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.