Millions of hryvnias have been spent to put the current president as the only candidate capable of bringing Ukraine out of the crisis. To create such an image, Mr. Poroshenko fairly prepared himself long before the elections, as in 2019 found a way to multiply his assets using illegal schemes, including the one that became known – Rotterdam Plus.

His companions and associates supported him in this matter: oligarch Rinat Akhmetov, prominent entrepreneur and politician Igor Kononenko, former deputy secretary of the National Security and Defense Council Oleg Gladkovsky, Prosecutor General Yury Lutsenko, Minister of Energy and Coal Industry Igor Nasalik, financier, ex-head of the NBU Valery Gontarev, Head of the State Fiscal Service of Ukraine (SFSU) Roman Nasirov, Deputy Head of the Petro Poroshenko Bloc, Yury Buglak, presidential adviser on financial matters, Boris Lozhkin, a businessman, former head of the National Commission for State Regulation of Energy and Utilities (NKREKU) Dmitry Vovk, Deputy Head of the State Property Fund of Ukraine (SPIU) Vladimir Derzhavin, as well as high-ranking officers in the ranks of the Security Service of Ukraine, the Interior Ministry and the prosecutor’s office.

How Petro Poroshenko was able to increase own assets, being in the chair of the president?

Let’s distinguish two directions. The first one is a cash reception based on the results of the activities of state enterprises, as well as companies in which the share capital is owned by the state. In this scenario, the withdrawal of finances is carried out either by transferring cash, or by bank transfers to the controlled offshore companies through Ukrainian firms, which are supervised by Igor Kononenko, Yuri Buglak and Roman Nasirov. The first direction also includes the disbursement of funds provided by the IMF and the IBRD, as well as the financing and support of strategic projects in industry and energy.

The second direction is the acquisition of full control (share in management) or the privatization of strategic enterprises and high-yielding assets through their bankruptcy. Later, the accumulated cash is invested and the capital received is legalized. The key sectors of the economy, in which Mr. Poroshenko is interested – are energy (including hydrocarbon production), engineering and the banking sector. All funds raised during the implementation of various corruption schemes were partly used to support the work of the parliamentary majority, unofficial events, as well as financing the work of the controlled media.

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The sword-arm of Mr. Poroshenko

The main assistant to the current president in the implementation of corruption schemes is Igor Kononenko. It is he who oversees the appointment of authorized persons to senior positions in enterprises, in return providing business owners with the loyal attitude of state bodies, assistance and protection in making the necessary regulatory decisions.

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Kononenko’s henchmen in state-owned enterprises and institutes are: Vsevolod Kovalchuk (NEK Ukrenergo), Oleg Kozemko (PJSC Centrenergo), Igor Syrota (PJSC Ukrhydroenergo), Nikolay Gavrilenko (Ukrtransneft), Miroslav Khimko (GP Ukrtransgaz), Oleg Prokhorenko (Subsidiary Ukrgazdobycha), Slawomir Novak (SE Ukravtodor), Vladimir Derzhavin (State Property Fund of Ukraine), Konstantin Vorushilin (Individual Deposit Guarantee Fund), Konstantin Likarchuk (State Customs Service of Ukraine), Igor Tregubenko (GP Transkhimammiak), Dmitry Vovk (National Energy Regulatory Commission).

In addition, Kononenko is responsible for the operation of six power grid companies, in which the controlling stakes are owned by the state – Kharkivoblenergo, Nikolayevoblenergo, Khmelnitskoblenergo, Ternopoloblenergo, Cherkasyoblenergo and Zaporizh’eoblenergo.

How’s Donetsk coal supplied according to the Rotterdam Plus scheme?

It is not a secret that the scandalous and well-known “Rotterdam plus” scheme has received the greatest scope. We decided to conduct our own investigation, in which we will try to uncover key points, present irrefutable evidence and the essence of the corruption scheme, and also reveal the list of persons and organizations directly involved.

