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U.S. political scandal marks blow to Ukraine's corruption reform efforts

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Tuesday, October 15, 2019 – Page A5

The fight over President Donald Trump's potential impeachment has divided the United States along party lines, Democrats versus Republicans, with Ukraine being talked about as the scene of a crime.

Many Ukrainians, however, feel their country is the victim in all this - not just because of the way Mr. Trump spoke to Ukrainian President Volodymyr Zelensky in the now-infamous July 25 phone call, but also because of the way their country's name and reputation has been dragged through the middle of the United States' political conflict.

Government officials worry about the effect that the scandal, and the incessant headlines connecting "Ukraine" and "corruption," will have on their attempts to promote the country as a safe place to invest. Anti-corruption activists - who have long held the U.S. up as an example of clean governance - worry that their fight to clean up Ukrainian business and politics will lose momentum as the sight of prominent Americans taking cash from dubious figures in Ukraine tarnishes the U.S.'s reputation here, too.

Much of the drama, ironically, revolves around one of the West's signature efforts to help fight corruption in Ukraine.

The National Anti-Corruption Bureau - known locally by its acronym NABU - was founded by the Ukrainian government in the heady days after the country's 2014 revolution, which saw the corrupt and Kremlin-backed regime of Viktor Yanukovych ousted after days of bloody street battles.

NABU was given the task of tackling high-level corruption in Ukraine, the kind that had persisted since it was part of the Soviet Union. NABU is funded by the U.S. and the European Union.

Crucially, NABU was created to be independent from the office of Ukraine's prosecutor-general.

That put NABU - and its backers inside the U.S. embassy in Kyiv - at odds with the political elite who were swept to power by the revolution. While the crowds who had overthrown Mr. Yanukovych wanted to see a corruption crackdown, the politicians they elected had complicated histories of their own. The new president, Petro Poroshenko, was one of the country's most powerful businessmen and had briefly served in Mr. Yanukovych's cabinet.

Acrimony quickly developed between NABU, which sought to investigate how billions of dollars had disappeared from Ukraine under Mr. Yanukovych's rule, and the prosecutor-general's office, which proved willing to cut deals with figures from the former regime.

The power struggle between Ukraine's two main corruptionfighting bodies would end up playing a role in a pair of scandals that have dominated much of Mr.Trump's time in the White House.

It was NABU that originally discovered, in a Kyiv office that had once belonged to Mr. Yanukovych's Party of Regions, a ledger detailing US$12.7-million in payments that the party had made to Paul Manafort, a onetime adviser to Mr. Yanukovych who later briefly served as Mr.

Trump's campaign chief. The ledger was treated as a key piece of evidence by former special counsel Robert Mueller's probe into the 2016 presidential election, and Mr. Manafort is now serving a 7½-year prison sentence in the U.S. on charges that include fraud related to the receipt of the Party of Regions funds.

That was one of NABU's few headline-grabbing successes.

More often, the agency found itself blocked - often by the prosecutor-general's office - in its efforts to expose corruption at the top of Ukrainian politics. A gas company called Burisma came to define the struggle between NABU and the country's political elite.

When Mr. Yanukovych was ousted, the oligarchs who had supported him were suddenly vulnerable. One of them, Mykola Zlochevsky - who owned Burisma at the same time as he served as Mr. Yanukovych's minister of ecology and natural resources - began stacking Burisma's board of directors with prominent figures in what anti-corruption activists say was a blatant attempt to polish Mr. Zlochevsky's reputation. Among those Mr. Zlochevsky recruited were then-U.S. vicepresident Joe Biden's son, Hunter, as well as Aleksander Kwasniewski, a former president of Poland.

Court records show Hunter Biden was paid US$50,000 a month by Burisma from April, 2014, until he left the post earlier this year.

There is no evidence of any criminal wrongdoing on his part.

The prosecutor-general's office has opened at least five investigations into Mr. Zlochevsky or the company since 2014, although three have been abandoned and none has developed into a prosecution. A letter in December, 2014, from the office of then-prosecutor-general Viktor Shokin - stating that Mr. Zlochevsky was not under active investigation - helped the oligarch gain the release of US$23-million that had been frozen in Britain as part of a money-laundering probe.

Olena Halushka, head of international relations for the Anticorruption Action Centre, a Kyivbased non-governmental organization, said three successive prosecutors-general, including Mr. Shokin, had "systematically delayed" the Burisma investigations.

