As U.S. Presses for Extradition of Ukrainian Magnate, His Lawyers Cry Foul
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Version 0 of 1. VIENNA — Far from the mortar fire in Donetsk and Luhansk, a different battle for Ukraine’s future has been playing out in a courthouse in Vienna and at the Justice Department in Washington, where American officials have spent the last year pressing for the extradition of Dmitry V. Firtash, one of Ukraine’s wealthiest and most powerful businessmen, and one-time patron of the ousted president, Viktor F. Yanukovych. An Austrian judge will issue a crucial ruling in the case on Thursday at an extradition hearing here, where Mr. Firtash’s lawyers will argue that his arrest — on charges of bribing officials in India to secure a titanium mining deal that never materialized — was really an effort by the United States to remove him from public life in Ukraine, where he controls major business interests and still holds considerable clout. The Justice Department has repeatedly declined to discuss the case because it is an active prosecution, but the United States attorney’s office in Chicago, which led the investigation, has flatly denied any political motivations. Still, the timing of the request for Mr. Firtash’s arrest on Feb. 26, 2014 — four days after Mr. Yanukovych’s ouster — and interviews with lawyers and co-defendants in the case, suggest that Mr. Firtash’s dealings with Gazprom, the Russian energy giant, and events in Ukraine, where the new Western-backed government is moving aggressively to curtail the influence of so-called oligarchs, have been major factors in the bid to extradite him. Mr. Firtash’s lawyers, co-defendants and other supporters said in interviews that American investigators and prosecutors had shown more interest in Mr. Firtash personally than in the underlying bribery case, in which he and five business associates were charged with paying $18.5 million in bribes to officials in the Indian state of Andhra Pradesh for licenses to mine titanium, which they planned to sell to Boeing for use in building the 787 Dreamliner passenger jet. “We are really strong in our defense,” said Ralph Isenegger, one of Mr. Firtash’s lawyers. “We will prove this request for extradition is an abuse of the extradition process by the U.S. and is purely politically motivated.” A top priority of Ukraine’s government — and a central demand of the Western creditors who have pledged more than $40 billion to help Ukraine avoid financial collapse — is a sweeping overhaul of the country’s notoriously corrupt natural gas industry, in which Mr. Firtash initially made his fortune, before branching out to build a vast business empire that includes interests in metals, manufacturing and media. Concerns about Mr. Firtash’s continued influence in Ukrainian politics are well-founded. Even after he was arrested, Mr. Firtash played a very public role in brokering a deal between Petro O. Poroshenko, another Ukrainian billionaire, and the ex-champion boxer, Vitali Klitschko, who were then both vying for the presidency. The three men met at the Ritz-Carlton Hotel here in Vienna, and Mr. Klitschko bowed out, choosing to run instead for mayor of Kiev, the capital. Mr. Poroshenko is now president. Lawyers involved in Mr. Firtash’s case say that the Justice Department specifically chose Austria as the country in which to seek Mr. Firtash’s arrest, even though he also spent extended periods of time in France and England, because the department believed the Austrian authorities would more readily agree to extradite him. Mr. Firtash has been free on more than $170 million bail but barred from traveling outside of Austria. The lawyers said that while the request for his arrest in February 2014 was presented as urgent, in fact an earlier request for his arrest had been made on Oct. 30, 2013, and rescinded five days later. The indictment against Mr. Firtash’s co-defendants, already approved by a grand jury, had been put under seal in June 2013. Prosecutors have not explained the gap between the indictment being put under seal and the arrest of Mr. Firtash, which occurred on the same day that Ukraine’s new prime minister, Arseniy P. Yatsenyuk, was visiting President Obama at the White House. The Firtash defense team includes lawyers and investigators in Ukraine, Austria, Russia and the United States. “We clearly know that it is the State Department who decided to arrest him,” said one lawyer, who requested anonymity so as not to interfere with the work of Austrian lawyers who will make arguments in court on Thursday. “We know that they decided as early as 2006 that Firtash was a target.” Asked about the allegations by Mr. Firtash’s lawyers of a politically motivated prosecution, a senior Obama administration official would say only that he was wanted to stand trial on charges of serious crimes. “Mr. Firtash has been indicted in the United States for his alleged role in an international racketeering conspiracy that bribed state and central government officials in India to allow the mining of titanium minerals,” the senior official said “He is charged with racketeering, money laundering, and F.C.P.A. conspiracies, as well as interstate travel in aid of