Prague, 8 June 2004 (RFE/RL) -- Former Ukrainian Prime Minister Pavlo Lazarenko became a multimillionaire while in power from 1996 to 1997.
A U.S. federal district court in California last week decided that he made that money through corruption and found him guilty on 29 charges, including conspiracy to launder money, money laundering, and fraud, as well as transportation of stolen property. Lazarenko, who was in jail for nearly five years while awaiting trial, has not yet been sentenced but could face around 20 years in prison.
It is rare for the Uninted States to put on trial foreign leaders, whether serving or former. Lazarenko, 51, was arrested when he arrived in the United States and asked for political asylum after fleeing Ukraine. He has previously been convicted in absentia by a Swiss court of money laundering and has been charged with murder in Ukraine. He said he will appeal the verdict.
"In the case of Lazarenko, had he been an acting prime minister, I would really doubt they could have brought any kind of criminal charges against him, but because he's a former prime minister they could do that." -- Mary Mycio
The case was tremendously complex and took almost five years to prepare. Lazarenko's defense attorney acknowledged that Lazarenko used his position to make a fortune, but said that had been usual and acceptable behavior in the 1990s in Ukraine.
American lawyer and journalist Mary Mycio lives in Ukraine. She practiced law in California, the state where Lazarenko was tried, and explained that in the end Lazarenko was convicted because he broke U.S. laws rather than Ukrainian ones. "The laws that he broke were American laws -- American laws on money laundering,” she said. “Basically, the fundamental crime at the heart of money laundering is that the money is derived from criminal activity and then it gets into American banks and goes through the whole laundering process."
Mycio said where the "dirty" money comes from is irrelevant as long as it is being laundered through the U.S. banking system. "The criminal activity can happen anywhere -- which also makes sense -- because a lot of money derived from money laundering comes from things like arms trafficking and narcotics and prostitution and that sort of thing and can happen all around the world," he said.
But crucially, under U.S. law, Mycio said, the money being transferred or laundered has to be shown to have been obtained illicitly. "In the case of Lazarenko, the prosecution argued that he received his money from extortion, bribery, that sort of thing," she said. "And so all of those activities happened on Ukrainian territory, but then that money that was earned from those activities was laundered through American banks."
Roman Kupchinsky writes about crime and corruption for RFE/RL and has followed the Lazarenko case closely. He said Lazarenko's defense lawyers argued that the former prime minister was behaving like many other former politicians in the former Soviet Union who used their positions to amass huge wealth. That was a problem for the prosecution, Kupchinsky said. "In order to prove money laundering, however, you have to prove that the money that was being laundered was earned illegally and there came the question of Ukrainian jurisdiction -- was that a violation of Ukrainian law at the time?"
He said the prosecution successfully made a case that Lazarenko had extorted money -- a crime in Ukraine during his time as prime minister. Their key witness was Ukrainian businessman Petro Kiritchenko, who told the court he felt forced to give Lazarenko many millions of dollars and ownership of half of a company to help expand his firm.
Kupchinsky said the prosecution did not have to prove Lazarenko physically transported stolen property in the form of illicit funds. It was enough to prove that he had committed mail fraud -- a crime that covers many actions. "Mail fraud includes wire transfers of illegal money, which was a statute which was originally brought in to combat drug money being moved about -- that's the bottom line," he said. "That's why they were able to use the U.S. jurisdiction to try the case in San Francisco."
The only previous case of such a prominent political figure being tried by the United States was the conviction in 1992 of former Panamanian leader Manuel Noriega in 1992. He was captured after the United States invaded Panama in 1989 and is currently serving a 30-year prison sentence on drug-trafficking charges.
Mycio said that it is unusual for one state to put on trial the head of another and there were initial difficulties over what to charge Noriega with. "In that case, the United States used this little bit of legal maneuvering because as a rule, a kind of principle of international law, is that one country cannot put another sovereign on trial," she said.
She said the United States would probably never put on trial a serving head of state or prime minister, and that in Noriega's case the United States argued that his election to power had been illegitimate. "In the case of Lazarenko, had he been an acting prime minister, I would really doubt they could have brought any kind of criminal charges against him, but because he's a former prime minister they could do that," she said.
Kupchinsky said the U.S. government had been concerned at the official corruption in Ukraine, which they were sure emanated from the highest levels. Washington had made discreet diplomatic as well as more public pleas for Lazarenko to stop his corrupt practices or for him to be removed.
Kupchinsky said the Ukrainian government ignored Washington's requests and the United States waited for an appropriate opportunity to send a strong signal to the Ukrainian leadership. "So, the United States decided to act and they had a chance when he entered the United States on an ineligible visa," he said.
The judge is expected to announce Lazarenko's sentence within the coming weeks. But the case will not be resolved until the appeals procedure is over and that, Mycio said, could take years.