Sense Bank

Peter Hitchens writes:

Our one-time Premier, Elizabeth the Brief, otherwise known as Liz Truss, has now become the great Apostle of Freedom of Speech.

On the British TV station GB News, she has been calling fervently for such freedom. And not only there. In the US she has a growing audience of libertarian admirers.

But what would her new fans do if they discovered that she had imposed a draconian and endless penalty on a British citizen, for saying things she disliked? How would they react if they found she is now uninterested in his deepening plight?

Let's get this quite straight. In the US, the First Amendment to the Constitution would bar any government from punishing anyone from speaking freely. There's more. Ms Truss now says explicitly that she wants a First Amendment here.

In June, she appeared, all smiles in a frilly shirt, on GB News, and argued that very case. You can still watch her doing so on YouTube. She said free expression had been undermined by legislation and institutions, that people should be able to express views without fear of state silencing, and that power had shifted too far from elected politicians to courts.

Is that so? What then of the British individual, Graham Phillips, 47, now exiled and impoverished thanks to a decision taken by Ms Truss, who, as Foreign Secretary, used her powers to sanction him? It is an amazing case.

Real, harsh, state cruelty is surely something from the distant past, or from fiction – Banishment For Life, The Man In The Iron Mask, Exile or, of course, Franz Kafka's sinister story about a man pursued day and night by dark officials for an unnamed crime. Surely that's all buried in the past, or at least limited to despotisms such as Russia?

How glad we all should be that such things have come to an end. Yet they have recently made a modest comeback, in Britain of all places. And they have done so on the say-so of freedom-loving Liz Truss.

Let me tell you about Mr Phillips, the man she punished, now the Exile of Mariupol. British born, he used to be a junior civil servant before moving to Ukraine in 2010, where he first taught English and then worked as a journalist. When the war broke out, his largely pro-Russian video-blogging saw him kicked out of the country.

He now lives in a semi-derelict building in Mariupol, a war-ravaged city in Russian-occupied Ukraine, which is visited almost nightly by bomber drones. He lives largely on the charity of neighbours.

He is not, in my view, a very nice man, and I do not like him. Yet, as the great US Supreme Court Judge Felix Frankfurter once said: 'The safeguards of liberty have frequently been forged in controversies involving not very nice people.'

Mr Phillips has done some wrong and stupid things and has expressed some foolish opinions. For me, his worst action was his cruel interrogation of a badly wounded Ukrainian prisoner of war, shown on his video blog.

Others have condemned his interview of Aiden Aslin, a British citizen who had been fighting with Ukrainian armed forces and was captured by the Russians. It has been suggested that the interview was a breach of the Geneva Conventions. But no action has been brought against Mr Phillips on those grounds.

He has been convicted of no crime. No police officer has arrested him. He has never been charged with an offence against our laws. No jury has found him guilty.

Yet in July 2022 Liz Truss sanctioned him for what she saw as his Putinist propaganda. The official wording says that his offence was to 'produce and publish media material'. It's a direct penalty for writing, speaking and publishing – normal in totalitarian states but not here.

The decree complains that this material 'supports and promotes actions and policies which destabilise Ukraine and undermine or threaten the territorial integrity, sovereignty or independence of Ukraine'. Who knew a few video blogs had such power? Ukraine remains remarkably stable.

When Mr Phillips tried to fight this, the High Court explicitly accepted that the sanctions interfered with his human rights under Article 10 (freedom of expression), Article 8 (private/family life), and Article 1 of Protocol 1 (property). But the judge ruled that this was proportionate and lawful in pursuit of the legitimate aim of 'protecting UK national security and supporting Ukraine'. So much for 'human rights', when they matter.

And so the Foreign, Commonwealth and Development Office (FCDO) has punished him with great severity.

He is forbidden by law to earn money, or to pay for anything. His bank account is frozen. We are all likewise forbidden by law to pay him any money.

He cannot return to England because he cannot buy a plane ticket, which – together with Ukraine and the European Union both banning him from entering their airspace – means he's trapped in Mariupol.

What would Liz Truss’s applauding US audiences make of her action in exiling Mr Phillips for expressing an opinion she personally did not like? And what does she say about all this now?

What would Liz Truss's applauding US audiences make of her action in exiling Mr Phillips for expressing an opinion she personally did not like? And what does she say about all this now?

