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18 Apr, 2024 12:11

Western tycoon claims Zelensky associates trying to extort millions of euros

Ukrainian authorities have accused a major online casino co-owned by entrepreneur Arnulf Damerau of tax evasion
Western tycoon claims Zelensky associates trying to extort millions of euros

One of the largest private Western investors in Ukraine has told the Financial Times that senior Kiev officials, including some from President Vladimir Zelensky's office, are trying to extort money from him.

Anglo-German businessman Arnulf Damerau co-owns Cosmolot, one of the largest online casino operators in Ukraine, which is being investigated by the country’s Economic Security Bureau (ESBU). In an interview with the British paper on Thursday, he alleged that senior Ukrainian officials some months ago had made to him what amounted to a criminal proposal. 

Cosmolot was founded in 2021 by entrepreneur Sergey Potapov, after the government of President Vladimir Zelensky legalized gambling, ending a ban that had lasted for over a decade. Damerau invested an undisclosed sum in the business last year, becoming one of the primary beneficiaries.

The Ukrainian authorities suspect Cosmolot of tax evasion. Last October, the ESBU raided the firm’s headquarters and in February it froze over $17 million in the company’s accounts, claiming it owed the government $30 million in back taxes. It alleged that copycat websites that share design and infrastructure with the online casino serve some of its clients, but do not report the proceeds that they generate. 

Damerau, who denies the allegations of tax evasion, claimed to the FT that in December a Ukrainian individual met him in Vienna and said that Cosmolot’s legal woes would disappear if half of the company’s shares were transferred to an offshore trust. The businessman said he informed law enforcement in the EU and the US about the situation.

The corruption, Damerau told the British newspaper, comes from a “minority” at the top level of the Ukrainian government, including in Zelensky’s office. Some reports in Western media have claimed that the president does not tolerate graft in his inner circle.

Critics of the Ukrainian leader point out that senior officials tend to get away with major corruption scandals in their departments, as was the case with former defense minister Aleksey Reznikov. He was removed from office last September, months after his ministry was accused of procuring military supplies at grossly inflated prices.

Zelensky’s office has championed the decriminalization of gambling, touting its benefits for the state budget. Cosmolot is the tenth largest taxpayer in the country, according to Damerau.

However, according to Ukrainian lawmaker Aleksey Goncharenko, the industry has become a national security threat. He claimed last month that some 90% of frontline troops suffer from a gambling addiction. Soldiers are paid relatively high salaries and do not have many ways to spend their money, so many of them reportedly turn to online slot machines to cope with the constant stress they face on the battlefield.