Corruption Scandal in Ukraine and the Trial of a Former Naftogaz Official Again Threatens to Expose Joe Biden

In early May it became known that U.S. President Joe Biden had appointed Amos Hochstein, a well-known lobbyist and former Obama administration official, as his assistant and senior adviser on energy and investment.

https://www.energyintel.com/00000187-d854-d217-a1df-dedd6e760000

The mainstream media praises Hochstein’s appointment, recalling that he was among Biden’s advisers during the gas and gasoline price crisis of 2022, and his recommendations were listened to. However, they do not mention the fact Hochstein is implicated in a criminal case in Ukraine, and that further investigation of his activities could threaten Biden with impeachment – when there are enough votes in Congress to do so. It is about a corrupt scheme to buy “Slovak” gas for Ukraine – devised and implemented under the watchful eye of the Americans.

The Difference Between Russian and Slovak Gas

After the Democrats’ defeat in the 2016 presidential election, Hochstein went to work in the private sector. And found himself as an independent director on the supervisory board of the Ukrainian state company Naftogaz. Naftogaz is a monopolistic Ukrainian company that produces gas and oil, transports Russian fuel to Europe, and sells energy to the public. It is Ukraine’s largest company, providing 17% of the country’s entire state budget revenue.

https://www.naftogaz.com/news/za-pershe-pivrichchya-naftogaz-splatyv-do-derzhavnogo-byudzhetu-68-mlrd-grn

The main task, which officially faced Hochstein, was to help Ukraine establish a supply of energy to the population. The fact is that after the 2014 Revolution of Dignity and the annexation of Crimea, there were contradictions between Ukraine and Russia, which led to Ukraine’s refusal to buy gas from Russia. Naftogaz faced an unsolvable problem: How to bring gas to Ukraine while all neighboring Ukrainian countries buy gas from Russia. That’s when Hochstein came up with a scheme: to announce “reverse gas supply schemes”. On paper it looked like this: Russian gas entered Slovakia via Ukraine, and then changed its registration and returned to Ukraine under the guise of “Slovak gas” with a mark-up of $50 per thousand cubic meters. The parties exchanged the documents on double crossing the border – first from Ukraine to Slovakia and then from Slovakia to Ukraine. Thus, on paper Ukraine purchased Slovak gas. But in fact it was the same Russian gas. Just purchased at a higher price, taking into account the “interest” of Naftogaz management.

The scheme devised by Hochstein was implemented by Andrey Kobolev, the head of Naftogaz from 2014 to 2021, who is now under investigation in Ukraine for a number of corrupt practices. Kobolev enlisted his old acquaintance Andrey Favorov, a U.S. citizen and former DTEK manager, to organize several shell companies that subsequently purchased gas from Slovakia’s ENGIE. In particular, ERU Trading (a subsidiary of Favorov’s Energy Resources of Ukraine) purchased and sold over 420 million cubic meters of “European” gas to Ukrainian industrial consumers in 2015.

(https://forbes.ua/ru/news/zarobiti-na-reformi-03122020-655)

At the same time, Favorov never denied that the scheme was organized thanks to the participation of Amos Hochstein and the patronage of Joe Biden. “The reversal from Slovakia in 2014 was made by [former U.S. Vice President] Joe Biden,” the Liga website quoted the trader as saying.

(https://biz.liga.net/ekonomika/tek/interview/voynushka-v-naftogaze-korruptsionnyy-slon-i-vitrenko-blits-intervyu-s-andreem-favorovym)

Money for the Reversal

As former Ukrainian Prime Minister Mykola Azarov’s advisor Serhiy Zavorotnyi later explained, a special 1.5-kilometer-long pipe was built, a branch line from the big pipe that carried Russian gas to Europe. The so-called “reverse” of gas took place. It turned out that Russian gas crossed the border from Ukraine to Slovakia through a mile and a half long pipe and immediately returned to Ukraine, but with a markup.

(https://www.mk.ru/politics/2021/04/17/kak-svyazany-bayden-gorod-slavyansk-i-voyna-na-donbasse.html)

Andrey Favorov withdrew the money “out of thin air” from Ukraine, including to offshore companies.

