Raid attack against foreign investments of Agromino in Kharkiv (updated)
Content:
General executive summary
2024 09 18 – Update on resolution of VEL Criminal Case
2024 09 05 – Update on legal development and future actions
2024 07 05 – Update and summary of recent events
2024 06 26 – Update on legal developments and future actions
2024 05 07 – Update regarding the raid attack
2024 05 07 – Update, reaction on Latifundist
2024 02 19 – Initial press release
Key Terms:
- VEL – Vovchanskyi Elevator (part of Agromino Group)
- Bureychak – Vitalij Bureychak, natural person accused of collaborationism, allegedly storing part of his traded production at VEL
- FC Bureychak – Farming Company Bureychak (100% owned by Bureychak)
- Novaagro – Kharkiv-based agricompany owned by Serhyi Polumysnyi who was designated by some media as Kharkiv region agriraider no. 1
- Sautenko – Serhij Sautenko, liquidator of FC Bureychak appointed by Novaagro
- Yarmolenko – Oleksandr Yarmolenko, private enforcer appointed by Sautenko after decision of the Appeal Court in the Commercial Case
- Proceeds – Approximately 6.2 million UAH resulting from the sale of grain
- Commercial Case – Dispute initiated by FC Bureychak (under control of Sautenko) with VEL as defendant regarding ownership of grain stored at VEL and payment of Proceeds and damages due to allegedly illegal sale of such grain by VEL
- Bureychak Criminal Case – Case against Bureychak for cooperation with occupation forces during Kharkiv region occupation; involves the initial arrest of grain stored at VEL as evidence, with an additional arrest of Proceeds established recently
- VEL Criminal Case – Case regarding alleged (mis)conduct by VEL in respect of the grain, with an arrest of Proceeds ordered in 02/2024
General executive summary:
VEL, the silo subsidiary of a EU investor located in Vovchansk, was under Russian occupation in the period from February to September 2022. During this period Russians seized and kept under control all VEL´s assets including stored grains.
After the deoccupation, VEL found degraded grain in silo and after inventorying, VEL distributed all grain to clearly identifiable owners including SBU – grain under arrests resulting from criminal cases initiated by the local SBU against local collaborants.
A smaller portion of grain, which remained unclaimed and without clearly identified owners, was sold after 6 months to prevent its loss and further deterioration in a region where even fumigation companies were reluctant to arrive due of constant shelling. The purpose of the sale was to convert tangible asset into money, thus preserving its value for the yet unidentified owner. After emptying the elevator of the grain with unidentified owners, VEL closed the silo´s operations, which proved to be a prudent move given the invasion to Vovchansk that followed later on in 2024.
While VEL was managing all the challenges resulting from the silo´s location, local raiders appeared with unsubstantiated claims towards VEL regarding the sold grain and the Proceeds obtained. Since these raiders could not prove the ownership of the grain, VEL refused to hand over the grain (Proceeds from its sale) and referred them to the court. After this refusal, the local SBU surprisingly intervened in this commercial matter and within a matter of days in fact started investigation of VEL in respect of the particularly serious crime of collaboration.
In the following months, an SBU officer absurdly participated in the Commercial Case (despite being the investigator in the “live” criminal case) in fact helping to local raiders . Also, the local commercial court reached similarly absurd conclusions, and awarded representatives of raiders damages that far (by more than 100%) exceeded the value of Proceeds from the sale of grain.
VEL understood that this development was likely the result of an organized group´s efforts and represented abuse of law against law abiding companies. Accordingly, VEL appealed the decision of the local courts to the Supreme court and alerted all relevant Ukrainian and international bodies.
After one year, the situation began to change, and it seems that the raiders are losing ground.
