People in Ukraine often complain about the weakness of Western sanctions against Russia. Even the president talks about this: “Russia has learned to circumvent sanctions. In the missiles used against us, we see parts produced by many countries around the world.” However, Ukrainian sanctions are also often ephemeral.
About how businessman Vadim Ermolaev circumvented sanctions, about the tricks he used, and why there is a National Memorial War Cemetery here
Vadim Ermolaev is a 56-year-old agricultural baron, distiller and one of the largest developers of the Dnieper. A year before the full-scale invasion, Ukrainian Forbes estimated his fortune at $221 million. Ermolaev does business in Ukraine, but is not formally a Ukrainian businessman. He himself claimed that he renounced Ukrainian citizenship back in 2017, and since then he has only had a Cypriot passport.
“Why did this happen? I want to have international protection. The Ukrainian judicial system, to put it mildly, is not ideal, and the tax system is not objective,” Vadim Ermolaev explained his decision to Forbes magazine.
In all other interviews, he did not forget to remember what a patriot he is. He has houses in London and Cyprus, and in the summer of 2022, Ukrayinska Pravda published a video of its reader who met Ermolaev in Monaco in a Bentley for three hundred thousand dollars. Ermolaev also became a member of the “Monaco battalion”.
On December 23, 2023, President Zelensky enacted the decision of the National Security and Defense Council to apply “personal special economic restrictive measures” against Ermolaev. And later, in June, another one was added to the previously introduced restrictions. Simply put, they imposed sanctions for ten years.
According to the SBU, Ermolaev, through dummy people, re-registered his business in Crimea under Russian laws and for many years paid taxes to the budget of the aggressor state. For this, he received 16 different economic restrictions from Ukraine. Sanction number one is blocking of assets, a ban on disposing of one’s property and companies.
Nikolay Dushka is also a businessman from Dnepr, like Vadim Ermolaev. They had a common project in agribusiness. It ended with Ermolaev simply “squeezing out” this business, at least that’s what Dushka claims. The essence of the conflict does not matter. But it was thanks to the constant trials with Ermolaev that Nikolai Dushka was the first to notice that he began to re-register his businesses after the imposition of sanctions. It was completely impossible from a legal point of view, but it happened.
Fictitious transactions
In total, we are talking about hundreds of companies and several different, but similar schemes. To make it easier to understand what happened, we will look at it using the example of one very important company for Vadim Ermolaev. A significant part of his Ukrainian assets is registered to the closed venture fund "Technologies", which is the founder of 28 different businesses - from agricultural production to financial companies. And all this is owned by a Cyprus offshore company - Licita trading Co LTD. For many years, Vadim Ermolaev used this company to manage his businesses in Ukraine and was the sole founder and director there.
In early January of this year, Ermolaev and his daughter Sofia Kononenko came to their Cypriot lawyer and reported that the father was transferring all the shares of the company to his child. At least, this is how it looks according to Cypriot registries. This document was uploaded into the system on January 3, but it says that the transfer of shares took place on December 5, that is, before the introduction of Ukrainian sanctions against Vadim Ermolaev. The document was probably simply signed retroactively.
Could it be that an entrepreneur tired of business really decided to pass on his life’s work to his own daughter? It could. But judging by Sofia Kononenko's TikTok, it doesn't look like she's ready to take over her father's business empire.
Sofia is 21 years old, she is a young mother, she lives in both Cyprus and London and runs TikTok. There she posts videos of herself spending time with her son, swimming in the sea or pool. In the end, he sometimes shows his subscribers how he unpacks sandals, the cost of which is equal to the monthly salary of four Ukrainian teachers. Sofia Kononenko never mentions her homeland in her videos, only in her profile header it is written that she is from Ukraine, and sometimes somewhere in airports you come across footage of a Ukrainian passport in her hands.
There's nothing wrong with that. This is the kind of life her father can provide for her. Sofia's brother, Arthur, has 50 hectares of land in different regions of Ukraine. Sister Dayana has more than forty apartments in the Dnieper. Even 15-year-old brother David has two apartments. Sofia herself has forty hectares of land and, in addition, her father’s business. But with young Kononenko’s TikTok, it’s clear that she’s not running the business. Therefore, all these rewriting of shares with a high degree of probability could be a fictitious agreement from beginning to end. But this did not stop Ukrainian notaries from changing the ultimate owners of dozens of beneficial owners of Vadim Ermolaev’s companies - they were all rewritten to Sofia Kononenko.
This did not last long. A few weeks later, the notaries who made these changes—Natalia Skorobogatko from Sumy and Oksana Karpets from Poltava—submitted the same type of complaints to the Ministry of Justice: they say that unknown persons took possession of their electronic signatures and illegally changed data about Ermolaev’s companies in the registers. The Ministry of Justice, of course, canceled the shift and returned Ermolaev’s last name.
