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. Last Updated: 07/27/2016

Russia Adds Fuel To Fire in Ukraine

Russian military prosecutors said Wednesday that they have gathered evidence implicating former Ukrainian Deputy Prime Minister Julia Tymoshenko in a murky financial scam that cost the Defense Ministry nearly half a billion dollars in 1996.

Also Wednesday, the Prosecutor General's Office announced that it has sent evidence to Ukraine that Tymoshenko and her husband, Alexander, violated customs regulations in 1995.

Julia Tymoshenko, who oversaw Ukraine's energy industry until her ouster as deputy prime minister earlier this year, denied the allegations.

"Russian prosecutors don't have a single piece of evidence against me," Tymoshenko said, according to the Ukrainian news site www.korrespondent.net. "That is why they are passing the criminal cases to Ukraine, where it will be used for political purposes."

Tymoshenko, who is an outspoken critic of President Leonid Kuchma and the leader of the Batkivshchyna (Fatherland) opposition party, has been in and out of prison several times this year on corruption charges.

Deputy chief military prosecutor Yury Yakovlev denied that there were any political implications to the case.

"There was neither politicking nor bias in our actions," he told Interfax.

He said his office passed evidence to the Ukrainian Prosecutor General's Office that Tymoshenko had ordered bribes be paid to several Russian government officials as part of a scheme under which Ukraine used Russian money to pay back gas debts.

He did not elaborate on Tymoshenko's alleged involvement.

He said, however, that his office was acting in accordance with the 1993 Minsk Convention, under which members of the Commonwealth of Independent States cannot investigate criminal cases against citizens of other former Soviet republics.

The Prosecutor General's Office, meanwhile, said its evidence showed that Tymoshenko was caught red-handed by customs officials at Vnukovo Airport trying to spirit $100,000 out of the country in July 1995.

A prosecutor's office spokesman refused to say why the six-year-old case was only being made public only now.

It was unclear Wednesday if Tymoshenko would face charges on the newly disclosed evidence.

The Ukrainian General Prosecutor's Office refused to comment.

But Tymoshenko and her supporters said they are convinced that Ukraine and Russia are working hand in hand on the matter. "Russia decided to bet on Kuchma and support him for a third term as president," Tymoshenko told Korrespondent.net. "Having done that, Russia is assisting in the destruction of Ukraine's opposition."

Her Batkivshchyna party claimed Russian prosecutors had acted after Kuchma asked President Vladimir Putin to cooperate in exchange for giving Russian firms better access to Ukrainian markets.

The fraud scheme that military prosecutors are saying Tymoshenko is linked to has already led to charges being lodged against the Defense Ministry's former finance chief, Colonel General Georgy Oleinik. He was charged with abuse of office in December 2000. Oleinik, who denies the charge, is under house arrest.

According to Russian media reports, the complicated scheme in which the Defense Ministry lost $450 million worked like this: Russian gas giant Gazprom borrowed $450 million from Imperial Bank and National Reserve Bank in 1995 to pay taxes via the Finance Ministry. Those funds were then sent to the Defense Ministry's finance department, which in turn transferred them to British-based United Energy International Ltd., a co-founder and agent of Ukraine's Unified Energy Systems.

The money went through this circular route as a way to help the Defense Ministry pay unspecified Ukrainian companies for deliveries of "material-technical valuables," the media reports said. No such deliveries were ever found in ministry invoices.

Later, United Energy International wired the money back to Gazprom to pay off part of Ukraine's gas debt.

Yakovlev said Wednesday that former Deputy Finance Minister Andrei Vavilov has also been charged with abuse of office in the scandal.

Earlier reports had said Vavilov was a witness and not a suspect in the probe.

Yakovlev said Vavilov was charged in May this year and his case was sent in July to the Prosecutor General's Office for investigation.

Vavilov's lawyer Viktoria Kopytseva denied that her client has been charged.

"The papers they produced in May to charge him were invalid," she said in a telephone interview. "The investigator questioning Vavilov has been fired, and this is why the case was sent to the Prosecutor General's Office for consideration about whether my client is guilty."