Editor’s Note: This is issue 150 of Ukrainian State-Owned Enterprises Weekly, covering events from Sept. 29 – Oct. 5, 2024. The Kyiv Independent is reposting it with permission.
Corporate governance of SOEs
Cabinet completes the composition of UDI’s supervisory board. On Oct. 4, the Cabinet of Ministers appointed Timur Bondaryev as an independent member of Ukrainian Defense Industry’s (UDI) supervisory board. This appointment completes the composition of the board, liga.net explained.
Timur Bondaryev is the founding and managing partner of Arzinger Law Firm, as well as a senior lecturer at the department of private law at the Kyiv Mohyla Academy.
As we wrote in June 2023, the State Concern Ukroboronprom was dissolved and replaced by a joint-stock company called Ukrainian Defense Industry (UDI). See Issue 95 for more detail.
In January 2024, we reported that the Cabinet of Ministers appointed UDI’s supervisory board. Oleksiy Honcharuk and Serhiy Konovets are independent members, while Tymofiy Mylovanov, David Lomjaria, and Linndy Smith are state representatives. On Jan. 16, Lomjaria was elected as the board chair. See Issue 115 for more detail.
Note that according to UDI’s charter, the supervisory board should consist of six members: half of the board must be made up of independent members, and the other half, of state representatives.
Note also that we are not aware of any public information on the competitive selection for UDI’s supervisory board, in particular, the selection of its independent members.
Dmytro Basmat
NABU completes the pre-trial investigation into the Sennychenko case, says SPFU’s former head and his accomplices embezzled millions. On Ot. 4, the National Anti-Corruption Bureau of Ukraine (NABU) and the Specialized Anti-Corruption Prosecutor’s Office (SAPO) announced that they had completed their investigation into a criminal group run by the former head of the State Property Fund of Ukraine (SPFU) in 2019-2021. Although NABU or SAPO do not name the suspect, Dmytro Sennychenko was the SPFU head during that period.
NABU and SAPO said that the group embezzled more than Hr 700 million (roughly, 23 million euros at the average exchange rate over the period to which the investigation refers) from state-owned enterprises, including the Odesa Portside Plant (OPZ) and the United Mining and Chemical Company (UMCC), as well as laundered Hr 10 billion (around 333 million euros) in 2019-2021.
As we reported in March 2023, NABU and SAPO said that they had exposed a criminal group run by Sennychenko. See our Issue 80 for detail.
Sennychenko headed the SPFU from September 2019 to February 2022. He filed his resignation letter in November 2021, but the Verkhovna Rada only approved his resignation on Feb. 17, 2022.
Back then, Ekonomichna Pravda (EP) contacted Sennychenko for comment, and he replied that he would “definitely provide a comment after consultations with a legal team," which he said would take several days. We are not aware of any public comments by Sennychenko since March 2023.
As we reported in Issue 83, the suspects in this case, including Sennychenko, were placed on the wanted list in April 2023.
In November 2023, we wrote that NABU and SAPO filed additional suspicions against all members of the criminal group allegedly led by Sennychenko. They are now also suspected of legalizing criminal proceeds of over Hr 10 billion (around 333 million euros in 2019-2021).
According to NABU, Sennychenko’s accomplices included:
- a person close to the head of the SPFU (co-organiser) – the NABU did not name the suspect but, according to the media, it is Andriy Hmyrin;
- an adviser to the head of the SPFU – Yuriy Lypko;
- two acting CEOs of OPZ at different times – Mykola Parsentyev and Mykola Synytsia;
- the acting CEO of UMCC – Artur Somov;
- two owners of the company that won the auction for the supply of natural gas to OPZ – Oleksandr Horbunenko and Volodymyr Kolot, co-owners of Agrogaztrading; and
- two other accomplices – Pavlo Prysyazhnyuk, investment banker (according to Censor.Net’s sources, Prysyazhnyuk was Sennychenko’s “curator” from the authorities), and another defendant.
In addition, on Dec. 12, 2023, NABU and SAPO served a notice of suspicion to Denys Kudin, former first deputy head of the SPFU. (He also served on the supervisory board of OPZ. See our Issue 114 for detail.
In February 2023, Ukrnafta’s CEO Serhiy Koretskiy wrote that Kudin, who had recently stepped down as first deputy economy minister, was appointed to head Ukrnafta’s department for strategy, development, and government relations. See Issue 75 for more detail.
Kudin worked with Koretskiy for the WOG chain of petrol stations in 2013-2018. Kudin has been the first deputy economy minister since November 2021. Before that, he was first deputy head of SPFU.
On the same day, Dec. 12, 2023, Kudin confirmed that he had received the notice of suspicion. He stated that he would prove his innocence via legal means.
On Jan. 17, the High Anti-Corruption Court (HACC) court set bail for Kudin at Hr 9 million (around 218,000 euros at that time), after which he posted on Facebook that he did not agree with the court ruling and would challenge it in an appellate court.
We are not aware of any statements by Kudin on his criminal case since then.
As we reported in May 2024 (Issue 131), the HACC ordered detention for Sennychenko, who is wanted internationally.
Kateryna Denisova
Banks
PrivatBank sells petrol stations and land plots, previously controlled by Kolomoisky, for almost Hr 700 million ($16.9 million). On Sept. 27, PrivatBank held an auction on the SETAM platform for the sale of 245 petrol stations and 33 land plots located in 21 oblasts, EP reported.
