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Report says Ukraine overpaid for oil rig
Journal Staff Report

KIEV, May 29 - Ukraine may have overpaid $150 million for an offshore drilling oil rig earlier this year, potentially highlighting a massive case of government corruption, according to an investigation by Dzerkalo Tyzhnia newspaper.

The allegation casts doubt on President Viktor Yanukovychs commitment to fighting corruption, as the oil rig deal was apparently discussed during his trip to Singapore earlier this year.

By contrast, the authorities cited alleged corruption for keeping opposition leader Yuriy Lutsenko in custody during the past five months on charges he may have overspent $5,000 in the course of several years.

The investigation by Dzerkalo Tyzhnia shows the deal to purchase the oil rig was conducted via a fixed tender in which two linked companies offered the oil rig at exorbitant prices.

Ukraines state-owned ChornomorNaftoGaz oil company shelled out $400 million in April to buy the oil rig from Highway Investment Processing Llp, a UK-registered company.

The same oil rig, named West Juno and produced by Keppel of Singapore, was sold to an undisclosed U.K company for $248.5 million on April 13, according to official company records.

The only other company that participated at the tender, Falcona Systems Limited of New Zealand, offered the same oil rig at $410 million.

But the investigation showed that both companies, Highway Investment and Falcona Systems, had been essentially run by people that had close business connections.

Stan Gorin, the head of Highway Investment, and Erik Vanagels, who was traced as a person behind Falcona Systems, have been earlier mentioned as partners in a separate report by Trout Cacheris, a U.S. law firm.

The Yanukovych government hired Trout Cacheris last year to audit potential overspending by the government of former Prime Minister Yulia Tymoshenko. The report at one point mentioned Gorin and Vanagels as business partners in companies that had created Highway Investment.

An Energy and Coal Industry Ministry spokesman was not available on Sunday for comments on the oil rig allegations.

Meanwhile, Highway Investment Processing Llp appears to have links to Ukraine as its website, http://invest-pro-llp.com, has been registered by the Center for Ukrainian Internet Names, and is hosted by Ukrainian servers, according to Who.Is, an internet information database.

The website, which misspells some English language words, for example bizness, has been created on February 15, or two weeks before the oil rig tender.

Energy and Fuel Minister Yuriy Boyko, in an interview with Inter television on April 4, praised the purchase of the oil rig as a breakthrough in plans by Ukraine to tap offshore oil fields in the Black Sea.

We purchased the most advanced drilling rig from Singapore, Boyko said. We plan to deliver it to the Black Sea by autumn. (sb/ez)




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