12:05 15.01.2018

Prosecutor's office orders economic examination of deals by Investment Capital Ukraine

5 min read
Prosecutor's office orders economic examination of deals by Investment Capital Ukraine

 The investigation into possible involvement of Investment Capital Ukraine (ICU) in the withdrawal of funds from Ukraine is still ongoing, Ukrainian Deputy Prosecutor General Yevhen Yenin has said.

"More than a year ago we questioned the head of this company. We threw into question the documents confirming the legality of funds and financial transactions. Therefore, over two months ago we sent a request for an economic examination to a judicial expert institution of Ukraine. The examination is still underway," he said on Hromadske Radio.

He added that the activity of officials of this company, as well as of state-owned banks and the National Bank of Ukraine, was the subject of a number of other criminal proceedings carried out by the Prosecutor General's Office and the National Anti-Corruption Bureau of Ukraine (NABU).

Yenin said that the Kramatorsk District Court's judgment had been preceded by about 30 other verdicts. Thus, more than 20 individuals have been brought to criminal liability. According to him, they include top-level officials, for example, deputy heads of ministries under former President Viktor Yanukovych.

Yenin also said that the seized funds had already been in the state treasury for eight months and could be spent on the country's needs.

"Last July, the Ukrainian parliament unanimously voted on targeted use of these funds for social projects, for example, building roads, medicine, education, and ensuring the country's defense capacity," he said.

On January 10, Al Jazeera published the text of a 95-page judgment issued by the Kramatorsk District Court on March 28, 2017, which was later classified as constituting a state secret.

Al Jazeera said the judgment reveals the schemes used for misappropriating the state funds under Viktor Yanukovych and asked why the decision was classified.

In addition, the channel notes with reference to lawyers and anti-corruption groups that the passing of such a verdict behind closed doors and without the participation of non-resident companies provides these companies with strong arguments to seek return of part of or all of $1.5 billion that fell under special confiscation.

The channel also reiterates that transactions for the purchase of government bonds, which fell under special confiscation, were brokered by the Investment Capital Ukraine (ICU) group, which has close links with the current government having advised Ukraine's President Petro Poroshenko. At the same time, the material contains the group's comments that in these transactions its role was limited to that of an agent.

Yenin said earlier that the Ukrainian Prosecutor General's Office neither confirmed nor denied the authenticity of text purported to be the ruling of Kramatorsk District Court on March 28, 2017. According to him, the text of the judgment seizing $1.5 billion from people in Yanukovych's entourage is classified due to ongoing investigative activity and in order to protect the people involved in the trial.

Asked by Interfax-Ukraine, ICU noted the matter concerns services to support transactions on the sale and purchase of government domestic loan bonds between Oschadbank and non-resident companies in November-December 2013, while Al Jazeera wrote about the period between 2012 and 2014.

The investment group explained earlier banks and other market participants could carry out such transactions directly, but the new wording of the law on the depository system from October 2013 obliged market participants to formalize all deals on the sale and purchase of government domestic loan bonds through PJSC Settlement Center and licensed brokers.

"It was not unusual that ICU acted as a broker in the deal with government securities, being the leader in this market," the group believes.

The group added that before signing contracts for brokerage, they conducted an obligatory identification and financial monitoring procedure in relation to the buyers of securities, who were the clients of state-controlled Oschadbank.

"The price, at which the companies bought government domestic loan bonds, was agreed directly without the participation of ICU. The investment group did not open any accounts for these companies and had not worked with them earlier. The role of ICU in these transactions was limited to the function of an agent," the group said.

ICU noted that the National Commission on Securities and the Stock Market within the investigation conducted an unscheduled inspection of the company and audited the mentioned transactions and found no violations. In addition, to protect its reputation, the group initiated an independent verification of its operations by a group of experts who previously worked with the State Financial Monitoring Service of Ukraine and the OSCE, which also confirmed compliance with the legislation, ICU added.

As reported, the companies affected by special confiscation contested not only the very special confiscation, but also the decision to make a secret out of the court verdict. In particular, Akemi Management Ltd in Kyiv's Solomiansky District Court succeeded in the lawsuit against the state expert on the secrets of the Prosecutor General's Office, the prosecutor general about the cancellation of the decision dated June 3 on the availability of statements containing state secrets in the verdict (which also has the label "secretly"). On December 19, the court by its ruling demanded explanations and/or evidence from the state expert about the circumstances of making the decision to declare this conclusion "secret."