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Financing terrorism is a good article for law enforcers

Author : Olena Holubeva

Law enforcement bodies could influence market repartition
23:16, 23 August 2018

Open source

One of these days, the law enforcers searched the offices of the biggest operators of fuel Galnaftogaz, which owns 400 gas stations working under OKKO brand. The company is suspected of financing terrorism due to its continuing control over the gas stations in the occupied Crimea and Donetsk region. The Galnaftogaz denied all the accusations saying they were “set up” by the rivals. 112.ua with the lawyers researched in which cases the companies with assets in the occupied territories could get the attention of the Security Service.

Within the criminal proceedings for financing actions aimed at violent change or overthrow of the constitutional order or seizure of state power, change of the borders of the territory or state border of Ukraine, Security Service law enforcers searched the offices of one of the largest retail fuel operators Galnaftogaz (OKKO gas stations). Law enforcers seized the files and computer equipment. The figurants of the case are officials whose names are not disclosed. It should be noted that the sanction of the article provides for imprisonment for 3 to 7 years, with the confiscation of property and deprivation of the right to hold certain positions for a term up to two years. Actions committed by an organized group, large-scale, or which have caused grave consequences, shall be imprisoned for a term of 8 to 10 years, with the deprivation of right to occupy certain positions or engage in certain activities for up to three years with the confiscation of property.

In this case, a large company bears a more serious risk. Since 2009, the European Bank for Reconstruction and Development owns 20% of its shares. The EBRD among the shareholders is always a certain sign of high business reputation and transparency. It is always easier for the companies with such shareholder to attract loans, it is profitable for them to use financial instruments because the companies trusted by the EBRD are also trusted by leading financial institutions. The EBRD's withdrawal from the company's shareholders would have had very unpleasant consequences for it. The Managing Director for Eastern Europe and the Caucasus Francis Malige, urged Wednesday not to speculate on the topic, but noted: "The situation is complicated: it is also complicated by the situation in Crimea and a set of sanctions that are changing constantly. International practice is that if we face such a difficult situation, we consider if it can be fixed. If it cannot be corrected, then a certain decision will be made. However, we cannot say that something is wrong right now."

Related: Ukraine's Government not to cancel subsidies for gas consumers without counters

The lawyers note that in such cases it is possible to prove company’s guilt only if it is proved that there was money in the case. “There are a few important things in such matters. Firstly, it has to be proved that organizers on the controlled territory have financial relations with the companies on the uncontrolled territory. Secondly, there should be proves that the money going by the chain is connected to the companies lined, for instance, with other organizations involved in financing the terrorism,” the lawyer of Berylstone group of companies Denys Fetysov explained to 112.ua.

It is hard to do. “The cases are usually and labour and time-consuming. Their peculiarity is also that Ukrainian law enforcers do not have an access to Crimea and the documents kept there. They can only work with the figurants and people on the Ukrainian territory,” Fetysov said.

Galnaftogaz head Vitaliy Antonov claims that the company has no money relations with legal entities that control gas stations left in the occupied Crimea. According to Galnaftogaz, 11 gas stations (with 250 people working there) are rented by their former employees who worked in Galnaftogaz for a long time before the annexation of Crimea.

“The rent was concluded with the company which belonged to the company’s employees. When Ukraine and Crimea had money transfers, we received once the rent payment. After the payment system was suspended, we stopped receiving money,” the Vice President of the Concern Vasyl Danyliak said.

Galnaftogaz does not deny that they keep in touch with the former employees in the occupied Crimea.  

“We maintain contact because we have our property there. And Crimea will sooner or later return to Ukraine. We consult them on business issues as they have no experience in this, but it does not mean that we control the gas stations or have an income from that. We don’t deliver there anything or have any financial operations,” Antonov said. Gas stations in the occupied Crimea do not work under the brand OKKO, as the company assures.

Related: Government cancels benefits on gas for consumers without counters

As for gas stations in the occupied territories of Donbas, nothing is known about their fate, according to Galnaftogaz. "We do not even know who is currently there at these stations. Out of 25 stations, during the period of active military operations in 2014, two were demolished," Antonov said.

Denys Fetysov notes that according to the law, the SBU cannot file a lawsuit against a company that has assets in the occupied territories out of the blue. “There must be a specific address or the company should be “spotted” in the chain of companies involved in the financing of terrorism," he notes.

At the same time, the issue of the rules of assets exploitation in the occupied territories is not regulated in Ukraine. It is unclear whether claims can be made to a company that transferred its assets to the management of a Russian company in the occupied territories that receives royalties through offshore. That's what some businessmen did. In Galnaftogaz say they had repeatedly received offers on the sale of assets in the occupied Crimea, but the company did not agree, because “there is no definitive answer about the legitimacy of the sale of these assets."

While there are gaps in legislation, the article on “financing terrorism” can serve as a powerful tool for the elimination of competitors and redistribution of the market. Recall that at the end of 2016, the SBU stopped several autogas suppliers at the customs and MERT sanctions were imposed on eight of them because of suspicions of fraud and involvement in the financing of terrorism in Donbas. Some experts and People's Deputy Serhiy Leshchenko then said that this was not a coincidence and it was due to the repartition of the liquefied gas market.

Related: UkrGasBydobuvannya states on arrest of company's accounts

When companies were able to resume their activities, competitors captured most of the market. This shows the possibility of participation of law enforcement bodies in the repartition of market, which in the modern world should not happen, as Business Ombudsman Algirdas Šemeta said at that time in an interview with 112.ua.

According to him, after addressing the Security Service they received a letter that SBU had no claims to companies. After that, the Economy Ministry lifted the sanctions. However, business damage has already been inflicted.

If the security forces cannot prove any facts and establish the company's guilt, they “hold searches and that’s it," Fetysov believes.

However, one cannot help but notice that in business this is sometimes enough. Some of the weaker players give in, it's easier for them to deal, to give up a part of the market or share in the business than to lose everything.

Galnaftogaz also suspects that puppeteers could stand behind of the sudden, first in the four years of occupation, searches. "We suppose that our competitors and those who run not quite transparent business on the territory of Ukraine are involved here. They can not be named because they do not exist (in the form of legal entities)," said Vitaliy Antonov, hinting at the representatives of the shadow gas refueling market. However, this is hard to believe. It seems that if there are puppeteers in this story, they are definitely much more serious and influential people.

Related: Merkel: Ukraine should remain participant in process of gas transit to Europe

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