Corruption scandals are nothing new in Ukraine. But an elaborate plot to siphon off millions of dollars from a fund intended for victims of Nazi crimes has taken corruption in that country to a new low. Ukrainian businessman (and parliamentarian) Viktor Zherditsky, now being held in Germany, could go to jail for up to five years if found guilty of stealing almost $40 million from a German fund set up to compensate Ukrainian victims of the Nazi oppression. RFE/RL correspondent Tony Wesolowsky has the details.
Prague, 3 November 2000 (RFE/RL) -- Viktor Zherditsky is now awaiting trial in Hanover, where he was arrested last month. Michael Buckup, a spokesman for the Justice Ministry of the state of Lower Saxony -- where Hanover is located -- told our correspondent the trial is likely to take place sometime early next year.
"The prosecutors now need to get all information and all paperwork together, and it normally needs some time. But he's [been] arrested and he's living warm and dry, so it won't be a problem to let him wait a little bit."
Buckup said justice officials in Ukraine had welcomed the detention in Germany of Zherditsky, who could not face trial in Ukraine because he enjoyed diplomatic immunity there as a member of parliament. Earlier this week (Nov. 1), however, the rules committee of the Ukrainian parliament revoked Zherditsky's immunity.
The Zherditsky story begins in 1993, when then German Chancellor Helmut Kohl and Ukrainian President Leonid Kuchma signed a historic agreement to compensate Ukrainian victims of the Nazi occupation of their country during World War Two. About $235 million (540 million marks) were to be set aside in the fund. One-time payments were to range from $350 to former "eastern workers" -- who toiled against their will in Germany during the war -- to $590 for Jewish survivors, whose treatment by the Nazis was deemed more severe.
Ukraine's Gradobank, headed by Zherditsky, was picked by the government to distribute the payments, which it began doing in 1995. But two years later, Kyiv detected that money had stopped being sent to the intended recipients. Officials suspected Zherditsky of skimming off $37 million (86 million marks) earmarked for the compensation fund.
The government then closed down the bank's Ukraine accounts and launched an investigation. The same year (1997), Ukrainian officials also requested help from justice officials in Germany. Zherditsky had set up bank accounts in Hanover, Munich, and Frankfurt, which German officials suspected had been used to send the compensation money abroad.
The case lay dormant for three years as German prosecutors investigated the money trail. Then they had a stroke of luck: On October 10, Zherditsky turned up in Hanover to withdraw money from an account at Deutsche Bank. German police promptly arrested him.
Ukrainian media have reported that Ihor Didenko -- another parliamentarian -- also played a role in the affair by helping set up the three German bank accounts. There are reports in Kyiv that Didenko may also have his parliamentarian immunity lifted and face embezzlement charges there.
Asked if German investigators were looking into Didenko's potential role in the scandal, Lower Saxony spokesman Buckup said the German probe is concerned only with Zherditsky.
"For us, it's focused only on Zherditsky, because I think he's also responsible for all transfers and for all accounts and for actions from the first account to the next one, so that may be the reason why [the] German Justice [Ministry] and prosecutors in Hanover only concentrate on Zherditsky."
Zherditsky was a powerful figure in Ukraine, the owner of five cement plants valued -- according to Buckup -- at almost $22 million. His ties to Germany go back to the early 1990s.
Buckup says that until 1995, Zherditsky owned an apartment in Hanover. He says that, as chairman of Gradobank, Zherditsky set up corresponding accounts at a branch of HypoVereinsBank in Munich, and branches of Deutsche Bank in Hanover and Frankfurt.
The account in Munich, Buckup says, was the starting point in 1995 for a circuitous trail of money transfers to move the $37 million from the Nazi compensation fund to front companies or accounts abroad owned by Zherditsky and, presumably, Didenko. Zherditsky's Gradobank was in charge of more than half of the $178 million earmarked for the compensation fund.
"From this [Munich] account, he transferred parts to different accounts and to different companies as a credit or as a subvention (subsidy) to companies existing only on paper and [which] were headed by Zherditsky or another Ukrainian (presumably, Didenko)."
Buckup says banks in New York, Prague, Limassol (Cyprus) and front companies in England, Luxembourg, and Belgium all were used by Zherditsky in his embezzlement scheme. He also says investigators in Hanover are looking into allegations the money could have been involved in a money laundering operation.
