PBG counted on good returns in 2018 when it invested $30 million into Energopol-Ukraine, receiving 51% of its shares. The company for many years has been actively building facilities in Ukraine's fast growing construction market.
Instead of seeing profits, a criminal investigation has been launched into what happened to $50 million from the developer's cash register.
Where did the money go?
Energopol-Ukraine's Polish manager Dariusz Szymanski is the main suspect in the case, according to Ukraine's Interior Ministry, which suspects him of incurring $50 million in damages to PGB shareholders, including the parent company. Szymanski is suspected of embezzlement and money laundering.
A criminal case was opened at the request of Ukrainian shareholders, who own 23% of the company. They consider themselves victims. Yuriy Sukhov, their lawyer, shed light on the shenanigans.
"Of the $240 million promised in 2008, PBG invested only $30 million with Energopol-Ukraine. But only $9.7 million was invested directly in construction. The remaining funds were used in other transactions that law enforcement agencies are now looking into. That's what we are trying to figure out," said Sukhov, who previously gained notoriety in Ukraine defending the interests of the country's leading politicians.
A copy of a statement made by Energopol-Ukraine minority shareholder Oleksander Klymenko lays out the mechanism used to siphon off funds from the company.
The statement says Energopol-Ukraine ten years ago started first-phase construction on a housing complex in Kyiv, on Kondratiuk 1 Street. The actual contractor who performed the work was Investments and Construction Company.
Two other companies – PBG-Ukraine and Stroy Holding – were intermediaries in between the customer and the real contractor. Payment for their services was not the usual 3%-5% rate, but much, much more.
PBG's Ukrainian partner, the ultimate beneficiary of which is Jerzy Wisniewski, received about $3 million as a result of overstating the costs of construction in which he did not participate.
Meanwhile, financial statements showing the success of intermediary firms involved in the venture were used to highlight the success of Polish investments in Ukraine. The market viewed the initial investment as the launch of a successful venture
Wisniewski and the board of creditors knew what was actually going on but remained silent.
Energopol-Ukraine minority shareholder Klymenko for many years attempted to rectify the situation without creating a scandal that would have been detrimental to his entire business.
In early 2019, Klymenko sent a letter to Wisniewski and PBG's Board of Creditors informing them about the financial abuses, as well as gross violations in the management of the company, which for years failed to provide information to shareholders about the state of affairs in the project and transgressions by managers.
The letter was not sufficient grounds for Wisniewski or PBG to commission a transparent and independent audit, reassure partners or initiate an action plan to stabilize the situation.
So far, attempts to justify the current state of affairs have fallen flat
Where exactly did the $50 million in losses announced by the Ukrainian shareholder of Energopol-Ukraine come from?
According to Klymenko's calculations, which Ukraine's Interior Ministry is now checking, a little more than $20 million of the $30 million invested by Poland's PBG was pilfered.
Funds on the account of Energopol-Ukraine were transferred based on fictitious contracts. For example, $5 million was spent on drawing up a "business plan" for a project in which only $9.7 million was actually invested. In addition, $7 million was transferred to a Polish company "for the production of project documentation." Initially, the money was transferred to a small intermediary firm, and then withdrawn to Poland.
No less interesting are other strange payments by Energopol-Ukraine to third-party companies made under strange circumstances, such as when the company was obliged to pay a penalty for non-fulfillment of a contract, which it had neither formal grounds nor opportunities to fulfill.
Total damages from these dubious operations are estimated at $50 million, with losses to the Ukrainian shareholder in the form of lost dividends at about $17 million.
How the dispute is eventually resolved already depends on Ukraine's law-enforcement agencies and the country's recently reformed judicial system.
Lawyers say even if only a part of the scandalous accusations are recognized by the courts, the Energopol-Ukraine's director and members of the company's supervisory board face lengthy jail terms.
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