Thursday, October 14, 2010

Ukraine: Government of Ukraine audit uncovers corrupt practices

The Government of Ukraine announced today that a team of international auditors has completed the initial stage of its independent audit of Ukraine's state finances and operations. The audit revealed evidence of fraud and misapplication of government funds from 2008 to the first quarter of 2010.

The team of lawyers and forensic investigators led by the Washington, DC law firm of Trout Cacheris, PLLC examined a group of transactions by various government bodies. The audit found evidence of the use of offshore shell companies, sham contracts and other international money laundering mechanisms in transactions involving private parties and the previous administration, as well as the unlawful misapplication of funds, resulting in the waste and misuse of government assets and the enrichment of private parties.

The largest instance of misconduct they have uncovered involved the unlawful misapplication of 2.3 billion hryvnias (euro 200 million) obtained through the sale of carbon credits under the Kyoto Protocol. High-ranking officials used these funds to conceal massive deficiencies in Ukraine's pension system shortly before the 2010 presidential election.

The audit also uncovered instances in which offshore shell companies and sham transactions were employed to sell automobiles and pharmaceuticals to the government at highly inflated prices; the use of state credit to purchase 1,000 vehicles which were distributed for political gain; manipulation of transactions with the sugar reserve; and the unapproved use of funds to carry out a land registration program to gain political favor in advance of the recent presidential elections.

Lead audit attorney Plato Cacheris of Trout Cacheris and co-counsel Mark MacDougall of Akin Gump Strauss Hauer & Feld noted that today's announcement is another example of how the Ukrainian leadership is committed to exposing corruption. "Today's report reveals a pattern of impropriety in transactions involving several levels of the Ukrainian government from 2008 through the first quarter of 2010. We are continuing our investigation and will share additional findings once those investigations are completed," MacDougall said.

SOURCE Trout Cacheris, PLLC