Acting on a Moscow district court ruling, Russian authorities seized $39 million worth of property belonging to Ukrainian President Petro Poroshenko's Roshen confectionary in the Russian city of Lipetsk, according to an April 28 company statement.
The latest in a tightening Russian vice on the candy factory since last year’s Ukraine EuroMaidan Revolution, the asset seizure took place on April 24. While Russia is alleging Roshen dodged $3.5 million in taxes, there was no explanation for why property worth more than 10 times that amount was seized.
Kyiv-based political analyst Vitaliy Bala described the probe into Roshen as “directly related” to Russia’s war against Ukraine.
Moscow-based political analyst Dmitry Oreshkin said Russia wants to “pile pressure” on Poroshenko and fuel Kremlin propaganda “that he’s at war with Russia but still doing business on its territory.”
Saying the claims are are a “show,” Roshen said this week it will appeal the April 16 Bassmanny District Court ruling that enabled the asset seizure.
During the presidential election campaign last year, Poroshenko pledged to sell his significant assets, including Roshen.
Bala, the political analyst, said the pressure underscores the need for Poroshenko to sell his property there. But Roshen in its April 28 statement said “the Russian side is intently using all possible methods that are depriving the company of the possibility of selling its assets in the Russian Federation.”
The company reportedly controls 7 percent of the Russian confectionary market and its Lipetsk factory accounted for as much as 20 percent of total production in 2014. Ranked the world’s 22nd biggest confectionary business in the world by Candy Industry, which covers the industry, Roshen in mid-February reported a nine-fold boost in net profit to Hr 34.8 million ($16.1 million) for 2014.
Earlier this month the business announced that it had closed a plant in Mariupol, the Azov Sea port city which Russian-backed separatists have pledged to capture. Production at the Mariupol plant, located less than 20 kilometers west from front lines where combined Russian-separatist forces and government troops continue to clash daily, was suspended in February 2014.
Headquartered in Kyiv, Roshen operates three other Ukrainian factories – one each in Kyiv, Vinnytsia and Kremenchuk. It also has production in Lithuania and Hungary.
The tax evasion charges stem from a value-added tax rebate for which the candy business applied in 2012-2013. Vladimir Markin, a spokesman for the Russian Investigative Committee, said that Roshen had submitted forged documents to the Federal Tax Service when applying for a rebate. Roshen denied the charge.
On March 21, 2014, Roshen said in a statement that it had invested $175 million in the construction of plants in Russia. Yet the nation’s state consumer rights watchdog, Rospotrebnadzor, banned the import of Roshen’s confectionary goods on July 29, 2013 for “unjustified” reasons, according to Roshen.
Last year, Russian authorities blocked the premises in Lipetsk related to criminal and civil disputes on the use of trademarks. The Tver District Court in Moscow froze Roshen’s Russian bank accounts containing $55 million after a lawsuit initiated by Moscow-based Uniconf.
Kyiv Post staff writer Alyona Zhuk can be reached at [email protected]. Kyiv Post staff writer Oleg Sukhov contributed to this article.
