Tuesday 29 April 2014

Corporate news coverage of Ukraine - 04/28/2014

Kharkiv mayor shot in assassination attempt as sanctions imposed
Mayor of eastern Ukraine's largest city is fighting for his life as instability sweeps region

28 April, 2014

The mayor of Ukraine’s second largest city is fighting for his life after an assassination attempt, as unrest spirals in eastern Ukraine, local officials have said.

Gennady Kernes, the major of the eastern city of Kharkiv, was shot in the back at about midday local time.

He is currently on the operating table in a hospital emergency room. Doctors are fighting for his life,” his office said in a statement on Monday afternoon.

The statement made no comment about the identity of the attackers or the circumstances of the attack.

Kharkiv is a major industrial and university city just 20 miles from the Russian

While it has seen pro-Russian disturbances in recent weeks, separatist activists have failed to establish a foothold there similar to those gained in Donetsk and Luhansk.

Pro-Russian demonstrators briefly occupied the regional administration building in the city centre earlier this month, but were swiftly evicted by police.

Mr Kernes is a member of former president Viktor Yanukovych’s Party of the Regions, and has been mayor of Kharkiv since 2010.

Heavily armed pro-Russian gunmen on Monday seized another town in east Ukraine, storming the town hall in Kostyantynivka and setting up barricades.

Kostyantynivka has 80,000 inhabitants and is located mid-way between the flashpoint town of Slavyansk and the regional hub city of Donetsk, both of which are also under the control of insurgents.

Speaking on a tour of Asia, President Barack Obama said the US and European Union would impose new sanctions later today that would target Russian companies and individuals close to President Vladimir Putin over the escalating crisis in Ukraine.

Mr Obama says the sanctions are in response to Russia's failure to uphold an international accord aimed at stemming the crisis in Ukraine. But he acknowledged that it's possible the sanctions won't change Russian President Vladimir Putin's calculus.

The specific targets are expected to be announced by officials in Washington. The list will also include firms with high-technology businesses close to the Russian defence industry.

A Ukrainian interior ministry spokesman said the pro-Russian separatists had taken the local police headquarters in Kostyantynivka first thing Monday.

"At 6:00am about 30 separatists came to the local police headquarters and occupied the ground floor. Negotiations are underway with the local police chief. 
We do not know what their demands are," said Laryssa Volkova, interior ministry spokeswoman.

Eyewitnesses said some 20 militants armed with Kalashnikov assault rifles and wearing uniforms with no insignias took control of the town hall and hoisted the flag of the "Donetsk Republic".

The gunmen also set up a perimeter around the adjoining police station.

They used the same tactics and weapons as those seen during in the lead-up to the annexation of Crimea which Moscow later admitted involved the deployment of Russian military forces.

Russian President Vladimir Putin has denied sending such forces to eastern Ukraine.

The development came hours after separatists paraded captive European military observers and three Ukrainian security guards, who were shown on Russian TV bloodied, blindfolded and stripped of their trousers and shoes, their arms bound with packing tape.

The provocative displays came as the increasingly ruthless pro-Russian insurgency in the east turns to hostage-taking as an ominous new tactic.

Germany's foreign minister condemned the appearance as "revolting" and a violation of the men's dignity. Four members of the team are German.
One of the observers, a Swedish officer, was released later in the day for medical reasons.

Dozens of people are being held hostage, including journalists and pro-Ukraine activists, in makeshift jails in Slovyansk in the heart of the separatists' territory, as the pro-Russian insurgents strengthen their control in the east in defiance of the interim government in Kiev and its Western supporters.

A crowd of several hundred pro-Russia activists stormed the television broadcasting centre in Donetsk, the regional capital of eastern Ukraine, to demand that Russian state channels be put back on the air. The Kiev government last month blocked broadcast of the Russian channels, which serve as propaganda tools for the Kremlin.

The crowd included several dozen men wearing camouflage fatigues and face masks, the standard uniform of the pro-Russia forces that have seized government buildings in at least 10 cities in eastern Ukraine.

Col Axel Schneider from Germany, who spoke for the group of military observers detained on Friday, stressed that they were on a diplomatic mission under the auspices of the Organisation of Security and Cooperation in Europe and weren't spying for Nato, as the insurgents claim.

Col Schneider said additional proof of this was the participation of the officer from Sweden, which is not a member of Nato.

The observers appeared nervous as they were escorted by armed men into the Slovyansk city hall for the news conference and then led away.

Referring to himself and his team as "guests" under the "protection" of the city's self-proclaimed mayor, Col Schneider said they were being treated as well as possible under the circumstances.

"The mayor of this city granted us his protection and he regarded us as his guests," Schneider told journalists. "I can tell you that the word of the mayor is a word of honor. We have not been touched."

US announces sanctions on Putin's inner circle over Ukraine
  • Seven officials and 17 companies targeted
  • Statement: involvement in Ukraine violence 'indisputable'

28 April, 2014

The US and the European Union stepped up their sanctions on President Vladimir Putin’s inner circle on Monday, accusing Russia of stoking violence and political tension in eastern Ukraine.

The White House announced it was adding seven prominent Russians to a blacklist subject to visa bans and asset freezes, including two officials particularly close to the Russian leader: Igor Sechin, the head of Russia’s largest oil company Rosneft, and Vyacheslav Volodin, first deputy chief of staff in the presidency, widely believed to run its internal political strategy.

