The seemingly never-ending saga of the Ukraina shopping center took another turn in an Irish court.
A high court in Dublin on June 20 extended orders to freeze the
assets owned or controlled by the five adult children of bankrupt Irish
businessman Sean Quinn Sr., his nephew Peter Daragh Quinn and two
sons-in-law. More than $500 million of foreign properties, including the
$78 million Univermag Ukraina shopping center and its estimated yearly
$10 million in revenue from tenant leases, were once structured into a
Swedish holding company controlled by the adult children of Sean Quinn
Sr.
The orders were based on an affidavit, obtained by the Kyiv Post,
submitted on June 14 by an executive of the Irish Bank Resolution
Corporation to which the Quinn family owes more than $3 billion. The
bank granted the order the same day.
A state-owned Irish Bank, IBRC has struggled to claim much of the
$500 million of foreign property assets, including the
42,000-square-meter Ukraina shopping mall located in Kyiv on Prospect
Peremohy. Since April 2011, IBRC has been losing court battles in
Ukraine to take over the lucrative shopping mall.
Ireland’s prime minister has taken up the matter with President Viktor Yanukoyvch.
The fight over the Ukraina shopping mall is just one battle in the
bigger business war being fought over assets once controlled by the
Quinn family. But it has nonetheless become one of the most recent
episodes highlighting Ukraine’s notoriously weak property rights
environment in which murky court decisions and muddled legislation are
exploited by so-called “raiders” to manipulate ownership of assets or
shake down businesses. The problem has over the years been cited as one
of the main problems that scare off foreign investment.
First Deputy Prime Minister Valery Khoroshkovsky stepped in on May
29, ordering law enforcement bodies to investigate the alleged illegal
takeover of the shopping mall, as well as the actions of judges and
court involved in legal proceedings surrounding the property.
One of Ukraine’s wealthiest individuals, Khoroshkovsky chairs the
inter-governmental committee on company takeovers. He also asked the
Interior Ministry, General Prosecutor’s Office and Security Service of
Ukraine (SBU) to put an end to extralegal “raider” attacks on
properties.
In Ireland, the affidavit outlined in detail how the Quinn family has
allegedly continued to “dissipate” assets that essentially have
prevented the IBRC from gaining control of property in Russia, Ukraine,
India and in other countries.
The bank executive said new evidence was uncovered in recent months that
demonstrate the extent to which steps have been taken by the Quinn
family and their agents to shift and appropriate assets in which IBRC
has an interest.
“The necessity for the injuction arose because evidence had emerged of
the June 27 Defendants (Quinn Investments Sweden AB (in bankruptcy),
Sean Quinn, Ciara Quinn, Colette Quinn, Sean Quinn Jr., Brenda Quinn,
Aoife Quinn, Stephen Kelly, Peter Quinn, Niall McPartland and Indian
Trust AB) transferring shares of International Property Group companies
into a new structure created for the purpose in order to bypass security
held by IBRC,” read part of the affidavit obtained by the Kyiv Post.
The asset freezing order follows two restraining orders issued in June
and July 2011 by the High Court of Dublin that ordered three Quinn
family members from taking action on implementing an elaborate scheme to
put assets beyond the reach of IBRC.
The Dublin High Court has yet to rule on whether Sean Quinn Sr., Peter
Quinn and Sean Quinn Jr. are in contempt of court for not adhering to
restraining orders.
When granting the asset freezing orders, the High Court judge said the
allegation against the defendants were of the “utmost seriousness” and,
given the “alleged deviousness,” he considered the court should
intervene and make the orders sought, the Irish Times reported on June
14.
The Quinn family has not denied the claim by IBRC that it has sought to
put the $500 million of international properties beyond the bank’s
reach. However, the defendants have maintained that they stopped any
attempts once the restraining orders were issued in 2011.
IBRC has been thwarted in Ukraine’s commercial courts by the shopping
mall’s former management, allegedly led by Laryssa Yanez Puga, who the
bank contends is acting on the behalf of the Quinn family. IBRC has been
unable to install its own management team at the shopping center and
has faced other lawsuits in Ukraine relating to the validity of a loan
agreement and the possession of the actual shares in the mall.
IBRC claims the Quinns were still linked with Puga as early as August,
when they allegedly gave her a “golden parachute” payment of $500,000.
The Quinns deny the payment was made.
The Kyiv Post has been unable to reach Yanez Puga for comment.
Meanwhile, a Kyiv court on May 18 upheld a $45 million debt claim by a
mysterious British Virgin Islands company over the shopping mall’s
management company, despite an Irish court injunction preventing the
company from retrieving the debt, which the bank claims is fraudulent.
Peter Quinn, Quinn Sr.’s nephew, gave testimony in Ireland in recent
months that he believed both the Quinn Group and the bank had been
tricked by the mall’s former management that still controls the shopping
center. On March 30, he testified that Yanez Puga was behind Lyndhurst –
the British Virgin Islands Company claiming the $45 million debt over
the mall’s management company – and that he had trusted her once but not
anymore.
Quinn’s nephew also said that at one stage his lawyers and the bank’s
lawyers had met at his suggestion, because of his fear that neither side
would end up with the shopping center in Kyiv.
The adult children of Quinn Sr., his nephew and two sons-in-law had
assets frozen worth below 50 million euros each except for living
expenses of 2,000 euros.
Kyiv Post staff writer Mark Rachkevych can be reached at [email protected]
