Exclusive interview with Maxym Liashko, managing partner of Energame (asset management company of the Parimatch group of companies).

 

-- Two months have passed since the company was included in the sanctions list and you announced the blocking of around UAH 250 million in customer accounts. Has the amount changed? What are the prospects for your clients to receive this money?

-- The amount has not changed; not a single hryvnia has been credited after the sanctions. The funds are available, blocked in the settlement accounts of the company that fell under sanctions. There are also funds blocked by financial monitoring of banks. They have not even been credited to the company's personal accounts yet, but they do exist and are blocked. They were in the process of processing bank payments and accumulated in the settlement accounts of the banks.

These funds are absolutely sufficient to settle with our clients. We have approached the Commission for regulation of gambling and lotteries, the National Bank, and the National Security and Defense Council of Ukraine with a request to provide us with the necessary explanations on how we can return this money to our clients. Initially, we received responses that, in principle, did not indicate a specific mechanism and were simply referrals to legislation. We have engaged lawyers who have written advocacy requests with more specific questions, and we are awaiting their response. We'll see. As far as I know, at least in the National Security and Defense Council, these letters were sent in order to obtain additional information about the amount and what to do next. That is, there are some indications that they really want to develop a mechanism and resolve this situation.

 

-- Are your clients taking legal action against you? Or perhaps challenging someone else's actions related to the freezing of these funds?

-- No, our clients are quite aware about the procedure. We have prepared explanatory summaries which we send in response to client inquiries about the situation. But even from these informal discussions, we see that clients understand that they have to wait for the compensation process. And clients are supporting us and waiting for our return to the Ukrainian market.

 

-- Have you settled with your staff and service providers to some extent? Will there be any legal disputes?

-- There are no clear mechanisms. We are trying to settle with our employees. However, there are difficulties in that banks are not willing to conduct such settlements. And here, we are the initiators of claims so that sanctioning companies can settle for rent, salaries, vacations and dismissals, utilities, and other mandatory payments that are not related to the restrictive regime.

We are currently studying this legal practice in detail in order to see how it can be applied to us. This is more related to employees.

As for contractors, we currently do not see a mechanism for settling with them. We simply keep records, but we do not accept or send payments to contractors.

 

-- Have you already studied the history of sanctions in Ukraine over these past two months? Because as far as we know, there have been no positive decisions regarding exclusion from sanction lists even at the first instance level. Are you trying to solve the problem through the courts or considering other options? What options do you currently consider most promising?

-- We understand that the state is at war, and all state resources can and should be used, and the sanctions mechanism is one such tool. And accordingly, for companies that really harm the interests of the state, such a mechanism should be applied. But mistakes, inaccuracies in using such a sanctions mechanism can occur. We simply made a mistake, so I think that cooperation is most effective for the state and business. In our case, we are talking about a Ukrainian high-tech company that was born and developed as Ukrainian. And through dialogue, explanation, and document provision, we can most likely find the path to truth. This is the first mechanism.

The second is judicial in Ukraine. The court can consider any issues that arise. There are also separate mechanisms for resolving disputes related to sanction lists. There are six months to submit documents to the court. Of course, we will take maximum actions to meet these deadlines. There are also European protection mechanisms. And cooperation with the constitutional bodies of Europe and the United States indicates that they are ready to consider documents, but we must use all available national defense mechanisms. And that is what we plan to do to assert our position.

 

-- In which countries outside of Ukraine and under what conditions do your companies continue to work? Have there been any business reductions due to problems or growth?

-- Of course, we feel a reputational threat in other countries where we are present due to the sanctions. However, at least for now, we see that we are not losing partners, and they have decided to stay with our brand. However, there are currently no new deals, and we understand that expanding our geography will be on hold for now.

 

-- If you type "Parimatch" into Google, the search engine returns other websites, such as one in English with a similar design but a different name. In other cases, links to certain Parimatch sites lead to other online casinos or betting companies in Ukraine, including legal ones. Have you started working in other markets under different brands or sharing your audience on certain conditions? (During the preparation of the interview, the search results mentioned in the question stopped appearing, and we did not take screenshots, so we are not providing the names of these sites, although they are available in the editorial office.)

-- We have always worked only under the Parimatch brand, in Ukraine and around the world. We have not changed this and do not plan to. However, we see and record many attempts to copy our design, mimic our site, and steal traffic in search. In addition, immediately after the introduction of sanctions, there were publications on social media about helping to withdraw funds from "Parimatch." We publicly stated that this is simply impossible for customers because the money is blocked in bank accounts. This is just another way to lure card data and access to a person's cards. I once again address our clients - the mechanism is currently unavailable, so please wait!

 

-- How many employees lost their jobs after the sanctions were introduced and how many employees from the Ukrainian office moved to work in other companies within the Parimatch group?

--This is a generalized formulation - employees. Because there are employees, consultants, contractors and individual entrepreneurs - a whole arsenal of outsourced personnel and everyone else. And currently, due to the introduction of sanctions, contracts were shortened or terminated, or outsourcing was refused in general, more than a thousand people in total.

Who among them has moved? There was no such transition. We announced that contracts with people were terminated as well as employment relationships. But then there is an opportunity to interview for other projects in other countries or partners and get a job according to these vacancies.

