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By John Helmer, Moscow

The Cyprus Government’s unit for combating money-laundering will consider an investigation of Igor Kolomoisky if it is requested by the Ukrainian or US Governments, Eva Papakyriacou revealed on Tuesday. Papakyriacou is the head of the unit, whose acronym, following the Greek, is MOKAS.

She declined to say if there has been a request for investigation, either by a foreign government, or by the Cyprus government agencies responsible for Kolomoisky’s Cyprus passport, or the source of funds of his Privatbank group in Cyprus. “All the information possessed by MOKAS is confidential,” Papakyriakou said. “However, it is noted that the source of funds is checked by the Banks and the Supervisory Authority for Banks is the Central Bank.”

The Cyprus reaction follows disclosures by the National Bank of Ukraine (NBU) that through last week, Privatbank, which Kolomoisky controls, has received UAH9.9 billion ($416 million) in loans to prevent the bank’s insolvency. The money is being paid out every two weeks. The NBU’s reason, according to a release of April 3, is “to support the liquidity of the bank [and] to ensure timely fulfillment of obligations to depositors – natural persons.” The NBU says that in return for the bailout, it now indirectly owns, and also controls Privatbank, through collateral amounting to a “significant share in the banking institution.” Also, according to the central bank, it is dictating how its loan money must be spent by the bank — “exclusively to meet [its] obligations to individuals.”

The NBU has also reacted to reports in the Ukrainian media that more than $1 billion in state and International Monetary Fund (IMF) cash which Privatbank received last year has been transferred by Kolomoisky to the bank’s Cyprus subsidiary, and to associated Cyprus companies which Kolomoisky also controls. On March 27 NBU issued a notice claiming “the National Bank of Ukraine sees no reasons for the clients and partners of the bank to have concerns over the misleading information about this financial institution’s performance that circulated in the media.”

PapakyriacouPeriodic reports by Papakyriacou (right) in Nicosia indicate that MOKAS has been accelerating the opening of its investigations since 2009. That year MOKAS reported 852 investigations. In 2013 the number had almost doubled to 1,513. The unit, which began operating in 1997, includes representatives of the Attorney-General, the Cyprus police, and Customs. MOKAS, according to Papapkyriacou, “conduct[s] investigations when there are reasonable grounds for believing that a laundering offence and a terrorist financing offence has been committed.” The European Union’s Moneyval Committee and the international Financial Action Task Force (FATF) coordinate with MOKAS.

Kolomoisky is identified in Cyprus as a Politically Exposed Person (PEP). Under the regulations of the Central Bank of Cyprus this carries “enhanced risks especially if the potential customer seeking to establish an account is a politically exposed person (“PEP”), a member of his immediate family or a close associate originating especially from a country which is widely known to face problems of bribery, corruption and financial irregularity.” A PEP is defined as “a senior figure in the executive, legislative, administrative, military or judicial branches of a government (elected or non-elected), a senior figure of a major political party, or a director/senior executive of a government owned corporation. It includes any corporate entity, partnership or trust relationship that has been established by, or for the benefit of, a politically exposed person.”

Kolomoisky’s status in Cyprus, said Papakyriacou, is “under the responsibility of the Ministry of Interior.” Kolomoisky himself has admitted he holds a Cyprus and an Israeli passport, in addition to his Ukrainian document. This is what he said last October — see minute 1:34-35. According to Ukrainian critics, Kolomoisky has broken Ukrainian law by holding multiple passports.

The Cyprus Ministry of Interior and the Cyprus Investment Promotion Agency (CIPA), confirmed today that they cooperate to manage a naturalization and passport scheme for wealthy individuals meeting a €5 million investment target in Cyprus, plus a residence costing not less than €500,000, and payment of €100,000 in income tax. The current regulations can be read here.

A CIPA source said his agency’s “mission is to promote Cyprus as an attractive investment destination. In other words, we act as the marketing branch of the country in the field of FDI [foreign direct investment]. [CIPA] has nothing to do with the process of reviewing, approving/disapproving of citizenship applications.”

The Interior Ministry was asked in what year Kolomoisky’s passport was issued, and whether, after the naturalization is granted, there is a compliance check of the residency and financial rules. At press time there has been no response.

