Ukraine court allows arrest of Ferrexpo majority owner
Kostyantyn Zhevago, the former CEO and majority owner of Ukraine’s largest iron ore pellet exporter Ferrexpo (FXPO LN), was allowed by an investigating judge to be arrested, according to a Dec. 3 post at Ukraine’s Prosecutor General’s website. Zhevago has been put on an international wanted list, the post said.
The post does not name Zhevago directly, describing only a former member of parliament from the third to the eighth convocations who on Sept. 27 was informed of a notice of suspicion in relation to the embezzlement of UAH 2.5 bln from a bank in which he was a beneficiary owner. However, Bloomberg News and Interfax-Ukraine implied it was Zhevago who is the subject of the post.
The arrest request was supported by the Prosecutor General and was satisfied because of Zhevago’s systematic failure to appear before Ukraine’s investigative bodies, the post said, adding that this court decision constitutes grounds for Zhevago’s detention outside Ukraine and for his subsequent extradition.
Recall, Ferrexpo’s board in the past cited Zhevago’s comments denying any allegations of wrongdoing and even denying Zhevago has been properly served with a notice of suspicion on Sept. 27. However, at the end of October, Ferrexpo’s board appointed an acting CEO in Zhevago’s stead, citing the interests of all shareholders.
Dmytro Khoroshun: The accusations against Zhevago have apparently been a negative factor for Ferrexpo's share price in the past couple of months, and it's understandable why. Namely, there are several scenarios, including Zhevago losing control over the company and the new owners making the company uninvestable, that provide direct links between Zhevago’s fate and Ferrexpo’s risks.
However, after the recent assertive actions by Ferrexpo’s board, we also see scenarios of Ferrexpo retaining full control over its Ukrainian assets to the full benefit of its shareholders, regardless of what happens to Zhevago and his relationship with the company.
Last but not least, as the Prosecutor General’s post said, all Ukrainian citizens, including Zhevago, are considered innocent until convicted by a court, according to the Constitution. And it might take years for Zhevago’s case to go to trial, although, reportedly, Zhevago was selected by Ukraine’s investigative bodies as a top target for a criminal case that can be completed swiftly and to the public’s satisfaction.