look at results and news flow ,just been given export licence as well this will be big money spinner for 2004
i hold a few of these from 20p

hi
i'm with you also.
both fto and jkx looking very nice

also into sibir energy
if you like russian oil (development situations) then this should fit the 'portfolio'

Dont forget this 1 this has risen a bit over last week or so

morning lads good luck in 2004 regards j[h d]

Hi
Another healthy rise for jkx

good news out

Looks like the JKX and Benam Holding Ltd thing is raising it ugly head again, oh dear - JKX and Benam mentioned too many times for my liking.


NAFTOHAZ UKRAINY - A STUDY IN STATE-SPONSORED CORRUPTION
[COMPLETE VERSION]
By Roman Kupchinsky

Naftohaz Ukrainy (NAK) is the state-owned Ukrainian gas monopoly responsible for providing natural gas to consumers all over the country, operating the Druzhba gas pipeline to Western Europe that supplies about 20 percent of Europe's gas needs, and selling Ukrainian natural gas abroad. It is also the largest Ukrainian commercial debtor to the Russian Federation. Since 2001, it has been headed by Yuriy Bojko, a relative newcomer to the gas business in Ukraine. Naftohaz Ukrainy is also the suspected source of much of what many believe to be illegal money going into the hands of corrupt officials in the Ukrainian government and to the president of Ukraine, Leonid Kuchma.

Naftohaz Ukrainy was established on 25 May 1998 in accordance with a 25 February 1998 decree by President Kuchma. By this decree, former state gas monopoly Ukrgazprom and a number of other entities were merged to form Naftohaz Ukrainy. The merger took place a little more than a year before the presidential elections of 1999, during which Kuchma was running for re-election.

Previously, in 1997, the Ukrainian parliament had attempted to pass a law that would have given the state accounting chamber the right to audit budget revenues. According to the "Financial Times" of 9 December 1998, the move would allow those auditors to investigate enterprises for transfer pricing and hiding profits. President Kuchma twice vetoed the bill. The "Financial Times" wrote: "When parliament overrode his veto, the constitutional court, widely believed to be an instrument of the executive branch -- found the law to be unconstitutional." This set the stage for the birth of Naftohaz, a company whose books would be off-limits to the state accounting chamber.

In order to better understand the nature of Naftohaz, it is vital to familiarize oneself with the relationship between the Ukrainian gas industry and Gazprom, the Russian state-owned natural-gas monopoly. Ukrgazprom, Naftohaz's predecessor, signed a contract in 1998 with Gazprom to purchase 36 billion cubic meters (bcm) of gas annually. In addition to supplying Ukraine with its gas needs, Gazprom supplied gas to Europe through the Ukrainian pipeline and paid Naftohaz's transit fees in gas. To protect itself against the risk of gas being stolen in the course of the contract, in October 1998 Gazprom insured itself with Sogaz, its fully owned subsidiary in Moscow.

One of the first steps of the newly formed Ukrainian government of Viktor Yushchenko, in January 2000, was to send Deputy Prime Minister for Energy Yuliya Tymoshenko to Moscow to discuss Ukrainian energy debts. Upon her return, Tymoshenko, a former head of Unified Energy Systems of Ukraine, informed the press that Ukraine owed Russia $2.23 billion for deliveries of natural gas. Disputing Tymoshenko's findings, the head of Naftohaz Ukrainy at the time, Ihor Bakaj, stated that his figures suggest a debt of $740 million, while Prime Minister Yushchenko stated that the debt was $1.24 billion.

Soon afterward, on 20 January 2000, the Ukrainian government met in Kyiv with the leadership of Gazprom in order to normalize Gazprom's deliveries of natural gas to Ukraine. A copy of the protocol of that meeting obtained by "RFE/RL Organized Crime and Terrorism Watch" and signed by Prime Minister Yushchenko and Gazprom President Rem Viakhiryev states: "The Ukrainian side will take the following measures to liquidate the debt for Russian natural gas.... Within a week's time [Ukraine] will adopt a decision forbidding the resale of Russian and other countries' gas and stop deliveries of it to subjects of commercial activity in Hungary, Poland, Romania, Moldova, and Slovakia."

Despite this agreement, Gazprom President Viakhiryev felt compelled to send a telegram on 2 February 2000 to Prime Minister Yushchenko, a copy of which was obtained by "RFE/RL Organized Crime and Terrorism Watch." In it, Viakhiryev wrote: "I am forced to bring to your attention that the agreements we reached in Kyiv on 20 January of this year between the Ukrainian government and Gazprom are being persistently broken by the national stock company Naftohaz Ukrainy. The theft of Russian gas continues, as does the sale of this gas to third countries."

As the controversy over the theft of gas continued, Gazprom announced that in order to prevent further theft, it would consider building a new pipeline to Western Europe that circumvented Ukraine. At the same time, Gazprom filed a claim with its insurer, Sogaz, for $88 million in losses stemming from gas allegedly stolen by Naftohaz. Sogaz subsequently paid Gazprom and was in turn reimbursed by Monegasque De Reassurances S.A.M. (Monde Re) of Monaco, a subsidiary of Reinsurance Australia Corporation Ltd., in accordance with a reinsurance agreement. Amazingly enough, Gazprom is believed never to have proven to Sogaz that any gas was in fact stolen or in what amount. In a period of five days, Sogaz reportedly paid Gazprom $88 million.

Monde Re in turn sued Naftohaz and won a judgment in a Russian arbitration court that ordered Naftohaz to pay Monde Re all $88 million. Naftohaz appealed the decision with the Russian Supreme Court, which upheld the lower court's ruling. Naftohaz refused to obey the court decision and pay Monde Re.

Monde Re then sued Naftohaz and the government of Ukraine (since Naftohaz was a state-owned company) in the United States, where on 1 September 2001 the District Court for the Southern District of New York ruled in favor of the Ukrainian government on the grounds of "forum non conveniens," a doctrine whereby a court declines to exercise jurisdiction because it is more convenient for another court to adjudicate the matter. That district-court decision was upheld by the Court of Appeals.

In the district court's decision, Judge Victor Marrero wrote: "There is no evidence before the Court however, to suggest that the arbitral award -- if confirmed here -- would be easier to enforce against Ukraine in the United States rather than in Ukraine."

To date, Naftohaz has not paid Monde Re the $88 million in damages awarded by the Russian court. In related press releases, Naftohaz has construed the court's decision as a "victory" for Naftohaz that "proved" that the company did nothing wrong.

