Ukraine's Poroshenko defends record after Panama leaks
* Poroshenko's law firm set up offshore company
* Poroshenko defends commitment to transparency
* Law firm: tax evasion allegations are groundless
* Lawmakers: leaks will erode trust in Poroshenko
* Radical Party says Poroshenko could be impeached
Ukrainian President Petro Poroshenko defended his commitment to transparency on Monday after lawmakers called for an investigation into allegations contained in the so-called Panama Papers that he had used an offshore firm to avoid tax.
According to the International Consortium of Investigative Journalists, Poroshenko set up an offshore company to move his confectionery business, Roshen, to the British Virgin Islands in August 2014 during a peak in fighting between Ukraine and pro-Russian separatists.
In response, Poroshenko said he handed over the management of his assets to consulting and law firms on taking office.
"I believe I might be the first top official in Ukraine who treats declaring of assets, paying taxes, conflict of interest issues seriously," he tweeted.
The law firm tasked with managing the sale of Roshen said the offshore firm was set up in accordance with Ukrainian law.
"The creation of a foreign structure does not affect the tax liabilities of the Roshen group in Ukraine, which continues to pay taxes," Avellum said in an emailed statement.
"Any allegations of tax evasion are groundless."
A senior official in the General Prosecutor's office said the leaked documents did not show Poroshenko committing any crime.
Lawmakers, including from within Poroshenko's own faction, called for the creation of a parliamentary committee to investigate the allegations, which surfaced after a global leak of documents from a Panama-based law firm over the weekend.
Under Ukrainian legislation, only parliament can initiate an investigation into a sitting president.
"It is the height of cynicism to open offshore companies at a time when hundreds of our soldiers are dying," leader of the populist Radical Party, Oleh Lyashko, said on Facebook, adding any investigation could lead to Poroshenko's impeachment.
The support of the Radical Party may be crucial in Poroshenko's efforts to cobble together a new government and avoid a snap election.
The president has made several attempts to oust Prime Minister Arseny Yatseniuk's government, saying it has lost the trust of the people, but he will likely need the support of smaller parties to hold a parliamentary majority.
The IMF, the United States and the European Union are becoming frustrated with Ukraine's patchy performance in tackling graft, and the Fund has threatened to halt aid until matters improve.
"The revelations of Poroshenko's offshore accounts will further destabilise the Ukrainian government, which has been in a state of crisis for over a month," said Daragh McDowell of the risk consultancy Verisk Maplecroft.
"Poroshenko's credibility in the eyes of Ukraine's Western allies will take a massive hit at a time when political infighting has already delayed the release of IMF loans."
Poroshenko, who came to power after protests in 2014, has already faced criticism over Roshen for not selling it despite promising to do so. Last year Poroshenko had said unfavourable market conditions made selling Roshen difficult.
"I think it will have an impact in terms of further erosion of confidence in Poroshenko," Serhiy Leshchenko, a lawmaker in Poroshenko's faction, told Reuters.