Timeline:
September 13, 2024 Friday: All three arrests confirmed by the Court as cancelled
August 22, 2024 Thursday: Date of repeated closure of VEL Criminal Case
August 16, 2024 Friday: Decision of the pre-trial judge in Bureychak Criminal Case about the arrest of Proceeds held by Sautenko
July 04, 2024 Thursday: VEL received e-mail from SBU investigator Zalevskyj with a copy of court ruling dated as of June 24, 2024 (new arrest of Proceeds)
June 28, 2024 Friday: Ruling of Supreme Court – acceptance of claim for review + suspending enforceability of Appeal Court´s decision
June 27, 2024 Thursday: VEL has notified Kharkiv´s SBU and prosecutor´s office that Proceeds were debited from VEL´s account based on enforcement order of Yarmomlenko (Sautenko)
June 27, 2024 Thursday: Alleged date of closing of VEL Criminal Case
June 25, 2024 Tuesday: OTP Bank has debited a 6.2 million UAH from VEL account in favor of private enforcer Yarmolenko – enforcement order was highly likely received by OTP bank on June 24, 2024, i.e. date when court imposed new arrest
June 24, 2024 Monday: Court ruling dated imposing new arrest in respect of Proceeds (info received by us on June 04, 2024) – they should be confiscated
June 21, 2024 Friday: Yarmolenko opened enforcement procedure against VEL
June 20, 2024 Thursday: Kharkiv’s commercial court issued a bailiff´s order for the enforcement of Proceeds (6,2 million UAH) + damages (8 million UAH)
June 17, 2024 Monday: VEL submitted extraordinary appeal to Supreme Court
June 15, 2024 Saturday: VEL letters to Kharkiv´s SBU, Prosecutor´s office and Sautenko regarding fulfilment by VEL of a court order regarding cash arrest with bank´s statement evidencing that Proceeds are on VEL´s bank account
June 12, 2024 Wednesday: Decision of Commercial Appeal Court in favour of FC Bureychak/Sautenko
2024 09 18 – Update on resolution of VEL Criminal Case
Following our previous update on 5.9.2024 regarding the closure of the VEL Criminal Case, Agromino is pleased to confirm that between 11.9.2024 and 13.9.2024, the Kharkiv region courts confirmed by its rulings the cancellation of all three outstanding arrests. These rulings mark the final closure of the VEL Criminal Case, bringing a successful conclusion to a prolonged period of legal uncertainty.
Agromino extends its deepest gratitude to all those who have stood by our side throughout these challenging times. We would like to specifically thank the presidential Council for Entrepreneurship Support under Martial Law Conditions under the President of Ukraine for its unwavering support and dedication to ensuring that justice prevails. Its involvement was instrumental in highlighting the absurdity of the VEL Criminal Case and in guiding this case to a rightful conclusion.
This outcome represents not only a significant victory for Agromino but also for the rule of law and transparency in Ukraine’s business environment. It sends a clear message that fair legal practices must and may be upheld, even in the most complex and challenging circumstances.
Supreme Court Hearing in Commercial Case
In parallel, the legal process in the Commercial Case continues. On 26.9.2024 the Supreme Court will resume hearings, and Agromino remains hopeful for a fair and objective trial. We trust that the Ukrainian judiciary will uphold the principles of justice, ensuring a transparent and lawful resolution based on the merits of the case.
Agromino reiterates its commitment to defending its legal rights and protecting its investments in Ukraine. We will continue to pursue justice through all available legal channels and provide further updates as the situation evolves.
2024 09 05 – Update on legal developments and future actions regarding Kharkiv investment dispute
Since our last update on the ongoing legal challenges surrounding Agromino’s investments in Vovchansk, Kharkiv region, several key developments have occurred which demonstrate both progress and continued obstacles as VEL continues to defend its rights and assets.
Brief summary of recent developments
1. Supreme Court hearing on Commercial Case
The first hearing at the Supreme Court within the Commercial Case took place on 15.8.2024. Although no final decision was reached, VEL remains hopeful that the court will adopt a well-reasoned decision in the next hearing, scheduled for 26.9.2024. Representatives of Czech and Danish Embassies are expected to attend the public hearing, signalling the case’s significance for foreign investments in Ukraine. VEL continues to expect a fair trial and hopes for a rational resolution in line with Ukrainian law and international standards.