The case is also notable in that Gazprom collected money from its wholly owned subsidiary company, Sogaz, allegedly without having to prove it incurred damages. Sogaz, in turn, was reimbursed by Monte Re, a little-known re-insurer from Monaco; while Naftohaz Ukrainy did not have to repay a penny to anyone. What then became of the $88 million that Naftohaz Ukrainy was accused of stealing?

Another question concerns the money allegedly paid out to Gazprom by Sogaz. Was there, in fact, any payment at all?

A partial explanation regarding the money can be found in "The Russia Journal" of 15 November 2002. In an article about insurance in Russia, the paper wrote: "It is rare for a local investment bank to expose an entire commercial market as a compound of tax-avoidance schemes, phony revenue statements, paper transfers and intentionally misleading valuations. But that is what the United Financial Group (UFG) manages to do for the Russian insurance market with a new report titled 'Russia's Insurance Industry: Enter the Man from Ru.'

"Starting with an initial estimate of $9.5 billion in insurance premiums officially reported as paid in Russia in 2001, roughly half -- $4.7 billion -- should be disregarded as insurance at all, UFG concludes, because it represents one- to five-year policies paid out as tax-free annuities that are, in reality, tax-free income."

The article quotes Reuben Vardanyan, a Troika Dialog executive who has since become chief executive of Rosgosstrakh, the state insurance company. Vardanyan "believes that Russian insurers are either placing their funds in high-risk investments that could trigger defaults; or else the missing money does not exist at all, because large sums of premiums 'paid' do not really exist, being no more than paper figures used in salary and captive schemes."

Compounding the mystery surrounding Gazprom's insurance provider, Sogaz, were reports in the Russian media ("Kommersant" and "Vedomosti") from 22 May 2002 that, one day earlier, Andrei Petukhov, the general director of Sogaz, was murdered along with his driver at a suburban Moscow dacha compound. Police sources said the crime appeared to have been carried out by at least two people using Makarov pistols with silencers.

Various theories were put forward by the above-mentioned newspapers concerning the possible motive for what appeared to be a contract killing. According to one, the murder of Petukhov, who was appointed head of Sogaz in April 2002, might have been connected to his stated plan to purge the company of holdovers from the old management team controlled by former Gazprom head Rem Viakhiryev. Some anonymous sources were cited as saying it was possible that, after assuming the helm, Petukhov uncovered operations that were "not fully legal."

Another piece in the puzzle concerns who in fact took the money that Naftohaz was alleged to have stolen from Gazprom. During the lawsuit in New York, Monde Re claimed that Naftohaz was depositing funds in U.S. banks. But Judge Marrero wrote in the U.S. decision: "Monde Re's own source declares something different -- that Ihor Bakaj, Naftohaz' chairman in 2000, simply transferred money through a United States bank account for his own personal use." In other words, the source appears to have suggested, it was not Naftohaz as an entity that was stealing: It was the chairman of Naftohaz, Ihor Bakaj, who was pilfering the proceeds from the stolen gas.

(The Ukrainian state-owned gas monopoly, Naftohaz Ukrayiny [NAK], is suspected by some of having been a main conduit of illegal money paid to the president of Ukraine, Leonid Kuchma, for his election campaign in 1999. In 2003, the company has been accused of involvement with organized crime in a scheme to defraud the Ukrainian treasury of millions of dollars. For Part 1 of this series of articles on Naftohaz Ukrayiny, see "RFE/RL Organized Crime and Terrorism Watch," 18 July 2003.)

In January 2000, the bilateral Kuchma-Gore Commission was preparing for its annual meeting in Washington. One of the members of the Ukrainian delegation (which was chosen by President Kuchma and his advisers) was to have been Naftohaz Ukrayiny President Ihor Bakay, but an extraordinary event took place: Bakay was refused a U.S. entry visa. Subsequently, the press reported that Bakay's name had been placed on a list of corrupt Ukrainian government officials by the U.S. government. This list was given to Ukraine's national security adviser at the time, Yevhen Marchuk (the current Ukrainian defense minister), who passed it on to President Kuchma.

Bakay's career in the gas business began in 1993. In 1993-94, he headed a company called Respublica that bought natural gas from Turkmenistan. In part as a result of Respublica's activities, the Ukrainian energy debt jumped to $664 million -- Respublica owned Russia and Turkmenistan some $240 million. In 1995, Bakay headed up a closely held stock company, Intergas, whose controlling package of shares was held by the company ADI. The sole shareholder of ADI was Ihor Bakay. By 1997, Intergas owed suppliers $340 million, $140 million of which was owed to Gazprom. On 11 August 1995, the enterprise Intergas Inc. was incorporated in the state of Pennsylvania (2664703), with Igor Shariv as CEO and Stanislav Melnik as its secretary/treasurer. The papers of incorporation show an address for Intergas in Kyiv. Melnik listed as his residence a $174,550 home (paid in cash) in Meadowbrook, Pennsylvania.

In 1997, President Kuchma appointed Bakay first deputy chairman of the State Committee for the Oil and Gas Industry, which in 1998 became part of Naftohaz Ukrayiny -- at which time Bakay was officially appointed board chairman at Naftohaz Ukrayiny by then-Prime Minister Valeriy Pustovoytenko.

U.S. officials who denied Bakay's visa knew very well with whom they were dealing -- and were presumably familiar with the financial resources at his disposal. According to public records obtained by "RFE/RL Organized Crime and Terrorism Watch," Bakay holds a U.S. Social Security number and at one time had an address in Meadowbrook, Pennsylvania. This was a property purchased by Bakay and his wife Elena on 18 April 1994 for $1.8 million (in cash) which, on 13 July 1997, was sold for $1 to Elena Bakay. Still on 13 July 1997, it was then resold for $1 to Bronislava Demchuk (Bakay's mother-in-law) before being resold for $1 to Serhiy Demchuk (Bakay's brother-in-law), who was listed as the owner in 1999.

There was other property aside from Meadowbrook. On 17 July 1995, Elena Bakay purchased property in Fort Washington, Pennsylvania, for $475,000 (in cash). She sold this property on 12 December 1997 for $395,000.

On 12 December 1994, Ihor Bakay purchased a property in Naples, Florida, in the name of his mother-in-law, Bronislava Demchuk. According to documents at the county clerk's office, a new home was constructed on this property in 1997 at a total value of more than $6.4 million.

