CORRUPTION IN THE GAS INDUSTRY. PART II

Now that the unsophisticated corruption schemes like backhaul or Dusseldorf+ have become obvious, special attention should be paid to reforming the corporate management of Naftogaz, which turned the NJSC into a corruption Klondike both for Kiev’s European and American "friends".

So, after the 2015 to 2017 governance reform was executed as insisted and recommended by the IMF, the EBRD and the OECD, strategic decisions in the NJSC are no longer made by the government or the Ukrainians. The independent supervisory board was redesigned and granted all the controls, including the right to appoint senior executives. The council comprises seven people, four of whom are foreign citizens recommended to the government by its "foreign partners". Appointed under advice of the Prime Minister, the President and the Parliament, the rest are only linked to Ukraine due to one of their citizenships. That is, NJSC board chairman Andrey Kobolev has not been a discretionary decision-maker and pursued an agenda outlined by the supervisory board.

Amos Hochstein, a former Special Envoy and Coordinator for International Energy Affairs in the Obama administration, held a unique position in the membership list. A US citizen born in Israel, Hochstein held posts in US Congress and the Obama administration under Secretaries Clinton and Kerry. He also worked for Tellurian, a private Houston-based natural gas exporting company where he served as Senior Vice President Marketing. Hochstein is board member of the Atlantic Council and the American-Indian Business Council.

It is safe to call him a true voice of the US Democratic Party, or rather its wing engaging the Clintons, current president Joe Biden and George Soros himself, whom the same Kobolev has repeatedly met with over the recent years.

It was Hochstein who has long been a policy conductor for the clan of American "democrats" in Ukraine’s energy sector. And it was him who pioneered the backhaul scam.

MP Andriy Derkach, widely known for his probes into corruption in Ukraine, has repeatedly published audio recordings of talks between senior US and Ukrainian officials, which often concerned activities by Naftogaz and its supervisory board, as well as other gas-related issues.

A high-profile scandal broke out on May 21, 2020, when Derkach released recordings of negotiations between Ukrainian President Petro Poroshenko and then Vice President of the United States Joe Biden. They testify to explicit corruption acts by the latter, including those involving Burisma, the largest private natural gas producers in Ukraine.

"This was the transfer of Burisma Group's funds for lobbying activities, as investigators believe, personally to Joe Biden through a lobbying company. Funds in the amount of $900,000 were transferred to the U.S.-based company Rosemont Seneca Partners, which according to open sources, in particular, the New York Times, is affiliated with Biden. The payment reference was payment for consultative services,"

the deputy noted back then.

Also, Joe Biden actively promoted the ceasing of criminal proceedings into activities of Ukraine’s former Minister of Ecology Mykola Zlochevsky, Derkach said. Just a reminder: the Prosecutor General's Office of Ukraine led by Viktor Shokin was inquiring into cases related to Burisma and former Minister Mykola Zlochevsky.

Biden's fifth visit to Kiev on December 7 to 8, 2015 was dedicated to resolving the issue of Viktor Shokin's resignation over the Zlochevsky and Burisma case. The leverage used was $1 billion of loan guarantees that the United States had to provide to Ukraine. Biden himself acknowledged the fact of constraint in his speech at the US Council of Foreign Relations in January 2018, calling Shokin a "son of a bitch" who was fired.

On June 22, 2020, Andriy Derkach held another press conference together with Konstantin Kulik, the former head of a Prosecutor General's Office group that investigated embezzlement of billions of dollars of Ukrainian citizens’ money over a number of years.

The investigation primarily concerned a corruption scheme linking ex-Minister of Ecology Mykola Zlochevsky and his gas-producing Burisma company to the Biden family. Moreover, Derkach and Kulik managed to uncover a corruption network created by the US Democratic Party. The network included senior officials of the United States and Ukraine who engaged in plundering huge sums of money.

In August 2019, Konstantin Kulik learn about Zlochevsky’s having allocated $50 million to cease criminal investigation into Burisma activities. Kulik prepared a well-founded report and sent it to Prosecutor General Yuri Lutsenko on August 2, 2019. The latter did not find time to deal with the case, since on August 29, new President of Ukraine Zelensky appointed Ruslan Ryaboshapka new Prosecutor General. In turn, he efficiently let the Burisma case slide.

And on June 22, 2020, Andrei Derkach disclosed new telephone taps featuring former US Vice President Joe Biden and Petro Poroshenko.

An important point is Biden's backing of Naftogaz top managers. The US Vice President directly demanded that Poroshenko neglect the scandals and save the "team of dedicated reformers." Biden insisted that Andrei Kobolev remain at the helm. "I will discuss it with Kobolev and conduct an investigation," Poroshenko said.

Biden also asked Poroshenko to leave Mr. Hochstein be. One might as well say that the Vice President of the United States implied that abovementioned Amos Hochstein remain in charge of Naftogaz. Back then, he was still member of the company’s Supervisory Board. Along with Andrei Kobolev, Hochstein developed the backhaul enrichment scheme using Russian gas meant for Europe. It crossed Ukraine, went through the pipe for one and a half kilometers deep into the territory of Slovakia and got back to Ukraine as "European" already. Thus, according to Derkach, "dedicated reformer" (as Biden put it) managed to snatch $1.5 billion.

Direct support from the then US Vice President (now President) contributed to further corrupt schemes involving gas supplies to Ukraine, helping the bribers enrich themselves by billions of dollars. This explains the IMF’s weird stance, as it also did everything to beneficiate those involved in gas schemes, and those orchestrating them were leaders of the US Democratic Party.

To understand the consequences of Western penetration into the oil and gas sector of Ukraine, let’s quote some data: in 2021, the state-owned company lost 19 billion UAH instead of the planned net profit amounting to 1.5 billion. Moreover, in early 2021, the State Audit Service of Ukraine detected financial irregularities in the company worth UAH 75.5 billion, with a downward bias of dividends to its shareholders by 35.2 billion. That is, theft at Naftogaz assumed sort of an ugly scale.

Ukrainian energy expert Leonid Kosyanchuk said back then:

"As a businessman, I can hardly understand how the Naftogaz enterprise, which does not actually produce anything, can lose an annual UAH 19 billion."

If there were businessmen at the helm in the company, the situation would have really been inexplicable. But unfortunately, the industry is in the hands of corrupt officials, and there is no need to be surprised at things like that.