2. VEL Criminal Case reopened and closed again
In an unexpected development, the Kharkiv state prosecutor opposed the closing of the VEL Criminal Case, which had been previously closed by the SBU. This led to the case being reopened briefly. During this period, the SBU proceeded with the arrest of funds that had been withdrawn from VEL’s account by private enforcer Yarmolenko and subsequently transferred to Sautenko. Following this arrest, the SBU once again closed the VEL Criminal Case.
3. Prosecutor’s Office no longer opposing VEL Criminal Case closure
According to information received from the Council of the Business Ombudsman, the state prosecutor has indicated that they will not oppose the latest closure of the VEL Criminal Case. This marks a positive development for VEL, which has been subjected to what it considers unjustified legal actions in connection with its efforts to preserve third party assets in a highly risky region.
4. Cancellation of arrests expected
In light of the closure of the VEL Criminal Case and the arrest of the Proceeds now being held by Sautenko, VEL intends to formally request the cancellation of all remaining arrests. The group argues that the Proceeds, now under Sautenko’s control, should logically no longer be subject to ongoing legal proceedings involving VEL, as VEL is no longer responsible for them.
Looking Ahead
Agromino reaffirms its commitment to transparency and legal integrity as it navigates these complex legal challenges. While the group remains cautiously optimistic about the upcoming Supreme Court hearing, it recognizes that the battle is far from over. The situation continues to illustrate the broader issues facing both domestic business as well as foreign investors in Ukraine, particularly regarding the arbitrary application of law and the potential for misuse of legal proceedings by local well positioned actors.
VEL will continue to defend its position through all available legal means, ensuring that the rights of foreign investors are respected and that justice prevails in Ukraine’s courts. We will provide further updates following the next hearing in September 2024 and remain committed to keeping all stakeholders informed throughout this process.
Agromino appreciates the ongoing support of its partners, stakeholders, and the international community as it seeks to protect its investments and uphold the rule of law in Ukraine.
2024 07 05 – Update and summary of recent events:
Throughout appeal hearing in Commercial Case the SBU was invited by Sautenko (Novaagro) to support Sautenko in obtaining result, i.e. to receive the Proceeds and damages. SBU participated in Commercial Case on side of Sautenko (i.e. in fact FC Bureychak). Appeal Court issued absurd decision highly likely influenced by some side incentives (aside from an indirect pressure caused by SBU´s presence and statements). Sautenko ordered enforcement of the appeal court decision and obtained Proceeds but pre-trial court in the Bureychak Criminal Case issued new order for arrest of those same Proceeds which should newly be used for confiscation in case of Bureychak´s conviction. Such court order was highly likely requested by SBU. At the beginning of July 2024 information notice about the new arrest was signed by the same SBU officer who participated in the Commercial Case supporting Sautenko and who in fact helped Sautenko to get the Proceeds which he (highly likely) at the same time wanted to have arrested for SBU (state). Few days after debiting of Proceeds from VEL´s account in favour of Sautenko “coincidently” SBU closes VEL Criminal Case. Now the real risk exists that law enforcement authorities may deem transfer of money out of VEL´s account as a breach of arrest and initiate new or reinstate VEL Criminal Case.
Executive summary conclusions:
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Background:
The root cause of all three cases (Commercial, Bureychak Criminal, and VEL Criminal) is the sale of grain by VEL in 04/2023 which grain was placed in the silo during occupation of Kharkiv region. The grain´s owner was unknown, and no one paid for its storage for over 6 months or contacted VEL as grain´s owner. Faced with the risk of total loss due to constant shelling, VEL sold the grain to protect the value of asset and held the Proceeds (6.2 million UAH) for the benefit of unknown owner. VEL was unaware that grain was placed under arrest as the law enforcement authorities did not inform VEL about such arrest. Since 02/2024, VEL has been pursued by Sautenko (Novaagro), SBU, and prosecutor for alleged illegal sale of arrested grain.