After the construction of the Naples mansion, Bakay, now the head of Naftohaz Ukrayiny, had to maintain the property where his wife Elena and children lived. A member of the Ukrainian parliamentary committee on combating corruption told "RFE/RL Organized Crime and Terrorism Watch" that, according to an investigation conducted by the committee, Bakay transferred $450,000 through his Kyiv bank, Financy i Kredity, on 21 December 1998. Then on 22 December 1998, he wired an additional $380,000, and on 23 December 1998 he sent another $680,000 -- for a total of more than $1.5 million -- to the Commercial Bank of San Francisco (account number 001-754867).

As recently as October 1998, using the same Kyiv bank, Bakay had transferred a total of $2.45 million to Dogmatos Trading Ltd in Ireland via an account at First Credit and Trade Bank in Nauru, the tiny island in the central Pacific Ocean that was a reputed haven for money laundering at the time. (It was only in June 2003 that Nauru was removed from the blacklist of countries suspected of money laundering by the Paris-based Financial Action Task Force on Money Laundering.)

In 1999, Bakay's transfers of cash continued. In December 1998/January 1999, Bakay wired a total $550,000 from various Ukrainian banks to an account he controlled called under the name "United Global Enterprises Ltd" in Hong Kong with the Hong Kong and Shanghai Banking Corporation.

During Bakay's chairmanship of Naftohaz Ukrayiny, he maintained a close relationship with the president, Leonid Kuchma, and was often present in his office. At this time, the conversations in the office were being secretly recorded by a member of his security detail, Major Mykola Melnychenko. Some of the recordings made there have since been authenticated by a private audio laboratory in the United States, BEK TEK, and by the FBI's audio laboratory. In one recording made in October 1999 (which has not been authenticated), Kuchma is heard asking Bakay to hand over large sums of money needed for his election campaign:

Kuchma: You understand, money [expletive deleted]. I don't want [to do this] anymore. I have been forced to turn to people with whom it is better for me not to deal with. I'm asking, boys, help me. Only 20 days remain before the election. Bakay: It is necessary for you to give us a concrete assignment, and a very clear one. I will find the sources for it as soon as you say so. Leonid Danylovych [Kuchma], so far we have transferred 48,800,000 hryvnyas [$9.8 million] as well as $10,004,057. This was done by my deputies.... Afterwards, we paid out $4 million in cash, but they told us that we were $100,000 short. I will not argue the point.... We then brought over those 100,000.

In the summer of 2000, Western media reports of Bakay's activities forced him to resign his post at Naftohaz Ukrayiny. Not wasting any time, he managed to get elected to parliament in a by-election, and thereby acquired immunity from prosecution. He ran unsuccessfully for re-election in 2002. Fellow parliamentarians have claimed that Bakay showed up for just a single session of parliament -- the day he was sworn in.

Ukraine's current prosecutor-general, Svyatoslav Piskun, announced in February that he would bring criminal charges against Bakay. So far such charges have not been forthcoming. Mykola Azarov, the former head of the State Tax Administration who is now deputy prime minister, declared that he would investigate Bakay for tax-related offenses, but that appears not to have taken place.

Despite Azarov's vow to investigate Bakay, conversations in Kuchma's office between Kuchma and Azarov recorded by Melnychenko (but unauthenticated) in 2000 suggest that Azarov was well-aware of Bakay's illegal activities:

Azarov: Now, concerning Naftohaz: I invited Bakay, as we agreed, and showed him all of these accounting records [skhemy]. My people did this, [people] I trust. I talked to Oleksandr Mykhailovych [otherwise unidentified], found out how much was actually coming in, and told him [Bakay] exactly the following: "Well, Iggy, at a minimum, you put 100 million in your pocket. Minimum. I understand, of course, that I will not expose you. I give you two weeks, a month at maximum." And I showed him the accounting records. "Destroy all the papers that bear witness directly or indirectly to all that you have been up to. You did everything stupidly and senselessly." And I showed that he was doing everything stupidly and senselessly. But what's done is done. That's the way it is. He says to me: "Call your people off...." I called them off. I gave him the month of February, and after that I can't keep calling them off. After that, someone will say to me, "Why did you call them off?" Kuchma: Absolutely. I told him, "Listen, dearie, nobody is going to cover your ass...." Azarov: I tell you, everything could have been done intelligently -- but no, he did it so that any stupid auditor would notice his sham expenditures records, even a stupid one.

Bakay is still at liberty but is barred from entering the United States.

Despite the ongoing (but arguably slow) investigation of Bakay by the Prosecutor-General's Office and the tax administration, the "Ukrayinska Pravda" website (http://www.pravda.com.ua) reported on 21 July that President Kuchma had signed a decree appointing Bakay to be the head of the State Committee on Water Economy in Ukraine.

In August 2000, Kuchma replaced Bakay at Naftohaz with his deputy, Ihor Didenko. Didenko did not last long in that post, however, since German police arrested him in the fall of that year and charged him with stealing millions of German marks from a fund earmarked for compensation to former Ukrainian slave laborers during World War II. He is still in custody.

The Naftohaz chairman's position is an influential one, and the Kuchma administration needed to fill it without undue delay. A new head, Viktor Kopylev, took over from Didenko. Kopylev was widely regarded as a person promoted to this position by former tax-administration head Azarov, With the arrival in May 2001 of Oleh Dubyna, the new deputy prime minister in charge of energy, Kopylev was let go; and in January 2002, he was replaced by the present head of the company, Yuriy Boyko.Yuriy Boyko was born in 1957 in Horlivka in Donetsk Oblast and graduated from Moscow's Mendeleev University of Chemical Technology. In 1981-99, he worked as director of a military-explosives producer called Zarya. He was then appointed head of LyNOS in Luhansk, one of Ukraine's largest oil-refining enterprises, where he worked until April 2001. Boyko then moved to Kyiv and, in August 2001, became the acting director of Ukrtatnafta, a joint Ukrainian-Tatar oil company.

At Naftohaz Ukrayiny, Boyko kept Bakay's top managers -- including Ihor Brahinskiy, who remained in one key position atop the department in charge of purchasing and paying for Turkmen gas. Brahinskiy's subordinates included Vladimir Belogorlov, who was in charge of transporting Turkmen gas. Brahinskiy, who had been a close associate of Bakay, began his career in the gas business in the days of Respublika and Intergas, and was generally regarded as an experienced professional in the field.

