Oligarchs and prosecution in absentia

The protection of business interests in Ukraine for “disgraced” oligarchs has become seriously complicated due to criminal proceedings opened against them by law enforcement agencies.

As a result, of the owners of financial and industrial groups “hostile” to the authorities, today only I. Kolomoisky remains in the country. And he has been in the SBU pre-trial detention center for almost a year now.

Firtash: extradition to infinity

For 10 years now, the owner of Group DF D. Firtash has not been able to come to Ukraine. He is still accused of giving bribes to Indian officials by the US Department of Justice. Therefore, the oligarch is forced to live permanently in Austria, where he has settled for permanent residence since the 2000s.

All these years, Austrian courts have been considering US requests for his extradition: they reject, allow, reject again, and then in a circle.

The last movement in the case dates back to June 2023. Then the Higher Regional Court of Vienna granted D. Firtash’s appeal to review his extradition to the American authorities. Obviously, in this way the procedure will drag on indefinitely. And with it the restricted status of the owner of Group DF. Ukraine also has questions for him.

In June 2021, the National Security and Defense Council imposed sanctions against the oligarch, providing for the blocking of assets and the cancellation of licenses for the development of deposits of titanium-containing sands in the Zhytomyr region.

These measures were a response to the continued supply of titanium concentrate from D. Firtash’s Ukrainian mining and processing plants to the occupied Crimean Peninsula and the Russian Federation.

The ban on such supplies has been in effect since 2014, and he was “punished” only 7 years later. But, as they say, better late than never. Which is true, and there are some nuances here too.

For some reason, the sanctions were applied only for 3 years. Time flies quickly, June 21 of this year. their period has expired. On this basis, the High Anti-Corruption Court (HACC), on June 25, at the request of the oligarch’s lawyers, lifted the seizure of the shares of regional gas companies owned by him.

We are talking about 22 regional and city gas distribution structures united in Regional Gas Company LLC (RGK). They were transferred to the state (first through the Agency for the Search of Material Assets (ARMA), then NJSC Naftogaz of Ukraine) in May 2023.

But not because of previously imposed sanctions, but as part of a criminal investigation into the infliction of UAH 18 billion in losses by regional gas companies RGC on the state represented by NJSC.

At the end of December 2023, Neftegaz announced the completion of the complete integration of regional gas companies RGK into its company. But, as the June events of this year showed, it is premature to talk about the final victory of the state in the dispute with the oligarch.

Firstly, the guilty verdict of the court should dot the “i” here - after considering the case of theft of 18 billion UAH. But so far there is no information about the completion of the investigation. Despite the fact that it has been dragging on for more than a year.

Secondly, the case of the VAKS decision is indicative. Yes, this time ARMA and the Prosecutor General’s Office reacted surprisingly quickly (although they learned about the return of regional gas companies to D. Firtash from journalists).

Already on June 28, the same day when publications appeared in the media, the Pechersky District Court of Kyiv re-arrested the shares of regional gas companies RGK. Based on a new decision of the National Security and Defense Council adopted on June 24 and put into effect by presidential decree of June 25.

Realizing that the best defense is attack, the authorities are trying to create additional pressure on a new level.

The head of the Deposit Guarantee Fund (DGF) S. Rekrut, in a July interview with the media, announced that she had filed a lawsuit to recover from D. Firtash 1.7 billion UAH of losses caused to the state through Nadra Bank, which previously belonged to him.

The amount is relatively small (for one of the wealthiest Ukrainian businessmen). But, according to S. Rekrut, there will be other similar lawsuits. The Financial Guaranty Fund estimates the total amount of damage to Nadra Bank from D. Firtash’s actions at approximately UAH 15 billion.

According to media reports, which refer to the results of an American investigation from 2020, D. Firtash, being the owner, used for personal purposes at least $190 million received from the state (represented by the National Bank) as stabilization loans for Nadra.