Overview of current issues:
- VEL´s position: VEL argues that selling the grain was legal and justified to protect its value. If the grain had not been sold, it would have been destroyed. VEL currently faces a total payment obligation of 14 million UAH to Sautenko/Novaagro within the Commercial Case (i.e. the amount significantly exceeding the Proceeds).
- Conflicting arrests: The Proceeds (6.2 million UAH) are also the subject of the Bureychak Criminal Case, where the SBU/Prosecutor wants to keep them under arrest a) as evidence (absurd) and b) potentially confiscate them based on a new arrest order.
Cases status:
A. Commercial Case: The Kharkiv appeal court ruled surprisingly in favor of FC Bureychak/Sautenko, obliging VEL to pay Proceeds and damages (totalling absurd 14 million UAH). Sautenko immediately engaged Yarmolenko to enforce the court´s decision, leading to the debiting of Proceeds from VEL´s account at OTP bank. VEL filed an extraordinary appeal, which has been accepted for review by the Supreme Court, suspending enforceability but, unfortunately, the Proceeds were already debited.
B. Bureychak Criminal Case: A new arrest of the Proceeds has been established, substantiating possible confiscation if Bureychak is convicted.
C. VEL Criminal Case: Informally VEL has information that the case was closed about three weeks ago, though given the fact that Sautenko breached the terms of arrest (without VEL being able to do anything about it), it cannot be excluded that VEL will (absurdly) face problems caused by Sautenko.
Description of Proceeds transfer:
Sautenko appointed private enforcer Yarmolenko after winning appellate instance in Commercial Case. Yarmolenko requested OTP bank to debit money in favor of Sautenko/FC Bureychak (effectively Novaagro). VEL complied with the arrest court order to keep the Proceeds untouched, but Sautenko/Novaagro disregarded pending arrest. VEL had no role in transfer of the Proceeds, and it appears that local SBU and/or prosecutor did not inform OTP bank about their arrest. Also, VEL informed local prosecutor and SBU on 27.6.2024 about debiting of Proceeds immediately after finding out. VEL´s letter emphasized that Proceeds were duly kept on VEL´s bank account and transferred without VEL´s consent by Yarmolenko.
Absurdity of law enforcement actions:
- Operation and collection: Agromino finds it absurd that law enforcement allowed FC Bureychak (under control of Sautenko/Novaagro) to operate and collect Proceeds without arresting FC Bureychak´s shares and other assets suitable for confiscation. I.e. grain allegedly owned by FC Bureychak is under arrest within Bureychak Criminal Case (i.e. case against natural person) since 03/2023, but no other assets owned by Bureychak (natural person) or its company FC Bureychak are under arrest. Sautenko and Novaagro are without any problems proceeding with liquidation FC Bureychak, collection of its receivables and settlement of monetary claims in parallel to pending Bureychak Criminal Case (!).
- Double Jeopardy: There is a risk that VEL will have to pay Proceeds within the Commercial Case and simultaneously maintain money corresponding to the amount of Proceeds for potential confiscation (i.e. those same Proceeds may be also confiscated from other assets owned by VEL).
Examples of absurdities
- SBU´s knowledge and inaction: Local SBU, provenly aware of Commercial Case (!), allowed Sautenko/Novaagro to collect the arrested Proceeds. SBU investigator Mr. Zalevskyj supported Sautenko in appeal hearing (!), thus eventually aiding in debiting of VEL´s account. Participation of Mr. Zalevskyj/SBU is documented in Commercial Case files. This same investigator recently informed VEL about new arrest of Proceeds with the aim of their possible confiscation.
- Lack of proper arrests: Despite knowing case details, SBU clearly did not inform OTP bank about Proceeds arrest (as otherwise the bank would not allow transfer) or place other assets of Bureychak/FC Bureychak under arrest.
- Judicial and prosecutorial inaction: In April/May 2024, VEL sought clarification on arrest order, but courts declined to interpret it, and local prosecutor did not attend the hearing. On 15.6.2024, VEL informed SBU, prosecutor and Sautenko about the arrested Proceeds, yet Sautenko proceeded to collect them via Yarmolenko.
