Geopolitics

Zelensky's Ukraine, Where The Pandora Papers Hit Hardest

The global probe of offshore accounts around the world strike at the heart of Kiev's current government and power structure of a ruling class that rose to power on the promise of fighting corruption, including the television-star-turned-President Volodymyr Zelensky.

Photo of Ukrainian President Volodymyr Zelensky in a crowd

Ukrainian President Volodymyr Zelensky, targeted by the Pandora Papers leak.

Iryna Lysohor

KIEV — Nowhere could the the revelations from the Pandora Papers investigation hit harder than in Ukraine. The discovery of offshore accounts strike at the heart of the current government and power structure of a ruling class that rose to power on the promise of fighting corruption, including the television-star-turned-President Volodymyr Zelensky.

The worldwide probe, prompted by a massive leak to the International Consortium of Investigative Journalists (ICIJ), has included work by journalists from the Ukrainian media Slidstvо.Info, which connected the shady financial dealings of Zelensky's television production company Studio Kvartal 95 to the Ukrainian oligarch Igor Kolomoisky. Slidstvo found that the laundered money passed through the Cyprus branch of Kolomoisky-owned Privatbank, according to law enforcement officers.


More than 600 journalists from all over the world worked on the Pandora Papers project for the past year. Among the millions of documents of offshore registrars are the names of some of the most powerful figures in Ukraine. Ivan Bakanov, the head of the Security Service of Ukraine, Serhii Shafir, the chief aide to the president, and the President Zelensky himself are all there.

Igor Kolomoisky, the billionaire behind the President

But, first let's rewind the tape: For this is a story about the actor and head of Studio Kvartal 95, who played the president in the series and won in real life. Volodymyr Zelensky's successful show business career was created in Ukraine through a hidden financial network of offshore companies.

Nine years ago, the popular Kvartal 95 goes to TV channel 1+1. Their shows and programs are hits on the channel owned by Igor Kolomoisky, who will later support Zelensky and the team not only as entertainers but also as politicians. Today, Kolomoisky is a person of interest in investigations in Ukraine, Britain, and the United States.

Nobody wants to talk about the secret network of offshore companies.

According to the Pandora Papers, millions from Kolomoisky went not only to the accounts of Ukrainian companies close to Zelensky and his associates. The money also went where there was warm weather and lower taxes. That year, when Kvartal began to cooperate with the oligarch, key people of the company registered several companies on distant islands. The network was assisted by the offshore registrar Fidelity and Ukrainian lawyer Yurii Azarov, whose signature is on all key documents.

Photo of \u200bUkrainian President Volodymyr Zelensky speaking at a news conference in Kiev, Ukraine

Ukrainian President Volodymyr Zelensky at a news conference in Kiev, Ukraine

Irina Yakovleva/ TASS/ ZUMA

Maltex Multicapital is revealed

At the heart of the network is the previously unknown company Maltex Multicapital, reveals Slidstvo. It is equally divided between the companies of Volodymyr Zelensky, brothers Serhii and Borys Shefirs and Andrii Yakovlev. The trust declaration was signed by the current head of the Security Service of Ukraine Ivan Bakanov. His company was the nominal owner of Maltex. The names of the real owners were safely hidden in the vault.

If we take a closer look at how the Kvartal business is structured, we will see that the products are created and shown mainly in Ukraine. At the same time, transactions are made through foreign companies. Accordingly, taxes on these transactions do not go to the Ukrainian budget.

A little later, the co-owner of Kvartal 95, Serhii Shafir, stated that Zelensky had left the business. On March 13, 2019, amid the presidential race, a lawyer working for the firms of Zelensky and his partners, Yurii Azarov, signed the document. It is a transfer of shares to Maltex, which is equally divided between the offshore leaders of Kvartal 95. The firm of Serhii Shafir, the future chief aide to the president, received a quarter of Maltex's ownership free of charge from Zelensky's firm in Belize. The day after the inauguration, Zelensky appointed Serhii Shafir as chief aide to the president of Ukraine.

What destiny awaits Zelensky? And Kolomoisky?

On April 25, 2019, a few weeks after the transfer of Zelenskyy's share to Serhii Shafir, the same lawyer Yurii Azarov signed another document stating that Maltex intends to pay dividends to Zelensky's offshore. Surprisingly, his offshore company no longer owned a stake in this firm.