But even here there are some nuances. In the same interview, S. Rekrut clarified that the Fund does not intend to recover state damages from the owner of Group DF in foreign courts. “We are concentrating on Ukrainian jurisdiction; we do not plan to go abroad, because the projected revenues will not cover expenses,” said the head of the Deposit Guaranty Fund.

Of course, this is not true. Even if the Ministry of Justice issues foreign business trips to its officials with accommodation in the royal apartments of the best London hotels. And he will hire the most expensive lawyers in the world to represent his interests. All the same, the costs will not amount to UAH 15 billion. They won’t even be able to handle 5 billion UAH.

It’s just that S. Rekrut chose not to delve into the nuances. And the nuance lies in the presence of a verdict of the Arbitration Tribunal of the Stockholm Chamber of Commerce on the recovery of $318 million from Ukraine in favor of D. Firtash’s companies.

This is the debt for gas supplies to the state-owned Odessa port plant in 2013, plus a penalty for late payments. The debt itself is questionable, but Ukrainian representatives were unable to convince the Stockholm arbitrators that they were right.

However, official Kyiv refused to implement the arbitration verdict made back in 2016. This decision was confirmed by the corresponding resolution of the Supreme Court of Ukraine, adopted in June 2021.

That is why starting a lawsuit with D. Firtash in London, by analogy with the lawsuit of the Federal Guaranty Fund and the state administration of Privatbank against its former owners I. Kolomoisky and G. Bogolyubov, is truly a pointless undertaking.

The High Court of London will not even consider the lawsuit against D. Firtash. Until the Ukrainian Themis fulfills the decision of the Stockholm arbitration. But if we consider the payment of compensation to the owner of Group DF as “costs,” then S. Rekrut can agree.

Well, it’s difficult to assess the prospects of battles with the oligarch in Ukrainian courts. Not in the sense of the state receiving the necessary decisions, but in terms of their subsequent implementation. Since D. Firtash’s Ukrainian assets are registered in Austrian and Cypriot offshore companies.

Zhevago: passions are heating up

An example of how long such proceedings can drag on in Ukrainian jurisdiction is the case of the Poltava Iron Ore Mining and Processing Plant (PGOC), part of the company of the oligarch K. Zhevago.

He acquired a 40.2% share of PGOK back in 2002, paying $27 million for this package to its former owners, “authoritative” Russian businessmen from the VSE group M. Voevodin, also known as “Misha Luzhanetsky”.

After 3 years, the sellers realized that they had sold on the price, and began to seek termination of the transaction in the Ukrainian courts. Which alternately canceled and confirmed the deal for 18 (!) years. Finally, on September 22, 2022, the Northern Economic Court of Appeal decided to return 40.2% of the shares of PGOK to the previous owners.

At first glance, it is quite strange: the Ukrainian Themis, in the conditions of full-scale aggression of the Russian Federation, makes a decision in favor of the sanctioned Russians. But it is possible that only at first glance.

Since the owners of VSE are under sanctions, the Ukrainian authorities would then have the legal right to nationalize this 40.2% share in K. Zhevago’s enterprise. And thus deprive the disgraced Ukrainian oligarch of control over his most valuable asset.

Be that as it may, the current owner of PGOK managed to fight off possible expropriation. The Supreme Court of Ukraine (SC) on April 20, 2023 overturned the verdict of the Northern Economic Court of Appeal.

According to the National Anti-Corruption Bureau of Ukraine, this decision cost K. Zhevago $2.7 million - 10% of the “issue price”. As part of open criminal proceedings on charges of taking a bribe, on May 15, 2023, the Chairman of the Supreme Court, V. Knyazev, was detained.

According to media reports, which cited sources in law enforcement agencies, the high-ranking official was literally “grabbed by the hand”: upon receiving $450 thousand - the second tranche of the agreed amount.

Theoretically, a conviction in the bribery case against V. Knyazev would give prosecutors grounds to seek the overturning of the Supreme Court decision on the purchase and sale agreement for 40.2% of the shares of PGOK. With the subsequent nationalization of this package. But…

The suspect has still not appeared in court. More than a year later, on July 11, 2024, V. Knyazev was detained in the Transcarpathian region. The reason was his stay in close proximity to the Romanian border.

