International Investment Fund Will Appeal to Western Embassies and Missions due to a Sponsored Show Search Carried out by the Security Service of Ukraine

Investohills Helianthus (“Fund”), an international investment fund operating in the interests of American and European investors, is sending an open letter to the embassies of the USA, the UK, Italy, and the European Union Delegation to Ukraine in connection with abusive acts perpetrated by the personnel of the Security Service of Ukraine (“SBU”) that have signs of a contract hit.

What is going on? In the morning of July 14, 2022, over 50 SBU crashed into the office shared by the Fund and Investohills Group of Companies (“Group”) that manages the Fund’s assets. Members of the SBU led by the investigator V. S. Lytvyn came to carry out an abusive show search of Kyiv offices of the Fund and the Group based on a ruling issued by Halytskyi Raion Court of the city of Lviv (by the investigative judge Nataliia Zubachyk).

As the subsequent check showed, the SBU had contacted investigative judges of various courts in Kyiv who rejected its multiple requests for a decision to authorize office searches on questionable grounds until it later obtained the desired ruling from Halytskyi Court.

During the search, the Fund invited attorneys and representatives of the Kyiv City Council of Attorneys. After several hours of discussions with leaders of the investigation team, attorneys of the Fund managed to explain to the SBU personnel that the court ruling they used to search the office may not be executed because the manner of its execution chosen by the SBU (by searching office space and seizing documents) is fraught with significant violations. After consultations with the pre-trial investigation supervisor from the prosecution office, the investigative team stopped its search but only for so much time.

On the night of July 14, after the curfew, several dozens of SBU officers arrived at the office again, this time without any court ruling, to carry out “urgent investigative action” and proceeded to search the offices. As a result, the search took almost two full days; it was performed with numerous violations recorded by the attorneys.

During the search, the SBU attempted to seize all available documents related to the financial and business activities of the Fund and the Group, as well as PCs, company charters, and corporate seals. Furthermore, accounts of several companies were frozen, and business operations of several companies of the Group were suspended in full at the request of the SBU.

It was found out that the criminal proceedings were opened back in October 2021 with the violation of procedural standards, accusing the Group of collusion with the Deposit Guarantee Fund and, purportedly, high treason. The allegations are ridiculous: the DGF sold assets (in the form of interests in loans and collateral) of failed banks that had been looted by their former owners by open tender on the ProZorro.Sales electronic platform. In the SBU’s opinion, the high treason is that the Group bought assets of many failed banks in a tender open to the general public and started litigation to recover the overdue debt from delinquent borrowers, including enterprises allegedly categorized as strategic.

In this case, the sheer absurdity and lack of professionalism on the part of the SBU investigators and prosecutors of the General Prosecutor’s Office went beyond the boundaries of legal rules and those of common sense. On the eve of war against russia, the SBU opened high treason proceedings against a business rather than looking for spies and saboteurs. During the war, dozens of the SBU personnel are harassing businesses for no reason instead of detaining real traitors. For instance, inter alia, the Fund and the Group are accused of PrAT Avtokraz’s failure to perform defense contracts. Allegedly, Investohills Vesta financial company had bought assets of this enterprise at a tender hosted by the DGF, and Avtokraz ostensibly failed to supply equipment for Ukraine’s Armed Forces.

We state officially that Investohills Vesta has no relation whatsoever to buying our assets of Avtokraz. Had the SBU investigators not been partial and had elementary information search skills, they would have found public information that the assets were bought by TOV FK Fintakt from Finance and Credit Banking Corporation and Delta Bank. According to the National Bank of Ukraine and the media, Kostiantyn Zhevago, a runaway oligarch wanted by the State Bureau of Investigation on an international warrant since the last year, is connected to Finance and Credit Banking Corporation, Avtokraz, and Fintakt. Journalists easily sorted out the information, but investigators of the country’s major security agency didn’t.

Furthermore, Mr. Zhevago forced Avtokraz into bankruptcy back in 2018. How relevant is that to the business of Investohills? Why didn’t the SBU initiate criminal proceedings against Fintakt and Zhevago based on these episodes? These questions are purely rhetorical.

The SBU referred to two more so-called “strategic cases” in their criminal proceedings – Rosava, a tire manufacturer (also connected to Zhevago), and one of the units of AT Ukrzaliznytsia (“UZ,” the national railway company), whose operations are allegedly blocked by the Group and the Fund.