Likewise, he is banned from paying any bills, such as the council tax due on his London home – a debt that Islington Council demands he pay. In the most recent act of this farce, his UK bank says that it will not take payment instructions from him unless he comes to England and gives them in person. For obvious reasons, he cannot do this, lest he breaks the law.

Just the other day, some rather brave and generous lawyers, acting without fee, argued that the council should cease their pursuit. We await the judgment. But if the court rules against him, it is not clear what will happen to his home. If he were a convicted prisoner, sitting in jail for a crime of violence or dishonesty, which he isn't, he would be exempt from that very same council tax.

Nor is there an apparent end to his sentence. No limit was fixed or has ever been stated. And there is no obvious lawful way of ending it.

He is, as far I can discover, the only person in the world being punished in this way. All the other people sanctioned by their own states have second passports and can dodge the effects by living out of their reach.

At the time of the sanctioning, Ms Truss was a militantly pro-Ukraine Foreign Secretary, once posing in Moscow in a fetching fur hat, despite it being quite warm weather. Soon afterwards, she famously became Prime Minister, and soon after that, even more famously, she became Not Prime Minister.

In the turmoil of her life since then, has she somehow forgotten that day in July 2022 when she approved the decree sending Graham Phillips into a bottomless chasm of unfreedom, because of some opinions he had expressed about the Russia-Ukraine war?

What would Liz Truss's applauding US audiences make of her action in exiling Mr Phillips for expressing an opinion she personally did not like? And what does she say about all this now?

Well, like so many in the political realm, she does not speak directly to people such as me, and instead I have to rely on her Representative on Earth, known as 'sources'.

Those sources say that Ms Truss, so talkative about liberty on public platforms, has no comment to make beyond referring me to the Foreign Office – whose stonewalling responses on this matter I have already many times experienced.

So much for Ms Truss, the born-again libertarian.

And all for what? As Mark Hollingsworth writes:

In a sparsely furnished four-room apartment on the 18th floor of 9a Hrushevskoho Street, Kyiv, several well-connected businessmen are discussing deals involving some of Ukraine’s most powerful politicians and officials. Meanwhile, anti-corruption investigators are listening in via a concealed bug. The contents of the 1,000 hours of conversation that they record are shocking. They reveal large-scale war profiteering among President Zelensky’s inner circle. In one case concerning the state nuclear company, Energoatom, contractors were forced to pay an extra 10-15 percent in kickbacks in order to avoid contracts being blocked or cancelled.

The recordings were made by the National Anti-Corruption Bureau of Ukraine (NABU) and the Specialized Anti-Corruption Prosecutor’s Office (SAPO) — the independent prosecutorial body that oversees and prosecutes NABU’s cases — as part of Operation Midas, a 15-month investigation into corruption within Ukraine’s energy sector, launched in 2024. NABU has implemented an unorthodox communications strategy, revealing information in episodes akin to a drama series like Homeland and giving suspects nicknames like The Surgeon, The Professor, The Rocket and Che Guevara.

As only a section of the transcripts has been published, the full extent of the corruption is still not known. However, the nine suspects named in the recordings so far are uncomfortably close to Zelensky. These include his former chief aide Andriy Yermak; former defence minister Rustem Umerov; former deputy prime minister Oleksii Chernyshov; and Tymur Mindich, the owner of the infamous apartment and the President’s former business partner.

So far, detectives have conducted 70 searches of premises where they seized $4 million in cash, hundreds of documents and mobile phones. Bail has been posted only to two of the nine suspects. “This is deeply regrettable”, said Kaja Kallas, the EU’s representative for Foreign Affairs, as the revelations became public last November. “It is literally the people’s money that should go to the front lines.”

All this has been deeply uncomfortable for Zelensky — who responded by announcing plans to clean up the energy sector. But many of his attempts to distance himself from the scandal have backfired. In July last year, crowds took to the streets holding homemade cardboard signs in protest after the Ukrainian parliament voted to strip NABU of its independent status, widely seen as an attempt to stem further revelations. This “Cardboard Maidan” reemerged last month after Zelensky sacked the popular modernising defence minister, Mykhailo Fedorov, who had cracked down on corruption by making procurement of weapons more transparent. Zelensky has so far opted not to reinstall Fedorov in spite of the protests.