The Cyprus interest in investigating Kolomoisky compounds his problems with the federal Swiss authorities, who have refused to renew his residency permit in Geneva; this expired late last year. For more, click. Fresh Swiss media reports add that the investigation of Kolomoisky has been going on in Berne and Geneva for “more than three months”.

Kolomoisky’s Israeli passport, according to US Government records, was issued on October 5, 2005. His residential address was given at the time as 48 Galei Tchelet Street, in Herzeliya, a seaside suburb of Tel Aviv.

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Over the weekend Kolomoisky was reported by Ukrainian and Russian sources to be in the US, together with his family. There has been no independent confirmation, and no direct sighting. At its headquarters in Dniepropetrovdsk, Privatbank refuses to confirm Kolomoisky’s whereabouts. The reported reason for his American trip is to attend the national college basketball finals in Indianapolis. Kolomoisky has been a financier of Ukrainian basketball in the past.

On Kolomoisky’s visa status in the US, US sources differ from Ukrainian sources. The former claim Kolomoisky has “no trouble” in obtaining a business visa to visit the US because he owns “substantial” assets in the country, most of them based in Miami, Florida. Ukrainian sources claim Kolomoisky has been under investigation by the Department of Justice and the Federal Bureau of Investigation in the past, and that his current visa is a temporary, restricted one. In Kiev it is believed Kolomoisky is asking US officials for a new haven for himself, his family, and his assets.

The US State Department does not confirm visa details for individuals. The last State Department reference to Kolomoisky was on March 25, when the Department spokesman defended Kolomoisky’s dismissal from the post of Dniepropetrovsk governor as “an internal matter for Ukraine. Governors in Ukraine are appointed by the president. Removing a governor from power is well within the authority of President Poroshenko, and obviously, as we’ve seen from reporting, that’s the case here.” Kolomoisky himself was not criticized. “We’ve seen conflicting reports about armed men entering certain businesses partially owned by Mr. Kolomoisky. Mr. Kolomoisky and the Ukrainian Government have stated these individuals were private security guards for him. I don’t have any additional confirmation or details for you.” For more on the dismissal, read this.

US media reports have grown more hostile towards Kolomoisky. On April 2 the New Yorker published a review of the circumstances of Kolomoisky’s dismissal by Sophie Pinkham, a graduate student and former employee of one of George Soros’s organizations in Ukraine. She concludes that “many Ukrainians see that Kolomoisky is a patriot only when patriotism is in his own best interest.”

US litigation records reveal that Kolomoisky controls a group of manganese refining and ferromanganese and silicomanganese trading companies in the Felman group, also known as Georgian American Alloys and as Optima Acquisitions. In a 2013 proceeding before the West Virginia Public Service Commission, lawyers for Felman admitted the group was “owned by a single individual” (Kolomoisky) through a Cyprus entity called Haftseek Investments; that was in turn owned by Divot Enterprises of Nevis, West Indies. The Felman group was also tied to Kolomoisky through a $35.1 million loan from PrivatBank at 12% for three years; and another loan from Haftseek. Most of the financial data are redacted in the West Virginia disclosure, except for two things — a calculation that $98 million had been invested in the group as of 2009; and that the Felman group companies were running at a loss in 2010 “and [for] the foreseeable future”.

Not loss-making, separate US court records show, were the Cyprus companies – Athina Investments, Varkedge Limited, and Wisewood Holdings, also owned by Kolomoisky – through which he held shares in the Nikopol manganese refinery in Ukraine, one of the suppliers of manganese to the Felman group.

Kolomoisky is reported in the West Virginia documents as “an ultimate major shareholder in Privat Bank but is not considered a controlling shareholder of the Bank.”

To support asset claims in arbitration and litigation in London, rival Dniepropetrovsk oligarch and pipemaker, Victor Pinchuk, won a federal US court order in September 2013, allowing Pinchuk to issue subpoenas and compel the disclosure of Felman company financials and details of Kolomoisky’s American businesses. Kolomoisky’s lawyers appealed, and the disclosures have not proceeded. For the story of Pinchuk’s London claim, read this.

Through his US holding called Optima Acquisitions Kolomoisky also owns a group of specialty steel producers in several US states — Optima Specialty Steel, Warren Steel Holdings, Steel Rolling Holdings, Michigan Seamless Tube, Niagara Lasalle, and Kentucky Electric Steel. A recent Moody’s rating report is critical of the steel group’s $175 million in debt, and warned that its future is likely to be lossmaking.

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