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US details charges against Ukrainian oligarch

Wednesday - 4/2/2014, 6:24pm  ET

MICHAEL TARM
Associated Press

CHICAGO (AP) -- One of Ukraine's most influential oligarchs and a major player in the sale of Russian natural gas to Ukraine allegedly spearheaded an international conspiracy to pay at least $18 million in bribes to mine titanium in India and sell it to a Chicago-based company, according to an indictment unsealed Wednesday by U.S. prosecutors.

Just hours later, Chicago-based Boeing Co. said it had once signed a memorandum of understanding with a firm controlled by the oligarch, Dmytro Firtash, but never followed through on it. The indictment itself does not identify the Chicago-based company or accuse it of any wrongdoing.

Firtash, a longtime ally of ousted Ukrainian President Viktor Yanukovych, is described as the ringleader of the alleged conspiracy that -- starting in 2006 -- sought to mine titanium deposits in the eastern Indian state of Andhra Pradesh. The enterprise was expected to generate more than $500 million annually from the sale of titanium, which is used in making items from golf clubs to jet engines.

The 48-year-old Firtash controls a conglomerate of companies, called Group DF, and the indictment alleges that several companies under that umbrella firm were involved in the conspiracy. Five other people are named as co-conspirators, including a member of India's parliament, another Ukrainian, a Hungarian businessman and a Sri Lankan.

Federal officials say the plan was for the Chicago-based company to be supplied with up to 12 million pounds of what is called titanium sponge each year, and that one conspirator also traveled to meet company representatives in Seattle.

Boeing, which also has major operations in the Seattle area, released its statement saying it had signed the memorandum of understanding, or MOU, in 2006 with the Firtash-controlled Bothli Trade company on conducting a feasibility study on the titanium.

"This was at a time of short supply of the material," the four-sentence statement from the aircraft manufacturer said. "But Boeing never pursued the MOU as supply became more plentiful and the MOU lapsed. We have never done business with Bothli other than the activities associated with the MOU."

Firtash was arrested March 12 in Vienna on an American warrant, then later released on a more than $172 million in bail on assurances he wouldn't leave Austria.

After his release, Firtash released a statement denying he'd done anything illegal.

"I am convinced in my innocence," he said. "This incident is the result of a misunderstanding and will be resolved in the nearest future."

U.S. authorities said they were seeking his extradition to Chicago. They also insisted last month that the legal action against Firtash had nothing to do with rising tensions in Ukraine. Russia later annexed Ukraine's Crimea region.

In addition to backing Yanukovych, who fled to Russia, Firtash has also been a significant figure in the sale of billions of dollars in Russian natural gas to Ukraine through RosUkrEnergo, a trading company he co-owns with Russian state gas company Gazprom.

So meticulous were the conspirators, federal officials said, that they would meet to calculate the proper amount of a bribe needed to spur some official act. Indian parliamentarian K.V.P. Ramachandra Rao, 65, who was also an official at the time of the alleged scheme in Andhra Pradesh, is accused of agreeing to accept bribes to approve the necessary licenses.

The papers unsealed Wednesday did not include attorneys' names for any of the defendants, including Rao. The Indian embassy in Washington, D.C., did not immediately respond to a message seeking comment.

All other defendants are still at large, U.S. prosecutors in Chicago said.

Firtash and the other defendants face multiple charges, including racketeering conspiracy and money laundering conspiracy. Five of the suspects, excluding Rao, were charged with violating the U.S. Foreign Corrupt Practices Act. A conviction on just one count of racketeering conspiracy carries a maximum sentence of 20 years in prison, as well as hefty fines.

U.S. authorities are also targeting a vast array of companies that underpin the Ukrainian oligarch's fortune.

The indictment released Wednesday seeks the potential forfeiture of Firtash's business interest linked to his Group DF, including 14 companies registered in Austria, 18 registered in the British Virgin Islands and 127 registered elsewhere.

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Follow Michael Tarm on Twitter at https://twitter.com/mtarm


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