Buckup says the investigators are now taking stock of Zherditsky's foreign-held assets. Some of those assets may be liquidated to pay back the missing $37 million to the Ukrainian government.
Prague, 3 November 2000 (RFE/RL) -- Viktor Zherditsky is now awaiting trial in Hanover, where he was arrested last month. Michael Buckup, a spokesman for the Justice Ministry of the state of Lower Saxony -- where Hanover is located -- told our correspondent the trial is likely to take place sometime early next year.
"The prosecutors now need to get all information and all paperwork together, and it normally needs some time. But he's [been] arrested and he's living warm and dry, so it won't be a problem to let him wait a little bit."
Buckup said justice officials in Ukraine had welcomed the detention in Germany of Zherditsky, who could not face trial in Ukraine because he enjoyed diplomatic immunity there as a member of parliament. Earlier this week (Nov. 1), however, the rules committee of the Ukrainian parliament revoked Zherditsky's immunity.
The Zherditsky story begins in 1993, when then German Chancellor Helmut Kohl and Ukrainian President Leonid Kuchma signed a historic agreement to compensate Ukrainian victims of the Nazi occupation of their country during World War Two. About $235 million (540 million marks) were to be set aside in the fund. One-time payments were to range from $350 to former "eastern workers" -- who toiled against their will in Germany during the war -- to $590 for Jewish survivors, whose treatment by the Nazis was deemed more severe.
Ukraine's Gradobank, headed by Zherditsky, was picked by the government to distribute the payments, which it began doing in 1995. But two years later, Kyiv detected that money had stopped being sent to the intended recipients. Officials suspected Zherditsky of skimming off $37 million (86 million marks) earmarked for the compensation fund.
The government then closed down the bank's Ukraine accounts and launched an investigation. The same year (1997), Ukrainian officials also requested help from justice officials in Germany. Zherditsky had set up bank accounts in Hanover, Munich, and Frankfurt, which German officials suspected had been used to send the compensation money abroad.
The case lay dormant for three years as German prosecutors investigated the money trail. Then they had a stroke of luck: On October 10, Zherditsky turned up in Hanover to withdraw money from an account at Deutsche Bank. German police promptly arrested him.
Ukrainian media have reported that Ihor Didenko -- another parliamentarian -- also played a role in the affair by helping set up the three German bank accounts. There are reports in Kyiv that Didenko may also have his parliamentarian immunity lifted and face embezzlement charges there.
Asked if German investigators were looking into Didenko's potential role in the scandal, Lower Saxony spokesman Buckup said the German probe is concerned only with Zherditsky.
"For us, it's focused only on Zherditsky, because I think he's also responsible for all transfers and for all accounts and for actions from the first account to the next one, so that may be the reason why [the] German Justice [Ministry] and prosecutors in Hanover only concentrate on Zherditsky."
Zherditsky was a powerful figure in Ukraine, the owner of five cement plants valued -- according to Buckup -- at almost $22 million. His ties to Germany go back to the early 1990s.
Buckup says that until 1995, Zherditsky owned an apartment in Hanover. He says that, as chairman of Gradobank, Zherditsky set up corresponding accounts at a branch of HypoVereinsBank in Munich, and branches of Deutsche Bank in Hanover and Frankfurt.
The account in Munich, Buckup says, was the starting point in 1995 for a circuitous trail of money transfers to move the $37 million from the Nazi compensation fund to front companies or accounts abroad owned by Zherditsky and, presumably, Didenko. Zherditsky's Gradobank was in charge of more than half of the $178 million earmarked for the compensation fund.
"From this [Munich] account, he transferred parts to different accounts and to different companies as a credit or as a subvention (subsidy) to companies existing only on paper and [which] were headed by Zherditsky or another Ukrainian (presumably, Didenko)."
Buckup says banks in New York, Prague, Limassol (Cyprus) and front companies in England, Luxembourg, and Belgium all were used by Zherditsky in his embezzlement scheme. He also says investigators in Hanover are looking into allegations the money could have been involved in a money laundering operation.
Buckup says the investigators are now taking stock of Zherditsky's foreign-held assets. Some of those assets may be liquidated to pay back the missing $37 million to the Ukrainian government.
