Ukraine prosecutors close investigation against Astarta

The Prosecutor General’s Office of Ukraine has closed
its investigation against the subsidiaries of Astarta (AST PW) “in the absence
of offenses,” Interfax-Ukraine reported on Sept. 19, referring to the company’s
press release. “All prior accusations have been dropped,” the company stated.
Astarta expects that all the blocked banking accounts of its subsidiaries will
be unblocked soon. It also hopes that Astarta’s case will become a point of no
return for the practice of “state bodies having a forceful impact on business
in the absence of grounds upheld by court decisions.”

Recall, Prosecutor General investigators searched the headquarters of Astartaon Sept. 6 and a local court froze the accounts of three of its subsidiaries in
late August.

Alexander Paraschiy: Astarta
proved to be a tough nut to crack for Ukraine’s law enforcement bodies in their
attempt to pressure Ukrainian business. As we wrote before, it was hard to see
any offenses in Astarta’s accounting practices, based on court documents. And
the searches’ timing was poorly selected, not only because Astarta is just
starting its busiest sugar production season. Ukrainian President Poroshenko is
visiting Canada in the next couple of days and the case of Astarta (in which a
large Canadian fund is among the biggest shareholders) could have spoiled the
spirit of that visit. Certainly, the Canadian government is aware of this case
since the Canadian ambassador to Ukraine visited the company on Sept. 11.

Also, criticism of the searches by CEO Viktor Ivanchyk
(also a top shareholder) at a Sept. 14 public meeting involving Poroshenko and
Ukrainian businessmen could have also prompted a fast closure on any actions
against Astarta. We see these developments as positive for Astarta, which has
gained even stronger immunity from further pressure from law enforcement
bodies.

What this also reveals is that the overall environment
in Ukraine remains not much friendly for business, which is risky for those
that don’t have such strong backing as Astarta does.