The only ones who moved were lawyers and financiers (not completely), who entered the sanctioned group that deals with all issues related to stopping this sanctions regime, figuring things out, and preparing documents.

 

-- Do you not consider it a mistake that you switched to the 2% simplified tax regime last year? Because I think it's hard for you to respond to accusations that the company paid too little to the budget last year. Because since the end of last year and the beginning of this one, you have increased payments by many times.

-- This is rather a philosophical question. We need to go back to the history that was two and a half years and even more ago when we agreed to set the rate for the license so high, make it so expensive that there would be no question about how taxes are paid before the monitoring system is introduced. Because everyone understood that it would be very difficult to determine the volume of taxes without a monitoring system. And we agreed. And a triple value was introduced. The sum was about UAH 130 million: UAH 108 million - a license for bookmaking activities and UAH 23 million for online casino activities. These amounts were just to avoid disputes over taxes during the period when the monitoring system would be introduced. After that, it would already be possible to cancel these increased license rates, make a normal payment size for the license, and tax regulation system.

But there is still no monitoring system. The license fees remained as they were introduced to avoid disputes over taxes. They were, so to speak, advanced, understanding that the issue with transactions (gambling business) was not resolved with the banks. At the time we paid for the licenses, everyone knew that there was a ban on transactions in the gambling industry in Ukraine. And only by the end of 2022, the first few banks passed the compliance and received letters from payment systems allowing them to process the gambling industry in Ukraine.

We understood all these issues, we talked about them at the (relevant parliamentary) committee and reached out to the Ministry of Justice and the Comission for regulation of gambling and lotteries with a request to influence all these international companies to start recognizing licenses. There was a trip with the Cabinet of Ministers to Silicon Valley before the invasion, where we also asked to raise this issue with Facebook and Google, that they should recognize Ukrainian licenses. There was a high-level meeting. Unfortunately, after the start of the invasion, of course, everyone lost focus on these issues. And as far as I know, they are still unresolved. That is why Ukrainian licenses are the most expensive in the world, and this was done so as not to argue about taxes.

Whether it will be 2% or 17%... As you can see, now nobody knows the numbers for all those operators that remain on the territory of Ukraine. How can the tax authorities or the Commission control this now? Only through the reports provided by companies, there is no other stage of control. That is why this issue is accumulating.

And we still feel like a Ukrainian company, ready to cooperate. To recover and fix this. We are ready for this. And also to continue communicating with payment systems and all international holdings to start recognizing the legal and official Ukrainian gambling business. Everyone wants financial licenses issued in Ukraine to be recognized abroad, recognized by international payment systems, to allow opening direct accounts, rather than just a few banks having everything, and only through them can something be done.

 

-- So what about your taxes?

-- During the past year, we were the number one taxpayer in the gambling industry. If you look at how many licenses were issued and how many companies paid taxes in 2022-2023, you will see that most of the list has zeros if you remove the column for salaries. But we paid.

The result: in 2022, we paid 51% of all gambling industry taxes. This refers specifically to taxes, not license fees. In total, we paid 354 million hryvnias for 2022. The situation was even more indicative for the first quarter of 2023: Parimatch paid 77% of all industry taxes, even with license fees included, and if they are not taken into account, then 95-98%! In absolute figures, it's even simpler: 957 million hryvnias were paid for the entire period of 2021-2023. For example, in December 2022, we paid 87.9 million hryvnias. In January 2023 - 244.6 million. In February - 130.7 million. In March - 106.5 million hryvnias. These are record figures for the gambling industry.

Another aspect is that in order to pay taxes, players need to be able to pay and transfer money. As of January 2023, almost all banks categorically refused to conduct payments for Ukrainian (gambling) licenses, the so-called payment code 7995. All state banks refused, private ones refused and only a few small banks remained that did all this within the daily limits set by Visa and MasterCard. Two years after obtaining the license, we received refusals from banks to work officially with white payments in Ukraine.

In addition to all of this, we also supported the army and people for hundreds of millions of hryvnias. This is not only reflected in absolute taxes, but in what you do in the market. How many contracts were made, even considering the state of emergency, with sports teams and charitable initiatives - hundreds of millions of hryvnias. Isn't this the economy of Ukraine? Isn't this jobs? And thousands of people were involved in the company in various forms.

 

-- Two months ago, you were asked about suspicions of unfair competition. In terms of betting licenses on the market, there were three companies, and now there are two. So, the market is quite narrow...

-- We also do not rule out such a motivation and analyze such scenarios. However, there is no evidence base. From a human point of view, if we say that the motivation is related to ties with Russia, then we understand that this is not the case: we have evidence, and we can prove it.

If the motivation is related to taxes, it simply cannot be a basis for sanctions. I think that the state has the opportunity, even during the state of war, to deal with such issues. Because when there are no explanations, you start to come up with anything. But I emphasize once again, we still hope for dialogue, and that everything will become clear in this dialogue.

 

-- Do you plan an international rebranding due to the sanctions?

-- Not at the moment. Changing the brand and starting something new again is also a way, but we don't want to. We still associate ourselves deeply with Ukraine. We hope that the issue with the sanctions will be resolved, when it can end, and only after that decide on the issue of rebranding.

In the event that the state resolves the issue and we resolve the issue, I do not think that this is a reason to change the brand. On the contrary, we are a brand that has gone through such circumstances in the country, proved its fairness, and proved its ability to exist.