2024 06 26 – Update on legal developments and future actions regarding Kharkiv investment dispute
Agromino is providing an update following recent court decisions regarding the raid attack against its foreign investments (Silo) in Kharkiv region. Agromino wishes to inform all stakeholders, including the judiciary, that while it respects the judicial process, the recent ruling by the Eastern Appeal Commercial Court in Kharkiv raises significant concerns about the application and interpretation of Ukrainian law in “extraordinary circumstances”.
Despite presenting well-documented evidence and sound legal arguments, the judges—specifically V.V. Rossolov, P.A. Hetman, and V.S. Khacharyan in their decision No. 922/1909/23 (922/4494/23) — have rendered a decision that not only contradicts fundamental principles of Ukrainian law but also appears to misuse the situation during the 2022 occupation to interpret legal norms absolutely arbitrarily. This ruling ignored critical documented facts and dismissed Silo´s requests for expert reviews that could have established the circumstances objectively.
The court demonstrated an arbitrary approach to the assessment of submitted evidence, admitting e.g. the clearly irrelevant and factually incorrect expert opinion of the claimant (created post factum), while entirely disregarding the expert opinion and grain quality analysis submitted by Silo. Silo´s expert analysis, prepared long before it was notified of claim by Bureychak (liquidator Sautenko), was crucial in establishing the true condition and market price of the grain at given place and time. Ignoring this key evidence along with other arguments indicates a significant bias and undermines the legal process´s integrity.
Examples of arbitrary approach:
- The court´s decision to rely on “non-standard” (i.e. not prescribed by law) documentation and ignore legally mandated procedures for proving ownership and storage of grain undermines the foundational principles of Ukrainian commercial law.
- By dismissing procedural concerns and ignoring Silo´s expert evidence, the court failed to uphold the standards of a fair trial, demonstrating a clear preference for the claimant´s position without adequate justification.
- The court´s selective admission of evidence and refusal to consider documented facts provided by Silo shows an inconsistent and biased application of the law, unfortunately raising serious questions about the impartiality of the judges involved.
It is also important to note that this is already one of several decisions within the last year in which Ukrainian courts have rendered judgments that completely undermine the trust of businesses, including international investors. Agromino, having assets, inter alia, in Kharkiv region, is fully aware that many people and businesses (including Agromino itself) faced and continue to face very difficult situations. Unfortunately, each of above referred cases involving Agromino subsidiaries has been an exemplary instance of Ukrainian companies not impacted by war in a significant way, who were only using made-up arguments with references to the war circumstances, to allow disregard for the basic legal principles and elementary logic.
In respect of this general observation from the Ukrainian reality Agromino expresses significant concerns over the long-term effects of this form of application of law on the business environment in Ukraine. Moreover, such application of law will open the door for opportunistic judges who may use the opportunity to adopt arbitrary decisions based on the willingness of one of the parties to promise benefits in return.
Future actions in respect of the Silo case
The Silo will pursue an extraordinary appeal against this decision, confident that higher judicial authorities will recognize the flaws and legal inconsistencies present in the ruling. Agromino firmly believes that an objective and independent review will rectify these issues and uphold the principles of justice and rule of law.
Agromino´s commitment to transparency and legal integrity remains unwavering. We will continue to keep the public informed about our legal actions and developments in this case. We also call upon the Ukrainian judiciary and relevant authorities to ensure that justice is always served, free from local biases and undue influences.
Agromino stands resolute in its mission to support the rule of law in Ukraine, and it will utilize all available legal avenues to protect its investments and uphold justice in Ukraine. Agromino appreciates your ongoing support and understanding as it navigates these challenging legal battles. Together, we aim to foster a fair and transparent business environment in Ukraine.