Frustration with Mr. Shokin was also widespread among Western diplomats. But it was a March, 2016, visit to Ukraine by Mr. Biden - who ran the Ukraine file in Barack Obama's administration - that had the most dramatic effect, causing Mr. Poroshenko to fire Mr. Shokin and replace him with long-time ally Yuriy Lutsenko. "If the prosecutor's not fired, you're not getting the money," was how Mr. Biden recounted delivering the message to Mr. Poroshenko's government.

Mr. Biden was addressing a 2018 meeting of the Council on Foreign Relations, a Washington think tank, and referring to US$1billion in loan guarantees the U.S.

government provided to Ukraine.

While anti-corruption activists believe Mr. Biden was right to call for change in the prosecutor's office, they say his efforts were tainted by his son's role at Burisma. "Joe Biden, the vice-president, was going around saying corruption in Ukraine was a cancer, while his son is on the board of Burisma," said Olena Tregub, head of the Independent Defence Anti-Corruption Committee, the Kyiv affiliate of Transparency International. "It might not be corruption, but it was hypocrisy at least."

The tension between NABU and the prosecutor-general's office ultimately came to a head during Mr. Lutsenko's tenure. A politician with no formal legal training, Mr. Lutsenko tried to position himself as the anti-corruption champion of Ukraine. But anti-corruption activists say he obstructed NABU's work at every turn. At one point, his office publicized the names of undercover NABU officers, foiling a long investigation.

A key point of contention would become the financial and political support that NABU received from the U.S. embassy in Kyiv, and in particular from thenambassador Marie Yovanovitch.

The embassy became publicly critical of Mr. Lutsenko. Mr. Lutsenko, it's now known, started campaigning for Ms. Yovanovitch to be replaced.

In January, Mr. Lutsenko flew to New York to meet with Mr.Trump's personal lawyer Rudy Giuliani. Mr. Lutsenko told The Globe and Mail he made the trip to propose to Mr. Giuliani that the U.S. and Ukraine jointly investigate investigate whether Mr.Biden had pushed for Mr. Shokin to be fired in order to protect Burisma, as well as allegations that the Ukrainian embassy in Washington had sought to damage Mr.Trump during the 2016 election by leaking details of the Manafort ledger mid-campaign.

Mr. Lutsenko said he decided to visit Mr. Giuliani after failing to convince the U.S. embassy in Kyiv of the need for a joint investigation into Burisma and the Manafort affair.

The meeting between Mr. Lutsenko and Mr. Giuliani set in motion a chain of events that saw Ms. Yovanovitch recalled to Washington in April. She hinted in her opening statement to a congressional committee last week that she believed Mr. Lutsenko had played a role in her ouster.

In her statement, Ms. Yovanovitch defended the U.S. embassy's anti-corruption drive in Ukraine, saying it had been in the interest of both countries. "Our efforts were intended, and evidently succeeded, in thwarting corrupt interests in Ukraine, who fought back by selling baseless conspiracy theories to anyone who would listen. Sadly, someone was listening, and our nation is the worse off for that."

Asked about allegations that he was personally corrupt, Mr.

Lutsenko - who was fired as prosecutor-general in August - told The Globe that "yes there are political tools and instruments" that were used by his office but that Ukraine saw a "record" number of corruption convictions while he was in the post. "There is no court conviction against me," he added.

(Mr. Lutsenko is now under investigation by his old office for abuse of power. Mr. Giuliani's dealings in Ukraine are under separate investigation in the U.S.

to determine whether any laws were broken.)

After Ms. Yovanovitch's dismissal came the notorious July 25 phone call, which saw Mr. Trump pick up on the themes Mr. Lutsenko had raised with Mr. Giuliani. Although the President didn't name Mr. Manafort, he said that Ukraine's role in the 2016 election should be examined. "They say a lot of it started with Ukraine," Mr.

Trump told Mr. Zelensky. "Whatever you can do, it's very important that you do it if that's possible."

He also leaned on the newly elected Mr. Zelensky to investigate Burisma, holding up US$319million in military aid to Ukraine as he did so. A whistle-blower's complaint about the call has sparked the impeachment hearings against Mr. Trump.

A struggle for power in Ukraine had merged with America's own fevered political war.

Today, all sides say they have high hopes for the new government of Mr. Zelensky, who, similar to nearly all of his recent predecessors, came to office promising to fight corruption.

Ukraine has actually made some progress since the revolution - it ranked 120th out of 180 countries on Transparency International's corruption perception index last year, a climb from 144th in 2013.

"The problem is changing the perception," said Dan Bilak, chairman of UkraineInvest, government investment-promotion agency. It's a problem that's worsened, he said, in the current media environment. "You never get criticized for saying or writing something bad about Ukraine."

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