Fraud accusations

An audit ordered by Ukrainian President Viktor Yanukovych's government claims that the former government of Yulia Tymoshenko misappropriated at least 360 million euros ($505 million) while in power. The publication of the audit done by US consultants came two weeks before scheduled elections.

According to the audit led by Washington law firm Trout Cacheris, Tymoshenko's government used offshore shell companies, sham contracts and other money-laundering techniques. For instance, money from selling carbon emission certificates had not been properly used to support environmental projects but to pay old-age pensions, the report claims.

"In a single instance involving the Kyoto Protocol, funding misapplication exceeded 200 million euros," said US lawyer Marc MacDougall. "In the case of national material reserves the amounts of loss are in the tens of millions of euro."

"We will make sure...that our partners around the world and the people of Ukraine know their 'heroes' have been robbing the country for years," Yanukovych said while on a visit to Lithuania this week.

Audit merely a political move?

Aides of Tymoshenko have dismissed the audit as being politically motivated, a tool used to tarnish the reputation of the opposition ahead of elections on October 31.

"That's an attempt to intimidate the opposition, among them Yulia Tymoshenko," said Hryhoriy Nemyria, who served as Tymoshenko's deputy prime minister.

"Obviously they are trying to draw off attention from the Ukrainian economy, which is not improving but declining. And one wants to dispel the indignation of how Yanukovych is monopolizing the power in Ukraine."

Susan Stewart from the German Institute for International and Security Affairs told Deutsche Welle that levels of corruption and embezzlement are quite high in Ukraine due to the very close connections between politics and the business sector and the strong impact of special interests.

"Considering how politics function in Ukraine, I'd say that it's not unlikely that some of the accusations are indeed valid. But I think equally important is that it's just as likely that similar corruption cases took place when Yanukovych was prime minister in 2006 and 2007," she said.

Corruption levels not significantly changed

Unfortunately, she added, the levels of corruption and embezzlement have not changed significantly over the years.

"It could certainly be the case that money allocated for one purpose was used for another. And this is actually one problem that the EU has often had with Ukraine in terms of implementing agreements that were reached because you really have to do a close monitoring of the process," said Stewart.

Yanukovych's government allegedly spent 1.4 million euros on the audit done by two law firms and one forensic auditing company. The US consultants have been criticized by Tymoshenko's aides, accusing them of bias.

"There have been allegations, incorrect though they may be, that this is a witch hunt," said Plato Cacheris, one of the US consultants.

"That is not so. This is a thorough, extensive review of available evidence which we strongly believe supports the conclusions in the audit report."

Neutrality in question

But according to Stewart, the neutrality of the consultants hired by Yanukovych remains questionable.

"I think he hired US consultants primarily to give the impression of being neutral, because if he had used Russian or Ukrainian consultants, that would have left him open to accusations of bias by the population," she said.

"I still think it's an open question as to whether this neutrality is really present as there have been accusations that he and people close to him have worked with this company or a company that took part in the audit before."

The upcoming election at the end of October is expected to be the first real test of Yanukovych's popularity since he defeated Tymoshenko in the run-off for the presidency in February.

The popularity of Yanukovych and his Regions Party has dropped significantly over in recent months as his government has implemented some unpopular economic reforms, such as raising the price of gas.

Author: Sarah Steffen (Reuters, AP, dpa)
Editor: Martin Kuebler