As the Boyko team was well into the task of taking over Naftohaz Ukrayiny, President Kuchma sacked the government of Prime Minister Anatoliy Kinakh on 16 November 2002 on the pretext that the government had been unable to guarantee financing for education and science; the president proposed that Viktor Yanukovych become Ukraine's 10th prime minister in little over a decade.

Boyko was immediately faced with a number of serious problems: Naftohaz Ukrayiny's debt to Gazprom had grown in 2001 by roughly $184 million to total $1.4 billion; he needed to address the question of a proposed Ukrainian-Russian consortium to manage and control the Ukrainian gas pipeline; and, to make matters worse, he came to Naftohaz Ukrayiny at a time of major crisis in the Ukrainian government. Kuchma and his closest associates were being accused of having ordered the murder of journalist Heorhiy Gongadze, who had been exposing corruption in the highest levels of government (see "RFE/RL Organized Crime and Terrorism Watch," 14 February 2002 and 13 March 2003).

As soon as Yanukovych's name was announced by the president as his candidate for the job, a number of political observers in Kyiv were quick to comment that, with his appointment, power in Kyiv would shift to the Donetsk clan, a powerful industrial grouping located in the Donetsk region of Ukraine. There were also signs that, given his alleged connections to what was reputed to be a criminal group, the West would be unhappy with Yanukovych's appointment. One of the first men to be named to the new cabinet was Deputy Prime Minister for Energy Vitaliy Hajduk. Hajduk was a major figure in the Industrial Union of the Donbas, regarded as the core group of the Donetsk clan. As deputy prime minister for energy, he would control few resources if he did not exercise control over Naftohaz Ukrayiny and Boyko.

(The Ukrainian state-owned gas monopoly, Naftohaz Ukrayiny [NAK], is suspected by some of having been a main conduit of illegal money paid to the president of Ukraine, Leonid Kuchma, for his successful re-election bid in 1999. In 2002, Naftohaz was accused of having aided entree into the gas business of reputed crime boss Semen Mogilevich, who allegedly controls Hungarian-based Eural TransGas. For Parts 1 and 2 of this series of articles on Naftohaz Ukrayiny, see "RFE/RL Organized Crime and Terrorism Watch," 18 July and 5 August 2003.)

A new battle for control of Naftohaz Ukrayiny (NAK) began on 18 January, 2003. Simply put, it was a contest between the presidential administration led by chief of staff Viktor Medvedchuk on the one hand, and the so-called Donetsk clan on the other. On that day, the cabinet issued a decree that placed Naftohaz Ukrayiny under the administrative control of the Fuel and Energy Ministry. Kuchma annulled the decree two days later, on 20 January, and allowed Naftohaz Ukrayiny to exist as a more or less autonomous structure.

According to a decision made by the president at the time, Naftohaz Ukrayiny was to be placed under the supervision of the State Property Fund, a body without regulatory or oversight functions in the energy sector and best known for dubious deals during the privatization auctions of the 1990s in which individuals close to President Kuchma and his predecessor, Leonid Kravchuk, were seemingly awarded for their loyalty through ownership of prime industrial enterprises at rock-bottom prices.

Prime Minister Viktor Yanukovych was told to prepare a transfer of administrative control over Naftohaz Ukrayiny by early March.

According to sources in the energy sector, the Donetsk clan, an influential industrial group in the Donetsk region of Ukraine, intended to exercise control over the negotiations between Naftohaz Ukrayiny and Turkmenistan for the purchase of Turkmen gas and also to have a say in who would handle the transit of this gas to Ukraine. Unconfirmed rumors had it that the Donetsk clan even had plans to replace Yuriy Boyko with Serhiy Taryta, the head of the Industrial Union of the Donbas.

The Power Of Gas

The transit of Turkmen gas to Ukraine had become a major issue by the end of 2002 and early 2003. It was not merely a power struggle between competing Ukrainian clans, but had much broader ramifications.

The company that had had the contract with Naftohaz Ukrayiny and Gazprom to transport Turkmen gas to Ukraine since 1998 was Itera. Founded in Moscow by Igor Makarov in 1992, Itera was given the concession to transport gas by Gazprom, the Russian gas monopoly, to Gazprom's "problem" clients such as Ukraine, Georgia, Armenia, and Belarus, which would pay late or not at all. By using various barter deals, Makarov built Itera into a major gas company and, within a few years, Itera owned its own gas fields; by 2002, it had become the world's fifth-largest gas company.

Relations between Itera and Naftohaz Ukrayiny were often strained. The Ukrainian side was habitually late in paying its transit fees, and Ihor Bakay, the former head of Naftohaz Ukrayiny, was suspected by some of seeking side deals to his own personal benefit. According to sources in the Russian energy sector, Bakay at one point pledged to repay part of the debt to Itera if 10 percent were kicked back to him. The offer was refused, the same sources said. By 2000, Itera began curbing gas shipments until payments arrived. By early 2000, Naftohaz Ukrayiny owed Gazprom some $1.4 billion. (This was the figure the Russian side accepted for negotiations.) Of the overall figure, Itera was owed some $600 million.

By mid-2002, Naftohaz Ukrayiny and Gazprom were faced with a situation that required a rapid change in the way they were doing business. Kuchma was in trouble with the Washington administration over the execution-style killing of Heorhiy Gongadze and his alleged intention to sell Kolchuga radars to Iraq, and he was now faced with a vocal opposition. Many politicians in Kyiv felt that Kuchma needed money to help install a successor and stay out of jail.

Russian President Vladimir Putin was also faced with mounting pressure to reform Gazprom. Russian oil companies -- richer than ever due to the high price of oil brought on in part by instability in the Persian Gulf, and with the war in Iraq around the corner -- were screaming for access to the Russian gas pipelines controlled by Gazprom so they could export their natural gas. (Much gas was simply being burned off.) But Gazprom was fiercely resistant. Other critics of Gazprom were calling for the company to be broken up and urging liberalization of the Russian gas business. Either way, Gazprom was afraid that its days as an all-powerful monopoly were coming to an end, and Putin doubtless considered the possibility that he might lose his most powerful source of funds.