The main beneficiaries of Rotterdam Plus are Poroshenko and Akhmetov, who, in essence, divide the loot among themselves in a 50/50 ratio. Most likely, the ideological creator of the scheme was an oligarch Akhmetov, who has mines in the Donbass, while Poroshenko provided a state cover and the legalization of coal “purchases” at incredibly high prices. To achieve this, the Ukrainian president has created an energy empire.

The key player in the scheme, who organizes the interaction between Poroshenko and Akhmetov, is Kononenko. However, it is necessary to understand the role of his team in the implementation of the coal supply scheme.

We’ll tell about them in order:

  1. The State Property Fund organizes appointments to the supervisory boards of energy companies of supervised members (such as A. Vizir and O. Denisenko), provides control over financial flows and the alienation of property.
  2. The Ministry of Energy and Coal Industry approves the norms of coal reserves at TPP, initiates inspections of NAEK Energoatom at the moment when it is necessary to hide participation of high-ranking officials in corruption schemes.
  3. The State Fiscal Service (GFS) ensures prompt withdrawal and security of withdrawal of funds of companies and their conversion, provides data on companies that are counterparties on transactions in securities and services, hides the true figures for the import of anthracite from L/DPR and Russia, falsifies data on the import of coal according to the Rotterdam Plus scheme. Under the leadership of Roman Nasirov, GFS regularly conducted a comprehensive audit of operations and generated positive results.
  4. The National Anti-Corruption Bureau of Ukraine (NABU) conducts inspections and audits of companies involved in money laundering corruption schemes, appoints “perpetrators” and hides organizers.
  5. The Antimonopoly Committee does not notice signs of a monopoly in DTEK, which in the EU would be subject to separation with the establishment of a fixed yield of 20% (the so-called “natural monopoly”).
  6. The Security Service of Ukraine, the Ministry of Internal Affairs and the Prosecutor’s Office of Ukraine, as well as their regional departments, organize inspections, prosecutions and initiate criminal cases against petty perpetrators of the fraudulent plans of the state’s top officials, deputies and officials and “throwing a curve” on innocent citizens.
  7. The National Commission implements state regulation in the fields of energy and utilities (NKREKU) establishes the formula for calculating the tariff for thermal generation (the purchase of coal and the sale of thermal electricity through the Rotterdam plus system), approves investment programs for energy enterprises, distributes super-profits from the formula Rotterdam Plus in relation to 50/50 with DTEK.
  8. The largest generating energy companies, PJSC “Centrenergo” and DTEK, purchase power coal and natural gas at inflated prices, organize the withdrawal of own funds (the main profit from the scheme) and artificial bankruptcy of assets, hide the real amounts of profit received from the application of tariffs (conditions of coal purchase contracts are classified information, purchases are made without competition).
  9. The ICU (“Investment Capital Ukraine”) company controlled by Poroshenko and Pasenyuk buys DTEC Finance plc. Bonds, and then resells them, passing losses and profits through itself and breaking the flow of funds that are sent to Poroshenko
  10. NEK “Ukrenergo” artificially sets the maximum load mode for power units, creates an energy shortage, which increases the share of PJSC “Centrenergo” and DTEK in the total electricity supply to the grid.
  11. NAEC Energoatom provides guidance on the manipulations with the power units of nuclear power plants (in particular, with the Zaporozhye NPP, the largest in terms of capacity).
  12. Zaporizhzhya NPP organizes artificial inaction of the 1st and 2nd power units, and also increases the repair time of the 3rd and 4th.
  13. Oschadbank issues state loans to subsidize “unprofitable” energy companies to prevent their fictitious bankruptcy.
  14. SE “Energorynok” accepts generated electricity from generating companies, distributes it through Energoset Holding Company (also known as Energomerezha, a monopolist in the field of transmission and sale of electricity in licensing areas) to business representatives and the public, accumulates funds of domestic and industrial consumers of Ukraine, makes advance payments for electricity.
  15. The National Coal Company (32 mines), the mines of L/DPR and the Russian Federation ensure the operation of the power plants of the power companies by supplying cheap coal from L/DPR and Russia.