And there are more revelations to come. One MP, Yaroslav Zhelezniak, has said he possesses more evidence and plans to release more secret recordings confirming suspicions that corruption is endemic in wartime Ukraine. Last year a Gallup poll put Zelensky’s approval ratings at 67% — lower than at the outset of the war, but still incredibly high compared to other world leaders. However, the same poll showed 84% of Ukrainians believed fraud and bribes were widespread throughout the government. And this year, a poll found 54% of Ukrainians citing corruption as the biggest threat to the country — compared to 39% who considered war the greater peril.

Meanwhile the scandal refuses to go away — indeed, it threatens to destabilise Ukraine at a critical moment. Ukraine’s long-range drones have provided a strategic advantage in the war and its bombing of oil refineries has created a nationwide fuel shortage in Russia. Meanwhile Zelensky’s diplomacy has been starting to bear fruit in Washington, with the Senate recently voting overwhelmingly in favour of sanctions on Russia.

Zelensky was, of course, elected President in 2019 as the anti-corruption candidate — a comedian who could portray himself to the Ukrainian people as the anti-establishment outsider. On the international stage, he has been hailed as a hero for standing up for democracy and liberty and projecting Ukraine as the shining antithesis to Vladimir Putin’s mafia-like authoritarianism. All of which makes him uniquely vulnerable to the charge of hypocrisy.

While there is no evidence implicating Zelensky himself, several of his former business partners and senior members of his Servant of the People party have escaped corruption charges by fleeing abroad, leading to claims they were tipped off by government insiders.

One of them is Tymur Mindich, the owner of the infamous flat bugged by the state anti-corruption investigators. A former business partner of Zelensky, Mindich is the key protagonist in Operation Midas — indeed, the investigation tends to be referred to as The Mindich Tapes in Ukraine. Mindich fled to Israel just before being charged with masterminding the $100 million scheme that diverted money intended to fortify energy infrastructure against Russian attacks into kickbacks for corrupt officials. He also lobbied the defence minister to award military contracts to Firepoint, a company under his control which produces critical defence equipment. Ukraine has sanctioned Mindich and demanded his extradition from Israel in order that he can face justice; Mindich in turn has attempted to sue his former friend, Zelensky.

Another central figure is Andriy Yermak, the massively influential former chief of staff to Zelensky once regarded as Ukraine’s second most powerful man. “He virtually ran the country”, one Ukrainian businessman told me. Codenamed ‘The Surgeon’, Yermak, an official suspect, has been arrested and last month posted bail of £2.3 million. He dismisses allegations against him as “unfounded”.

The most explosive of the tapes is a conversation between Mindich and a woman named Natalia, who is apparently helping to oversee construction of four luxury villas near Kyiv, apparently built with the proceeds of embezzlement. It appears from the transcripts that one of the villas was intended for Mindich, one for Yermak, and another for the former deputy prime minister, Oleksiy Chernyshov. At one point, Natalia says that the interior structures of “Andriy’s” (i.e. Yermak’s) house have already been completed. At another, she mentions that a fence now separates Mindich’s villa from “Vova’s” — a common short version of Volodymyr that many have taken to mean Zelensky.

Zelensky has denied all knowledge of Mindich’s schemes and called for any corrupt officials to be jailed. So the most plausible explanation is that the President has shown poor judgment in choosing his closest advisors. To some extent this is understandable. He inherited a legacy of endemic corruption in Ukraine whereby bribes were already institutionalised, the judiciary was compromised and politically connected oligarchs routinely ripped off the people by obtaining valuable state assets for a fraction of their real value. Indeed, the very existence of organisations like NABU; the freedom of Ukrainian media to pursue the revelations; and the street protests that have been allowed to proliferate are in themselves evidence of the strength of Ukraine’s commitment to transparency.

Nevertheless, the charges against his closest friends have made it more difficult for Zelensky to distance himself from the case. This may yet become even harder as the repercussions of one Ukraine’s biggest and unnoticed scandals make their way through the courts.

