You're reading: Khoroshkovsky steps into Ukraina mall battle

One of Ukraine’s most powerful officials and richest businessmen on May 29 ordered law enforcement bodies to investigate the alleged illegal takeover of the capital’s $78 million Ukraina shopping center, as well as the actions of judges and courts involved in legal proceedings surrounding the lucrative property.

News of the move offers fresh hope that the nation’s leadership is stepping up efforts to properly handle a long-running business dispute which has been complicated by suspicious Ukrainian court rulings, in turn increasing concerns about property rights in Ukraine’s notoriously horrible investment climate.

The order from First Deputy Prime Minister Valeriy Khoroshkovsky came after a meeting of the inter-governmental committee on company takeovers that he chairs. 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.

“The situations that we examine at committee meetings develop according to one scenario. The court makes an illegal ruling. The authorities don’t react accordingly. As a result, property gets taken away from the rightful owner,” Khoroshkovsky said in a May 29 press release.

He added: “If the government doesn’t take action with the purpose of taking sides or correcting the situation, then it’s practically an abettor of unlawful action.”

Khoroshkovsky’s order comes after a Feb. 9 conclusion made by the committee he chairs that determined the lucrative shopping center was the subject of a raider attack. In such common risks to investors in Ukraine, “raiders” exploit the nation’s muddled legislation and corrupt courts to wrestle away control over a business or assets.

Kyiv’s business community welcomed the move by Khoroshkovsky. "I hope that this can be perceived as a positive step in the right direction of improving the investment climate," said Anna Derevyanko, executive director of the European Business Association. "Now we would like to see action taken as well."

Quinn Holdings Sweden is the 93 percent shareholder of Ukraina shopping center. The holding was once part of Irishman Sean Quinn’s billion-dollar business empire that went bankrupt and now is under the control of his creditor, state-owned Irish Bank Resolution Corporation.

IBRC has since April 2011 been unable to take control over Ukraina and its estimated $10 million rent roll, as well as other foreign properties once owned by the Quinn family in an effort to recoup more than $1 billion of debt.

IBRC and Quinn Holdings Sweden have 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. The Irish state-owned bank 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.

The Irish state-owned bank alleges that the Quinn family has kept assets of foreign properties it once owned out of the reach of the bank through offshore companies and other means. IBRC says the Quinns are in contempt of court in Ireland for continuing to shift assets even after the lender gained court orders last year to stop this.

Meanwhile, a Kyiv court on May 18 upheld a $45 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, Sean’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 High Court in Dublin is expected to rule whether the Quinns were in contempt of court on June 6.

Kyiv Post staff writer Mark Rachkevych can be reached at [email protected].