Timeline in Ukraine Probe Casts Doubt on Giuliani’s Biden Claim

Stephanie Baker and Daryna Krasnolutska
Timeline in Ukraine Probe Casts Doubt on Giuliani’s Biden Claim

(Bloomberg) -- President Donald Trump’s personal lawyer is raising the specter that Joe Biden intervened in Ukrainian politics to help his son’s business.

But if that was Biden’s aim, he was more than a year late, based on a timeline laid out by a former Ukrainian official and in Ukrainian documents.

The official described to Bloomberg details about the country’s political dynamic in the run-up to early 2016 when Biden, then the U.S. vice president, threatened to hold up U.S. funding to Ukraine unless it cracked down on corruption. Biden’s chief demand was the ouster of a top Ukrainian prosecutor who he said had been ineffective. The episode has come under the spotlight in the last week because at one point, that prosecutor had been investigating a natural gas company where Biden’s son, Hunter Biden, sat on the board and received substantial compensation.

There’s little question that the Bidens’ paths in Ukraine held the potential for conflict, and in a tweet last week, Trump attorney Rudy Giuliani said the U.S. should investigate the matter. But what has received less attention is that at the time Biden made his ultimatum, the probe into the company -- Burisma Holdings, owned by Mykola Zlochevsky -- had been long dormant, according to the former official, Vitaliy Kasko.

“There was no pressure from anyone from the U.S. to close cases against Zlochevsky,” Kasko said in an interview last week. “It was shelved by Ukrainian prosecutors in 2014 and through 2015.”

Kasko’s assessment adds a wrinkle to one of the first political intrigues of the 2020 election season. It undercuts the idea that Biden, now a top Democratic presidential candidate, was seeking to sideline a prosecutor who was actively threatening a company tied to his son. Instead, it appears more consistent with Biden’s previous statements that he was pressing for the removal of a prosecutor who was failing to tackle rampant corruption: According to public reports and internal documents from the Ukrainian prosecutor’s office, U.S. officials had expressed concern for more than a year about Ukrainian prosecutors’ failure to assist an international investigation of Zlochevsky.

Joe Biden declined to comment through a spokesman, who also said that Hunter Biden wouldn’t comment. Zlochevsky couldn’t be located for comment. Representatives for Burisma, which is based in Cyprus, didn’t respond to emails requesting comment.

U.K. Probe

Questions about the potential Ukraine conflict resurfaced with recent reports of a video in which Joe Biden described how he’d threatened to withhold $1 billion in U.S. loan guarantees from Ukraine unless its leaders dismissed Prosecutor General Viktor Shokin. The New York Times reported on May 1 that Hunter Biden had a stake in the outcome because at the time he was on the board of Zlochevsky’s company, where he was paid as much as $50,000 a month for his work.

Hunter Biden joined the board in April 2014, two months after U.K. authorities requested information from Ukraine as part of a probe against Zlochevsky related to money laundering allegations. Zlochevsky had been minister of environmental protection under then-President Viktor Yanukovych, who fled to Russia in February 2014 after mass protests.

After the U.K. request, Ukrainian prosecutors opened their own case, accusing Zlochevsky of embezzling public funds. Burisma and Zlochevsky have denied the allegations.

The case against Zlochevsky and his Burisma Holdings was assigned to Shokin, then a deputy prosecutor. But Shokin and others weren’t pursuing it, according to the internal reports from the Ukrainian prosecutor’s office reviewed by Bloomberg.

In a December 2014 letter, U.S. officials warned Ukrainian prosecutors of negative consequences for Ukraine over its failure to assist the U.K., which had seized Zlochevsky’s assets, according to the documents.

Those funds, $23.5 million, were unblocked in 2015 when a British court determined there wasn’t enough evidence to justify the continued freeze, in part because Ukrainian prosecutors had failed to provide the necessary information.

No Action

Shokin became prosecutor general in February 2015. Over the next year, the U.S. and the International Monetary Fund criticized officials for not doing enough to fight corruption in Ukraine.

Shokin took no action to pursue cases against Zlochevsky throughout 2015, said Kasko, who was Shokin’s deputy overseeing international cooperation and helping in asset-recovery investigations. Kasko said he had urged Shokin to pursue the investigations.

The U.S. stepped up its criticism in September 2015, when its ambassador to Ukraine, during a speech, accused officials working under Shokin of “subverting” the U.K. investigation.

Kasko resigned in February 2016, citing corruption and lawlessness in the prosecutor general’s office.

The U.S. plan to push for Shokin’s dismissal didn’t initially come from Biden, but rather filtered up from officials at the U.S. Embassy in Kiev, according to a person with direct knowledge of the situation. Embassy personnel had called for U.S. loan guarantees to Ukraine to be tied to broader anti-corruption efforts, including Shokin’s dismissal, this person said.

Biden’s threat to withhold $1 billion if Ukraine didn’t crack down on corruption reportedly came in March. That same month, hundreds of Ukrainians demonstrated outside President Petro Poroshenko’s office demanding Shokin’s resignation, and he was dismissed.

Shokin has denied any accusations of wrongdoing and declined to provide immediate comment for this article. In an interview with the Ukrainian website Strana.ua published on May 6, Shokin said he believes he was fired because of his Burisma investigation, which he said had been active at the time.

In October 2017, Burisma issued a statement saying Ukrainian prosecutors had closed all legal and criminal proceedings against it.

No Convictions

Earlier this year, Ukraine’s current prosecutor general, Yuriy Lutsenko, met with Trump attorney Giuliani, and the two discussed the Burisma investigation, according to Lutsenko’s spokeswoman Larysa Sargan.

Sargan said the prosecutor general hasn’t reopened the case into Burisma or Zlochevsky, contradicting a claim in the New York Times that the Ukrainian prosecutor is scrutinizing millions of dollars of payments from Burisma to the firm that paid Hunter Biden. Ari Isaacman Bevacqua, a Times spokeswoman said, “We stand by our reporting, which is detailed and well documented.”

Ukraine’s incoming president, Volodymyr Zelenskiy, is likely to appoint his own top prosecutor to replace Lutsenko. Under Poroshenko, Ukraine hasn’t convicted any high-ranking officials of corruption.

Giuliani has been pressing for greater scrutiny of the Biden matter. “Biden conflicts are too apparent to be ignored and should be investigated quickly and expeditiously,” Giuliani tweeted, sharing a link to the Times’s story.

President Donald Trump has also referenced potential conflicts of interest by Joe Biden, one of the Democrats currently seen as having the greatest chance to defeat him.

“Sure, I’m hearing it’s a major scandal, major problem,” Trump said. “I hope for him it is fake news. I don’t think it is.”

In an interview with Bloomberg in December 2015 when he was vice president, Biden said he’d never discussed Burisma with his son or with Ukrainian officials. “No one has ever raised that with me in Ukraine,” he said. “I don’t talk to my son” about his work.

Hunter Biden, 49, is a son of Joe Biden’s late wife, Neilia, who was killed in a car accident when he was a child. Biden, a Yale-educated lawyer, was discharged from the Navy Reserve in 2014 after testing positive for cocaine and joined the Burisma board shortly after. The company’s website listed him as a board member as recently as last month, but he has since left the position.

(Adds account from U.S. embassy in Kiev under ‘No Action’ section heading.)

--With assistance from Volodymyr Verbyany.

To contact the reporters on this story: Stephanie Baker in London at stebaker@bloomberg.net;Daryna Krasnolutska in Kiev at dkrasnolutsk@bloomberg.net

To contact the editors responsible for this story: Jeffrey D Grocott at jgrocott2@bloomberg.net, Andrew Martin, Ian Fisher

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