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Wind in the field. How ex-prosecutor of the Yanukovych era is building the largest wind farm in Europe

Source : 112 Ukraine

The project cost is estimated at 450 million euros
10:10, 19 October 2021

Wind farm
itc.ua

The project for the construction of the largest wind farm in Ukraine and Europe on Syvash Lake in Kherson and Molochnyi Lyman in Zaporizhia regions with a total cost of more than EUR1.5 billion may turn out to be a major scheme to embezzle foreign investors' funds. Among the defendants are ex-prosecutor of the times of Yanukovych Andriy Zhovner and former assistant to a number of MPs Yuriy Kizilov.

In January 2019, in Davos, in the presence of the fifth President of Ukraine Petro Poroshenko and the head of the EBRD Suma Chakrabarti, the French company Total Eren, the Norwegian NBT, and the EBRD itself signed an agreement on participation in the project for the construction of the largest wind farm in Ukraine at Molochny Lyman in the Zaporizhia region.

The project cost was estimated at 450 million euros.

In the autumn of the same year, as NBT reported, CET, Industrial Commercial Bank of China (ICBC), Export-Import Bank of China (Exim Bank of China), and China Construction Bank (CCB) agreed to invest another 500 million euros. It was also planned to attract an additional 250 million euros from other banks. The sub-funds have involved an additional EUR 188 million from other investors, out of which EUR 103 million have been invested from pension funds. The total investment in the Zofia project was estimated at more than 1.2 billion euros.

Earlier, the same investors from Norway (NBT) have already purchased the Syvash Wind Farm from other Ukrainian entrepreneurs on the Syvash Lake in Kherson region. The cost of this investment is 300 million euros. However, further events show that international financial institutions are likely to become participants in a large scheme to launder money by Ukrainian and Norwegian businessmen. And even if a giant wind farm is built, some of the finances will dissolve into corrupt equipment.

Zofia Wind Farm. The origins

The project of a wind park in the south of Ukraine's Zaporizhia region was invented and began to be implemented back in 2008 when the topic of renewable energy, "green tariffs" and foreign investments in this area was just beginning to develop in Ukraine. The first wind turbines were installed on the territory of Akimovsky, Radyvonivsky, Volodymyrsky village councils on the banks of the Molochny Lyman. Initially, the project, which in the future will receive the general name "Zofia", was implemented by the individual Andriy Zhovner (at that time the head of one of the departments in the prosecutor's office of Zaporizhia region, later the head of the department for the protection of citizens' rights), Yuriy Kizilov (assistant to the MP Valeriy Baranov (Blok Lytvyna) and Oleksandr Zatsa (Party of Regions), a number of leaders and employees of the Institute of Renewable Energy of the National Academy of Sciences of Ukraine.

According to Dmytro Marunych, co-chairman of the Energy Strategies Fund, Zhovner, who for four years before the 2013 Revolution of Dignity has been serving as head of the general supervision department of the Prosecutor General's Office under Prosecutor General Viktor Pshonka, and Kizilov, thanks to their administrative ties, could provide land allocation for wind generators to private enterprises Azovenergo, Azovenergomash, Azovelektrikmash. Subsequently, Zhovner and Kizilov became the only beneficiaries of the project through a new legal entity - Azovinvestprom LLC.

In 2014, Zhovner was lustrated but appealed against it with a big scandal. Moreover, he even managed to work for a while as the head of the Office for Monitoring Corruption-Related Factors of the Cabinet of Ministers' Secretariat under Prime Minister Arseniy Yatsenyuk. However, later he still had a focus on business.

“In 2015, Zhovner's close friend from the university, who was engaged in the feasibility study of the project, joined the project; in 2017, another friend, Serhiy Yevtushenko, provided funding for the design work. At the same time, Yevtushenko was formalized in a share, a "conceptual" agreement was concluded with a university friend," Marunych says.

The group had only a small 3 MW power plant in its portfolio. The partners began to attract investors by selling Sivashenergoprom LLC in April 2017 to the little-known Norwegian company NBT.

