Ukraine’s Supreme Court on Nov. 25 upheld an arbitration court ruling that state-owned energy company Naftogaz is required to return natural gas worth nearly $3 billion to a company owned by Russia’s state-controlled Gazprom and businessmen close to President Viktor Yanukovych.
An international arbitration court in June ruled that Naftogaz must transfer 12.1 billion cubic meters of gas to RosUkrEnergo, 50 percent owned by Gazprom and 50 percent owned by Ukrainian billionaire Dmytro Firtash and partner Ivan Fursin.
The controversial RosUkrEnergo monopolized the lucrative business of supplying Ukraine with gas from 2006 through 2008 until being cut out of the business in early 2009 by then-Prime Minister Yulia Tymoshenko.
The government used the legal system to siphon big sums of money out of the taxpayers’ pockets to satisfy the interests of a private company.”
– Serhiy Vlasenko, a lawmaker and member of Tymoshenko’s political camp.
As prime minister, Tymoshenko described the company’s role as non-transparent and argued that it acted as a “parasite” on Ukraine’s energy market, earning huge profits for business interests close to Yanukovych. But since she narrowly lost February’s presidential election to Yanukovych, RosUkrEnergo has gradually but steadily moved to regain the disputed gas volumes, which Ukraine acquired in early 2009 as part of a compromise with Gazprom that ended a two-week energy standoff.
All attempts by Naftogaz to appeal court rulings against its favor, which would cost it $2.8 billion under the current price, have failed so far. The Supreme Court ruling means there are no other venues to challenge it.
“The appeal by Naftogaz has been examined by the court and had been rejected,” the Supreme Court’s spokeswoman said.
Government officials had not, as of late Nov. 25, confirmed whether the gas had already been transferred from Naftogaz to RosUkrEnergo. But the move was expected to be cleared in coming days.
Meanwhile, members of the opposition do not believe that the government did its best to defend Naftogaz in court, suspecting it has all along played on RosUkrEnergo’s side.
“The government used the legal system to siphon big sums of money out of the taxpayers’ pockets to satisfy the interests of a private company,” said Serhiy Vlasenko, a lawmaker and member of Tymoshenko’s political camp. According to Vlasenko, the government made no real attempt to defend itself in court against the Swiss-registered gas intermediary.
Tymoshenko has – while prime minister and now as opposition leader – repeatedly claimed that Firtash and Fursin are close associates of Yanukovych and his chief of staff, Serhiy Lyovochkin.
I am sure that RosUkrEnergo is used by Yanukovych as the main source of income for his political and non-political activities.”
– Yulia Tymoshenko.
Yanukovych, Lyovochkin and Firtash have repeatedly denied wrongdoing. This fall, Lyovochkin admitted to being close friend with Firtash and Fursin, but denied the existence of a conflict of interest or common business interests with them. Fursin denied comment when approached by a Kyiv Post editor this autumn. Firtash has consistently refused comment to the Kyiv Post.
But London-based Global Witness, an international anti-corruption watchdog, has repeatedly in recent years questioned the role and transparency of RosUkrEnergo.
Tymoshenko has in recent weeks called upon the international community and Ukraine’s main creditor, the International Monetary Fund, to investigate RosUkrEnergo. She warns that a significant chunk of $15.5 billion in loan assistance provided to Ukraine by the IMF could be used de facto to cover losses incurred by the transfer of the gas to RosUkrEnergo.
Ukraine’s government said last year that it had bought the disputed gas from Gazprom for $1.7 billion after RosUkrEnergo failed to pay the Russian gas giant for it.
Dominique Strauss-Kahn, head of the IMF, said last month that Russia should help Ukraine repay the RosUkrEnergo debt. He said cash-strapped Kyiv could not afford a straightforward cash settlement.