The blockade of Donbass, which resulted in the termination of direct coal supplies from L/DPR, is the main prerequisite for the successful implementation of the Rotterdam plus scheme. It is known that up to 90% of the costs of the two largest Ukrainian energy generating companies (privately owned DTEK and state-owned Centrenergo) are expressed in the purchase of coal.

The formula introduced by NKREKU from 2016 makes it possible to legally purchase coal at a price that is being formed on European exchanges. At the same time, the “European price” is much higher than the cost of coal from Russia, and even more from the Donbass mines.

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Resolution of the National Commission for Energy and Energy Regulation No. 289 of March 3, 2016 on the procedure for forming the forecast wholesale electricity market price

Consequently, having isolated Ukraine from the Donetsk coal and artificially creating an acute shortage of electricity in the country, the scheme invented by Akhmetov and approved by Poroshenko became single-ended.

The essence of the large-scale corruption scheme lies in the fact that the state that allocates budget money for the purchase of coal for power plants actually buys coal either directly from L/DPR enterprises, or Donetsk coal sold to Russia through controlled companies, or Russian anthracite at prices ranging from 38 to 77 dollars (according to 2017). However, coal is supplied to the thermal power plants of the country at a price of its fictitious cost of about $150 per ton, based on the tariff set by NKREKU. The “project” has two profit centers: margins of the importing company and the intermediary company.

At the same time, coal purchases were financed at the expense of the Ukrainian population through the payment of electricity tariffs, as well as subsidies from the state budget and from state banks, such as Oschadbank and Eximbank.

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The cost of electricity in the cities of Ukraine in 2018

A mark-up of about $ 100 per ton is taken through front companies to offshore and settles on the accounts of numerous intermediary firms (related to Poroshenko’s entourage), standing between the coal importer and the final consumer. Subsequently, the super-profit is distributed between the owners as a percentage of 50/50 private DTEK and the managers of the state-owned PJSC “Centrenergo” represented by Akhmetov on the one hand and Poroshenko, Kononenko on the other.

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Information on planned and actual coal reserves in the warehouses of PJSC Centrenergo divisions

According to rough calculations, the annual profit on the L/DPR coal purchased through Russia (or in Russia) was at least ($ 105 – $ 76.9 = $ 22.7) × 1.1 million tons (see customs statistics below) = 25 million dollars. The average cost of a ton of Donbass coal in 2017 is $ 37.6. The profit from the purchase of Donetsk coal directly amounts to $ 173.6 million. The total aggregate income when working under this scheme reaches $ 198.6 million per year.

The efficiency and profitability of the scheme is proved by the customs statistics of the Federal Customs Service of Russia and the SFS of Ukraine for 2017.

The discrepancy in data of 2.1 million tons of anthracite (290%) does not correspond to the maximum possible theoretically explainable underestimation of value and volume. The minimization of the export duty (no more than 10-15%) is excluded, since in Russia there is a zero export duty on the export of coal, including anthracite.

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The volume of coal that produces L/DPR and sells to Russia is 2.8 million tons (2.1 million tons of which is returned to Ukraine). Since L/DPR are unrecognized republics and do not legally exist for the FCS of Russia, all deliveries from L/DPR are drawn up using Ukrainian legal entities. Otherwise, the FCS will not be able to identify L/DPR products.

An interesting fact is that all these supplies are not reflected in the statistics of Ukrainian customs, since Ukraine does not control the border between the DPR and the LPR with Russia.

Conclusive evidence of the scheme

According to Ukrainian customs data for 2017, Ukraine during this period actively imported anthracite from several manufacturers from Russia: Obukhov Mine Management (owned by R. Akhmetov), Yuzhtrans, Sibantratsit, Pechora Mining Company. It is characteristic that these companies have no direct supply contracts. Contract holders are companies registered in offshore. For example, DATORO CORP, Antex Intertrade Ltd, Benecoal International Limited, I-COAL Sp z o.o.

