Ukraine detains energy pointman of ousted leader

Ukrainian police on Friday detained the powerful head of the Naftogaz state energy company on suspicion of embezzling at least $4 billion (2.9 billion euros) during the rule of ousted president Viktor Yanukovych.

Yevgen Bakulin's arrest came as the country's new Western-backed leaders seek to build credibility with Ukrainians who have lost faith in government after years of corruption left the ex-Soviet state mired in debt with one of the slowest growth rates in the emerging world.

Ukraine's Prime Minister Arseniy Yatsenyuk said days after taking power in the aftermath of Yanukovych's flight to Russia last month that he discovered empty state coffers and $70 billion in theft by the deposed president's "clan".

Interior Minister Arsen Avakov said in a statement published on his Facebook account on Friday that Naftogaz chief Bakulin was suspected of heading a "criminal group" whose members include other senior current and former Ukrainian government members.

"I am afraid that our thorough investigation is going to uncover simply colossal theft conducted by a large number of well-known people... who belong to both the past and present political class," wrote Avakov.

Naftogaz is Ukraine's primary importer of natural gas from Russia and currently owes about $1.9 billion (1.4 billion euros) to Moscow's state-run energy giant Gazprom.

The debt has seen Gazprom threaten to cut Ukraine off from natural gas shipments in a repeat of halts to supplies that also impacted Russia's western European clients in 2006 and 2009.

Naftogaz has come under heavy scrutiny from the new Kiev leaders who spearheaded three months of deadly protests whose primary aim was to rid Ukraine of corruption and to sever its ties to the Kremlin.

Avakov's statement was issued moments after Ukrainian media reported that prosecutors and police had searched the apartment of Ukraine's former energy minister Eduard Stavytsky.

The Ukrainska Pravda news site said Stavytsky was suspected of money laundering and abuse of power.

The site quoted undisclosed sources as saying that Stavytsky had fled to Italy shortly after Yanukovych left Kiev for Russia.

- Cash and jewelry -

Interior Minister Avakov said investigators had also seized more than $1.8 million (1.3 million euros) in cash after searching the premises of the first deputy head of Ukraine's health inspection service.

Avakov added that a separate sweep of the office of the former agriculture minister had uncovered $350,000 (250,000 euros) and "several wristwatches of high value of renowned world brands".

But analysts said that it was the Naftogaz probe that should resonate with the public most.

"Financial opaqueness has been a trait of Naftogaz for many years," independent energy policy analyst Volodymyr Saprykin told AFP.

"The company has always been handling huge amounts of state budget money and its managers have long been accused of corruption."

The analyst said former energy minister Stavytsky was especially close to Yanukovych while Bakulin had lost some of his influence during a change of command in the sector about a year ago.

Institute of Energy Research director Dmytro Marunych said Bakulin had long been suspected of delivering natural gas at a massive discount to energy trader Sergiy Kurchenko -- a billionaire who is viewed as one of the many members of Yanukovych's oligarchical "family".

"Naftogaz was essentially getting nothing in return in these deals," Marunych said in a telephone interview.

But Kurchenko's firm issued a statement on Friday calling the various ongoing investigations a "political campaign".