The new management of Gazprom ushered in by Putin was having a difficult time with the company's assets, and rumors were making the rounds in Moscow that the new Gazprom chief, Aleksei Miller, and his crew were less than competent. "Nezavisimaya gazeta," reporting on the annual Gazprom shareholders meeting on 27 June, offered on 30 June that "Putin's reformist team of Miller's is more crooked than [Rem] Viakhiryev's." Vast reserves of natural gas in the Yamal were not being developed and, coupled with the low price of gas in Russia, the company was making little money on its home market. The only money to be made was in Europe; but in order to sell gas to Europe, Gazprom needed to find this gas, and the largest available source was Turkmenistan. For Turkmen gas to reach final users in Europe, it had to be transported through Kazakhstan via the Central Asia-Center pipeline network to Russia; and from there to Ukraine, where it would be pumped through the Dryzhba pipeline and on to Slovakia. The Dryzhba pipeline was owned by Naftohaz Ukrayiny.

Opening New Channels

In late 2002, Naftohaz Ukrayiny and Gazprom thus embarked on a joint adventure. Despite the lawsuit brought against Naftohaz Ukrayiny by Gazprom for allegedly stealing gas in the fall of 2000, there were apparently no hard feelings between the managers of those companies, and they agreed to cooperate in a new -- albeit more dangerous -- scheme.

Gazprom was aware of one major impediment: Ukraine already had a contract with Turkmenistan to purchase some 36 billion cubic meters (bcm) of gas per year, and this amount was virtually all that the Central Asia-Center pipeline could handle; so Russian attempts to buy Turkmen gas were being stymied. To bypass the problem, Gazprom and Naftohaz Ukrayiny decided to rework the transport of Turkmen gas.

It is unclear who first suggested that Gazprom and Naftohaz Ukrayiny work with Semen Mogilevich, a man wanted for securities fraud by the U.S. FBI and who, according to the FBI, was among the most dangerous criminal bosses in Russia. Gazprom claimed that it was the Ukrainian side. There were lingering suspicions that Kuchma had had connections with Mogilevich over the years. This view was further reinforced when conversations recorded in Kuchma's office by Mykola Melnychenko, a member of the president's security detail, became public. In conversations between Kuchma and Ukrainian Security Service head Leonid Derkach, there are references to Derkach setting up meetings for Kuchma with Mogilevich. Members of the Ukrainian parliament's anticorruption committee told "RFE/RL Organized Crime and Terrorism Watch" that they believe Mogilevich contributed money to Kuchma's political campaign in 1999. According to Gazprom second-in-command Aleksandr Riyazanov, the plan for swapping transporters of Turkmen gas was put forward by Boyko from the Ukrainian side. In any case, the move appears to have been accepted by Gazprom CEO Miller, and it went forward in an arguably hasty and clumsy fashion.

Both Gazprom and Naftohaz Ukrayiny were interested in selling gas to Germany and wanted to maximize profit and minimize tax liabilities. According to the new arrangement, Ukraine would agree to elbow out Itera and replace it with a still-unregistered Hungarian company known as Eural TransGas, a company reportedly controlled by Mogilevich.

Eural TransGas Kft. was registered in Hungary on 6 December 2002 at an in the city of Csabdi (Szabadsag u. 24) and with an account at Raiffeisenbank. Its basic capital was listed as the equivalent of $12,000, and the owner was listed as Zeev Gordon, with an address in Tel Aviv, Israel. (Gordon's given name is not in fact Gordon, but Averbuch.) Gordon was a Russian emigrant to Israel. The Tel Aviv address was also identical to that of another Mogilevich company, Highrock Properties. The papers of incorporation filed by Eural TransGas also listed as officers in the enterprise three Romanian nationals: Anca Negreanu, Mihai Savu, and Louise Lukacs. Soon afterward, Gordon sold his interests in the company to the Romanians.

Andras Knopp, listed as the director of Eural Trans Gas Kft., had a long and familiar record. Under the Soviet yoke, he was a state secretary under Janos Kadar's post-1956 Hungarian government and a minister of culture. With the fall of socialism, Knopp became director of operations within the Commonwealth of Independent States for tobacco company Reemtsma. However, allegations of cigarette smuggling by Reemtsma emerged in 2000, and Knopp was prompted to go elsewhere. It was apparently at this time that Knopp met up with Mogilevich in Russia.

Knopp's activities and contacts with Mogilevich are described in detail in a letter from the Russian Interior Ministry's Major General A. P. Mordovetz to the head of Russian Interpol, General Major Vladimir Ovtsenskii, dated 14 November 1998. The letter also highlights Mogilevich's alleged attempt to send a three-man hit squad from Budapest to Hamburg to "do bodily harm" to an individual who was interfering in his and Knopp's illegal cigarette business.

(In April 2003, Mogilevich, now living in Moscow, was placed on the FBI's most-wanted list after being indicted by a Philadelphia court for alleged fraud. In July, Washington formally asked Russia to extradite Mogilevich to the United States to stand trial on charges stemming from a fraudulent stock scheme involving a Mogilevich company known as YBM Magnex.)

Back-Door Plan

According to the scheme conceived by Gazprom and Naftohaz Ukrayiny, Eural TransGas would become the new owner -- on paper, at least -- of 36 bcm of Turkmen gas. It would then sell 34 bcm of gas to Ukraine and be contracted by Gazprom to "transport" the gas from Turkmenistan to the Ukrainian border. For its transportation services, which turned out to be purely fictional, Eural would receive 14 bcm of gas -- which it would divide between Naftohaz Ukrayiny, Gazprom, and Mogilevich -- and they in turn would sell to a Gazprom subsidiary called Gazexport that was headed by Gazprom Deputy Chairman Yurii Komarov. Gazexport would then resell this gas in Germany to traditional Gazprom clients, including Ruhrgas and Wintershall. Before commissions, this 14 bcm of gas was worth approximately $1.5 billion on the German market. Well-informed sources in Moscow and Kyiv have suggested that they believe part of that money was kicked back for Kuchma's use in his 2004 re-election campaign.

In order to finalize the deal, Boyko (representing Naftohaz Ukrayiny) flew to Moscow, where he signed a contract with Eural TransGas Director Knopp on 4 December 2002 to purchase 34 bcm of Turkmen gas from Eural TransGas. Boyko was not legally authorized to sign such a contract; but that fact was apparently overlooked by everyone, including the Ukrainian Prosecutor-General's Office. The deal was closed quietly so as not to alert the cabinet, which wanted to gain control over Naftohaz Ukrayiny, or the parliament, some of whose members might expose the scheme. On 5 December 2002, Gazprom signed its own contract with Eural TransGas, granting Eural TransGas the right to operate the transport of 38 bcm of gas to the Ukrainian border from Turkmenistan through the Gazprom-controlled pipeline. In neither case did Eural TransGas have any documentation showing that it in fact owned this gas, since Eural TransGas had not yet been registered in Hungary. That registration took place only on 6 December.

