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Research Report

UKRAINE v. RUSSIA and the Kleptocrats: The Legal Route to Recover Ukraine’s Losses

Alan Riley
Copyright Date: Apr. 1, 2016
Published by: Atlantic Council
Pages: 19
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Table of Contents

  1. (pp. 1-1)

    The invasion and annexation of Crimea and the occupation of parts of eastern Ukraine in 2014 by the Russian Federation should serve as a wake-up call to members of the Atlantic Alliance. Over the course of the last decade, Russia has begun to pull away from the post-Cold War settlement and, indeed, from the Helsinki Accords. We have seen Russia invade, then de facto annex parts of Georgia in 2008, twice threaten Europe with gas cut-offs in 2006 and 2009, and deploy cyber warfare against Estonia in 2007. More broadly, the Alliance is now facing a significant military build-up against...

  2. (pp. 2-6)

    During the Yanukovych administration, corruption accelerated and significant plundering of Ukrainian state finances occurred. This first section examines the scale of that theft and considers the options for recovery.

    There have been large scale thefts of public assets across the globe from Haiti to the Philippines to Egypt and beyond. The World Bank conservatively estimates that approximately $20-40 billion of public assets from developing countries are stolen annually.¹ By way of highlighting how difficult it is to recover such assets, the World Bank estimates that only $5 billion has been recovered in the last fifteen years.²

    The theft of public...

  3. (pp. 7-11)

    Ukraine has suffered losses not just from large-scale theft by its own elites, but also losses from invasion and occupation. This section of the paper considers how far it would be possible for Ukraine to recover damages for the losses it has suffered. For instance, would it be possible to link and indeed sequester Russian state-owned assets in the West to pay for the mounting liabilities arising from the occupation of Crimea and eastern Ukraine? While it is clear that the Russian Federation is responsible for aiding and assisting the invasion and occupation of Ukraine, it is difficult to obtain...

  4. (pp. 12-13)

    In respect to the theft of state assets during the Yanukovych administration, it is clear that asset recovery will be a complicated process, requiring law firms in different jurisdictions, forensic accountants, and investigators. A multi-jurisdictional recovery operation over several years could easily cost $50 million in professional fees per year. There are a number of options to consider in financing such an operation:

    One approach would be to seek funding from litigation funds that invest in cases.51 They advance the funds to investigate, bring actions, and seize assets. In turn, they are compensated with a percentage of the recovery. It...