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Head of Kyiv tax authority accused of multimillion-dollar fraud | Ukraine

Volodymyr Zelenskiy’s fight against corruption has continued as a woman who heads the Kyiv tax office was accused of massive fraud following a search of one of her four homes, and a number of national officials were forced to leave their positions.

The residence of businessman Igor Kolomoisky, a former political ally of the Ukrainian president, was also raided as part of an investigation into alleged customs evasion linked to the Ukrainian oil company Ukrnafta and oil refinery Ukrtatnafta.

The media empire owned by Kolomoisky, who is already under U.S. sanctions for his alleged involvement in “significant corruption,” helped popularize Zelensky as an artist and later supported his political career. Kolomoisky denies his guilt.

Vasily Malyuk, the head of the country’s security service, said there were “dozens” of actions Wednesday against what he said were corrupt officials, Russian agents and those who undermine national security.

“We don’t plan to stop,” he said in a Telegram statement. “Every criminal who has the audacity to harm Ukraine, especially in a war, must clearly understand that we will put handcuffs on him.”

The events came as Ukraine’s president was preparing for Friday’s EU summit in Kyiv to discuss the country’s potential entry into the 27-member bloc.

According to a leaked draft statement, the EU will encourage Ukraine to comply with the requirements of the European Commission, including the fight against corruption, to allow membership talks to begin. “The EU will decide on further steps once all the conditions specified in the commission’s opinion have been fully met,” the bloc’s statement is expected.

Last week, a number of Ukrainian officials were forced to resign amid allegations of corruption as Zelenskiy vowed that the practice, widespread before the war in Ukraine, would not be allowed.

On Wednesday, the repression was in full swing. The State Bureau of Investigation of Ukraine (SBI) said in a statement that the acting head of the Kyiv Tax Inspectorate, who has not been named, abused her “power and official position” along with other government officials.

Investigators search woman's house
Investigators search the woman’s house. Photo: State Bureau of Investigation of Ukraine

During a search of the woman’s home, investigators found $158,000 (about £128,000), 530,000 Ukrainian hryvnias (£11,000), 2,200 euros (£1,900) in cash, as well as a variety of expensive jewelry, designer brand clothes and luxury gold watches. The SBI released photographs of what it called the catch.

Investigators argued that the woman’s lifestyle did not match her declared income as head of the Moscow tax office. She is said to own three apartments in the city worth $1 million (£811,640), a house near Kyiv worth about $200,000 and two cars worth about $150,000.

Her driver also had a $100,000 car registered, although “the man’s income has not exceeded $8,000 in recent years,” the SBI said.

An image released by the SBI shows that it was cash seized.
In a SBI released image of what he said was seized in cash. Photo: State Bureau of Investigation of Ukraine

The Guardian was unable to contact the official. The Kyiv Tax Service did not respond to a request for comment.

Investigators allege that the woman used her position to reduce the tax bills of certain individuals and companies.

The SBI said in a statement: “The official’s total identified unfounded assets are around $1.4m” (£1.1m).

The clock, which, according to the State Bureau of Investigation, was found in the house of a woman
The clock reported by the RBI was found in the woman’s house. Photo: State Bureau of Investigation of Ukraine

It also turned out that the acting heads of the national customs and tax services have been temporarily dismissed. Last month, a series of alleged corruption schemes were uncovered at regional customs offices.

Zelenskiy said he would make the change after the arrest and dismissal last week of Infrastructure Minister Vasily Lozinsky over allegations of overpricing winter equipment, including generators, and allegedly pumping out $400,000. Approximately $38,000 in cash was reportedly found in his office. He didn’t comment.

Deputy Defense Minister Vyacheslav Shapovalov also “asked to be fired” following reports of overpriced purchases of soldiers’ rations, raising fears of potential kickbacks. He denied any wrongdoing.

According to Transparency International’s 2021 index, Ukraine is the second most corrupt country in Europe after Russia. As Ukraine takes its first steps towards what could be a long road to EU membership, the government is under pressure to show it’s on the mend.

Zelenskiy is expected to attend a summit in Kyiv with European Commission President Ursula von der Leyen and her European Council counterpart Charles Michel on Friday to discuss progress. It is not yet known whether EU leaders will take part.

Prime Minister of Ukraine Denys Shmygal expressed hope that the country will become a member of the EU within two years. The EU granted Ukraine official candidate status in record time, but it has no chance of joining the bloc in such a short time. Turkey has had candidate status since 1999.

Despite the lukewarm language of the EU’s draft statement, there was some positive news on Wednesday as US auditors who met with senior Ukrainian ministers this week said they found no evidence of misuse of US bailouts for Ukraine. A number of senior Republicans have raised concerns about possible fraud.

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