racketeering.” The official was referring to the Foreign Corrupt Practices Act. Associates of Mr. Firtash’s said they believe that senior officials at the White House and the State Department have been actively involved in inquiries into him since then, and that the Indian bribery case was all that investigators could come up with after scrutinizing Mr. Firtash’s business dealings with Gazprom, particularly his ownership of RosUkrEnergo, a 50-50 joint venture with Gazprom, which bought Russian gas and resold it to the Ukrainian national gas company, Naftogaz. United States officials have suggested that RosUkrEnergo may have been used to funnel kickbacks to Russian mob figures, with a cut ultimately going to senior officials in the Russian government. Mr. Firtash initially cloaked his ownership of RosUkrEnergo in a trust held by Raiffeisen Bank, which is based in Austria. Andras Knopp, a Hungarian businessman and longtime associate of Mr. Firtash’s who is also charged in the case, said that the United States authorities had made no effort to extradite him, or even to talk to him about the case, even though he was at the center of the Indian titanium deal and handled negotiations with Boeing. “I was not contacted by the authority of any country,” Mr. Knopp said in an interview in Moscow, where he now lives. Mr. Firtash has also been of interest to the United States authorities because of accusations that he has ties to a Russian mob figure, Semyon Y. Mogilevich, who is on the F.B.I.’s 10 most-wanted list. Mr. Firtash came to prominence again after a classified State Department cable that was made public by WikiLeaks described him meeting with the United States ambassador in Kiev, the Ukrainian capital, and acknowledging that he had to obtain Mr. Mogilevich’s permission to enter the gas-trading business. Mr. Firtash has repeatedly denied the accuracy of most of the cable, though there are numerous connections that suggest Mr. Firtash and Mr. Mogilevich ran in the same business circles and likely had dealings with each other. For instance, both men used the same Israeli lawyer in some important corporate deals. Regardless, Mr. Firtash is hardly a sympathetic figure. He is among the most secretive of billionaires, historically refusing to acknowledge his true net worth, and eschewing the public rankings by Forbes magazine and others that try to gauge the world’s richest individuals. He is also despised by many people in Ukraine for his role as a main financial backer of Mr. Yanukovych, whose victory over the former prime minister, Yulia V. Tymoshenko, in the 2010 presidential race effectively scuttled any lingering hopes that the country’s so-called Orange Revolution would lead to a more European-oriented future. Mr. Firtash and Ms. Tymoshenko are archenemies dating from gas disputes during her time as prime minister. Mr. Knopp said that the money paid by companies set up by Mr. Firtash to carry out the titanium deal had gone not to Indian officials but to Jugendra Singh Raghav, an Indian-Russian businessman and reputed former K.G.B. operative, who runs a metals trading business called Stork Group, and who, according to Mr. Knopp, originally proposed the India deal to Mr. Firtash. Mr. Raghav, who is not named in the indictment, is believed to be cooperating with the United States authorities. Phone and email messages left for Mr. Raghav were not returned. Mr. Knopp said he believed that Mr. Raghav may have pocketed the money that Mr. Firtash thought would be used to set up the business in India and that American prosecutors now say was used to pay bribes. He also said the United States authorities did not understand the nature of the deal in India. “The whole indictment is a stupidity,” Mr. Knopp said, puffing on a Cohiba Cuban cigar. “First of all, according to Indian legislation, a foreign company and a foreign citizen cannot get mining licenses for rare earth metals in India. You cannot bribe Indian officials to get mining licenses, because you cannot get it, by definition.” Lawyers involved in the case say that the only evidence even suggesting the possibility of bribes comes from a page in a PowerPoint presentation about the proposed titanium deal, apparently developed by McKinsey and Co., the American consulting firm, which was working with Boeing to identify new sources of titanium sponge. The document suggests that the deal would involve a two-pronged strategy: “invest significantly in infrastructure and employment in India” and “respect traditional bureaucratic process, including use of bribes.” Mr. Firtash’s defense lawyers scoffed at the idea that McKinsey would ever write such a thing, and said other details of the proposed titanium deal included on the slide were factually incorrect. “We signed a joint venture agreement with a government agency,” Mr. Knopp said. “They applied for the mining licenses from the central government. They would bring to the joint venture the mining licenses as a sublease and we would invest the money and build up the whole production. We couldn’t get mining licenses. I don’t know who told this stupidity to the F.B.I. and the prosecutors.” He added, “We were going to invest 1.5 billion U.S. dollars in this project.” |