03/21/2014 06:51 pm ET Updated May 21, 2014

The Financial Overthrow of Ukraine

Despite all the swagger of Russia's Putin and the pro-Russian sentiments of many citizens of Ukraine living in Crimea, the people of Ukraine remain angry about the staggering sums of cash allegedly stolen from them by the country's former government leaders and their cronies.

According to a report in the Kyiv Post, Ukraine's new prime minister Arseny Yatseniuk accuses the previous regime of president Viktor Yanukovich of stealing $70 billion.

If this figure is accurate, then this is surely the largest theft in history.

As Ukraine's fortunes swirl in uncertainty, the U.S. government made an initial pledge of $1 billion in loan guarantees to Yatseniuk's administration, the EU is talking of support of $15 billion, while the International Monetary Fund and the European Bank for Reconstruction and Development may both provide additional sums. The government says it may need $35 billion to pay its bills this year.

But, before the new cash tap is turned on, there needs to be a major effort to determine how much has been stolen, where the cash is, how can it be repatriated, and what the truth is.

IMF Action is Urgent

The latter issue is especially important as the survival of the current Kiev government will crucially depend on its ability in the midst of Russia's pressure to get its economy up and running. It is vital that experts from the International Monetary Fund have total access to the books of the government and Ukraine central banks and reach some conclusions on the country's financial needs as swiftly as possible.

Meanwhile, the European Union plus Switzerland and Liechtenstein have frozen the bank accounts of 17 Ukrainians, including Yanukovich, his son, his cronies, former prime minister Mykola Azarov and other senior officials. These European authorities have provided no public details on where the frozen accounts are and how much cash is in them. It is highly probable that combined they only contain a fraction of the amount that Yatseniuk says has been embezzled.

Almost certainly, Ukraine investigators are now sifting through documents that they have found in Yanukovich's magnificent Kiev palace -- a palace so lavish that it astounded citizens when they got to visit it. According to a report in the Stuttgarter Zeitung of Germany, that focused on "The double life of Viktor Yanukovich," the former Ukraine leader for years flatly denied any ownership of companies registered in Austria and in Switzerland that in turn owned major coal mining companies in Ukraine. Now, according to this newspaper, documents found in the palace prove that these companies were fully owned by him and his friends.

Tracing the Stolen Assets

Tracing all the assets will be difficult without the full cooperation of a host of international banks and international law firms that specialize in creating dummy companies in many parts of the world, from Austria to Dubai to the British Virgin Islands. The sums are so vast that the bankers and lawyers who have handled the cash for the Yanukovich gang (what else can one call a group that has plundered on such a massive scale?) could have had no doubts that the money was stolen.

All Western countries have banking "know your customer" regulations in place that require banks to have full information on the legality of proposed new deposits before accepting them. The lawyers and bankers who handled the Ukrainian gang's cash may well be criminal co-conspirators and as the amounts are so big, then involvement of very senior bankers and lawyers is almost certain. I am skeptical about the extent to which they will now cooperate to disclose the deposits, let alone see them repatriated to Ukraine.

This is by no means the first case of formidable thefts of government funds by foreign autocrats. The UK investigative group, Global Witness, has been closely following the Ukrainian events, just as it has traced the money trails of many former government leaders who served themselves rather than their citizens. As Global Witness's Anthea Laswson has just blogged:"The key point is still not getting through to banks that accept dirty money, and governments that let them get away with it. If banks didn't take the cash, it wouldn't be possible for corruption to occur on such a massive scale."

The world's leaders in their 2013 summit meetings of the Group of Eight and the Group of Twenty stressed their determination to counter money-laundering. So far, they have been big on the talk, but slow on the walk. The Ukraine financial rape may prove to be a test case of their resolve to finally go after all the financial intermediaries that assist people like Yanukovich to launder stolen cash. New anti-money laundering initiatives are set for the agenda for the next G20 summit in Australia later this year and are currently being prepared by senior officials.

Forceful action to expose the Ukrainian thefts and to repatriate the stolen cash would also send a powerful signal to all those other kleptocrats who run governments in Afghanistan and Angola and Belarus and Zimbabwe and in many other countries and who act with impunity. They see little risk of having their foreign assets impounded. They steal on a wholesale scale from the people they have pledged to serve and then ship their cash out of their home countries. And, when they are deposed one of the first things that their successor governments do is to turn to Western governments and the IMF for new cash!