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Ukraine’s Zelenskiy is making headway against corruption, and fight risks angering Trump

By MICHAEL BIRNBAUM AND DAVID L. STERN | The Washington Post | Published: December 1, 2019

KYIV — By the end of this month, more than 500 Ukrainian prosecutors will be out of their jobs as part of sweeping professional reviews under Ukrainian President Volodymyr Zelenskiy. Among the prosecutors heading for the exit: a key Kyiv contact for Rudy Giuliani.

The prosecutor purge is one of several corruption-busting efforts set in motion by Zelenskiy. But it puts into sharp relief Zelenskiy’s twin challenges — trying to balance his clean-government promises at home with his needs to keep President Donald Trump from turning against him.

Zelenskiy’s bind is not hard to spot.

Trump’s views of Ukraine — and his demands to investigate the Biden family — were shaped largely by his personal lawyer, Giuliani. The theories and opinions that were passed to Giuliani came from some of the very officials who Ukrainian activists claim are prime corruption culprits in their own system.

Now that Zelenskiy’s reform push is underway, some of those Giuliani-linked officials are in the crosshairs.

A prosecutor named Kostiantyn Kulyk is one of the first.

Zelenskiy’s new prosecutor general, Ruslan Ryaboshapka — “100% my person,” Zelenskiy told Trump in July — last week gave a dismissal notice to Kulyk, a key player in the effort to provide Giuliani with political ammunition of dubious accuracy. Kulyk denies meeting Giuliani, but former associates say he prepared a seven-page dossier that his boss later passed along to the former New York mayor. Kulyk did not respond to a request for comment.

Kulyk was fired after not turning up for an examination that was part of a review process that will assess prosecutors across Ukraine.

At least 569 other prosecutors have also fallen short of the standards of the review and will be off the payroll by Dec. 31, the prosecutor general’s office said.

Ryaboshapka also has started to audit how previous investigations were pursued against the owner of Burisma, the natural gas company that employed Joe Biden’s son, Hunter.

But anti-corruption activists say the audit is unlikely to produce any information that would lead to evidence of wrongdoing on the part of Biden because no evidence has emerged.

 

A political filter

Ryaboshapka “is in a hard situation,” said Daria Kaleniuk, the director of the Anti-Corruption Action Center, one of Ukraine’s main anti-corruption organizations.

She said Mykola Zlochevsky, the owner of Burisma, “has to be investigated” for suspected self-dealing that predated Hunter Biden’s association with the company, including how Burisma was awarded several extraction licenses while its owner was Ukraine’s natural resources minister from 2010 until 2012.

But a move to prosecute him will be seen by Americans through a political filter, she predicted.

“I cannot imagine anything he can do that would not be interpreted as a political sign by American journalists,” Kaleniuk said, referring to Ryaboshapka. “Any decision will be politically examined.”

Western diplomats in Kyiv say that despite the intense pressure from the White House, Zelenskiy appears unlikely to give in.

Zelenskiy “realizes that if he wants to survive, he needs to make some reforms,” said one Western diplomat, who like others spoke on the condition of anonymity to assess a host country.

“Nasty U.S. politics are kind of spilling over and corrupting Ukraine,” the diplomat added. “And we have a credibility problem because we rely on our norms to be an example. The Ukrainians say, ‘Who are you to lecture us?’ There isn’t the same sort of pressure” as Ukraine’s Western partners previously could bring.

Zelenskiy, a comedian and entertainer, promised Ukrainians he could finally deliver on the hopes of a 2014 revolution that partially drove out Ukraine’s old guard. Many citizens thought judges still could be bought by the highest bidder. They hated having to pay regular bribes for driver’s licenses and construction permits.

Now, half a year into Zelenskiy’s tenure — and just three months into his control of parliament — he has tried to move as quickly as possible in anti-corruption counterpunches, fearful he has a limited amount of time before his political support slips away.

 

Questions unresolved

Ukraine’s parliament voted to strip members of immunity from prosecution. Anti-corruption activists who clashed with Zelenskiy’s predecessor say they are surprised to finally feel movement within a system that has long resisted change.

But given a long history of dashed expectations from Ukrainian reformers, some Western diplomats and activists say the truest test of whether Zelenskiy’s efforts will endure simply will be time. And some big questions remain unresolved, including Zelenskiy’s relationship with one of Ukraine’s richest men, Ihor Kolomoisky, whose television stations helped fuel his rise and who is now demanding the return of his banking empire that was nationalized in 2016.