2024 05 07 – Update regarding the raid attack
Agromino is providing the following update to the press release issued on 19.2.2024 which concerned the raid attack against foreign investments of Agromino in Kharkiv
Since the date of said press release, Agromino has filed numerous claims to various Ukrainian authorities as well as international authorities regarding the clearly fabricated criminal case. The goal of this transparency seeking approach and escalating this issue even on international level was clear – to draw attention to the abuse of criminal law by raider and local law enforcement authorities in Kharkiv, when opening the criminal case. This approach of Agromino has clearly led to review of the materials of the case by upper level institutions and the local institutions immediately requalified the case to minor criminal offence. However, even the new qualification lacks any grounds, because it concerns disobey of asset blockade order, which Agromino has not even received. Agromino will continue to use all legal means to keep conduct by law enforcement authorities under the public spotlight.
What concerns commercial dispute – unfortunately, the result of the case at first instance reflects expectation of Agromino based on prejudiced behaviour of judge Ayupova P.M. during the trial. Throughout all proceeding the judge was openly showing clear preference of one side and this also served as a basis why Agromino (unsuccessfully) requested replacement of the judge. What was communicated orally by the judge was eventually also reflected in the written decision which basically copy-paste argumentation of the opponents. The decision is clearly biased and legally incorrect and hence Agromino filed appeal, with the expectation that higher courts will be able to review the case objectively and independently. It is clear that this was not the case at the first instance level. To follow the line of transparent communication, we hereby publish the text of our appeal in which our argumentation is presented – LINK.
To sum up, what Agromino sees in the current case (and publicly comments) is that the regional raiders continue to be well positioned to push forward their interests when any decision making power is in the hand of regional authorities or courts. In one case we could see rare coincidence of absurd decisions lacking any grounds initiated by the Kharkiv law enforcement (SBU, prosecutor´s office) and similarly absurd decision of the first instance judge Ayupova P.M.
2024 05 07 – Update, reaction on Latifundist (LINK)
Raiders from Nova Agro also tried to exert pressure on Agromino through the media and make media to “investigate” conduct of Agromino´s subsidiary. Therefore, Agromino confronted the journalists with reality and documented the raiding nature of this attack. On 7th May 2024 Latinfudinst published article which was more or less ballanced except for an unexplained note about criminal case without giving Agromino the opportunity to react to this note. It is exactly this part of the whole case where the business dispute turns into a raider´s attack as the criminal case shows signs of misuse of state authorities against respectable companies by widely known raiders. Since this is a textbook example of the misuse of law enforcement authorities at the local level, it is necessary that the whole case (and conduct by the authorities) be fully investigated and therefore several renowned law firms are engaged and wide range of authorities at Ukrainian and international level are involved in it.
The absence of the rule of law in Ukraine costs the citizens of Ukraine from 14.8 to 45.3 billion dollars a year (source: economic policy think-tank EasyBusiness). We hope that non-corrupt, honest and strong media will contribute to changes in this situation in Ukraine with their impartial work.
2024 02 19 – Initial press release
Agromino, Czech-Danish agricultural holding (“Group”) active in various areas of agribusiness in Ukraine, namely its Kharkiv region based subsidiary, is currently under a coordinated attack organized by Ukrainian company Novaagro, whose ultimate beneficial owner is designated by some media as “Kharkiv agroraider no. 1”. Absolutely unjustified and illegal pressure by said company through black PR media campaign and, seemingly related, activity of the local law enforcement bodies. All that happening 2 weeks after the President of Ukraine intervened against arbitrary pressures by some law enforcement agencies on business.
Given the seriousness of the situation, SBU and Office of the Prosecutor General were asked by Agromino to urgently intervene. Relevant institutions were also informed including Offices of the President of Ukraine and Czechia, European Commission, European Parliament, Embassies of Czechia and Denmark in Kyiv and Ministry of Foreign Affairs of Ukraine, Council of the National Security and Defence of Ukraine etc.
