EU judges have said member states had no legal grounds to impose an asset freeze on a Ukrainian former regime member, in a ruling which puts in doubt other listings.
The bloc’s General Court, in Luxembourg, on Monday (26 October) “set aside” the EU decision, last March, to seize the funds of Andriy Portnov, a former aide to Ukraine’s ousted leader Viktor Yanukovych.
It said the freeze was imposed “solely on the basis of a letter of 3 March 2014 from the Public Prosecutor’s Office of Ukraine, which stated that the investigation into, amongst others, Mr Portnov, had ‘made it possible to establish misappropriation of sizeable amounts of state funds’.”
It added that “on that basis … the inclusion of Mr Portnov’s name on the list does not satisfy the criteria for designating persons”.
The EU, shortly after the “Maidan” revolution last year, imposed asset freezes on 18 members of the old nomenklatura, including Yanukovych himself and his two sons.
The decision, originally published in the bloc’s Official Journal on 3 March 2014, cites the same grounds for all the listings, including Portnov, as their being “subject to investigation in Ukraine for involvement in crimes in connection with the embezzlement of Ukrainian state funds and their illegal transfer outside Ukraine”.
The list later grew to 22 people.
Four of them – including Portnov, as well as Oleksandr Yakymenko (a former Ukraine intelligence chief), Oleksii Azarov (the son of Ukraine’s former PM), and Ihor Kalinin (also a former Yanukovych aide) – were already delisted in March because Ukraine failed to put forward evidence.
Another person on the list, Yanukovych’s younger son, Viktor, died in Russia also in March.
A contact at the EU Court noted that Portnov continued to pursue his case despite the delisting “in order to prove the point that he should never have been on the list in the first place”.
The contact noted that most of the other Ukrainians on the list are pursuing similar annulments, with judgments pending.
Five Russian firms and two Russian individuals – TV anchorman Dmitry Kiselyev and Kremlin-linked oligarch Arkady Rotenberg – have also filed legal challenges.
Meanwhile, Yury Chizh, a Belarusian tycoon accused of funding authoritarian president Alexander Lukashenko, on 6 October, won his case against an EU designation.
Other high profile defeats for the EU Council, the EU entity which imposes sanctions, in recent times include by Palestinian militant group Hamas, by Iranian banks and shipping firms, and by members of the former Tunisian regime.
Council lawyers are currently studying the Portnov verdict to decide whether to appeal.
But one EU diplomat said it has prompted plans to hold wider talks on EU sanctions policy in Relex, a Council working group which brings together member states’ senior officials.
He said the Portnov ruling might see the EU pre-emptively delist others from the remaining group of 17 Ukrainians.
“We have to make sure all the people on the list are there on a really sound basis … that we can provide the evidence”, the diplomat noted.
“It [the Portnov decision] risks making EU sanctions useless because people will think you can’t designate someone if you fear there’s lack of legal justification … The decision means you’ll have to think twice before putting someone on a list”.
A third EU source said the sanctions debate is yet to be tabled on Relex’ agenda.
By contrast, US sources note the US Department of the Treasury, which imposes US blacklists, has never lost an asset freeze court challenge.
Ukraine’s post-Maidan authorities accuse the Yanukovych regime of stealing up to $70 billion in its four years in power.
When he fled, activists who entered his home and the home of his former prosecutor general, Viktor Pshonka, found luxury furniture, art, and jewellery indicating a level of personal wealth far beyond their official incomes.
EU diplomats also say Yanukovych, who is now living in Russia, is using stolen money to help the Kremlin fund military operations in east Ukraine.
Struggling to reform
The Maidan revolution was, in the main part, a popular uprising against the former regime’s corruption and lawlessness, as well as its decision to suspend EU integration.
But 18 months down the line, the country is struggling to reform the institutions at the heart of the problem.
Kalman Mizsei, the head of the EU’s rule of law mission in Kiev, Euam Ukraine, told EUobserver in an interview last month the prosecutor’s office still resembles an organised crime syndicate.
“There’s still no concept of public service. There’s widespread buying and selling of positions”, he said.
“The prosecution is the backbone of the old system. It’s vital to clean it up, to reduce its power, and to make it respectable”.