According to Interfax, NBT owns 49% of shares in the Linxi wind farm with a capacity of 100 MW and a 33% stake in the Baicheng wind farm with a capacity of 49.5 MW in China and is also developing two WPP projects in Thailand (60 MW each). It has booked a land plot for a future WPP in Vietnam and is looking for attractive opportunities in Albania. The company's offices are located in Oslo, Limassol, Beijing, Karachi, and Kyiv.

However, although the leadership declares its presence in other countries, it looks like Ukraine is a key market for this company, the energy expert stressed.

"In December 2017, Azovinvestprom signed an agreement with the consulting company Milgravis Capital Partners LLC to provide services for finding investors and project financing. Under the terms of two contracts, the consultants' remuneration was supposed to be 5% of the amount of attracted investments in a 200 MW plant. This was the first agreement with American consultants. As the project grew, the terms of cooperation also changed. So in 2018, the old agreement was rewritten and according to the new document, Milgravis already had the rights to 10% of the amount of attracted investments. At the same time, there were no restrictions on the final size of the project," Marunych assures.

During 2018, the project attracted many people willing to participate in it, including the EBRD and other international financial institutions. The negotiations resulted in the agreements signed in Davos. The investment was legally formalized as the purchase of Azovinvestprom shares by the Swedish company East Renewable Zophia AB, fully controlled by NBT. The authorised capital of Azovinvestprom remained 2400 UAH.

Withdrawal schemes

Immediately after the signing of the contract, investment advisors turned attention to the dubious actions of the negotiators, owner of Milgravis Capital Partners Oleksandr Kostyuk says. As soon as it became clear that investors had already made a decision to enter the Zofia projects with money, Zhovner and Kizilov tried to “forget” about their contractual obligations to consultants from the United States. According to Kostyuk, the terms of the contract stipulated that there were no "hidden" participants in Azovinvestprom. At the same time, the “conceptual” share of one of the friends was not taken into account; its presence could formally be considered the basis for terminating the investment agreement. But the parties - both the buyer and the seller - did not pay attention to it. It seems they even entered into a conspiracy.

“We informed the Norwegian investors who signed agreements with Milgravis that Ukrainian partners prefer to“ forget ”about their obligations. The NBT management notified the Ukrainian partners in writing about the inadmissibility of such actions. But at the same time, it immediately bought Ukrainian companies bypassing American partners," says Kostyuk.

In addition, payments that came from East Renewable Zophia AB to pay for engineering work were transferred to companies controlled by Zhovner and Kizilov through the mechanisms of "irrevocable financial assistance" (Azovprominvest LLC, Azovenergoprom LLC, Ukrnaftaresurs LLC, Akturn LLC ", Zhovner as an individual).

Also, the money that was supposed to finance the development and execution of documentation for land acquisition, urban planning documentation, and design was transferred to private entrepreneurs, through debt assignment agreements, to individuals controlled by Kizilov and Zhovner.

According to Kostyuk, despite the fact that these circumstances are well known to the management of East Renewable Zophia AB, they are carefully hushed up before the supervisory board, board, and shareholders of NBT. It is possible that in the future the money of investors - the EBRD and other banks - will also go to enterprises controlled by Zhovner and Kizilov.

Kostyuk adds that Zhovner and Kizilov remained the actual leaders of the project despite it was sold to the Norwegians. According to him, on their initiative, Azovinvestprom did not fulfill its obligations to pay commissions to Milgravis Capital Partners for attracting investors, despite all the work done.

“Essentially, the Norwegians have taken control over the companies and put their people in top positions. But for all shady issues, they still used their Ukrainian partners and their accomplices in government agencies," Kostyuk said.

The owner of Milgravis filed an application with the National Police to open criminal proceedings on the fact of misappropriation of someone else's property through abuse of office. Subsequently, the court recognized him as a victim in the case. Interestingly, according to the court materials, which are at the disposal of the editorial office, Zhovner did not deny even during interrogation that his company had decided not to fulfill its obligations to consultants.