Agromino´s anti-corruption and bribery policy strictly prohibits bribing in any form. The policy is applied under any circumstances, i.e. also in cases where it means loss of court trial or deal, which we experienced in Kharkiv or Kyiv regions on many occasions. We adhere to the UN Global Compact principle 10: We shall work against corruption in all its forms, including extortion and bribery. When engaging in business relationships Agromino chooses its partners with the same zero-tolerance approach to corruption and bribery. The Group assesses the risk of corruption and bribery in the countries it operates and continues to take measures to minimise this risk. We apply same zero-tolerance approach to any form of breach of sanction or terrorist financing legislation, incl. collaboration with the occupying forces (which is one of the main areas of activity of the SBU).
Accordingly, we were strongly embarrassed and concerned about recent actions taken by the local division of the Security Service of Ukraine (“SBU”) and region prosecutor´s office in the Kharkiv region clearly aiming at our subsidiary operating in the area to the east of Kharkiv (“Silo”).
Background:
The Silo was occupied by the army of Russian Federation during February-September 2022. During said period grain was stolen from the fields leased by the Group and from the Silo itself. The Group estimates damages in this region to exceed 17 million Euros.
After the deoccupation of eastern part of Kharkiv oblast in September 2022, the Group found in the Silo part of grain which it was able to identify as owned by the Group entities operating in the area as well as other grain belonging to third parties. All discovered grain was in a very poor condition – wet, dirty, unpleasant smell, and full of insects (independent survey was done). It has to be also noted, that the access to the Silo was, for understandable reasons, restricted by the local SBU and military for almost 2 months after deoccupation. Hence, possibility to ensure standard treatment of the grain at the Silo for an extended period of time was very limited. The risk of further decay of the grain, risk of repeated occupation of the Silo, as well as the risk of Silo destruction (with Silo being only 5 km from the Russian border) was extremely high.
Accordingly, acting with due care Agromino sought ways to protect the remaining assets stored at the Silo from further damage.
Agromino cooperated with the local SBU office and, based on the court orders provided to us, our Silo subsidiary separated the grain subject to court orders for seizure within criminal proceedings (including relocating a portion of this to other grain storage facilities in less risky locations in accordance with the court orders).
Since no one had approached the Silo with proper documents proving ownership to the outstanding part of the grain for more than six months after the temporary occupation of eastern Kharkiv region ended, acting in good faith under force majeure circumstances, based on the norms of Part 1, Article 8, Chapter 79 of the Civil Code of Ukraine, Part 3, Article 31 of the Law of Ukraine “On Grain and the Grain Market in Ukraine”, Articles 193, 226 of the Economic Code of Ukraine, Agromino decided to sell such part of the grain whose owners had not approached the Elevator for its claim with proper confirmation of their rights. The money from the sale of the grain were deposited to be subsequently transferred to such owners of the grain who will confirm their rights to it. Thus, the grain was converted into money according to the law (i.e. in the interest of the third party), thereby eliminating the risks of further loss of values.
Further development:
In the second half of 2023 group Novaagro, whose owner is known in the business community for its links to various law enforcement activities see e.g. the following articles: LINK no. 1, LINK no. 2, contacted Agromino´s top management, declaring they have an indirect claims to a bankrupted collaborator V. B. who allegedly also placed his grain into Agromino´s Silo. No reliable grain ownership documents were presented neither from V.B.´s company, from Novaagro´s side, nor from the side of the Mr. Sautenko, liquidator of the company belonging to V. B. To prevent any misconduct and payout of money to non-owner, Novaagro was asked to solve this issue via commercial court who will determine the question of whether the grain was owned by V. B.´s company or not. Highly likely after Novaagro realized that they may not obtain sale proceeds via court due to lack of evidence of V. B.´s ownership of the grain, a black PR campaign was initiated in the same period when Kharkiv local SBU division initiated criminal proceedings.