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Deliveries of coal from the Obukhov mine department via DTEK Trading

Characteristically, some of these firms have already managed to “light up” in the investigations of the media about the supply of coal from Russia and L/DPR to Ukraine. In particular, the Panamanian DATORO CORP. One of its directors is the Greek national Lazoros Leonidis. Until 2016, this man owned almost 20% of the shares of TAScombank of a Ukrainian businessman and politician Sergey Tigipko. The company imported anthracite from the Russian Federation in 2016. In 2017, deliveries continued. The company was a contract holder of JSC “Russian Railways Logistics”.

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Import of anthracite with the participation of DATORO CORP from the Russian Federation in 2017

Benecoal International Limited, headed by Jeffrey Brown, is also a contract holder. This person is the director of Sun Generation Limited, which is owned by Igor Morkotonov, a business partner of the head of the Ministry of Internal Affairs of Ukraine Arsen Avakov. In turn, Benecoal is the holder of contracts for the supply of coal produced by the Pechora Mining Company.

Polish company I-COAL Sp z o.o. is also a contract holder of the Pechora Mining Company. The company is known for competing with the Georgian company Sakhnakhshiri GIG Group, which won a tender in 2016 for the supply of coal for Centrenergo. In 2017, I-COAL continued to supply Pechora anthracite to Ukraine.

The story of ZNPP + NAEK “Energoatom”

Special attention should be paid to the story of the Zaporizhzhya NPP, and in particular, the correspondence in February-March 2017 between the Director of Expert Center LLC Vyacheslav Popov and the adviser to the president of the National Atomic Power Generating Company (NAEK) Energoatom George Balakan.

It discusses the corruption scheme for obtaining benefits by senior officials and the business elite of Ukraine (Igor Kononenko, Rinat Akhmetov, Yuriy Nedashkovsky, etc.) and personally by the President of Ukraine Petro Poroshenko through the Rotterdam Plus coal procurement scheme.

According to George Balakan, the process of obtaining benefits suggested shutting down one and a long repair of diesel generators of other power units of Zaporizhzhya NPP to create an energy deficit. Originally it was planned to arrest accounts with funds for the repair of power units, but the conspirators refused this decision for security reasons.

To replenish it, the use of coal purchased under the “Rotterdam plus” scheme in L/DPR was assumed with the mediation of Rinat Akhmetov. Of course, the administrative patronage of all actions was carried out through the party “Petro Poroshenko Bloc” personally by the President of Ukraine.

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Due to the actions of Igor Kononenko, loyal people were appointed to the management positions of nuclear power enterprises, including the National Atomic Energy Company (NAEK) Energoatom, which then delayed the launch of the ZNPP units.

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The correspondence notes that Yuriy Nedashkovsky and Oleksandr Shavlakov worked in the interests of the Petro Poroshenko Bloc party. Their actions have contributed to obtaining undue benefits in the framework of the work on the Rotterdam Plus coal purchase scheme. The amount of energy that could overlap during normal operation of ZNPP was recovered through the use of coal.

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Based on the text of the correspondence, the implementation of the criminal plan was carried out at five levels. Of particular interest is the fact that, through their criminal actions related to the repair of power units, the management of ZNPP and Energoatom NAEK have actually reduced their service life by 10 years. The second part of the letter refers to the fact that the SBU decided to appoint the perpetrators.

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One of the mails mentions the preparation of Yury Nedashkovsky in case of interrogation by the Ukrainian special services.

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The investigation shows that the level of corruption in Ukraine has reached incredible proportions. We can only ascertain the fact that all the assets of Poroshenko, accumulated as a result of “work” as president, were paid by the population of the country. There can be no question of energy independence from L/DPR and Russia, or the elimination of manual regulation of electricity prices, or about the balanced surplus activity of state-owned mines, or about getting rid of the problems of heating seasons. On the other hand, the Rotterdam Plus formula, in addition to other presidential money-withdrawal schemes, contributed to the fact that the country, together with the population, again became a laughing stock not only in the eyes of other countries, but also of its own government.

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