(Two days earlier, on 4 December, another company had been formed -- this time in France. It was called Benam Holdings, and it remained dormant until late June 2003. Benam will be discussed later in this series.)

The circumstances of the arrangement suggest a deliberate attempt at obfuscation. The legal terms of the deal do not reflect the process of gas transport because, in reality, the general operator for the transport of Central Asian gas is Gazprom itself -- and not Eural TransGas, which had neither the infrastructure nor the capability to act in that capacity. Eural TransGas apparently never even applied for the customs documents needed to transport gas.

But perhaps the most telling sign of Eural TransGas's dubious role as a provider of Central Asian gas lies in the fact that it was Gazprom, in the person of Aleksandr Ryazanov as "Client," that signed a separate agreement to transport Turkmen and other non-Russian gas through Uzbekistan.

Ryazanov signed a service contract (No TRGUZ - 03-06) with Uztransgaz, the Uzbek gas-transport company (represented by its director, identified only as I. H. Vagapov) on 29 December 2002 for the period from 1 January to 31 December 2003. In accordance with that contract, Uztransgaz was obliged to "transport gas from Turkmenistan through the territory of Uzbekistan and from the Turkmen-Uzbek border to the Uzbek-Kazakh border in the amount of 34 bcm, including 2 bcm of Uzbek gas."

As these arrangements were being made, Mogilevich affiliates apparently began establishing a number of other companies in Hungary. On 2 April, a Budapest business court registered Elmstar Trade, an enterprise that listed its business activities as "energy, textiles, and trading in raw materials." It, too, was registered at the same Csabdi address, and the registered owner was Andras Knopp. His partners in Elmstar were three Romanian nationals (not the same individuals that appeared in the registry for Eural TransGas).

Months earlier, on 8 January, Vanguard Trade had been registered in Hungary at the same Csabdi address. The president was also Andras Knopp, and it listed Cyprus-based Highrock Properties Ltd. among its founders.

Highrock, another company believed by law-enforcement agencies to lie within Mogilevich's network of companies, had been active in the energy sector in Central Asia. The financial director of Highrock, Igor Fisherman, is presently wanted by the FBI on similar securities-fraud indictment as Mogilevich. Highrock's director in Ukraine, Dmytro Firtash, reportedly has extensive experience in the Central Asian energy business and is said to be well connected in Ukraine. Highrock also owed Itera, the company forced out of the transport business by Naftohaz Ukrayiny and Gazprom, some $100 million stemming from a gas-purchase contract that Firtash had signed with Itera in 2000.

(The Ukrainian state-owned gas monopoly, Naftohaz Ukrayiny, is suspected by some of having been a main conduit of illegal money paid to the president of Ukraine, Leonid Kuchma, for his successful re-election bid in 1999. In 2002, Naftohaz was accused of having aided entree into the gas business of reputed crime boss Semen Mogilevich, who allegedly controls Hungarian-based Eural TransGas. For Parts 1, 2, and 3 of this series of articles on Naftohaz Ukrayiny, see "RFE/RL Organized Crime and Terrorism Watch," 18 July and 5 and 15 August 2003.)

The Reaction To Exposure

By February 2003, news of the Gazprom-Eural TransGas contract had made its way into the Russian and Western press. After numerous denials by Gazprom and Naftohaz Ukrayiny spokesmen, Gazprom finally admitted that there was in fact a contract between Gazprom and Eural TransGas. The Ukrainian side on the other hand refused to admit to having signed a contract with Eural TransGas and claimed that this was "confidential company information."

As this was occurring, the internal Ukrainian struggle over control over Naftohaz Ukrayiny was continuing. In March 2003, the Ukrainian Cabinet of Ministers ordered Naftohaz to comply with customs declarations for the payment of Turkmen gas owed to Eural TransGas. Apparently this was not being done, and Eural TransGas, which did not in fact transport anything except money, had no documentation of any kind. The government also "recommended" that Naftohaz comply with the cabinet's decree of 26 March 2003 that foreign-made goods purchased by Naftohaz for use as barter payment for gas be subject to open tenders. Earlier, only Ukrainian-made goods purchased by Naftohaz were sold at tenders.

On 13 March, Interfax-Ukraine reported that Yuriy Boyko announced that Naftohaz Ukrayiny (NAK) was in the process of buying out part of the shares of Eural TransGas and was recommending to Gazprom to do the same. He also rejected charges that Eural TransGas was in any way connected to organized crime and that the deal with Eural TransGas was a very favorable one for Ukraine since it cost Ukraine "$60 million less" in gas-transit fees then the previous deal with Itera.

By the end of May the affair was getting very messy and the U.S. ambassador to Ukraine, Carlos Pascual, addressed the issue. Speaking at the sixth international "Energy Security in Europe" conference in Kyiv on 28 May, Pascual said, according to the embassy's website (http://www.usinfo.usemb.kiev.ua/): "By the end of 2000, Ukraine had taken concrete steps to advance its gas security. An agreement with Turkmenistan covered over 38 percent of Ukraine's gas needs up until 2006, reducing Ukraine's dependence on one single supplier from Russia. Itera was the transporter, supplier, and operator, providing NAK Naftohaz with relative security that supplies would reach the Ukrainian border. NAK Naftohaz also agreed with Gazprom on the precise gas debt, $1.4 billion. In 2001, Gazprom accepted that the debt would not be sovereign guaranteed. In December 2001, Ukraine signed a deal with Russia that also decreased barter-based transactions.

"Some of these successes are now at risk. In December 2002, just a few months ago, Ukraine signed several agreements that increase Gazprom's control over NAK Naftohaz and its activities. Itera, seen by many as a Gazprom competitor, was pushed out of the Ukrainian market and substituted for a new Gazprom intermediary, Eural TransGas. According to press accounts, Eural TransGas was registered in Hungary the day before the contract was signed with just $12,000 in charter capital. In addition, media reports link Eural Trans Gas with organized-crime figure Semen Mogilevich, who was recently indicted in the United States."

