Head of Kyiv tax authority accused of multimillion-dollar fraud

One of unnamed woman’s four homes raided along with home of former Zelenskiy ally amid president’s crackdown on corruption

Volodymyr Zelenskiy’s crackdown on corruption has continued as the woman leading the Kyiv tax authority was accused of massive fraud after a raid of one of her four homes, and a series of national officials were forced from office.

The residence of the businessman Igor Kolomoisky, a former political ally of Ukraine’s president, was also raided as part of an investigation into the suspected evasion of customs duties linked to the Ukrainian oil producer Ukrnafta and refiner Ukrtatnafta.

The media empire owned by Kolomoisky, who is already under US sanctions for his alleged involvement in “significant corruption”, helped popularise Zelenskiy as an entertainer and then supported his political career. Kolomoisky has denied any wrongdoing.

Vasyl Maliuk, the head of the country’s SBU security service, said “dozens” of actions had taken place on Wednesday, targeting what he described as corrupt officials, Russian agents and those undermining the nation’s security.

“We don’t plan to stop,” he said in a statement on Telegram. “Every criminal who has the audacity to harm Ukraine, especially under war conditions, must understand clearly that we will put him in handcuffs.”

The developments came as Ukraine’s president prepared for an EU summit on Friday in Kyiv to discuss the country’s potential accession to the bloc of 27 member states.

According to a leaked draft statement, the EU will encourage Ukraine to meet the European Commission’s demands – which include dealing with corruption – to allow membership negotiations to start. “The EU will decide on further steps once all conditions specified in the Commission’s opinion are fully met,” the bloc is expected to say.

A number of Ukrainian officials had been forced to resign last week amid allegations of corruption as Zelenskiy pledged that practices that were widespread before the war in Ukraine would not be allowed to continue.

The crackdown was in full swing on Wednesday. Ukraine’s state bureau of investigation (SBI) said in a statement that the acting head of Kyiv’s tax inspectorate, who was not named, had abused her “power and official position” along with other members of the authority.

Investigators search the woman’s home
Investigators search the woman’s home. Photograph: Ukrainian state bureau of investigation

During a raid on the woman’s home, investigators found $158,000 (about £128,000), 530,000 Ukrainian hrynvia (£11,000), €2,200 (£1,900) in cash, and an array of expensive jewellery, designer-branded clothing and luxury gold watches. The SBI published photographs of what it described as the haul.

Investigators claimed the woman’s lifestyle did not fit her declared income as head of the capital’s main tax office. She is said to own three flats in the city with a total value of $1m (£811,640), a house near Kyiv worth about $200,000 and two cars together worth about $150,000.

Her driver was also found to have a $100,000 car registered in his name, although the man’s “income in recent years was no more than $8,000”, the SBI claimed.

An image released by the SBI of what it said was the haul of cash seized
An image released by the SBI of what it said was the haul of cash seized. Photograph: Ukrainian state bureau of investigation

The Guardian was unable to contact the official. Kyiv’s tax office did not respond to a request for comment.

Investigators allege that the woman had used her position to reduce the tax bills of some individuals and companies.

The SBI said in a statement: “The total amount of established unsubstantiated assets of the official is about $1.4m” (£1.1m).

Watches which the SBI says were found at the woman’s home
Watches which the SBI says were found at the woman’s home. Photograph: Ukrainian state bureau of investigation

It also emerged that the acting heads of the national customs and tax services had been fired. Last month a series of alleged corruption schemes were unravelled in regional customs offices.

Zelenskiy had said he would make changes after last week’s arrest and dismissal of Vasyl Lozinskyi, an infrastructure minister, in relation to accusations of inflating the price of winter equipment, including generators, and allegedly siphoning off $400,000. About $38,000 in cash was reportedly found in his office. He has not commented.

The deputy defence minister, Vyacheslav Shapovalov, had also “asked to be fired” after reports that soldiers’ rations were being bought for inflated prices, raising concerns of potential kickbacks. He has denied any wrongdoing.

According to Transparency International’s 2021 index, Ukraine is the second most corrupt country in Europe behind Russia. With Ukraine taking its first steps on what could be a long path to EU accession, the government is under pressure to show that it has cleaned up its act.

Zelenskiy is expected to take part in a summit in Kyiv with the European Commission president, Ursula von der Leyen, and her European Council counterpart, Charles Michel, on Friday to discuss progress. It is not yet known whether EU leaders will also attend.

Ukraine’s prime minister, Denys Shmyhal, has said he hopes the country will become an EU member state within two years. The EU granted Ukraine formal candidate status in record time but there is no prospect of it joining the bloc on such an accelerated timetable. Turkey has had candidate status since 1999.

Despite the lukewarm language of the draft EU statement, there was some positive news on Wednesday as US auditors who met senior Ukrainian ministers this week said they had found no evidence of the misuse of US financial aid to Ukraine. A number of senior Republicans have raised concerns about potential fraud.


Daniel Boffey in Kyiv

The GuardianTramp

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