Ukraine's corruption is leaving investors wary and the country weak

Ukraine's corruption is leaving investors wary and the country weak
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Ukraine is under constant threat, both from the looming specter of further Russian incursions and from its inability — or refusal — to make meaningful reforms to establish the rule of law and root out its infamous corruption.

Both the Obama and Trump administrations have incessantly interceded with President Petro Oleksiyovych Poroshenko to crack down on graft and ensure independence of the courts. So far, it is an uphill, if not losing, battle.

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If Ukraine has any hope for a free and fair future, then it must quickly send a message to its enemies, allies and would-be investors that the country is serious about exorcising its internal demons. Otherwise, those threats might be Ukraine’s undoing.

 

A strong Ukraine is the best weapon available to permanently repeal Russia’s oppressive designs on the country. But Ukraine can never be strong if the world sees a country that is dying from the inside-out, mortally wounded by its own corrupt ways. If Ukraine is corrupt, Ukraine will be weak, and that is exactly what Russia wants.

The bad news is that time is short, and the country’s leadership has done very little to show that it is serious about facing and defeating its enemies within. The good news is that the nation has a golden opportunity to send a much-needed message.

Ukraine billionaire Dmitry Firtash is Exhibit A of how corrupt, ex-President Viktor Yanukovych-era Ukraine oligarchs are scaring away investors and aggravating fault lines between the county and its crucial allies.

Awaiting extradition to the U.S. from Austria — unless his lawyers successfully argue that the U.S. has no interest — Firtash is alleged to have employed threats, extortion and fraud in his quest to become rich and powerful.

He is reportedly connected to the reputed Russian mob boss Semyon Mogilevich, an entry on the FBI global most wanted list and for years a major funder of the who’s who in Ukrainian politics, including Yanukovych.

Unfortunately for Firtash and his associates in the Ukrainian parliament, part of that quest involved stealing a $50 million soybean plant built by two American citizens.

The Segal brothers, Vadim and Ilya, were born in Ukraine, and they are U.S. citizens who now make their home in New York City. They sought to invest in their native lands, spreading economic opportunity to make their home stronger and more prosperous.

For their efforts, they were accused of crimes by Firtash and his cronies who controlled the police force and court systems: Ivan Fursin, a Rada Member of Odessa, the chairman of a failed Nadra Bank, and the Parliament (Rada) Member Oleksandr Granovsky, Firtash reported fixer for legal affairs.

While the Segal brothers have enjoyed some limited victories in their protracted efforts to regain control of their plant, Firtash’s allies in the Ukraine government have stalled their gains. Seven years after first going to the Ukraine government for help in resolving their nightmare, the Segal brothers are still not in full control of the plant they built. U.S. prosecutors pushing for Firtash’s extradition have compared his organization and business tactics to the Mafia, exposing links between Firtash and his associates to Russian organized crime.

It’s not difficult to see the chilling effect this saga has had on other would-be investors who continue to view the country as a hotbed of crime and corruption. Furthermore, it is exhausting and frustrating to the United States to have to constantly clean up Ukraine’s messes. The U.S. has been steadfast in its commitment to protect the country’s sovereignty.

It is far past time for Ukraine to show a similar commitment to its own people: to clean its own Augean stables.

U.S. prosecutors are working hard to extradite Firtash from Austria for bribing Indian officials to the tune of $18.5 million, but all parties involved know that is just the tip of the iceberg.

While his lawyers argue that there is no U.S. interest in prosecuting Firtash, the Segal brothers – American citizens – continue to try to win back their hard-earned gains from the clinched fist of Ukraine corruption. If the Firtash extradition is successful, it won’t be surprising if Granovsky and Fursin eventually join their patron in the U.S.

If President Poroshenko’s hands are clean and he wants to demonstrate that he is serious about combatting corruption and leading Ukraine into a future it can be proud of, then he and Ukraine must make clear that Firtash and his group will be forced to return their ill-gotten gains.

If not, then Ukraine has already lost, and the dark forces of corruption that have enjoyed free reign in the region for far too long are just getting started.

Mark Pfeifle served as a deputy national security adviser to President George W. Bush.