Cases involving high-ranking civil servants are being investigated by the National Anti-Corruption Bureau. NABU detectives are also investigating crimes related to money laundering. The investigation believes that the former owners, in particular Igor Kolomoisky and Hennadii Boholyubov, could have caused billions in losses to the state. But the Security Service of Ukraine was unable to calculate the amount of damage and the case got stuck. The current General Prosecutor refused to answer journalists' questions about the Privatbank case.

Risk of U.S. jail time

What destiny awaits Zelensky? And Kolomoisky? For the latter, this week Kolomoiskyi in the United States, where his fate risks being the same as former Ukrainian Prime Minister Pavlo Lazarenko: to wind up in an American prison.

For Zelensky, nobody wants to talk about the secret network of offshore companies. Only Borys Shafir, the co-founder of Kvartal 95, responded to a few of our questions. He, unlike his partners, did not go into politics, and now is the owner of a significant part of the offshore business of Kvartal.

"Bakanov was our financial director, he arranged the financial schemes of our company. And honestly, I'm not ready to answer you now," said Borys Shafir. "Maybe I'm the owner."

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Future

7 Ways The Pandemic May Change The Airline Industry For Good

Will flying be greener? More comfortable? Less frequent? As the world eyes a post-COVID reality, we look at ways the airline industry has been changing through a pandemic that has devastated air travel.

Ready for (a different kind of) takeoff?

Carl-Johan Karlsson

It's hard to overstate the damage the pandemic has had on the airline industry, with global revenues dropping by 40% in 2020 and dozens of airlines around the world filing for bankruptcy. One moment last year when the gravity became particularly apparent was when Asian carriers (in countries with low COVID-19 rates) began offering "flights to nowhere" — starting and ending at the same airport as a way to earn some cash from would-be travelers who missed the in-flight experience.

More than a year later today, experts believe that air traffic won't return to normal levels until 2024.


But beyond the financial woes, the unprecedented slowdown in air travel may bring some silver linings as key aspects of the industry are bound to change once back in full spin, with some longer-term effects on aviation already emerging. Here are some major transformations to expect in the coming years:

Cleaner aviation fuel

The U.S. administration of President Joe Biden and the airline industry recently agreed to the ambitious goal of replacing all jet fuel with sustainable alternatives by 2050. Already in a decade, the U.S. aims to produce three billion gallons of sustainable fuel — about one-tenth of current total use — from waste, plants and other organic matter.

While greening the world's road transport has long been at the top of the climate agenda, aviation is not even included under the Paris Agreement. But with air travel responsible for roughly 12% of all CO2 emissions from transport, and stricter international regulation on the horizon, the industry is increasingly seeking sustainable alternatives to petroleum-based fuel.

Fees imposed on the airline industry should be funneled into a climate fund.

In Germany, state broadcaster Deutsche Welle reports that the world's first factory producing CO2-neutral kerosene recently started operations in the town of Wertle, in Lower Saxony. The plant, for which Lufthansa is set to become the pilot customer, will produce CO2-neutral kerosene through a circular production cycle incorporating sustainable and green energy sources and raw materials. Energy is supplied through wind turbines from the surrounding area, while the fuel's main ingredients are water and waste-generated CO2 coming from a nearby biogas plant.

Farther north, Norwegian Air Shuttle has recently submitted a recommendation to the government that fees imposed on the airline industry should be funneled into a climate fund aimed at developing cleaner aviation fuel, according to Norwegian news site E24. The airline also suggested that the government significantly reduce the tax burden on the industry over a longer period to allow airlines to recover from the pandemic.

Black-and-white photo of an ariplane shot from below flying across the sky and leaving condensation trails

High-flying ambitions for the sector

Joel & Jasmin Førestbird

Hydrogen and electrification

Some airline manufacturers are betting on hydrogen, with research suggesting that the abundant resource has the potential to match the flight distances and payload of a current fossil-fuel aircraft. If derived from renewable resources like sun and wind power, hydrogen — with an energy-density almost three times that of gasoline or diesel — could work as a fully sustainable aviation fuel that emits only water.

One example comes out of California, where fuel-cell specialist HyPoint has entered a partnership with Pennsylvania-based Piasecki Aircraft Corporation to manufacture 650-kilowatt hydrogen fuel cell systems for aircrafts. According to HyPoint, the system — scheduled for commercial availability product by 2025 — will have four times the energy density of existing lithium-ion batteries and double the specific power of existing hydrogen fuel-cell systems.