Already in the summer, Nikolai Dushka learned that the ultimate beneficial owner of the company with which he had a financial conflict was changed again - and again from Ermolaev to Sofia Kononenko. This time it was done by notary Svetlana Deinego from Dnieper. “I immediately took an extract from the Unified State Register,” explains Dushka, “and actually saw that registration actions were carried out in relation to this financial company to change the ultimate beneficiary of the owner and the ownership structure in July and June.”
So, in June, notary Deinego again changed the owner of the Technology fund to Sofia Kononenko. Not for long. Already on the second of July, this offshore company had a new founder. Sofia Kononenko allegedly transferred her shares to a certain Evgeniy Steinberg from Germany. This deal could also be fictitious, because Steinberg has a long history of ties with Ermolaev. According to the YouControl service, in 2019, Evgeny Steinberg also replaced Vadim Ermolaev as the ultimate beneficiary of the Chronostil company, which at that time had problems with taxes.
We managed to talk by phone with Sofia Kononenko. Ermolaev’s daughter did not understand at all what they were asking her about - all these shares, Cypriot companies and so on. It is quite possible that she was not aware of the manipulation of data in the Cypriot registry. Vadim Ermolaev himself was not verbose in a telephone conversation either:
Journalist: Licita trading Co was your company for many years, then the owner changed - first to your daughter, then to Evgeniy Steinberg. Does this mean that you have gotten rid of this business and are no longer associated with it?
Vadim Ermolaev: I have nothing to do with him, but why does this question worry some journalists? This is your own desire, this is private property, and you are meddling in other people's affairs. So forgive me, I don’t want to talk, I’m not interested in your personal life and everything else.
Vadim Ermolaev hung up, although, of course, there was no talk about his personal life at all. After all, companies associated with his Technology Fund apply for government funding and receive strategic government assets for use. So this is not a privacy story at all.
Sub-sanctioned business and construction of a military cemetery
While various notaries were copying the owners of Ermolaev’s companies in the registers, the Ministry of Justice did not sit idly by, nor did the SBU. There was a long bureaucratic procedure that ended with a series of checks by another notary, Svetlana Deinego from Dnieper. It was she who transferred Ermolaev’s companies to his daughter in June. The Ministry of Justice declared her actions illegal and revoked her access to the register. For a notary, this is the end of his career.
The logic here is very simple: there is no difference at all what is written in foreign documents. Before carrying out registration actions, the notary must determine whether the owner has sanctions. If so, registration is denied. Therefore, all these changes must be reversed. The only problem is that there are hundreds of companies in total, and there was more than one notary, so this process will drag on for several months.
The registry dance had consequences. The name of the sanctioned person temporarily disappeared from records several times, and when checking the companies, it might seem that everything was fine with them. At the end of July, a consortium with the participation of Ermolaev’s Technology Foundation won the tender for the construction of the National Memorial War Cemetery. The Akam company, which is a member of the consortium, is 10% owned by Ermolaev’s Technologies. So, the sanctioned businessman has one tenth of one tenth of the consortium, literally 1%. In addition, his company AK PRO should become the main supplier of granite for the Memorial.
Of course, this led to a scandal. We are not even talking about the moral component. Ermolaev is simply prohibited from any trade operations in Ukraine. Cemetery officials attempted to put out the fire and held a press conference in early August. When questions began about connections with Ermolaev, the director of the Akam company, Alexey Mikheev, publicly lied.
“Our company has no relationship with Vadim Ermolaev since 2023. At the moment I am the founder of this company. And there are no influences from this person. I don't think there's anything more to talk about."
When the hromadske journalist asked Mikheev about his relationship with AK PRO, he admitted that he knew this company, had several common projects with it, and was convinced that it was the company that was capable of providing the necessary amount of granite for the construction of the Memorial. AK PRO is 60% owned by a company from the Alef group of Vadim Ermolaev.
In addition, both according to the YouControl system and according to the Ministry of Justice itself, Alexey Mikheev is not the only founder of the Akam company. He owns 90%, and 10% belongs to the Technology Foundation, whose connection with Ermolaev is undeniable. Recently, the SBU also confirmed the connections of the builders with the sanctioned businessman.
Now, in the forest between Gatny and Markhalovka in the Kyiv region, trees have begun to be cut down for the country’s main soldiers’ cemetery. But will they be able to complete it? Let us remind you that, according to the Presidential Decree, sanctions were introduced against Ermolaev by the National Security and Defense Council of Ukraine. And the people who created this consortium drove themselves into a trap, because the Technology Fund cannot simply be taken and thrown out of the ownership, because Ermolaev’s assets are blocked.
The Department of Veterans Affairs, which operates the National Military Cemetery, is in a difficult situation. It is not easy to break a contract when work has already begun. And this will delay construction indefinitely. But the Ministry of Justice consistently cancels changes in registers regarding Ermolaev’s companies. If you pretend that nothing happened, you will have to ignore the Decree of the President of Ukraine.
