“Occupier’s” Assets: Seized, then Released

Nothing but defeats after resounding victories

article by OLEKSANDR LIEMIENOV,

StateWatch CEO

Since the beginning of the full-scale armed aggression on February 24, 2022, Ukrainian courts have been continuously ruling on the seizure of certain assets that can be identified as Russian or Belarusian. As part of the Trap Aggressor project, the StateWatch team has not only monitored the Unified State Register of Court Decisions, trying to find arrests imposed on assets belonging to individuals from the aggressor country or its Belarusian satellites, but has also discovered cases where these arrests have been lifted. In fact, it is possible to impose a ban on the alienation of, say, a network of gas stations with pomp, as if the Kremlin had already been destroyed, but then this arrest is quietly lifted and the property comes under the full control of Putin’s entourage. The reasons for lifting arrests are different, mostly procedural. Adding insult to injury, it is sometimes difficult to even find them due to the unavailability of registers.

We have selected the most emblematic cases, odious persons and well-known legal entities owning property that was arrested and from which the ban on asset management was subsequently lifted in whole or in part.

First of all, our attention was drawn by one of the key Russian oligarchs, Oleg Deripaska, who controls the united company Rusal, one of the world’s largest aluminum producers. It should be recalled that back in July of this year, one of the courts seized and handed over to the National Agency of Ukraine for Finding, Tracing and Management of Assets derived from Corruption and Other Crimes, also known as Asset Recovery and Management Agency (ARMA), the corporate rights in the form of the authorized capital of Mykolaiv Alumina Plant LLC and other companies worth UAH 3.6 billion. This plant is the second such largest asset of Deripaska in the Rusal structure. Currently, it is difficult to understand whether full state control has been established over the said asset.

However, there are also completely unambiguous stories where arrests were made and then lifted. For example, this happened with the property of the Belarusian Oil Company and the State Production Association Belorusneft, the assets of the oligarch from Putin’s inner circle Arkadiy Rotenberg, the “milk” businessman Aleksandr Slipchuk, who recognized paying bribes for supplies to Russia as his obligation, and his partner Sergey Yevlanchik. The latter two control the subsidiary Starokostyantynivskyi Dairy Plant, which is also arrested. One can also mention Sergey Ilchuk and Pavel Stutman, as well as the famous hotelier Igor Akivison.

Let’s start with those most influential and closest to the key criminal of the oligarch world — Arkadiy Rotenberg and Oleg Deripaska. The former has been with Putin for more than a dozen years and is rightly regarded as the head of one of the two “towers of the Kremlin,” the second being headed by the Kovalchuk brothers. It is them, together with Putin and, to a lesser extent, Secretary of the Security Council of the Russian Federation Nikolai Patrushev, who rule the world’s largest country.

Rotenberg’s friendship with Putin began in their childhood, when they went in for sports together. He is now rightly considered a billionaire and said to be the owner of the structure Mostotrest (96.7%), Minudobreniya JSC (80%), which, by the way, is mentioned in the context of the supply of ammonia through the Togliatti-Odesa ammonia pipeline, TPS Avia (35%), which controls Sheremetyevo International Airport, SMP Bank (50%) and others. That said, the amount of money alone cannot be used to assess the extent to which the Rotenberg brothers have influence over the President of Russia. It is clear that since March 2014, when the Ukrainian Crimea was occupied, Arkadiy Rotenberg has been under US sanctions; the EU imposed sanctions on him in July 2014, Ukraine followed suit in June 2018. Since March 2022, he has faced full-scale and comprehensive prohibitions.

So what property has the Rotenberg family owned in Ukraine for ten years? The key interest is the Ocean Plaza shopping mall, located almost in the heart of the Ukrainian capital, near the Lybidska metro station. Prosecutor-General Andrii Kostin has already reported that, as part of the criminal proceedings, the property in question has been seized and handed over to ARMA. The Prosecutor-General has also noted that the funds received from the operation of the Ocean Plaza shopping mall were transferred to Russian citizens through a chain of financial transactions. It is fitting to recall that the Russian TPS Real Estate bought Ocean Plaza in 2012 from the developer of this object – the company of the Ukrainian businessmen Vasyl Khmelnytskyi and Andrii Ivanov. Liliya Rotenberg, one of the owners of the Russian company, is the daughter of the oligarch Arkadiy Rotenberg. After the annexation of Crimea, the Russians sold half of the mall to the previous owners, and the second part came into possession of two Swiss citizens. According to our information, in 2019, Liliya Rotenberg left the group of beneficiaries of the Lybid Investment Union LLC, which owns Ocean Plaza. But it looked like a nominal rather than an actual change of ownership. Moreover, the aforementioned businessman Vasyl Khmelnytskyi has told Forbes that Ocean Plaza has Russian beneficiaries.

