On sale now at amazon.com

Dodo co-founder Igor Gilenko wanted in Ukraine over bank fraud



 Igor Gilenko, who helped to found the innovative Dodo internet service provider, is under investigation in Ukraine for bank fraud.
•           The Australian
•           MARK SCHLIEBS

He was a star in Melbourne — a dashing silver-haired businessman who had MPs and business veterans fighting in his corner.
There was a place for him on a BRW Young Rich List, thanks to his co-founding of innovative cut-price internet provider Dodo, and his lavish lifestyle and penchant for deep-sea diving saw him travel the world.
His charm and intelligence were Igor Gilenko’s biggest assets.
But now Gilenko, 50, has vanished, an international fugitive linked to powerful Russian mobsters — including the biggest of them all.
He is believed to be hiding somewhere in Moscow and refusing to return to Ukraine, which is investigating massive bank fraud it alleges was carried out by him and billionaire gas oligarch Dmytro Firtash, whom the US Federal ¬Bureau of Investigation is pursuing.
And one of Gilenko’s obscure Melbourne companies was ¬repeatedly named by the FBI in the 2003 indictment of Russian mobster Semion Mogilevich.
Gilenko’s flight to the country of his birth as an inter¬national fugitive has shocked friends and supporters back in Melbourne.
“I don’t know his business dealings,” says fellow Dodo co-founder Larry Kestelman. “He seemed like a very legitimate businessman, and that’s what I still believe of him. I don’t know what his other dealings were.
“He was very smart and I thought he was a good businessman. He was very smart and well-educated.”
Another Australian who knew him through family connections says Gilenko is a clever and amiable businessman. “He is charming, yes. And very, very motivated and driven,” he says.
“I don’t believe any of those ¬allegations are true … Ukraine is a very complicated country.”
At his peak, Gilenko rubbed shoulders with Ukrainian presidents and the financial elite. He was named on the BRW Young Rich List in Australia at the same time as he was being described as a “financial whiz-kid” in Kiev — his home away from Melbourne.
In Australia, he was best known for Dodo, which eventually sold for $203 million in 2013 after he gave up his stake three years ear¬lier. In Ukraine, he was the popular chairman and chief executive of a major bank.
But Gilenko was not involved in the day-to-day running of Dodo and rarely met his fellow co-founders. Kestelman says he has not spoken or dealt with Gilenko for many years.
Greg Hywood, chief executive of Fairfax Media, once wrote an opinion piece calling for an overhaul of Australia’s immigration rules after the government refused to give Gilenko citizenship. At the time, Gilenko had been a permanent resident here for seven years and Hywood was a senior bureaucrat in the Victorian government.
“He has poured $2.5 million into the company (Dodo) but is ¬denied citizenship because the international travel associated with his work keeps him out of the country much of the time,” -Hywood wrote in The Age in February 2005. “The minister could make an exception, but won’t.”
Melbourne Labor MP Michael Danby also lobbied then-¬immigration minister Amanda Vanstone to grant Mr Gilenko citizenship. In a letter to the minister, Danby criticised the Immigration Department’s grounds for refusal — that “evidence provided by Mr Gilenko does not demonstrate that his business ventures offshore bring any significant benefit to Australia”.
“This ruling is somewhat like arguing that Frank Lowy adds ‘nothing’ to Australia because a large part of Westfield’s holdings are in the USA,” Danby wrote, ¬according to Hywood’s piece.
Danby tells The Australian that Gilenko was eligible for citizenship at the time.
“Our records show that in 2004 Igor Gilenko fulfilled the legal requirements of Australian citizenship and was a senior executive with Dodo, the reputable and still very active local telco service,” Danby says. “We have no idea of Igor Gilenko’s ¬activities since that time and more than a decade later.”
Hywood tells The Australian: “An elected federal representative asked me to consider the case of one of his constituents and also the broader implications of the way Australia attracts and retains skilled immigrants. The broader discussion of attracting skilled ¬immigrants is as relevant today as it was in 2005. Given the particular case is a matter of legal interest it would be inappropriate of me to comment further.”
It was shortly before the collapse of the Soviet Union that ¬Gilenko first started doing business in Australia. He was born and raised in Moscow, graduating from that city’s Institute of Electrical Technology in 1988. His initial connection with Australia is still a mystery. It is suggested he knew people who had migrated from eastern Europe to Melbourne.
It was in 1991 while he was still in Moscow that Gilenko, using his skills with electronics, became a director of an Australian company distributing computers and software. Investments in clothing and property development followed.
In 1993, he set up an obscure shelf company in Melbourne called Australian Finance Structure Pty Ltd and became its biggest shareholder.
It was this Gilenko company that was named in a 2003 criminal ¬indictment issued by a US grand jury — in connection to the most powerful eastern European criminal in the world.
Even now, few outside law ¬enforcement know that a Latvian bank account in that company’s name allegedly received $US1.8m as part of large-scale stock fraud carried out in the US and Canada, allegedly under the direction of Semion Mogilevich.
So notorious is Mogilevich, formerly of Budapest but now in Russia, that the FBI last year -removed him from their top 10 most wanted list, conceding it was unlikely to help bring him to justice.
The former Russian spy Alexander Litvinenko, who infamously was killed from polonium poisoning in London 10 years ago, once claimed Russian President Vladimir Putin “is hiding Mogilevich”.