Meanwhile, Rolls-Royce is looking to smash the speed record of electrical flights with a newly designed 23-foot-long model. Christened the Spirit of Innovation, the small plane took off for the first time earlier this month and successfully managed a 15-minute long test flight. However, the company has announced plans to fly the machine faster than 300 mph (480 km/h) before the year is out, and also to sell similar propulsion systems to companies developing electrical air taxis or small commuter planes.

New aircraft designs

Airlines are also upgrading aircraft design to become more eco-friendly. Air France just received its first upgrade of a single-aisle, medium-haul aircraft in 33 years. Fleet director Nicolas Bertrand told French daily Les Echos that the new A220 — that will replace the old A320 model — will reduce operating costs by 10%, fuel consumption and CO2 emissions by 20% and noise footprint by 34%.

International first class will be very nearly a thing of the past.

The pandemic has also ushered in a new era of consumer demand where privacy and personal space is put above luxury. The retirement of older aircraft caused by COVID-19 means that international first class — already in steady decline over the last decades — will be very nearly a thing of the past. Instead, airplane manufacturers around the world (including Delta, China Eastern, JetBlue, British Airways and Shanghai Airlines) are betting on a new generation of super-business minisuites where passengers have a privacy door. The idea, which was introduced by Qatar Airways in 2017, is to offer more personal space than in regular business class but without the lavishness of first class.

Aerial view of Rome's Fiumicino airport

Aerial view of Rome's Fiumicino airport

commons.wikimedia.org

Hygiene rankings  

Rome's Fiumicino Airport has become the first in the world to earn "the COVID-19 5-Star Airport Rating" from Skytrax, an international airline and airport review and ranking site, Italian daily La Repubblica reports. Skytrax, which publishes a yearly annual ranking of the world's best airports and issues the World Airport Awards, this year created a second list to specifically call out airports with the best health and hygiene standards.

Smoother check-in

​The pandemic has also accelerated the shift towards contactless traveling, with more airports harnessing the power of biometrics — such as facial recognition or fever screening — to reduce touchpoints and human contact. Similar technology can also be used to more efficiently scan physical objects, such as explosive detection. Ultimately, passengers will be able to "check-in" and go through a security screening anywhere at the airports, removing queues and bottlenecks.

Data privacy issues

​However, as pointed out in Canadian publication The Lawyer's Daily, increased use of AI and biometrics also means increased privacy concerns. For example, health and hygiene measures like digital vaccine passports also mean that airports can collect data on who has been vaccinated and the type of vaccine used.

Photo of planes at Auckland airport, New Zealand

Auckland Airport, New Zealand

Douglas Bagg

The billion-dollar question: Will we fly less?

At the end of the day, even with all these (mostly positive) changes that we've seen take shape over the past 18 months, the industry faces major uncertainty about whether air travel will ever return to the pre-COVID levels. Not only are people wary about being in crowded and closed airplanes, but the worth of long-distance business travel in particular is being questioned as many have seen that meetings can function remotely, via Zoom and other online apps.

Trying to forecast the future, experts point to the years following the 9/11 terrorist attacks as at least a partial blueprint for what a recovery might look like in the years ahead. Twenty years ago, as passenger enthusiasm for flying waned amid security fears following the attacks, airlines were forced to cancel flights and put planes into storage.

40% of Swedes intend to travel less

According to McKinsey, leisure trips and visits to family and friends rebounded faster than business flights, which took four years to return to pre-crisis levels in the UK. This time too, business travel is expected to lag, with the consulting firm estimating only 80% recovery of pre-pandemic levels by 2024.

But the COVID-19 crisis also came at a time when passengers were already rethinking their travel habits due to climate concerns, while worldwide lockdowns have ushered in a new era of remote working. In Sweden, a survey by the country's largest research company shows that 40% of the population intend to travel less even after the pandemic ends. Similarly in the UK, nearly 60% of adults said during the spring they intended to fly less after being vaccinated against COVID-19 — with climate change cited as a top reason for people wanting to reduce their number of flights, according to research by the University of Bristol.

At the same time, major companies are increasingly forced to face the music of the environmental movement, with several corporations rolling out climate targets over the last few years. Today, five of the 10 biggest buyers of corporate air travel in the US are technology companies: Amazon, IBM, Google, Apple and Microsoft, according to Taipei Times, all of which have set individual targets for environmental stewardship. As such, the era of flying across the Atlantic for a two-hour executive meeting is likely in its dying days.

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