In parallel, Milgravis also filed a civil suit for almost 150 million USD. This is the amount of the expected commission from attracting and supporting investments in the amount of over 1 billion euros. The court arrested the property and accounts of Azovinvestprom and satellite companies in the framework of criminal proceedings No. 12020100010002779. Despite the fact that the project raised a lot of environmentalists' criticism, and the network operator Ukrenergo generally stated that no one had coordinated the connection of hundreds of megawatts of green capacities, in November 2020 NBT announced the start of construction of Europe's largest windfarm. However, allegedly after pressure from the head of the internal security department of the Security Service of Ukraine, General Andriy Naumov, the case was closed, and the investigator who led it was fired, the arrest was removed from accounts and property. At the same time, according to the injured party, this also happened with the tacit consent of the leadership of the authorities.

By the way, the observers call the legal advisers of the deal close to the UCP - Integrites, which was responsible for the "purity" of the securities signed when attracting investments and even attracted for this a whole heap of expensive English firms headed by K&L Gates (its founder was Bill Gates's father, William Henry Gates II who died in 2020). Legal advisers are also involved in the closure of criminal cases on the facts of fraud on the part of Zhovner and his Norwegian "partners."

Milgravis is preparing another appeal to the law enforcement agencies to expose and stop the criminal activity - alleged tax violations by the Syvash residents.

According to the company's lawyers, investment agreements were concluded through a semi-legal scheme using a venture fund, investment certificates, and non-repayable loans, the purpose of which was tax evasion. At the same time, according to one version, there was simply not enough money for taxes after the investments were transferred to the "necessary" accounts.

As far as the authorized capital of Azovinvestprom was less than 100 USD, the Norwegians have not left the project. As a result, the budget of Ukraine will miss several dozen, if not hundreds of millions of hryvnias in taxes from the project worth 1.5 billion euros.

"New horizons"

Criminal proceedings, litigation, and dubious prospects for the implementation of the project within the stated timeframe (until the end of 2022) do not stop those involved in the  "siphoning off" from new "projects".

In particular, in the middle of 2020, Andriy Zhovner became known as one of the possible contractors for the construction of a hydrogen plant and a data center (including for cryptocurrency mining) in Zaporizhia region through his company H2. The company signed corresponding memoranda for the total amount of a billion dollars with Energoatom and Ukrhydroenergo. It was created in February 2020 with an authorized capital of 1,000 UAH (38 USD).

Besides Zhovner, it was also founded by Vadym Chyzhykovsky, who after Zhovner headed the corruption monitoring department in the Secretariat of Cabinet of Ministers, and before that, since 2003, he had also been building a career in the prosecutor's office of Zaporizhia and Kyiv regions.

He was also in the picture as one of the leaders of the company, which received an oil and gas field in Chernihiv region for use at the beginning of 2019. Interestingly, the well-known entrepreneur Igor Voronov and the aforementioned partner of Zhovner, Yuri Kizilov, were its owners a little earlier.

It is noteworthy that among his possible "partners" for the construction of a data center and a hydrogen plant, Zhovner again names the Norwegian NBT, as well as the Austrian Yom Capital. President Volodymyr Zelensky even met with their representatives.

However, judging how the project for the construction of wind generators in Molochnyi Lyman is being "implemented", the hydrogen plant and data center may also turn out to be the usual places for siphoning off the money of gullible financial investors who will provide loans to the former prosecutor and his Norwegian partners, but it is unlikely that they will ever get it back.

***

In the process of preparing the material, it became known that the Director-General of NBT and the head of the board of directors, who directly organized the deal with Zhovner and Kizilov, were forced to resign. The new director general of the company, Emma Collins, before the new appointment, featured in a major corruption scandal in Thailand and it was in the field of the construction of wind farms at that, which cost IPO company $ 2 billion.

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