Dubious Dacha Sale Raises Tricky Questions Over Ukrainians Fleeing to Moscow

KIEV, Ukraine -- Owning a dacha in the Ukraine these days isn't as easy as it used to be, especially for a Russian president.

Dacha Number One, the country mansion on the Crimean riviera which Leonid Brezhnev used for vacations, is at the centre of fraught relations between the new, Orange Revolution government of Viktor Yushchenko and Vladimir Putin, Russia's president.

The dacha, whose 20-hectare grounds include a pool with water pumped in from the Black Sea, was sold last November by the outgoing pro-Russian regime of Leonid Kuchma to a Russian state-owned bank for use by Mr Putin and other top officials.

Igor Bakai, the official who handled the deal, however, is wanted for interrogation over the oddities of the transaction, and over numerous other sales of state assets which he oversaw. He is being sought by Interpol after Ukraine issued an international warrant for his arrest this week.

Mr Bakai obtained Russian citizenship "before the Orange Revolution", according to Viktor Chernomyrdin, Russia's ambassador in Kiev. According to a friend of Mr Bakai's pop singer wife, he is living comfortably near Moscow after a swing through Monte Carlo.

Mr Bakai is only one of a growing number of former Ukrainian government offi cials under investigation who are obtaining protection in Russia. Ukraine's new government increasingly fears that its neighbour is becoming a haven for officials wanted for questioning on numerous sales of state assets.

Mr Yushchenko's government is considering reversing the sale of dozens of state enterprises to private entrepreneurs who were cronies of Mr Kuchma. Among the deals are three of Russia's largest investments in the Ukraine.

On Wednesday, Ukraine's interior ministry said it had asked Russia to establish the location and citizenship of four former top officials who are wanted for questioning: Mykola Bilokon, who was Mr Kuchma's interior minister; Sergey Kivalov, who headed the central election commission; Ruslan Bodelan, the former mayor of Odessa; and the former regional governor of Sumy, Volodymyr Shcherban.

The interior ministry wants to question Mr Shcherban in a racketeering case, Mr Bodelan on the sale of city property, and Mr Kivalov in connection with transfers of land and property by the Odessa Law Academy, where he was rector. A spokeswoman for the ministry declined to say why it wanted Mr Bilokon.

Mr Bodelan, according to his lawyers, is living in less luxury than Mr Bakai, but in greater security at a military hospital in Moscow, where even Russian law-enforcement authorities would need to go through special procedures if they wanted to arrest him.

In addition to the dacha sale, the interior ministry is investigating Mr Bakai for his role in allegedly channeling money from the state railways to a charity fund that the ministry suspects was used to fund the unsuccessful presidential campaign of Viktor Yanukovich, Ukraine's pro-Moscow former prime minister.

Moscow appeared to have acquired the dacha last autumn, when Russia's Vneshtorgbank agreed to pay nearly $15m for the villa. But to get around tender requirements for state asset sales, Mr Bakai donated the dacha, renamed Glitsynia (wisteria), to Artek, a children's sanatorium in Crimea. Artek then sold it to Vneshtorgbank on November 12 last year when Mr Putin and Mr Yanukovich dropped by the compound.

After Mr Yushchenko swept to victory and began a thorough review of suspicious transactions conducted by the previous government, the transfer of the dacha was frozen.

Mr Yushchenko has said that "Bakai won't hide anywhere" because Russia would co-operate with Ukraine's investigation.

Still, dacha diplomacy could still survive. Mr Yushchenko says he is willing to sell the dacha to Russia for use as a vacation residence for Russian officials, but not in the way Mr Kuchma's administration arranged.

"Having such a property as a vacation resort for members of the Russian government is a question that deserves attention . . . We will propose an honest, public and legal alternative, so that both sides can demonstrate their transparency and openness and not base their relations on scandalous properties," Mr Yushchenko said this week.

In another gesture towards Russia, Mr Yushchenko is reconsidering his decision not to attend Monday's ceremonies in Moscow marking the 60th anniversary of the end of the second world war.

Source: Financial Times