On March 27, 1998, two alleged accomplices of Mogilevich — Jacob Bogatin in Philadelphia and Igor Fisherman in Hungary — communicated via telephone. FBI agents listened in.
“[The men were] discussing Russia and Ukraine licensing ¬arrangements and the use of a company named ‘Australian ¬Finance Structure’ to facilitate the transfer of money,” the 2003 ¬indictment states.
The FBI was investigating share fraud.
Several weeks later, the two men again discussed the company over the phone, “in which Bogatin advises the Australian company is an obvious ‘sham’.” But the company name was not fake. It was registered in Melbourne five years earlier. Its dominant shareholder was listed as Igor Gilenko.
Eventually, on June 30, 1998, about $US1.8m (the equivalent of $3.6m today) was transferred “for the Russian licensing agreement” to the Latvian bank account of “Australian Finance Structure Pty Ltd”, according to the Mogilevich indictment.
Mogilevich was never brought to trial over these matters. The FBI and the US Justice Department both refuse to provide any further details of the telephone conversation, the funds transfer or the company. “As this is still an open case, we’re unable to provide those details, in any format,” an FBI spokeswoman says.
At the time of the transaction, Gilenko was a director and the biggest shareholder of the company.
In Melbourne, Gilenko lived in plush suburbs before moving into a flash St Kilda Road apartment in the city with his Russian wife Elena Zavelov and her two sons from a previous relationship — one of whom became a founding director of Dodo.
But his struggle to secure an Australian citizenship and his ¬expansion of Bank Nadra — of which he was chairman and chief executive since 1997 — prompted him to spend more time in Ukraine.
“Igor was only in Australia several times,” one associate in Melbourne says. “It’s not like he spent a lot of time here.”
In Kiev, Gilenko rubbed shoulders with Ukrainian and eastern European elite and was hailed as a financial “wonderkid” for his management of the bank. But the global financial crisis in 2008 forced the bank to seek bailouts from Ukraine’s central bank — before billionaire Ukrainian gas oligarch Dmytro Firtash swooped in to take control of Nadra.
The National Bank of Ukraine repeatedly bailed out Nadra over six years, to the tune of $560m. But much of the bailout money given to Nadra by the National Bank vanished and an arrest warrant was issued for ¬Gilenko in 2009.
One person who remained in contact with Gilenko after the ¬arrest warrant was issued says he believed the allegations were politically driven and were baseless.
A senior Ukrainian government source tells The Australian that Firtash and Gilenko are both under investigation in a case ¬involving ¬alleged defrauding of the country’s central bank.
“Nadra collapsed at autumn 2009 when Gilenko was the chief executive. The investigation -period includes 2008-2014,” the source says. “Mr Igor Gilenko is wanted now by national police.”
Ukrainian investigators says officials from the Trasta Komercbanka bank in Latvia — the country where the account for Australian Finance Structure ¬allegedly received money from Mogilevich’s alleged share fraud — were also suspects in the Nadra fraud investigation.
Asked if he was surprised that Gilenko set up a company that was named in the indictment of -Mogilevich, the Ukrainian government source said: “No, because (the) connection between Firtash and Mogilevich is a common known fact.”
This statement appears to be based on a 2008 diplomatic cable, released by WikiLeaks, sent by then US ambassador to Kiev ¬William Taylor, in which he says Firtash had admitted links to -Mogilevich.
“Firtash acknowledged that he needed, and received, permission from Mogilevich when he established various businesses, but he denied any close relationship to him,” Taylor says in the December 2008 diplomatic cable.
Firtash has strenuously denied that such a conversation took place and says he had no direct or indirect business dealings with Mogilevich.
According to other cables, Firtash was seen as controlling the bank since late 2008. He claims to only have taken over the bank in 2011, paying $400m to secure a 89 per cent stake, according to a statement released at the time.
Firtash is widely seen as using his massive business interests to influence Ukrainian politics, candidly expressing support for pro-Moscow candidates. He made his fortune as a co-owner, with Gazprom, of gas middleman Ros¬UkrEnergo.
“As co-owner of gas intermediary RosUkrEnergo, Firtash is widely believed to be serving as a front man for far broader interests,” a November 2008 cable from the US embassy in Kiev said.
“In the case of Nadra, Firtash is sufficiently cash-rich to finance the purchase on his own, but the suspicion remains that in his major business dealings he ¬remains at least politically ¬indebted to the ¬forces that helped him rise so quickly.”
He was arrested in Austria on a US extradition warrant — issued over foreign bribery charges laid in 2013, which he says are untrue — just four days after the culmination of 2014’s Maidan revolution in Ukraine.
A Vienna judge refused last year to extradite him and ruled the FBI’s bid was politically motivated and tied to the unrest in Ukraine.
As for Gilenko, his high profile life abruptly came to a halt.
Reports in Ukraine stated that Gilenko flew to Melbourne when investigators began sniffing around Nadra but there is no confirmation that this ever happened.
One Melbourne man says it is several years since Gilenko set foot in Australia, and he believes he remains in Russia.
He has split up with the woman he helped bring to Australia, who is believed to be in Melbourne with one of her sons. They both have Australian citizenship.
The last news about him comes from 2010.

As Gilenko deleted his social media profiles, Russian authorities reportedly located him outside of Moscow. But they refused to ¬detain Gilenko. He was a Russian citizen and thus could not be -extradited.