Putin’s decision to move into Crimea is believed to have been based on consultations with his closest advisers, including Volodin,” a US Treasury statement said.

Accusing Russia of continuing to “fund, co-ordinate, and fuel a heavily armed separatist movement” in eastern Ukraine, the US also imposed asset freezes on 17 Russian companies, which will also be denied trading licences.

After a meeting of European ambassadors in Brussels, the EU declared it was increasing its own list of targeted sanctions from 33 to 48 top Russians. The 15 new names added to the list are not due to be published until Tuesday.

Both the US and UK warned that broader sanctions against whole sectors of the Russian economy would be forthcoming in the event of more overt Russian miltary intervention in eastern Ukraine, despite concerns that such measures would pose a risk to the global economy, and have limited support inside the EU.

Speaking in Manila, Obama said the goal of the new round of sanctions was to change the Russian calculation in its alleged sponsorship of separatists in Ukraine. “The goal is not to go after Mr Putin personally. The goal is to change his calculus with respect to how the current actions that he's engaging in Ukraine could have an adverse impact on the Russian economy over the long haul,” Obama said.

The administration said that further sanctions could include targeting sectors of the Russian economy such as financial services and energy, the impact of which would be “far more powerful” than those announced on Monday, officials said.

The tier of sanctions announced on Monday had been prepared some weeks ago but had been held back after an 17 April accord in Geneva signed by the US, Russia, EU and Ukraine, intended to defuse the crisis. US officials said Russia had done nothing to implement the measures agreed to, but had instead fuelled the separatist takeover of eastern Ukrainian cities.

Anger in Washington and Brussels was exacerbated by the continued detention of seven European military monitors by pro-Russian separatists in the town of Slavyansk. A senior US official said that the seven, including four Germans, a Pole, a Dane and a Czech officer, in Ukraine under the mandate of the Organisation for Security and Cooperation in Europe (OSCE), had been “subjected to abuse in capitivity” but that claim could not be confirmed.

At an emergency meeting of OSCE member states in Vienna, the US delegate, Gary Robbins, said the organisation faced “a hostage crisis”. Robbins said: “We remain disappointed that senior officials in Moscow have not condemned the abduction – nor have they demanded the team’s immediate release.”

He added: “While the government of Ukraine is working in good faith to fulfill the aspirations of the Geneva joint statement, Russia continues to deceive and destabilise its neighbour. Despite its propaganda attempting to hide the truth, Russia continues to fund, coordinate, and fuel a heavily armed separatist movement in Donetsk.”

The OSCE reported that other members of its special monitoring team had been temporarily detained by separatists in two locations near Donetsk on Sunday. Monitors were held in a heavily-barricaded police builidng in the town of Horlivka and were accused of espionage before being allowed to leave.

Speaking in the House of Commons on Monday, the British foreign secretary, William Hague said: “Russia is already paying a serious price for its actions and the longer it breaches the independent sovereignty of Ukraine the heavier the price it will pay."

Russia’s actions betray their fear of democracy and the rule of law taking root in their neighbourhood,” the foreign secretary added.

The principal target of Monday's sanctions was Rosneft. Not only was its president, Igor Sechin, singled out in the US blacklist, but also Sergei Chemezov, a member of the board who also directs a state-owned holding company.

Like other Russian energy firms, Rosneft has deep ties with American-based counterparts, particularly ExxonMobil, with whom it has a $500m joint venture for exploration of Arctic oil. The British oil giant, BP, also owns a nearly 20% stake in Rosneft, but said on Monday it intends to remain a long-term investor in Russia, despite the new sanctions.

Russian officials vowed to take reprisal measures for the American sanctions package. “We are certain that this response will have a painful effect on Washington,” deputy foreign minister Sergei Ryabkov told the Interfax news agency.

The Obama administration indicated it believes it is more likely to influence Russian behaviour through economic pressure than providing additional and potentially lethal military aid to Ukraine, citing the massive discrepancy in Ukrainian and Russian military capabilities.

Last week, a contingent of US soldiers from the 173rd infantry combat team arrived in a Polish air base, part of a commitment of 600 troops the administration will send to Poland and the Baltic states on a so-called training mission that the White House hopes will have a deterrent value.

Fraud investigators in Britain also froze $23m of suspected dirty money held in the UK, as they opened an investigation into possible money laundering from Ukraine, mostly by members of the ousted regime of Viktor Yanukovych.

The announcement of a criminal investigation by the Serious Fraud Office comes on the eve of an international conference in London aimed at helping Ukraine’s new government recover stolen assets. The two-day Ukraine Forum on Asset Recovery, organised by the Foreign Office and the US attorney general, brings together investigating organisations to work on recovering millions in stolen assets.

Robert Barrington, executive director of Transparency International in the UK, said the $23m of suspected stolen money the SFO was looking at could be a tiny proportion of the total money embezzled by corrupt officials in Ukraine. “One would hope this would be the first announcement on a very long journey.”

Governments were working much faster to recover stolen assets than after the Arab Spring, he said. But questions persist about the UK’s legal framework for checking on stolen money. “Why was the money here in the first place? If if was corrupt it should never have been here.”

Last month the EU froze assets of former president Yanukovych, and 21 other people held responsible for embezzling state funds.

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