The ex-official himself explained that he came to Transcarpathia to rest and after a while was released by border guards. It seems that in this case he did not lie.

If for a whole year the criminal proceedings against the former chairman of the Supreme Court have not reached the court, it is difficult to say that “the ground is burning under his feet” and there is a need to escape. But this does not mean that there is no movement at all in this case.

On July 10, VAKS, at the request of the prosecutor's office, arrested K. Zhevago in absentia, whom investigators suspect of giving a bribe to V. Knyazev. The oligarch’s lawyers call the actions of prosecutors and judges “manipulative.” In their opinion, arrest in absentia is necessary for further investigation without the participation of the suspect. Who thus will not be able to defend himself.

Here we can agree with them: being in the status of a “banned person” narrows K. Zhevago’s ability to “resolve issues” and fight off the claims of the state. Both to him personally and to his controlled enterprises.

And they do have complaints. In the first half of August, the Swiss company Ferrexpo AG, owned by K. Zhevago (which includes PGOK), announced the seizure of a 49.3% stake in PGOK on the recommendation of the State Enforcement Service of Ukraine.

The submission was made as part of the proceedings to collect K. Zhevago’s debt to the National Bank on refinancing loans for the Finance and Credit bank.

Earlier, “OstroV” noted that the state, represented by the NBU and the Deposit Guarantee Fund of Individuals, has achieved relative success in seizing insignificant assets of the “Finance and Credit” business group of K. Zhevago.

Now his main and most valuable asset is under attack - the iron ore business. But we must understand that (in Ukrainian conditions) between the arrest of shares and their withdrawal there is a legal abyss of years.

Bogolyubov: new “dissident”

The security forces show amazing slowness not only in relation to K. Zhevago. The investigation into multibillion-dollar thefts from Privatbank began almost immediately after its nationalization at the end of 2016.

But only in September 2023, one of the co-owners, oligarch I. Kolomoisky, officially received the corresponding suspicions. At the same time, the person of his business partner and second main co-owner, G. Bogolyubov, still seemed to remain “behind the scenes.”

Although in the lawsuit materials presented by the current state administration of Privatbank to the High Court of London in December 2017, G. Bogolyubov appears as one of the co-defendants along with I. Kolomoisky.

And only in July of this year he received the status of a suspect... No, not in the case of theft from Privatbank. The State Bureau of Investigation opened criminal proceedings, accusing the oligarch... of illegally crossing the Polish border.

The media, citing sources in law enforcement agencies, report that G. Bogolyubov decided to leave Ukraine, allegedly having learned that the Bureau of Economic Security (BEB) was preparing suspicion for him in the Privatbank case.

It is possible that this version is close to reality. Although the oligarch himself claims that he left for family matters and planned to return soon.

However, the fact remains: more than 2 months after the “flight”, no charges have been brought against him as part of the investigation into the theft from Privatbank. Although BEB could have done this in absentia, as in the case of K. Zhevago.

In this regard, it is appropriate to recall how at one time the Soviet government “gently” fought with objectionable representatives of the scientific and creative intelligentsia, pushing them to flee.

During a foreign business trip on tour or a scientific symposium, such an artist or professor was informed by the accompanying “good people” from the KGB “in great secret” that the Union was going to open a criminal case against him.

They say, look for yourself. You can stay here and avoid trouble. As a rule, artists and professors agreed. And thus they became dissidents and political refugees in the West. But the criminal case was never opened...

Considering that for the last few years G. Bogolyubov has been constantly suing in Ukraine, seeking to cancel the nationalization of Privatbank, one can assume that for the authorities he has become as undesirable a person as liberal-minded intellectuals are for the KGB.

Obviously, now, in the status of a suspect and “banned from entry,” it will become much more difficult for the former co-owner of Privatbank to continue the fight for his return.