC townhouse with an 80-meter long swimming pool in the basement.
Igor’s DIAMOND SPHERE GROUP company, meanwhile, sponsored Team Ukraine racing with Ferrari.” The gifting exercise helped Ukraine’s squad take top team honors in 2013.
Conclusion
This brief includes only some of the facts dug up during the course of a 3-month investigation. Ukraine, which for the last three years has beeb busy fighting off a Russian invasion, has been deprived of billions of dollars worth of property and assets procured abroad by former Yanukovych’s top backers.
The corruption of former top bureaucrats and oligarchs, according to many foreign experts, may be the most significant impediment for Ukraine as it seeks closer integration with the EU. How Ukrainian and western officials react — or don’t react — to the Yankovsky may indicate how out completely of touch western policy makers for Ukraine are today.
Most of the facts contained in this report are already shared knowledge. How Ukraine’s law-enforcement authorities respond to them will allow us all to assess their capacity to establish Rule of Law.
— — — — — — — — — -Sources — — — — — — — — — —
1. igor yankovsky w/ jamala for eurovision 2016 victory, invites her to hungary. http://iff-charity.org/en/support-of-the-youth/igor-iankovskyi-met-with-jamala-and-greeted-her-with-eurovision-victory
2. mykola yankovsky’s uah 120,000 kedr hunting club membership.http://m.antikor.com.ua/articles/5355-za_vhodnoj_b...
3. fancy a game of tennis? ( игра в теннис). http://vesti-ukr.com/strana/18229-ukrainskaja-jeli...
4. mykola yankovsky in april 2010 opines on economy.http://www.ukrrudprom.ua/digest/Dlya_kogo_vibil_sk...
5. tramadol scandal. http://ru.tsn.ua/analitika/na-kogo-rabotaet-tramad...
6. yanukovych, mykola yankovsky (background) and anna akhmetov (february 2013)
7. racing ferraris in italy http://www.segodnya.ua/ukraine/ukraincy-vpervye-po...
8. concern stirol sale to group df, stirolbiofarm http://amm.net.ua/taynaya-pilyulya.html ,http://www.epravda.com.ua/news/2010/09/13/248191/
mykola yankovsky sells concern stirol to dmytro firtash during the summer of 2010, but retains control of stirolbiofarm, a modern pharmacological production enterprise. the plant today is in no-man’s land in an area not fully controlled by ukraine. it is not paying taxes. the propaganda tv station of the self-proclaimed donetsk people’s republic, or dnr tv (see: dnr-info), aired footage of dnr leaders visiting the stirolbiofarm plant, thanking company owners for producing much needed medicines for the population in areas occupied by kremlin-led military groups.
9. ukrainian state security service launches investigation into stirolbiofarm on suspicion of financial terrorism. http://gordonua.com/news/war/eks-regionala-yankovs....
10. a russian 24 tv report on january 31, 2016 visit to stirolbiofarm in horlivka, donetsk region http://bit.ly/1UlN6oU
11. igor yankovsky buys barrel of burgundy for eur 270,000 http://www.nytimes.com/2012/11/24/dining/24iht-win...
12. igor yankovsky spends usd 22 million for a nyc townhouse http://censor.net.ua/photo_news/226152/syn_regiona...
14. igor yankovsky sells nyc townhouse for usd 25 million http://www.nytimes.com/2015/02/22/realestate/a-tow....
15. mykola yankovsky about his businessman son igor yankovsky. http://www.ostro.org/general/society/news/418953/
16. dotterbloem holding b.v. (netherlands) http://www.salespider.com/country/nl/bw-4658451/do... , http://delo.ua/ukraine/amku-razreshil-niderlandsko...:
17. as of august 18, 2008 dotterbloem held 62.5808% of concern stirol stock.http://www.fin.org.ua/bd_sobst.php?act=vlasnyky&id...
18. stirolkhiminvest owns 90% b4 ay 15, 2008. http://www.fin.org.ua/bd_sobst.php?act=vlasnyky&id...
19. misleading news on uknown russian buyer of concern stirol appears in the in the pr press. http://news.meta.ua/archive/20.08.10/cluster:17919678-Stirol-kupili-nevdom-nvestori/
20. uk firm friston llp and david rubin & partners.
http://www.drpartners.com , same address as friston llphttp://www.companieslist.co.uk/OC301542-
21. offices of friston llp in london.https://companycheck.co.uk/company/OC301542/FRISTO...
22. friston llp register of uk companies. https://companycheck.co.uk/company/OC301542/FRISTO...
23. friston llp directors listed in 2002 are danica universal sa and falo corporation limited. https://companycheck.co.uk/company/OC301542/FRISTO....
falo corporation international check. https://companycheck.co.uk/director/914125580/FALO...
25 danica-universal-sa check. https://companycheck.co.uk/director/914125581/DANI...
26. chemo-invest-trade llp shares offices with friston llp in uk. https://companycheck.co.uk/company/OC313039/CHEMO-...
27. social media life — igor yankovsky’s facebook page.
m.facebook.com/profile.php?id=100009419397713
igor has 15 friends, starting with his wife svitlana sukhina and including yuri mironenko, a trusted manager for the family turned ngo director. two former parliament deputies expelled from the ranks self-defense (samopomosh) party faction — anna hopko and viktor krivenko, as well as a parliament deputy from mykolaiv, boris kozyr, are also on the list. aeksandr glus, the scandal-mongering former co-founder of nemirov is also a friend. gabor hartman of the duna medical center in budapest is one of two foreigners on the list, which also includes reuben f. johnson, an american journalist employed by the weekly standard.
28. a search for gabor hartman finds this youtube video clip, during which igor yankovsky announces (in english) a deal to invest usd tens of millions in a super-modern hospital in budapest, hungary. other:
29. history of stirol (english) http://en.stirol.net/stirol/inc/osobinf/1.html
30. igor yankovsky’s initiative for the future foundation http://iff-charity.org/ru/
31. yuriy mironenko — yankovsky familiy’s closest mgr, now director of the institute for social and economic studies http://ises.org.ua/
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notes (updated june 2, 2016):
friston llp listed as stakeholder in concern stirol after may 2008 (until then, more than 90% of the shares were held by ooo stirolkhiminvest). chemo invest trade llp began working with concern stirol in 2005, buying ammonia and carbamides. the yankovsky family made millions pocketing the difference between the concern stirol sale price and the market price charged by yankovsky’s offshore companies (friston llp, chemo invest trade llp, interprofit 2000 kft, doeterbloem b.v., et al)
concern stirol shares were bought a one price by the yankovsky family and sold to firtash for quite another. group df bought the fertilizer production bits of the concern in 2010.top estate kft (hungary) is a company catering to the personal needs of igor yankovsky family. his house outside of budapest in the village of telki and several cars are registered to the firm.
ukrainian companies kamia, kamia plus, nereyintertrans are used for commercial projects, including a port construction project in mykolaiv in southeastern ukraine. kamia security service employs a small army of ex agents from ukraine’s state security service.
after sale of concern stirol to group df in 2010 funds were removed from dotterbloem b.v. and the company liquidated. (double check)
hungarian affiliate of chemo invest trade llp and interprofit 2000 kft. both companies are registered at the following address:
hungary, 1037 budapest, montevideo u.3/b 3 em.
statistic number 14228041–4675–113–01
eu vat number hu 14228041
tel.+3613599695
fax+3613390226
