News (#05 May 2017)


NBU decision on Financial Initiative banks insolvency declared illegal

On 13 April the Supreme Administrative Court of Ukraine confirmed the illegality of the National Bank of Ukraine decision to recognize the Financial Initiative bank insolvent and to hand it over into provisional administration.

The court found illegal the introduction of provisional administration, confirmed understating by the NBU of the value of government securities owned by Financial Initiative, which artificially created the conditions for the financial institutions bankruptcy.

The ex-owner of the bank, Oleg Bakhmatyuk, who owns large agricultural holdings Ukrlandfarming and Avangard, expects this court judgment to increase investors confidence.

On 20 March 2015, the NBU decided to revoke the banking license and to liquidate VAB Bank, and in June 2015 it recognized the Financial Initiative bank as insolvent. Furthermore, the NBU filed five lawsuits against Oleg Bakhmatyuk to recover debts under the personal suretyship agreement for obligations of these credit institutions, which in total owed NBU UAH 10.9 billion under refinancing.

Pechersk District Court arrested Ukrtelecom shares

The Pechersk District Court of Kyiv arrested shares in the telecommunications operator Ukrtelecom and 3Mob.

The Prosecutor Generals Office is investigating the illegal allocation of UAH 220 million from the state budget under the direction of the former President of Ukraine Viktor Yanukovych, and privatization of 93% of Ukrtelecom shares at a price understated by UAH 1.6 billion.

Ukrtelecom is the largest fixed-line telecommunications provider in Ukraine, and also the leader on the broadband Internet access market.

From May 2016 to February 2017 the State Property Fund conducted an audit on the results of which the Fund came to the conclusion about non-performance by the owner of a number of obligations under the agreement on the privatization of Ukrtelecom JSC. The company claimed that it did not agree with the conclusions made by the State Property Fund.

OJSC Ostankino Dairy Combine bankruptcy

On 28 March Russian Vozrozhdenie Bank applied to the Moscow Arbitration Court on bankruptcy against OJSC Ostankino Dairy Combine (which is part of the Milkiland Group owned by Anatoly Yurkevich).

The application provides for introduction of a supervision procedure and regime of provisional administration for the company. The creditor declared that the company failed to repay its debt to the tune of RUB 309.2 million.

The court initiated bankruptcy proceedings with the industrial complex and the hearing was scheduled for 26 April.

In early April, Milkiland N.V. initiated a procedure for voluntary liquidation of the company. In order not to interrupt the work of the industrial complex, the OJSC Ostankino Dairy Combine was established. It will be responsible for contracts with suppliers and clients of Milkiland Group in the Russian Federation.

ECHR obliged Russia to pay EUR 3 million to relatives of Beslan victims

The European Court of Human Rights has awarded nearly EUR 3 million to relatives of victims and to those who suffered in the terrorist attack in Beslan in 2004.

There were more than 400 applicants in the case who received compensation in the amount of EUR 2.955 million. Another EUR 88,000 will be paid as reimbursement of court expenses.

The court acknowledged that the Russian authorities did not take the necessary measures to investigate all the circumstances of the terrorist attack and reasons for the death of the hostages. At the same time, the ECHR did not pass a judgment on whether the actions of law-enforcement bodies led to a significant increase in the number of victims among the hostages. The court confined itself to the assertion that the assault affected death of people to some extent.

Moscow did not bring to the court satisfactory and convincing evidence of the fact that it used only necessary and adequate means and force.

The ECHR found that the authorities of the Russian Federation had information about the terrorist attack that was being prepared, but they did not take sufficient measures to minimize the risk. The operation to rescue the hostages was not sufficiently thought out either, according to the court.

On 1 September 2004 terrorists attacked a school in Beslan and took more than 1,000 people hostage. As a result of the attack and the subsequent assault, 333 people were killed and about 800 were injured.

The Ukrainian Journal of Business Law

Subscribe to The Ukrainian Journal of Business Law right now and enjoy the most relevant issues on doing business in Ukraine on your device or in print.

All this for just USD 9.99 a month.


Subscribe now