Neither Rosava nor, by the way, Avtokraz are on the official list of strategic industries. The Group bought an interest in Rosava’s debt to Finance and Credit Banking Corporation. However, like in the Avtokraz case, Rosava was bankrupted by its former owner back in 2018. The company had been operating actively till July 5 this year. Currently, the production process is put on hiatus due to the hostilities.

As regards the debt of one of UZ’s subsidiaries bought in accordance with laws of Ukraine from Forum Bank, Investohills Helianthus has all the necessary legal documents, including two rulings by the Supreme Court in its favor. It could have initiated enforcement proceedings immediately to recover almost USD 15 million from UZ. However, because of the war, the Fund suspended all potential actions to support the state of Ukraine in fighting the aggressor. It is what they call high treason! The SBU could have verified all of this easily without an abusive search procedure and groundless accusations.

Why is it going on? Investohills Group of Companies is one of the largest players in the non-performing loans (NPL) market. In late 2021, Investohills Helianthus, a corporate venture investment fund, bought a portfolio of corporate NPLs from the Group. The Fund’s founders include international groups from the USA, the UK, and Europe.

These companies manage an aggregate asset portfolio of USD 10 billion worldwide. The portfolio of the Ukrainian assets bought from Investohills now costs UAH 30 billion. In Ukraine, they are managed on a day-to-day basis by the Group.

These assets have been brought together over several years by buying claim interests under loans and collateral owned by bankrupt banks at ProZorro.Sales, the state-owned electronic trade platform. Such banks include Finance and Credit Banking Corporation and the Ukrainian Professional Bank (also known as “Ukrprofbank” and “UPB”). The NBU recognized Finance and Credit Banking Corporation to be under control by Zhevago, and UPB by Anatolii Yurkevych.

These banks had been stripped of their major assets before being found insolvent. As a result, the so-called liquidation estate was minimized, and the Deposit Guarantee Fund was forced to pay out the debt to the banks’ depositors using the national budget funds.

In turn, the DGF invalidated contracts through which the banks, their creditors, the national budget, and taxpayers had been robbed. However, entities associated with oligarchs Zhevago and Yurkevych are actively disputing DGF’s decisions in court and keep trying to maintain control over several businesses. Anatoly Yurkevych is also known for having seized USD 9 million from Ukraine together with his partner Yurii Kaplun for the debts of the bankrupted privately owned Kredytprombank. Kaplun himself and legal entities and individuals related to him are in the focus of the criminal proceedings in respect of stripping UPB of its assets a day before the temporary administration was appointed.

However, after several years of investigation, law enforcement agencies failed to achieve any result in criminal proceedings based on these episodes. As a result, the ex-owners of the banks and oligarchs stay unpunished. For instance, the SBU failed to bring huge criminal proceedings concerning UPB’s unlawful asset stripping before the court of law.

It would appear that judges and uniformed agencies supposed to defend the interests of Ukraine tend to operate based on the example of the Kremlin’s propaganda operatives Solovyov and Skabeyeva. Who is the beneficiary of the SBU’s abusive acts while the cases of Zhevago’s and Yurkevych’s banks have not been investigated yet? Now, Ukraine’s national budget needs as many extra funding sources as never before. The estates of oligarchs who robbed depositors of their banks years ago can become such a source. However, the law enforcement agencies should better investigate real cases rather than seek fish in the troubled waters of corrupt contract hits. Moreover, the EU granted Ukraine the candidacy. Its key demands include judicial reform and anti-corruption reform in law enforcement agencies.

According to earlier reports, the Grand Chamber of the Supreme Court issued a precedent-setting ruling in January 2022 to invalidate transactions underlying the UPB being stripped of some of its assets.

Investohills Helianthus International Fund’s owners and management demand that the SBU, the Prosecutor General’s Office, and the Office of the President immediately close this sponsored criminal case and investigate and punish their staff members guilty of the corruption.

The Group and the Fund have submitted appropriate crime reports to Ukraine’s State Bureau of Investigation and expect criminal proceedings to be opened soon.

Ambassadors of the USA, the UK, and Italy, and the EU Delegation to Ukraine will also be informed about the details of this case and the actual investment climate prevailing in Ukraine.

By way of background information:

Investohills Helianthus is a closed-end non-diversified venture corporate investment fund operating in the interests of foreign investors and providing a range of professional services related to buying out and collecting the distressed debt. The Fund is owned by international companies that manage assets worth nearly USD 10 billion in aggregate.