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Dragon Capital firm complains about pressure from authorities, Bureau of Economic Security denies

by Martin Fornusek May 24, 2024 3:57 PM 3 min read
Victoria Gardens in Lviv. (Victoria Gardens)
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The Dragon Capital investment group has come under undue pressure from the Bureau of Economic Security (BEB) over the activities of one of its key assets, the company said in a statement on May 24.

The bureau issued a statement in response, calling Dragon Capital's accusations "manipulation."

Representatives of Ukraine's business sector have repeatedly complained about growing pressure from the authorities, particularly from the controversial bureau. The government promised steps that would mend the relationship between the business and the state.

Dragon Capital is Ukraine's largest investment company whose portfolio includes Ukrainska Pravda, one of the country's leading newspapers.

"Over the past few months, we have come to realize that the authorities of the Bureau of Economic Security of Ukraine are paying increased attention to the activities of the Victoria Gardens shopping and entertainment center... in Lviv," the company's statement read.

The shopping center is owned by the Europolis Property Holding company, which Dragon Capital purchased in 2018.

The bureau opened a tax evasion criminal case related to Victoria Gardens in 2017, one year before Dragon Capital's acquisition.

Dragon Capital said that Europolis Property Holding's employees in Lviv Oblast have been questioned, and "it seemed that all the issues... had been resolved."

In May 2024, Europolis Property Holding received a request from the bureau's detectives over another case from 2017 requesting the same explanations and documents as were already provided.

After the company submitted the necessary documents but was reminded that they were already subject to another investigation, the bureau issued another request along with a warning of possible seizures and searches.  

"Dragon Capital believes that duplicating the work of the bureau's detectives and involving the company in such 'historical' proceedings is a form of pressure on our business," the statement read.

"Dragon Capital calls for the cessation of such practices and the provision of favorable conditions for doing business in Ukraine.

"The company hopes for the support of government authorities in creating a transparent and fair business environment."

MP Yaroslav Zhelezniak: Developments in Ukraine’s parliament on economic reforms, international obligations — Issue 51
Editor’s note: This is issue 51 of Ukrainian lawmaker Yaroslav Zhelezniak’s weekly “Ukrainian Economy in Brief” newsletter, covering events from April 8- 14, 2024. The digest highlights steps taken in the Ukrainian parliament related to business, economics, and international financial programs. The…

The bureau denied exerting pressure on the company, calling the accusations "manipulation" and saying that the detectives are in full right to collect information as part of criminal proceedings.

The agency also said that the tax evasion case was closed in February this year, while the case from May was referred to the bureau from the National Police through the prosecutor's office.

"As part of verification of the presented data, the detectives sent a request for information to the address of the mentioned company," the statement read.

"Currently, materials on the closure of this criminal proceeding are being prepared."

Earlier this month, CEO Club Ukraine, a club of Ukrainian business leaders, said that its premises were searched by the bureau's detectives and linked it to a supposed smear campaign against the club.

The business association has previously called for reforms of the bureau to, in their own words, prevent it from becoming "an instrument of bribery and political pressure."

The bureau was established in 2021 as the key agency for combatting economic crimes. Several media outlets and civil society organizations have complained since then that the body fell under the unofficial influence of Oleh Tatarov, a deputy head of the Presidential Office.

On April 11, the parliament passed in the first reading a bill on reforming the bureau to meet the requirements of domestic actors and international partners.

Business association CEO Club says it was searched, complains of smear campaign
CEO Club Ukraine, a club of Ukrainian business leaders, said on May 6 that its premises were searched by the Bureau of Economic Security (BEB) in April and linked it to a supposed smear campaign against the club.
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