Ihor Zabolotskyi, a leading expert in the field of commercial real estate from the Colliers Ukraine company, also noted that the aforementioned TPS Real Estate had never lost control over Ocean Plaza. The issue of confiscation of the said asset is still on the agenda. The mechanism was created almost half a year ago, and the lawsuit was brought to the High Anti-Corruption Court to transfer it to state ownership. 

As for another Russian oligarch, Oleg Deripaska, already mentioned above with respect to the Mykolaiv Alumina Plant, the Unified State Register of Court Decisions contains several decisions on the seizure of assets, probably related to him. One of these rulings of the examining magistrate referred to the seizure of 17,799 wagons used by companies resident in Russia and Belarus. Then one of the arrests, imposed on April 6, 2022, was removed, as it usually happens, since the prosecutors had not invited the owner party to the process. The procedural violation is obvious, because it was probably too difficult to look through the Criminal Procedure Code. However, the number of wagons that were supposed to be returned was 97. At the same time – something Trap Aggressor analysts emphasized – although the arrest was canceled, the decision to return the wagons to the owner was not published in the register. In general, before the completion of measures for the organization of ARMA property management, wagons are usually handed over to Ukrainian Railways JSC for responsible storage.

There is also an interesting story with the imposition and subsequent removal of seizure from the property of BNK-Ukraine LLC, co-owned by Belarusian Oil Company CJSC (56.53%) and the State Production Association Belorusneft (43.47%). Later, on June 10, 2022, by the decision of the examining magistrate, a seizure was also imposed on the funds – €455,000 and several hundred hryvnias that were in the accounts of BNK-Ukraine LLC. This ruling concerned Alliance and Pivdennyi banks. But already on August 11 and 16, our StateWatch team found two additional court rulings, which canceled the arrests in Raiffeisen Bank and PUMB to cover certain social obligations, including the payment of taxes and salaries.

It is difficult to find logic in such processes. Representatives of Ukrainian law enforcement agencies and the prosecutor's office simply do not have an algorithm of appropriate actions. The National Police acts in one way, the Security Service of Ukraine acts in another, the Security Service of Ukraine acts in its own fashion, and so on…

No less fascinating is the story of the property of AEROС LLC, engaged in the production of concrete and related structures. In order not to complicate the legal relationship, let me note that, due to certain German roots, the interest of the Russian oligarch and owner of the LSR Group Andrey Molchanov can be seen behind this company. He is no stranger to the key party of the Russian Federation, United Russia, was a sponsor of their election campaigns and was also on the lists of the so-called Kremlin report of the US Treasury Department, presented in January 2018. Analysts of StateWatch have learnt that in this case, too, arrest was lifted from some property of AEROС LLC.

Now about the famous Ukrainian Odesa. Unsurprisingly, quite a lot of Russian property is also located there. In particular, law enforcement officers and prosecutors have managed to seize four hotels, whose owners, according to the official Ukrainian authorities, are citizens of the Russian Federation – the Akivison family. Yes, it was about the Arсadia hotel, whose property was seized on June 6, 2022, and released from arrest on September 13. We have also found the facts of the imposition of arrests on a number of related legal entities, namely: Viktoria Production and Commercial Company, P.A.L.A.D.A. LLC, Odesa Hotel Central LLC and their ensuing removal. 

Finally, we will simply list a few more cases when arrests were made and lifted. This concerns the property that Ukrainian law enforcement officers associated with Aleksandr Slipchuk and Sergey Yevlanchyk. In particular, it is interesting that as early as 2014, a pre-trial investigation was conducted by the Investigative Department of Financial Investigations of the Main Department of the Ministry of Revenues and Duties in the Sumy region. At that time, it was established that in order to avoid paying the company's income tax in 2012, Krolevets Butter Making Factory PrJSC (owned by Yevlanchyk and Slipchuk) formed gross expenses and hid money in the current accounts of the Asset Management Company Dovira-Capital PrJSC, opened at OTP Bank PJSC. The amount of funds transferred to the current accounts of AMC Dovira-Capital PrJSC amounts to UAH 1.17 million. 

Another Russian businessman, Sergey Ilchuk, has a connection with Avgust-Ukraine LLC. The list of cases given here is far from exhaustive.

Arrests can and should be imposed, and sometimes removed, if there are clear procedural violations. But if the authorities so vividly report on “victories” when an arrest is imposed by the corresponding ruling of the examining magistrate, why are they silent when this “victory” quietly turns into a “defeat”? Moreover, apart from having political will and leading the competition “to be the most beloved wife” of law enforcement officers on Bankova Street, it is also necessary to devise a clear joint mechanism for the imposition of arrests in order not only to prove later the guilt of Russian and Belarusian businessmen or their partners, but also to nationalize the relevant property. The procedure should not end with an arrest, because the final stage is confiscation.

Read this article in russian and Ukrainian.