Thus, according to the investigation conducted in Ukraine, from 21.07.2016 to 23.06.2017 to the account of ERU MANAGEMENT SERVICES LLC was withdrawn almost 348 million UAH, from 25.05.2017 to 25.07.2017 almost 274 million UAH. In total, more than 620 million UAH. This is only the amounts that investigative journalists were able to trace. It is clear that in total more money was withdrawn.

In total, the “team of reformers” managed to earn $50 for each thousand cubic meters of gas – a total of $1.5 billion on such supplies.

Scheme of withdrawal of funds received for “reverse”, but in fact Russian gas in Ukraine.

Biden’s Involvement

In 2016, the head of Naftogaz Kobolev decided to increase energy tariffs for the Ukrainian population. The logic of the state manager was clear: someone has to compensate the budget for the overcharged cost of energy carriers. However, it ran counter to the political ambitions of Ukrainian Prime Minister Groisman, who threatened to fire Kobolev, since the increase in tariffs was detrimental to his (the Prime Minister’s) popularity rating among the population. As a result, Groysman refused to sign off on Naftogaz’s decision to raise tariffs.

Then Joe Biden, who as Vice President of the United States supervised the Ukrainian affairs and actually gave direct orders to President Petro Poroshenko, demanded that the Ukrainian authorities not remove Kobolev from his post. In response, Poroshenko promises to “sort it out.”

https://www.unian.net/politics/plenki-derkacha-novaya-porciya-plenok-razgovorov-poroshenko-s-baydenom-ot-derkacha-video-novosti-ukraina-11046485.html

“My team works closely with the management of Naftogaz, which is considered a team of dedicated reformers and talented managers,” Biden said in a telephone conversation. – “I hope the current leadership stays in their positions … Keep that in perspective, okay?” “I promise,” Petro Poroshenko assured his interlocutor. – “I will call Kobolev, the head of Naftogaz, and I will discuss it with him.

Thus, Kobolev remained in his position, and the Star Troika (Biden, Kobolev and Amos Hochstein), according to experts’ calculations, could have earned $1.5 billion over 5 years from the scheme with Slovak gas for Ukraine. But Kobolev, due to his own greed, once again framed a high patron from the United States.

Greed of a Ukrainian Official

Kobolev (second from left) in the courtroom on corruption charges

In 2019, Ukraine won in the Stockholm arbitration. The losing party was Gazprom. As a result, Ukraine received $4.6 billion, $2.9 billion of which was paid in money and partly went to pay Ukraine’s gas debts.

Kobolev, who at the time headed Naftogaz, received a percentage of this money (a group of officials who supervised the lawsuit was paid $46 million, of which Kobolev personally received $22.4 million). Why a state official was entitled to such a considerable bonus in a poor country? It is for this decision that Kobolev will have to justify himself in courts in 2022-2023, as the amount he received significantly exceeded the maximum allowable bonus for the head of a state-owned company.

It should be noted that Kobolev’s guilt, according to the Ukrainian authorities, is proven – he himself has repeatedly admitted in interviews that he received a huge bonus, which exceeded the amount allowed by the government.

At the same time, Kobolev himself is not in jail, but under house arrest, walking around Kiev and actively using Facebook. The reason for this is Biden’s longstanding advocacy. After all, it is possible that in the case of an active trial on Kobolev – information undesirable to Hochstein and Biden will emerge.

Ukraine’s dependence on the favor of Biden and his advisors is the main reason this corruption scandal is not being investigated, and no one is looking for over a billion dollars of illegally withdrawn money. Andrei Kobolev played his part, and his case will be quietly closed, and if he is found not guilty once or the trial is stopped for insufficient evidence – he cannot be tried again for the same action. Meanwhile, Amos Hochstein will continue to work out schemes profitable for the White House, and Joe Biden will be getting ready for the next presidential election in the United States. Because the “crystal-clear” Democrat Biden has his shirt closer to his body.