Donetsk business court of appeals has satisfied a counterclaim of the Specialized Anti-Corruption Prosecutor’s Office (SAPO) and ordered the business court of Zaporizhia region to hear the lawsuit of SAPO seeking the termination of the contract between the State Property Fund of Ukraine (SPF) and offshore company Tolexis Trading Limited (Cyprus), a part of Dmytro Firtash’s Group DF, on the creation of Zaporozhye Titanium and Magnesium Works LLC on the basis of the eponymous state-run enterprise.
SAPO wrote on its Facebook page that the counterclaim was satisfied by the court on March 28.
“We welcome the decision of the appeal court. We are ready to protect the economic interests of the state and terminate the contract with the dishonest investor in the business court of Zaporizhia region. Since the moment of revealing the fact of deliberate non-observation of liabilities by the investor we have initiated the return of the works to the state. We would consistently and legally reach the goal,” SAPO said, referring to SAPO Head Nazar Kholodnytsky.
SAPO said that the lawsuit announced on January 25, 2017 on the termination of the above-mentioned contract was sent by Kyiv’s business court to the business court of Zaporizhia region. The latter ruled out to return the lawsuit to the prosecutor without hearing it on February 24, 2017 under Paragraph 3 of Part 1 of Article 63 of the Civil Procedural Code of Ukraine in connection with the alleged non-mentioning the circumstances the claim was based on.
SAPO also said that the court hearing scheduled for March 22, related to the indictment against Director of Zaporozhye Titanium and Magnesium Works LLC Volodymyr Syvak being accused of embezzling UAH 492 million repeatedly failed to take place.
As reported, SAPO filed two claims to the business court of Kyiv. In December 2016, SAPO filed the first claim, while the court unlawfully rejected hearing the case without properly notifying the prosecutor about it twice. To avoid a delay in hearing the case after paying the new court fee and having the materials returned from court, on January 25, SAPO filed the new claim.
In 2013 SPF signed the contract with Tolexis Trading Limited allegedly aimed at attracting investment, introduce modern technologies and create cost-effective production.
According to the reached agreements, SPF transferred the property of the works to the charter capital of the newly created company. Tolexis Trading Limited invested $110 million that were to finance modernization of production facilities in 2013 through Q1 2015.
Despite the fact that the stake in the limited liability company belonging to the state was 51% (a controlling stake), actually the company was transferred to the management of managers close to the investor. These managers spent the major part of raised investment to pay a debt of state-run enterprise Zaporozhye Titanium and Magnesium Works for energy and a debt to creditors affiliated with DF Group. Then the funds were removed from Ukraine via sending them to accounts of offshore firms. Only UAH 20 million was sent to modernize production.
SAPO initiated the annulment of the contract and return the works to the management of the state. (Interfax-Ukraine/Ukrainian metal)