Ukraine court rules to arrest Bakhmatyuk in absentia

The appellate chamber of the High Anti-Corruption
Court of Ukraine ruled on May 28 to arrest in absentia the individual who
controlled VAB Bank in October 2014, the court’s website reported the same day.
Media identified the individual as Oleg Bakhmatyuk, the bank’s former owner,
the current owner of Ukrlandfarming (ULRLAN) and the majority shareholder of
Avangardco (AVINPU, AVGR LI). The ruling allows for INTERPOL to begin an
international search for Bakhmatyuk, the Anti-Corruption Centre said the same
day.

As his response, Bakhmatyuk called the ruling unlawful
and illogical, according to Ukrlandfarming press-release on May 28. Alleging
political bias, he referred to the same court’s refusal to arrest two former
top officials of the Yanukovych government. He alleged the ruling was made
under pressure from National Anti-Corruption Bureau (NABU) Head Artem Sytnyk,
who has personal animosity to him and is seeking personal revenge. He also
claimed the ruling has stopped his efforts to return his banks’ debt (recall,
earlier Bakhmatyuk claimed he was ready to repay UAH 8 bln of debt of his two
failed banks to state bodies). Bakhmatyuk promised to defend his rights in
international courts.

Recall, Bakhmatyuk has been named a suspect by NABU in a conspiracy
that has led to the misappropriation of UAH 1.2 bln of a refinancing loan taken
by VAB Bank from the central bank in October 2014. Other suspects in the
conspiracy are former top officials of VAB Bank and the central bank.
Bakhmatyuk has not returned to Ukraine since NABU opened this criminal case in
November 2019. Bakhmatyuk is currently residing in Austria and his residence is
well known to Ukraine’s anti-corruption bodies, he commented to
Interfax-Ukraine.

Alexander Paraschiy: As we
discussed in our Nov. 25 note, we see poor chances for law enforcement bodies
to prove a criminal conspiracy in the VAB Bank case. Therefore, we see the
court’s ruling to arrest Bakhmatyuk in absentia as unnecessary. Firstly, it
won’t change anything for Bakhmatyuk. Secondly, it will allow him to claim more
effectively that he is being pressured politically or personally, giving him
more ability to defend his position in the international courts. Thirdly, this
will provide a basis for Bakhmatyuk to officially step out of his UAH 8 bln
debt resolution offer to state entities, as well as delay debt restructuring to
international creditors.

Ultimately, the ruling enhances the negotiating
leverage of Bakhmatyuk and casts the latest shadow over the new anti-corruption
infrastructure of Ukraine. At the same time, none of this changes much the
prospects of Bakhmatyuk’s farming and egg businesses in Ukraine, which are very
fragile anyway.