“Zelenskiy told me, ‘It’s morally wrong for people to be dying and for all this wealth to be around,’ ” said one senior Western diplomat who has extensive experience in Kyiv. “It’s the first time in all these years I’ve heard an official really talk that way. To be so genuinely appalled.”

But, the diplomat said, the big question remains: “Can they hold oligarchs at arm’s length?”

Still, Zelenskiy appears to get high marks so far from Ukrainians happy about any change.

“A year ago, I would not even dream that just in a year the main part of our anti-corruption agenda would already be passed by the parliament. So I am very optimistic,” said Halyna Yanchenko, an anti-corruption campaigner who decided to sign up with Zelenskiy’s Servant of the People party and was elected to parliament alongside a slew of newcomers in July, days before Trump’s July 25 phone call with Ukraine’s leader.

Ukraine’s previous president, Petro Poroshenko, was a candy oligarch who had built his own business and was greeted with caution by the activists who took to the streets in late 2013 and early 2014 to demand clean government and European integration from Russia-friendly President Viktor Yanukovych.

Though Poroshenko overhauled the gas sector and made other key changes early in office, he ultimately disappointed many reformists, appointing a series of prosecutors general whom Western diplomats believed to be corrupt and breaking a campaign promise to sell his candy empire if elected.

“If we don’t move so fast, we cannot implement this reform,” said Oleksandr Lemenov, founder of a civil society group called State Watch, who is helping the prosecutor general’s office review more than 1,000 prosecutors in the Kyiv region for their qualifications, case record and any signs of corruption.

More than 11,000 prosecutors across the country eventually will be examined.

“When you play basketball or football, you just need to win the game. 2-1, 4-2, that’s fine; 5-0, you can’t necessarily get. The key is to win the game,” Lemenov said.

 

Bank figure's case a key test

Activists point to a criminal case against the former head of Ukraine’s tax agency, Roman Nasirov, who is accused of defrauding the state of $70 million.

Under the previous system, it took 1½ years just to read out the charges against him in court — a necessary first step in any courtroom proceeding — because of repeated bureaucratic delays. Activists said the slow pace was a deliberate ploy to delay justice. In a new courtroom, under new jurisdiction, the charges took 10 minutes to be read on Nov. 19.

The biggest test will be with Kolomoisky, the former owner of Privatbank, one of Ukraine’s largest financial institutions, who fled Ukraine during Poroshenko’s rule but made a triumphant return after Zelenskiy’s election.

Privatbank was nationalized in 2016. An audit the next year found that fraud at the bank had led to $5.5 billion in losses. Kolomoisky and his partners deny the allegations. One of his biggest defenders — attorney Andriy Bohdan, who represented Kolomoisky during the nationalization — is now Zelenskiy’s chief of staff, causing nervousness among the international community.

Lenders including the International Monetary Fund and the European Bank for Reconstruction and Development have been hesitant to extend assistance to Ukraine while it remains unclear how Zelenskiy will handle the charges against the man who helped launch his political career.

If Zelenskiy chooses not to try to recover the $5.5 billion in losses from Privatbank’s former owners, the IMF might be hesitant to commit go forward with the assistance package it has drawn up, which, coincidentally, is $5.5 billion — a politically difficult sum to offer Ukraine if the government is not seen also to be aggressively pursuing suspected lawbreaking.

In an interview, Kolomoisky said he had no control over the presidency.

“What is it precisely that I got from it? Six months have passed, what are my benefits?” he said.

The Ukrainian central bank, which helped lead the nationalization of the bank in 2016, might not be confident that Zelenskiy is on its side rather than Kolomoisky’s. On Wednesday, it accused Kolomoisky of paying for “hired thugs to forcibly invade it” after media reports that Kolomoisky employees had joined raucous protests in front of its headquarters. Kolomoisky denied the allegations.

“It’s the most disruption to oligarchs I think I’ve seen in 30 years covering the country,” said Timothy Ash, a senior emerging markets strategist at Bluebay Asset Management, an investment firm. “I would say it looks hopeful, but there’s this Privatbank thing and the fact that Kolomoisky appears to be untouchable.”

The Washington Post’s Dalton Bennett and Natalie Gryvnyak contributed to this report.

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