This affair concerns the state takeover of Sense Bank, one of Ukraine’s biggest, with assets of £2.3 billion. Prior to 2022, it operated as Alfa-Bank Ukraine, part of a group of banks associated with the Russian oligarchs Mikhail Fridman and Petr Aven, and owned via the Luxembourg-based, ABH Holdings. Following the Russian invasion, it was sanctioned and then effectively seized by the Ukrainian state — who bought up 100% of its shares for a nominal one hryvnia in 2023. “The deal will help safeguard the interests of the Bank’s depositors and ward off threats to Ukraine’s financial stability,” stated an official announcement.

The Mindich Tapes reveal that another suspect, Oleksandr Tsukerman, was instrumental in appointing new members to Sense Bank’s board. Last May, Tsukerman telephoned a businessman named Vasyl Vesely, apparently on behalf of Zelensky. Vesely, who was described as “a watcher” from the President’s office, named the people he wanted to join the board. “There should be six of our members there in this crowd of nine”, he told Tsukerman. “These are ours and one [director] will do everything if positioned correctly”

A month later, Ukraine’s cabinet appointed those six individuals to the Sense Bank board. When the tapes were released, Vesely’s involvement — apparently as Presidential fixer — cast doubt on the independence of the board of one of Ukraine’s biggest banks. The bank’s chairman, Mykola Hladyshenko, duly suspended himself. “Sense Bank appears to have been captured by domestic criminal networks with access to the highest levels of the Ukrainian state”, a Ukrainian banking analyst told me. “The suspicion is this bank has become a vehicle for laundering the proceeds of domestic corruption, including funds that may have originated in Western aid to Ukraine”. Like Mindich, Tsukerman fled to Israel and is now the subject of an extradition request by Ukrainian prosecutors.

Some central bankers are concerned at the broader implications of the case. “This is not a scandal about individual names [joining the Sense Bank board]”, wrote Kyrylo Shevchenko, former head of the Ukraine National Bank between 2020 and 2022, after the tapes were published. “It concerns a systematically important bank, a state asset and who controls financial institutions in Ukraine during the war.” He described his own tenure at the Ukraine National Bank as being subject to “constant” political interference when it came to appointing personnel.

The involvement of Zelensky’s former chief of staff, Yermak — now under investigation for alleged corruption — in nationalising Sense Bank is particularly problematic. The state took ownership of the bank in 2023 after passing a special law to nationalise any bank if it was insolvent. But the National Bank of Ukraine had already stated that Sense Bank was solvent.

And so the government passed a new law that enabled a bank to be declared insolvent if some of its shareholders were sanctioned. In the case of Sense Bank, three of its indirect shareholders, notably the Russian billionaire Fridman, were sanctioned and so the bank could be deemed insolvent despite the regulators stating it was financially sound. A month later, Sense Bank was nationalised and its properties, shopping centres and land were seized by the state, with a new CEO and board of directors installed.

In response, ABH Holdings filed a $1 billion lawsuit against Ukraine in the World Bank’s arbitration court. In essence, ABH Holding’s accusation is that individuals close to Zelensky, notably Yermak, used corrupt tactics of state capture to gain control of the bank. The investigative reporting platform, Follow the Money, has interpreted his a different way: as a Russian oligarch exploiting European treaties and US-based courts to sue a country that Russia has declared war on, effectively for behaving like Russia. Should ABH Holdings win, it could open a “Pandora’s box” of oligarchs using lawfare to target Ukraine, warn legal scholars quoted in the article. But noting this uncomfortable irony does not magic the problem away.

When asked about Sense Bank last year, President Zelensky told a Cabinet meeting that it “must be privatised”. But it hasn’t happened yet. The Ukrainian government has meanwhile requested the court hearings to be held in secret. ABH Holdings refuses and insists Ukraine abides by arbitration rules which states “confidentiality is neither agreed nor envisaged”. When the case is heard next year, the role of President Zelensky and his advisors will be revealed. If the Ukraine government loses the lawsuit, the award is likely to be in the hundreds of millions of pounds — a major dent in the war coffers.

But the importance of the Sense Bank case, the “Mindich Tapes”, and the far-reaching corruption investigation is more profound. Ukraine’s greatest strategic asset is not its military capability or territorial location. It is the moral clarity of its cause: that it is a democracy based on the rule of law, freedom and worthy of defending in the face of tyranny and brutality. But corruption is Ukraine’s fatal flaw. Unless Zelensky removes this cancer at the heart of the state, the West may find it increasingly difficult to defend and financially support Ukraine.