Sergiy Oleksiyenko, a former financial whiz who has held several posts in Ukraine’s oil and gas industries, set up an offshore foundation last year in an attempt to circumvent the country’s currency controls, according to leaked documents.

Credit: OCCRP Naftogaz, Ukraine’s state-owned oil and gas conglomerate, employed financial whiz Sergiy Oleksiyenko.

In 2016, Oleksiyenko planned to use Isle of Man lawyers to transfer $1 million to the foundation, according to a new trove of documents leaked to the German newspaper Süddeutsche Zeitung and shared with colleagues from the International Consortium of Investigative Journalists (ICIJ) and the Organized Crime and Corruption Reporting Project (OCCRP).

Oleksiyenko is one of the Ukrainians whose names appeared in the records.

He denies any such intent and said no transfer was made, saying that the foundation was never used for anything and has now been disbanded.

It is not known whether the transfer actually took place.

The leaked documents include records and email correspondence between two law firms: Appleby on the Isle of Man and Avellum Partners in Ukraine.

The correspondence and documents indicate that Oleksiyenko wanted to evade restrictions imposed by the National Bank of Ukraine. These transfers were illegal at that time because the Ukrainian government was trying to stabilize its currency. Such capital restrictions are nothing new in the country, which has been battling capital flight since the fall of Communism nearly three decades ago.

The documents indicate Oleksiyenko wanted to establish an offshore foundation in the Isle of Man, a tax haven located in the Irish Sea between Ireland and Great Britain. It is not part of the United Kingdom (UK) or the European Union (EU), although the Manx people are British citizens.

Manx officials insist the island is transitioning from a tax haven to a tech center, specializing in e-startups and block chain currencies.

Scheme Created By Genius

On Dec. 7, 2015, Vadim Medvedev, an associate of Avellum Partners, sent an email to the Appleby law firm asking to register a foundation for Oleksiyenko as soon as possible – ideally by the end of the year. Oleksiyenko was copied in the email.

“With regards to particular source of funds to be transferred to the foundation: it will be [a] foreign (non-Ukrainian) entity affiliated with the client’s bank,” Medvedev wrote.

Two days later, Andrii Gumenchuk, another Avellum associate, specified that the amount to be donated to the foundation “is approximately $1 million.” Two weeks after that, Gumenchuk told Appleby how the foundation will be funded:

“The Foundation will obtain a loan from Loki Assets L.P., an entity affiliated with Alfa-Bank.”

Loki Assets was registered in the UK in 2015, using an address in Edinburgh, Scotland shared by almost 2,600 other companies.

It is owned by companies in Belize and the Seychelles, two notoriously opaque offshore jurisdictions.

The Avellum representative continued: “This loan will be secured by pledge of the Client’s deposit in Alfa-Bank Ukraine. The parties will execute the documents, which will allow the bank to attach the Client’s deposit instead of collecting the loan. The Client, in its turn, will provide the Foundation with waiver letter confirming that he has no claims to the Foundation. Separately, Loki Assets L.P. will provide a no-claim letter.”

Through this complex structure, Oleksiyenko would essentially establish a loan to himself through the UK to allow him to avoid sending money from Ukraine directly.

In the e-mail, the Avellum associate explained that the arrangement was required due to Ukraine’s cash transfer restrictions.

Appleby asked to know more, and Avellum replied: “There is general currency control regulations regime in Ukraine which requires [a] special license of the National Bank of Ukraine for an individual to transfer funds abroad. However, currently the National Bank of Ukraine [has] prohibited payments abroad even to individuals holding such special licenses. Such temporary restrictions [have been] in place for more than a year and it is not clear when they will be removed.”

Despite the restrictions, Appleby agreed to continue working with the client. The correspondence between the Manx law firm and Ukrainian lawyers continued over the Christmas holidays. Oleksiyenko’s Isle of Man foundation, called the Pioneer Foundation, was ultimately established on Jan. 25, 2016.

In an emailed response to reporters’ questions, Avellum said: “Providing legal services to its clients the company adheres to all legal requirements, including the requirements of the regulations of the National Bank of Ukraine.”

A reporter for OCCRP met with Oleksiyenko to ask about the scheme the lawyers had discussed. “I do not know what the essence of this scheme is, but it has nothing to do with me,” Oleksiyenko said. “It would take a genius to create something like that.”