Given above, the criminal case as initiated by the local SBU division in Kharkiv region with support of Kharkiv regional prosecutor´s office seems to be clearly linked to the above described sale by our Silo of the grain owned by unknown persons. This move is unexpected and concerning, considering the SBU’s primary focus on safeguarding national security and fighting against collaborators working with the Russian aggressor. As we know from some cases in the past, broad powers of law enforcement authorities (even more so during war time) may also be misused by the local businessmen and raiders misusing their links and resources (both financial and informal) to perform raids against competitors. For reputation of Novaagro´s owner in this respect please see above links to publicly available resources.
An additional confirmation of the law enforcement’s arbitrariness is the fact that the SBU officers and the Kharkiv regional prosecutor’s office, having started the illegal proceedings against the Silo on 09.02.2024 for a particularly serious charge under the Criminal Code of Ukraine that is not within their jurisdiction, initiated the arrest of the Silo´s funds by an investigative judge on the very next working day.
It is worth noting that such situations, unfortunately, are not isolated. The unprecedented pressure by some law enforcement agencies on business during the most challenging time for Ukraine not only provokes a negative reaction from investors and international partners but also compelled the President of Ukraine to intervene. The respective decision of the National Security and Defence Council of Ukraine was enacted by the Decree of the President of Ukraine No. 21/2024 dated 23.01.2024.
Regrettably, it must be stated that in practice, by the second week of the mentioned decision’s implementation, the law enforcement officers of the Kharkiv region vividly demonstrate their “fight” against “criminals”, i.e. Agromino´s subsidiary! At the same time, based on information from local people, some Kharkiv companies clearly linked to the people being criminally prosecuted for collaborationism continue to operate.
As shown in more detail below, Agromino A/S is one of the strongest proponents standing behind Ukraine, actively supporting the country not only via investments and indirect support, but also by means of cooperation with both the European Union and international organizations to promote transparency and the rule of law. We strictly adhere to legal standards in all our operations, incl. in the Kharkiv region’s previously occupied territories. The above-described development hence poses a significant risk to Group´s operations and reputation in the region.
Agromino is very concerned that the local businessman highly likely decided to perform what he has a reputation for in the business community, i.e. to exert unjustified pressure by all possible means. However, the fact that it is the local SBU division (with its broad enforcement powers) along with Kharkiv regional state prosecutor, which are highly likely participating in this activity by use of particularly serious charge under the Criminal Code of Ukraine, and the fact that SBU together with state prosecutor are acting with stellar speed (so different from approach when we ask for defence against other raiders) is even more concerning.
Agromino A/S has a robust history of supporting Ukraine, particularly evident since the onset of the full-scale invasion nearly two years ago. Our contributions include for example:
- Crowdfunding 2.57 billion UAH in Czechia for the Ukrainian army
- Direct cash donations over 20 million UAH to support military efforts
- Supplying over 1000 pieces of military equipment, including body armor and drones
- Donating 12 vehicles for military use
Furthermore, Mr. Petr Krogman, the owner of Agromino is founder and president of the Ukrainian-Czech Chamber of Commerce (UKRCHAM), now one of the largest chambers of commerce in Czechia. This institution focuses on supporting businesses and strengthening Czech-Ukrainian economic ties.
In light of these contributions which clearly show that Agromino is the exact opposite of people and companies, who should be investigated by the SBU, as well as Agromino´s adherence to laws, Agromino hopes in thorough review and investigation into the substantiation and legality of the criminal proceedings initiated by the local SBU and state prosecutor´s office of Kharkiv region against its subsidiary. Solving clearly commercial issues (question of ownership) with the use of law enforcement authorities, serious charges under Criminal Code and black PR campaigns may be a normal modus operandi for some entrepreneurs in Ukraine, but Agromino has not and will not participate in these “games” as a victim of non-functional rule of law. Agromino intends continue in its fight for rule of law improvement in Ukraine and will cooperate with all Ukrainian and international institutions and bodies who share the same goal.
In this particular case, Agromino´s aim is to ensure justice and prevent any unwarranted harm to its operations due to some potential influence of local notorious businessman on actions of the local SBU. Agromino has always acted in favour of Ukraine, transparently and hence see zero reasons for its subsidiary to be investigated by the SBU and state prosecutor´s office.