Former Prime Minister Says Gas Trader|Runs Racket for Ukraine’s President

MANHATTAN (CN) - In a RICO and Torture Victims Act class action, former Ukrainian Prime Minister Yulia Tymoshenko claims a gas trader dismantled Ukraine's judicial system with help from President Victor Yanukovych, "stripping away all remaining vestiges of an independent judiciary and the rule of law" in the Ukraine.

Tymoshenko, a leader of the so-called Orange Revolution, sued Dmytro Firtash and RosUkrEnergo under the Torture Victims Protection Act, the Alien Torts Statute, and the federal RICO Act. She seeks "to recover monetary damages and other relief arising out of the defendants' concerted efforts to defraud the Ukrainian people of their valuable natural resources, as well as their political and human rights."

Firtash owns 45 percent of RosUkrEnergo (RUE) and a partner owns 5 percent; the other half is owned by Gazprom, Russia's natural gas monopoly, according to the federal complaint.

Tymoshenko, who was prime minister from 2007 to 2010, claims "Firtash has admitted that he got his start in the gas trading business with the assistance of Semion Mogilevich, the Russian organized crime boss. Firtash is also a close associate and advisor to the current Ukrainian President, Victor Yanukovych."

Tymoshenko says her co-plaintiffs, John Does 1-10, were all members of her administration, and that "They have all been subjected to politically motivated investigations and selective prosecutions by the current Ukrainian administration under the leadership of President Victor Yanukovych. The reason why their names are not specifically listed as plaintiffs in this matter is that, in some cases, they are incarcerated under conditions that severely restrict their ability to communicate freely, and both those who are incarcerated and those that are not, but are under intense investigation, would likely be subjected to further intimidation and persecution if their names were listed as plaintiffs in this action."

Tymoshenko says that Firtash colluded with the Yanukovych administration to seize $3.5 billion in resources by "stripping away all remaining vestiges of an independent judiciary and the rule of Law" in the Ukraine.

Yanukovych, accused of massive corruption throughout the complaint, is not a defendant. Up to 100 unnamed corporate and individual co-conspirators are listed as defendants.

"For many years, RUE bought cheap gas from Russia and Turkmenistan and had Gazprom deliver it to the Ukrainian border, where most of the natural gas was sold at a favorable price to the state-owned Ukrainian company, Naftogaz, and the rest to European customers at global market prices," Tymoshenko says in her 29-page complaint.

As prime minister, On Jan. 19, 2008, Tymoshenko says she negotiated with Russian Prime Minister Vladimir Putin to eliminate RUE as the broker of gas transactions between Russia and the Ukraine, and agreed to have the two countries trade directly with each other.

She says that Western countries celebrated the deal, which the U.S. Embassy said would bring "transparency and accountability" to Ukraine's gas trade. But public and secret critics of the plan signaled that it would have a violent fallout, according to the complaint.

Tymoshenko says the deputy chairman of Ukraine's state-run oil company received threatening phone calls from Kiev, warning him that he would "do time" if he signed the agreement.

She says Firtash publicly denounced her agreement with Russia as "criminal" and said that if anyone else had made it, "he would have already been hanging from the streetlights."

Firtash opposed the deal at the Stockholm Chamber of Commerce, but the Ukrainian government was confident that it would win, Tymoshenko says. But she says everything changed when Yanukovych became president in February 2010, financially backed by Firtash.

Firtash immediately joined the Yanukovych administration's inner circle; his associates were put in key positions, including chief of staff, energy minister and security chief, and Yanukovych replaced the entire management of the state-run gas company Naftogaz, Tymoshenko says.

"Since the entire management team at Naftogaz now reported to the Yanukovych administration, the two parties that were facing each other in the Stockholm arbitration were now friends and allies," the complaint states.

By March 2010, Yanukovych's Naftogaz announced a "change of position" and "admitted" that the seizure of RUE's natural gas was illegal, Tymoshenko says.

"Upon information and belief, Naftogaz's 'change of position' was due to the fundamental conflict of interests, collusion and corrupt agreement between defendants Firtash/RUE and the Yanukovych administration," the complaint states.

The Stockholm Arbitration Tribunal, lacking any opposition, awarded RUE 12.1 billion cubic meters of gas.

"In order to understand the enormity of the transaction, it should be noted that the 12.1 billion cubic meters of gas that Naftogaz transferred to RUE following the Tribunal award represented approximately 50 percent of the 25 billion cubic meters of gas produced in Ukraine annually, and approximately one-sixth of Naftogaz's total annual 'gas balance' of 75 billion cubic meters, which includes the gas shipped by pipeline into Ukraine from Russia and Turkmenistan," the complaint states.

Tymoshenko says the Yanukovych administration enacted a set of "reforms" to make sure the Ukrainian courts would rubber-stamp the Stockholm award.

"In July 2010, under the guise of 'Judicial Reform,' the administration also granted the Supreme Council of Judges certain powers not specifically enumerated or even mentioned in the constitution, including the power to appoint the head judges of all the courts, to control the assignment of cases and the allocation of offices, computers and other resources, and to remove judges within one month's period without hearing, the right to defend against the charges, or other indicia of due process.

"Since the Yanukovych administration has the allegiance of at least 16 of the 20 members on the Supreme Council of Judges, through the increased powers granted to the Supreme Council, the administration has virtual complete control over the hiring and firing of judges, thus precluding the possibility of any independent judiciary," the complaint states.

Tymoshenko says Yanukovych's courts arrested, jailed, exiled and psychologically tortured his political opponents. The complaint names four high-ranking officials of her administration who allegedly have been subjected to such persecution, including Tymoshenko's minister of the economy, acting minister of defense, Customs chief, and deputy Customs chief.

She seeks treble damages and punitive damages for the class.

She is represented by Kenneth McCallion.

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