Two affidavits obtained by the Kyiv Post taken this summer by two members of an Irish family that once owned Kyiv’s lucrative Ukraina shopping mall provide evidence that the family received proceeds from the property while under court orders to cease stripping the mall’s assets.
The developments are part of a long-running court
battle waged by a state-owned Irish bank to collect on debts by a prominent –
and once wealthy – Irish family.
The written oaths also identify a Moscow-based law
firm that was retained to “advise” and “devise a scheme” whereby the family’s
foreign properties
in Russia and Ukraine, including the $78 million
Ukraina shopping mall, would be transferred to the “names and persons nominated
by Attorneys and Business (in Moscow) for nominal consideration.”
“Those persons then became the legal owners of the
assets and it was hoped that the (state-owned Irish Bank Resolution
Corporation) wouldn’t be able to enforce against them in advance of the dispute
between us being resolved,” reads the affidavit taken by Sean Quinn Jr., the
son of Sean Quinn Sr., whose billion-dollar business empire dissipated in the
wake of the global financial crisis.
A&B
lawyer Dmitry Shtukaturov declined to speak to the Kyiv Post on Oct. 9 when
reached by phone, and his colleague Artur Zafarov was unavailable for comment
in a second phone call placed to the law firm the same day.
At the
height of his success, Quinn Sr. was the 12th richest man in the United Kingdom
and the richest in Ireland in 2008 with an estimated $6 billion net worth. He employed
thousands, mostly in the previously job-starved cross-border area of Fermanagh
and Cavan.
IBRC has
been trying to take control over some $500 million worth of international
properties since April 2011 that once belonged to Quinn Sr. and his family.
Quinn Sr. filed for bankruptcy in 2011 and owes the bank an estimated total of
$3 billion.
On July 20,
a Dublin judge found that Quinn Sr., his son, and a nephew, Peter Darragh
Quinn, hid millions in assets from the bank. Quinn Jr. and Peter Quinn were
given three-month jail terms. Quinn Jr. is still in jail, and Peter Quinn has
avoided prison by staying in Northern Ireland.
“It was anticipated by us at the time that A&B
would be able, in due course, to procure the agreement of these nominees to
transfer the assets back to our control, or provide us with a return from the
assets,” reads Quinn Jr.’s July 20 affidavit.
While IBRC met with stiff resistance in Ukraine’s
courts to install its manager at the mall and access the shopping center’s
estimated $10 million yearly rent roll, an Irish company owned by a trust set
up for the grandchildren of bankrupt businessman Quinn Sr. was paid $650,000 in
2011.
The payments stemmed from a services contract with
Univermag Ukraina whose terms were set out by its director Laryssa Yanez Puga –
whom IBRC has unsuccessfully been trying to remove from managing the mall – and
Stephen Kelly, Quinn Sr.’s brother-in-law, according to the affidavits.
Yanez Puga also, according to the two affidavits, apparently retained the Moscow law firm for $1 million in April 2011 on behalf of
the Quinn family to keep the Kyiv property out of Irish bank’s hands. The
affidavits stated that Yanez Puga, in turn, had retained a “significant portion
of that payment.”
The Kyiv Post has been unable to reach Yanez Puga for
comment via personal visits to the management office at the mall and repeated phone
calls – a message left as recent as Oct. 8 with her office went unanswered.
And in August 2011, Irish court documents show that
Yanez Puga received a $500,000 “golden parachute” payment from the Quinns.
The service contract outlined in the affidavits was
the subject of a January meeting at a posh Kyiv restaurant between Peter Quinn,
Quinn Jr. and Yanez Puga, Volodymyr Hurtovy, Univermag’s deputy director, Donetsk
Oblast lawyer Dmytro Zaitsev, and an unidentified Mr. Orlov.
The purpose of the meeting, according to the
affidavits, was to discuss $500,000 worth of missed payments from Univermag to
the Quinns’ Irish firm.
A 15-minute excerpt of the 90-minute meeting has been
made available online. The video shows friction between the parties and gives
the appearance of a business relationship breaking down. In the video, only
$100,000 of cash was offered to the Quinns who expressed displeasure and doubt
over being able to take that much hard currency out of Ukraine back to Ireland.
Quinn Jr. in the affidavit maintained that that was
the last day he had communicated with Yanez Puga, and that neither he nor the
family controls the Ukrainian property, as well as other foreign assets. He
also expressed fear that without the cooperation of intermediaries, he won’t be
able to reverse the transactions that led to Ukraina’s asset stripping, thus
not being able to comply with court orders.
However, IBRC doesn’t believe that the Quinns don’t
control these assets anymore.
“I
sanctioned the initial strategy last year (in 2011) to frustrate [the bank],”
said Quinn Sr. in his affidavit, reported the Irish Times. “I take full
responsibility for the consequences of that strategy”, which are that the
family is not able to do as the court has ordered.
A chain of
what IBRC has called “fictitious” loan assignments has led to Univermag
Ukraina’s asset stripping. Lawyers for IBRC on July 4 discovered that the
rights to a $45 million debt claim over the Ukraina shopping mall was on June
22 transferred to two Ukrainian companies.
The
supplemental loan agreement belonged to Lyndhurst, a British Virgin Islands
company, that the Dublin High Court found was actually controlled by a member
of Sean Quinn Sr.’s family. It formerly belonged to Demesne Investment in
Fermanagh, Northern Island where a Quinn family member was a former director.
In April 2011, around the time that the Moscow law firm was retained on behalf
of the Quinns, the debt was transferred to Innishmore Consultancy, another
Northern Ireland company run by Peter Quinn.
However, in
June a Kyiv city commercial court successfully allowed for Lyndurst’s debt
claim to be substituted by Elegant Invest. Elegant is registered in the capital
on 11 Spasska Street. This company now has the rights to the $45 million debt
claim over Univermag Ukraina.
Elegant
Invest’s director Ruslan Horbyk declined to answer questions when contacted
over the phone on July 5 by the Kyiv Post.
Lawyers for
IBRC argued that the transfers amounted to further attempts to place the
multi-million dollar asset beyond its reach.
In a
separate court case in Northern Ireland, Judge McCloskey said that those
responsible for the debt transfers were taking part in “an orchestrated,
elaborate and illicit charade.”
The judge
stated: “With each passing phase of this litigation, the correctness of this
finding is vindicated and fortified.”
McCloskey
further stated: “Independent of my primary conclusion, there is clear prima
facie evidence that the process of this court has been seriously misused by
Lyndhurst.”
Quinn Sr.,
Quinn Jr., and Peter Quinn are scheduled to see a Dublin judge on Oct. 19,
during which Quinn Sr. could be sent to jail for failing to reverse the asset
stripping transaction he allegedly sanctioned.
Kyiv Post staff writer Mark Rachkevych can be
reached at [email protected].
