Tensions Grow Between Obama Admin, Ukraine

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Ukrainian officials feel betrayed by President Barack Obama’s support for a key anti-corruption prosecutor in their government who is closely tied to Russian corporate interests in Ukraine.

Ukrainian officials are also disillusioned that Vice President Joe Biden’s son, Hunter, is on the board of one of those interests, Ukraine’s biggest privately owned gas company, The Daily Caller News Foundation has learned.

Members of the Ukrainian parliament were silent when the Vice President addressed them last week about their government’s anti-corruption actions. Their only applause came when Biden spoke of U.S. opposition to Russia’s seizure of Ukrainian territory.

At the center of the controversy is the younger Biden, who last year joined Burisma Holdings, Ltd., the Ukrainian gas company owned by Mykola Zlochevsky, a cabinet member of former President Viktor Yanukovich, who now lives in exile.

Biden sits on the gas company’s four-member board.  Also on the board is Devon Archer, who is a close family friend of Secretary of State John Kerry. Biden and Archer are partners in the D.C.-based investment and policy advisory firm Rosemont Seneca Partners.

The senior Biden is supposed to be Obama’s point man on Ukraine, but his son’s decision to remain on the Burisma board could undermine the vice president’s encouragement of anti-corruption measures in the country.

Ivan Vinnyk, deputy secretary of the Ukrainian parliament’s security and defense committee, which oversees the country’s national security and anti-corruption policies, told TheDCNF that “Biden has a certain interest, given that his son has an interest inside the Ukraine.”

Reflecting the growing belief within Ukraine that father and son were working together, Vinnyk said, “I believe they were asking as one team” in an effort to pressure the Ukrainian government to ease off on its anti-corruption program.

A spokesman for Rosemont Seneca Partners told TheDCNF that Biden has no financial interest in the gas company but confirmed he did have a seat on Burisma.  The Vice President’s office did not respond to a request for comment from TheDCNF.

In interviews with TheDCNF, Ukrainian anti-corruption activists also deplored what they view as U.S. Ambassador Geoffrey Pyatt’s fawning support for Vitaliy Kasko, who, as Ukraine’s deputy general prosecutor, is supposed to be the government’s top anti-corruption official.

Ambassador Pyatt has repeatedly hailed Kasko as a “courageous” reformer and declared on October 28 that he is “a huge fan of what Deputy Prosecutor General Kasko is doing with trying to establish a general inspection unit.”

Olena Tyshchenko, the former director of Ukraine’s asset forfeiture office, told TheDCNF that U.S. support for Kasko by U.S. Ambassador Geoffrey Pyatt constituted “interference. His support was so straight forward.  It was complete interference.”

Vinnyk called Pyatt’s public support for Kasko, “not acceptable” and said Kasko’s appointment constituted a serious conflict of interest since Kasko was a law partner at Arzinger law firm that represents Russian interests.

Arzinger represents the Russian oil giant Rosneft, which recovered an oil field last June that had been impounded by the Ukrainian reform government of President Petro Poroshenko.

Poroshenko’s government in June 2014 froze the assets of Rosneft and its Ukrainian partner, TNK, in an alleged $1 billion tax avoidance scheme that was reported to line the pockets of both the Russian oil company and some of Ukraine’s most powerful corporate oligarchs. Critics charge that Kasko did not vigorously defend the state’s interest in the case.

Arzinger was paid $480,000 for its representation of Rosneft, according to Ukrainian government documents obtained by TheDCNF.

Vinnyk called Kasko’s appointment “a pure conflict of interest.  I’m sure in other Western nations, if this information was released, Kasko would be gone.”

Kasko has also been criticized for failing to provide documentation to overseas banks of frozen assets tied to the Yanukovich government. As much as $1 billion are frozen in funds across the European Union, as well as in Latvia and Lithuania.

Tyshchenko charged that Kasko’s office consistently missed deadlines to provide supporting documents to authenticate $23 million held by Britain in a British criminal investigation of money laundering by Ukrainian nationals.

Anti-corruption activists have been especially critical of a heavy-handed public relations campaign led by the Ukraine chapter of Transparency International to promote Kasko. Liberal billionaire George Soros has been a major funder of TI, which claims to be an independent international non-profit advocating civic reforms.

Anti-corruption critics point out, however, that Arzinger’s CEO, Timur Bondarev. sits on TI’s Ukrainian board of directors.

Olena Kifenko, a spokeswoman for the Ukrainian chapter of TI, confirmed for TheDCNF that, “Timur Bondarev was elected to the board of TI Ukraine in October 2014 by individual members and board members of TI Ukraine,” adding that “board members represent themselves and not the companies they work for.”

Chris Sanders, a spokesman for TI’s international headquarters in Berlin, told TheDCNF that the central organization is not responsible for activities of their country chapters.

“Our chapters are independent entities who do their own advocacy, fundraising, research, policy development, etc. As such, they speak for themselves,” Sanders said.

However, Tyshchenko charges that TI and other Ukrainian-based non-governmental organizations are lobbying for new government rules that would enable law firms like Arzinger to manage Ukraine’s national assets, including $1.5 billion of state bonds and $200 million in offshore companies owned by Yanukovich allies.

“Mr. Kasko with TI secured support from the U.S. Embassy for the creation of a separate state agency that would rely on law firms,” John Falk, an expert who is familiar international law with Ukraine’s anti-corruption effort, told TheDCNF.

Changing the rules could generate up to $100 million in new revenues for private law firms by Arzinger, according to Tyshchenko.

Kasko did not reply to TheDCNF’s request for comment.

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