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You're reading: Ukraine court tells government to pay for Tymoshenko firm failed deal

(Reuters) - A Ukraine court on Wednesday ordered the government to pay Russia $382 million over a failed deal involving a company once run by former prime minister Yulia Tymoshenko, a move that could prompt fresh legal action against the jailed politician.

Tymoshenko, the key political opponent of
President Viktor Yanukovich, was sentenced to seven years in prison last
October on abuse-of-office charges in a case the West saw as an example of
selective justice.

Despite calls from Brussels and Washington for
her release, Ukrainian prosecutors have heaped more charges on Tymoshenko,
bringing her to court in a tax evasion and embezzlement trial and investigating
her over a 1996 murder case.

In a case that could have further legal
repercussions for Tymoshenko, a court in Kyiv ruled on Wednesday the Ukrainian
government owed Russia’s Defence Ministry 3.1 billion hryvnias ($382 million)
over a deal in which she was involved.

According to the ruling, Unified Energy Systems
of Ukraine (UES), a now-defunct company run by Tymoshenko in the 1990s, signed
a deal with the Russian ministry in 1997 to supply it with various goods.

The Ukrainian government had acted as a
guarantor to the firm, the court said, which then failed to deliver the agreed
supplies, prompting a lawsuit from the Russian side.

“The court has decided to partly uphold
the complaint,” Judge Anatoly Ivchenko told the courtroom. The court
slightly reduced the payout from the 3.2 billion hryvnias ($394 million) sought
by Russia.

Lawyers for both sides declined to comment on
the ruling.



The move exposes Tymoshenko to further legal
action, either as part of her current embezzlement and tax evasion trial which
also dates back to her time at UES, or in a separate case.

According to Ukrainian law, the government must
seek compensation from companies to which it acts as a guarantor if it has to
assume their liabilities.

Tymoshenko, 51, who has been receiving
treatment for back trouble in a state-run hospital since May, is challenging
her initial abuse-of-office conviction in the European Court of Human Rights
and has denied any wrongdoing.

A leader of the 2004 “Orange
Revolution” protests which derailed Yanukovich’s first bid for presidency,
she has accused him of extracting revenge and trying to weaken the opposition
ahead of the October 28 parliamentary election.

The European Union shelved a landmark agreement
on free trade and political association with Ukraine after her conviction, and
the United States said this month the upcoming vote could further distance Kyiv
from the West.

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