The Ukrainian media carefully avoided any mention of this portion of Pascual's speech. When RFE/RL's Ukrainian Service (http://www.radiosvoboda.org/) interviewed a spokesman for Naftohaz Ukrayiny on 3 June, he told the station that the U.S. ambassador "should not teach Ukraine how to go about doing business." Replying to a question whether there was in fact a contract between Naftohaz Ukrayiny and Eural TransGas, the spokesman refused to divulge any information and stated that this was "confidential company information." This was seen by many as a strange answer coming from a state-owned company.

On 24 June, the Russian newspaper "Vedomosti" reported that Gazprom's efforts to move Eural TransGas out of the gas-transit contract they had signed with them in December 2002 was being blocked by the Ukrainian partners -- Naftohaz Ukrayiny. "Vedomosti" quoted Gazprom Deputy Chairman Aleksandr Ryazanov as saying that in the efforts to buy out Eural TransGas shares, the Ukrainian side is offering too little. Another spokesmen from Gazprom was quoted as saying that it was the Ukrainian side which choose Eural TransGas to be the transit company in the first place. According to other sources, the Ukrainian side, which initially said that Eural TransGas was owned jointly by Gazprom and Naftohaz Ukrayiny on a 50-50 basis, was determined that the shares for Eural TransGas be divided up as follows: 40 percent for Gazprom, 40 percent for Naftohaz Ukrayiny, and 20 percent for Mogilevich. "Vedomosti" cited an analyst from Hermitage Capital Management as saying that the Eural TransGas contract had caused losses of $320 million for Gazprom. And while these were paper losses, the kickback scheme through Eural TransGas selling 14 billion cubic meters of gas to Gazeksport, which then resold it to German companies, was bringing in real millions of untaxed dollars to Gazprom and Naftohaz Ukrayiny -- and Mogilevich.

On 30 June, "Vedomosti" announced that Gazprom had decided not to buy out any shares of Eural TransGas and that a British company, JKX Oil and Gas, had decided to buy an unspecified number of shares of Eural TransGas together with the company Benam Holdings. The newspaper "Vremya novostei" on 27 June announced that JKX was buying 20 percent of Eural TransGas stock, a number which was denied by JKX. A Gazprom spokesman told "Vedomosti" that Gazprom had insisted on buying 50 percent of Eural TransGas stock with Naftohaz Ukrayiny buying the other 50 percent, but that Naftohaz would only agree to 40 percent each and wanted to sell "20 percent of the shares to an unknown company," so Gazprom decided not to participate in the buyout.

JKX Oil and Gas is presently involved in a gas-extraction project in Ukraine's Poltava region and in 2002 extracted a modest 290 million cubic meters of gas (compared to the 38 billion cubic meters Ukraine was buying from Eural TransGas of Turkmen gas). According to JKX, Naftohaz Ukrayiny owns almost 9 percent of their shares. In a press release sent out by JKX on 20 June, the company's CEO, Dr. Paul Davies, is quoted as saying, "I look forward to finalization of this important step for the company which will send a positive message to all foreign investors in Ukraine." JKX Oil and Gas is listed on the London Stock Exchange and has license interests in the United States. When asked by "RFE/RL Organized Crime and Terrorism Watch" about the alleged connections of Eural TransGas to the Mogilevich crime group, a person responsible for JKX's public relations declined to comment on these alleged connections and replied that the company was doing everything in the interests of its shareholders, adding that no decision had yet been reached and that JKX was merely thinking of participating in this transaction.

Benam Holdings

JKX Oil and Gas's partner in the proposed buyout of Eural TransGas shares, Benam Holdings, is an unknown holding company which, as mentioned earlier, was incorporated on 4 December 2002 (at the same time that Eural TransGas was being formed outside of Budapest) in France (58 rue Pottier, Le Chesnay) listing its CEO as Franck Ben Hamou. The other two partners were Marie Ben Hamou and Brigitte Goldberg. The company stated that it had one employee at the company headquarters on rue Pottier. According to a report on 25 June by AFX News service, "Benam Holdings Ltd. operates in the Ukrainian and Central Asian gas markets." When asked about Benam Holdings' operations in this market, nobody at either Gazprom or Itera had ever heard of the company. The suspicious nature of Benam Holdings and its date of formation leads some analysts to conclude that Benam was established as part of the Eural TransGas scheme from the very beginning.


(The Ukrainian state-owned gas monopoly, Naftohaz Ukrayiny [NAK], is suspected by some of having been a main conduit of illegal money paid to the president of Ukraine, Leonid Kuchma, for his successful re-election bid in 1999. In 2002, Naftohaz was accused of having aided entree into the gas business of reputed crime boss Semen Mogilevich, who allegedly controls Hungarian-based Eural TransGas. This is the concluding part in the series.)

Once the Western and Russian media began exposing the alleged criminal connections in the delivery of Turkmen gas, Naftohaz began taking measures to save its reputation. In late June, a hastily arranged listing of the "Best Ukrainian Companies" was published and Naftohaz came in first. Then, Naftohaz Chairman Yuriy Boyko announced that the company would be requesting Moody's to give it a credit rating so that the company could expand its business. A number of articles appeared in the "Zerkalo Nedeli" newspaper praising the accomplishments of Boyko's management of the company and restating the "positive" aspects of the deal with Eural TransGas. One of Boyko's achievements played up in the articles is the credit line opened for Naftohaz at Gazprombank, a subsidiary company of Gazprom.

Despite Naftohaz 's chronic debts (about $1.4 billion), in January, Gazprom opened a credit line for Naftohaz in Gazprombank for $200 million at an annual interest rate of 12 percent-13 percent. (The line was for the pre-export financing of gas deliveries to the European market.) An analysis of Gazprom's hard-currency credit agreements with Russian commercial banks that extend its short-term loans to cover a lack of working capital, shows that the interest rate is 18 percent-19 percent. Gazprom stood to lose about $10 million on this deal from the difference in credit terms alone.

It has been alleged by executives in the Russian gas industry that the Naftohaz management uses this credit not only for pre-export financing, but also to repay Gazprom for outstanding obligations. The conditions for returning the loan and the interest rate have not been made public. There is also the question of whether this line of credit is appearing in Naftohaz's books as income. Since no independent Ukrainian agency can audit the company's books, the answer to this remains vague.