Back in 2016, PrivatBank, then controlled by the Privat group associated with tycoons Ihor Kolomoisky and Hennadiy Boholyubov, received 120 oil depots and 248 petrol stations as collateral at the request of the National Bank of Ukraine (NBU).
During August-September 2016, the bank leased all of them to companies related to its former shareholders. The lessees then subleased them to other companies associated with the Privat group.
On Dec. 18, 2016, PrivatBank was nationalized due to a shortage of funds and the risk of bankruptcy. For the first four months after the nationalization, PrivatBank received payments under leasing agreements, but the borrowers then stopped paying.
This forced PrivatBank to start the process of terminating these agreements and regaining control over the petrol stations in 2019-2020. The court allowed PrivatBank to seize 245 of these stations in November 2023.
According to EP and Forbes Ukraine, most of the former ANP and Avias petrol stations controlled by the Privat group were put up for sale.
The winner offered Hr 695.9 million ($16.9 million), which was only 0.3% more than the starting price. The winner undertook to pay in full within 10 banking days.
The winner’s name was not disclosed on the SETAM platform. However, according to EP, it is a little-known company Max Energy Resource LLC, founded and owned by Ihor Suprunenko. Max Energy Resource only started importing fuel after the outbreak of the full-scale war, when the EU became a dominant source of fuel supplies to Ukraine, EP added.
According to Suprunenko, the company only imports petroleum products and is not part of any oligarchic groups. He added that Max Energy Resource has several co-owners but did not disclose their identities.
In his interview with EP, Suprunenko also stated that the company’s 2023 revenue was approximately Hr 1.5 billion (37.9 million euros at the average exchange rate over that period). He explained that the main goal of the purchase was to develop the network. “We want to take a certain segment in the petroleum products market, increase competition, and supply quality fuel,” he said.
Suprunenko said the company planned to launch up to half of the petrol stations they acquired over the next year, with 55-60 petrol stations in the first stage (six months) and another 50-60 stations in the second stage. The remainder required restoration, and about 50 petrol stations were either destroyed or located in the occupied territories, he clarified.
According to Suprunenko, a total of Hr 1.2 billion ($29 million) will be invested in the project over the first year, which includes the above Hr 700 million ($16.9 million) to be paid for petrol stations. Max Energy Resource has yet to obtain a merger clearance from the Antimonopoly Committee of Ukraine, he added.
Dominic Culverwell
Defense
UDI to cooperate with four NATO arms companies. On Oct. 2, UDI reported that it signed partnership documents with arms companies from the U.S., France, and Poland.
The partnership includes cooperation in the areas of ammunition and special chemicals, unmanned aerial vehicles, as well as electronic intelligence and electronic warfare. UDI did not disclose the names of the companies, probably for security reasons.
As we wrote in Issue 114, during 2023, Ukrainian state-owned defense companies reported that they started manufacturing new weapons and signed cooperation and joint production contracts with various counterparts in NATO member states. See Issues 74, 79, 88, 91, 97, 105, 108, and 111 for more detail.
The Kyiv Independent news desk
Privatization
Land Bank holds first auctions, leases state agricultural land for Hr 35 million ($849,000). On Oct. 1, the State Property Fund of Ukraine (SPFU) reported the results of the first 16 online auctions for sublease of state agricultural land within the Land Bank project.
According to the SPFU, 94 bidders competed for 16 land plots in Vinnytsia Oblast with a total area of 1,075 hectares. The total value of the sublease increased by more than eight times compared to the starting prices. The average sublease price was Hr 33,000 ($801) per hectare, the SPFU added.
The sum of the winning bids was slightly over Hr 35 million ($849,000), and 10 bidders won the auctions. They must sign sublease agreements within 20 working days and then pay the price of the assets plus VAT within the next five working days. Then, they will obtain the right to use the land plots for a period of 14 years, the SPFU explained.
By the end of 2024, another 1,900 auctions are planned for more than 100,000 hectares in 20 oblasts.
As we reported in June 2023, the SPFU was working out plans to centralize state property management, which included setting up a land bank (see Issue 93).
We then wrote that the Cabinet transferred 25 SOEs, previously managed by the National Academy of Agrarian Science, to the SPFU on Aug. 11, 2023. (see Issue 100).
In June 2024, the Cabinet took away 2,764 agricultural land plots with a total area of more than 104,000 hectares from SOEs. The SPFU-managed Agrarian Investment Fund was given control. The SPFU then announced that preparations for the Land Bank were complete. The next step was to corporatize the Agrarian Investment Fund, so it could act as a land auction operator (see Issue 136).
In August, the SPFU completed the corporatization of the Agrarian Investment Fund, creating State Land Bank LLC on its basis (see Issue 144).
Shortly after that, the SPFU-managed State Land Bank announced the first 16 auctions on Prozorro.Sale for the lease of state agricultural land (see Issue 145).
Starting from July 1, 2021, Ukrainian citizens can legally buy and sell agricultural land. However, the sale and purchase of state-owned and communal agricultural land remain banned.
Ukrainian SOE Weekly is an independent weekly digest based on a compilation of the most important news related to state-owned enterprises (SOEs) and state-owned banks in Ukraine.
The contents of this publication are the sole responsibility of the editorial team of the Ukrainian SOE Weekly.
The SOE Weekly is produced and financed by Andriy Boytsun. Communications support is provided and financed by CFC Big Ideas. The SOE Weekly is not financed or influenced by any external party.
Editorial team: Andriy Boytsun, Oleksiy Pavlysh, Dmytro Yablonovskyi, and Oleksandr Lysenko.
Abbey Fenbert