In late 2002, an announcement was made that, by 1 July, Naftohaz would settle its debt of $1.4 billion to Gazprom by transferring over the amount of the debt in Eurobonds. However, 1 July came and went and no bonds were transferred. The reason given by Naftohaz was that Gazprom was looking for a way to escape paying taxes of approximately $400 million on this debt repayment. Interestingly enough, the Russian media did not comment on why a state-owned company would refuse to pay taxes to the state that owned it. An obvious question comes to mind: do Russian state-owned companies enjoy a privileged status with the Putin administration, especially if they make substantial contributions to political parties that support the president?

On 27 June, Interfax Ukraine reported that Naftohaz Chairman Boyko announced in London that his company would be expanding its gas export business by 400 percent in 2004. According to him, the company exported 3.3 billion cubic meters (bcm) of gas in the first five months of 2003. Of this, about 2 bcm were exported to Germany, 0.6 bcm to Hungary, 0.4 bcm to Romania, and 0.3 bcm to Poland.

According to Interfax, Boyko said that Naftohaz had signed a contract with the Russian gas supplier Gazexport on the export of 5 bcm of gas. In addition, Interfax reported, "Naftohaz is independently exporting about 1.5 bcm of gas according to three contracts signed with unnamed Polish, Hungarian, and Romanian companies." What Boyko failed to mention at the press conference was how all this gas suddenly came into his company's possession. Many analysts suspect that Naftohaz did not have 5 bcm of spare gas to sell. In an interview with the "Kyiv Post" on 17 July, Andras Knopp, a Eural TransGas official, admitted that the gas that Naftohaz was selling to Germany was of Turkmen origin.

Earlier, in an interview for the "Delovaya Stolichya" newspaper on 10 June 2002, Boyko replied to a question about gas sales: "We only sell gas which we have extracted ourselves. We are allowed to export only that gas which we ourselves are able to extract.... [W]hat would it look like in Ashgabat [Turkmenistan] if we were to sell their gas somewhere else and the money from these sales did not go back to them?"

In reality, it is likely that Naftohaz was selling Turkmen gas to Germany which it had received from Eural TransGas. Naftohaz received from Eural 5 bcm of gas of the 14 bcm that Eural received as compensation for its fake transportation contract. Naftohaz then resold this gas to Gazexport, who then sold it on to Ruhrgas AG and Wintershall AG in Germany. In the process the Ukrainian and Russian treasuries were deprived of millions of dollars. Turkmenistan was the biggest loser of all since its gas was being sold to Germany at approximately $119 per thousand cubic meters, while Naftohaz paid Eural just $44 per thousand cubic meters for this Turkmen gas.

PRE-ELECTION DIRTY TRICKS

By May, pre-election maneuvering had begun in Ukraine with President Leonid Kuchma announcing that he wanted to reform the political system of the country. These reforms, according to the opposition, boiled down to the president trying to find a way of insuring he didn't go to prison after the elections.

One of the items on Kuchma's reform bill was the creation of a bicameral parliament where former presidents would serve in the upper house and be granted immunity from prosecution for life. Shortly afterwards, Kuchma announced his proposed reforms and the country was plastered with billboards urging the population to support the president's initiative to "clean up" the country's unwieldy politics. The question soon arose: who was paying for these billboards? The opposition began asking this question more often and more loudly. The advertising agencies shrugged their shoulders and said that they had no idea who had paid them the huge fees for these billboards. The president's administration claimed to know nothing about this matter and refused to discuss it with the press or parliament.

Then another scandal broke out: some unknown person or persons were printing and mailing leaflets with statements attributed to Viktor Yushchenko, the leader of the opposition. The leaflets were fakes and meant to discredit Yushchenko in the eyes of voters. Millions of the bogus leaflets were distributed through the mail. Again the question arose: at whose cost?

In interviews with "RFE/RL Organized Crime and Terrorism Watch," and other media outlets, members of parliament have stated that lawmakers are being offered bribes to vote in favor of Kuchma's reforms.

CONCLUSIONS

If any conclusions are to be reached from the above, Kuchma and Boyko (in early August, Boyko was promoted by Kuchma to become the right-hand man to the deputy prime minister for fuels and energy, while keeping his position at Naftohaz) may have convinced Alexeii Miller, the head of Gazprom, to replace Itera, the traditional transporter of Turkmen gas to Ukraine, with a new unknown company, Eural TransGas. They may have known in advance that Eural would not transport this gas, but function as a money launderer. By doing so, Naftohaz, a state-owned company, appears to have diverted millions of dollars from the Ukrainian treasury.

As this deal was being conceived, Naftohaz allegedly brought into the gas business a man wanted by the FBI and indicted in the United States for securities' fraud, and placed him in a crucial position in the business chain used by Russia to sell gas to Western Europe. It remains to be seen how law enforcement officials in Germany and England will look upon this.

Naftohaz has often been criticized for a lack of transparency in its operations. Yet, this criticism has been ignored and does not seem to prompt the reforms so badly needed in the Ukrainian energy sector. However, the current and former management of Naftohaz has never been prosecuted by the government for any wrongdoing. It reportedly also has political connections to the highest levels of the Ukrainian government.

The money earned from such dubious endeavors -- and possibly other such schemes -- seems to be the source of funding for illegal political operations in Ukraine.

The energy business in the former Soviet Union has the well- earned reputation of being the most corrupt sector of the economy. From Kazakhstan to Gazprom to Yukos and Unified Energy Systems and on to Naftohaz, scandal after scandal has emerged implicating men elected to the highest levels of government in fraud, bribery, and outright theft. At the same time, there is evidence of Western oil and gas companies being involved in such activity as the recent arrest of the U.S. banker James Giffen for his alleged activities in Kazakhstan indicates.

And while former Ukrainian Prime Minister Pavlo Lazarenko, handpicked to be the head of government by Kuchma, is awaiting trial in San Francisco for allegedly stealing and then laundering hundreds of millions of dollars from the Ukrainian energy sector, others are continuing his legacy.





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Roman Kupchinsky is an RFE/RL senior analyst and editor of RFE/RL's "Crime and Corruption Watch."


Republished by Ukrainian Archives & News with the permissions of
Radio Free Europe & Radio Liberty,
1201 Connecticut Ave., N.W. Washington DC 20036.
http://www.rferl.org/


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I don't think there's anything to worry about here - quite the reverse in fact. A storming couple of weeks and no signs of slowing down yet. Anyone remember Cairn...?

morning all things are fine with jkx imho, price just consoladateing getting ready for the nexed leg up keep smiling i hold so dyor [hd]

It looks to me as though the falls this morning have been slightly overdone. Anyone got any views on this?