Unscrupulous companies take advantage of turmoil by seizing properties illegally.
Many Ukrainians hoped their country would become a safer place for investing and doing business after the EuroMaidan Revolution, but lawyers are saying the number of raider attacks – illegal takeovers of a company using coercion, force or bribery – has increased.
Since the revolution that ousted the corrupt President Viktor Yanukovych on Feb. 22, alleged raider attacks have been carried out against McDonalds, GerMedTech, Swissport Ukraine, Corum, Unirem and AP Securities. Figures are, however, harder to come by than anecdotal stories.
Yuriy Makaruk, a Kyivan who is a translator by profession, says that last year he invested $50,000 in an apartment in a 10-story building that was being constructed in Irpin, a Kyiv suburb, by the local company Build Group Management.
Now he can’t even enter the apartment because his ownership documents are no longer recognized as legitimate. All the door locks have been changed. Makaruk says he is the victim of an illegal raider attack.
“We hired a lawyer who examined the company from every angle and said everything was good,” Makaruk told. “He said it was ideally clean and that these kinds of companies are not common in Ukraine. There was even an investor company called Fordon which guaranteed my investment with bonds.”
But on Feb. 22, the day of Yanukovych’s deparature, some of the company founders held a board meeting where they decided to fire the director of Build Group Manager, Inna Bechko, and appoint Olena Mozgova in her place, according to Makaruk.
A Batkivshina member of Irpin City Council, Valeriy Peshiy, ended up with a 40 percent stake that had belonged to former ruling Party of Regions city council member Igor Vyshnyakov. According to investigative website Anikor.com.ua, the company is now co-run by Peshiy’s son, who lives in California. The company’s new directors are now refusing to recognize the old ownership’s liabilities, causing investors like Makaruk to lose out.
Legal Quarterly tried to contact Peshiy and Vyshnyakov for a comment on Makaruk’s claims, but did not receive a reply.
The Irpin city council website www.irpin-rada.org mentions Peshiy, who, according to Makaruk, already owned a 60 percent controlling stake in Build Group Managment, as an employee of Ukraine’s Land Committee, a public office in charge of land affairs.
“Vyshnyakov wasn’t in the city during the events. When he came back – all of this happened,” explains distressed Makaruk. “They tell us that all of our contracts and documents are worthless.”
Makaruk says that he was asked to pay $3,800 by the new corporate administration without any recordings of the payment.
Nataliya Osadcha, a lawyer at Syutkin and Partners, says that while raider attacks are different, they have similar features.
Substantial real estate and human capital makes a company attractive for raiders. If a firm has legal mistakes in its documents, they can be used as a basis for an attack. Furthermore, if the distribution of shares between business owners is on the basis of majority control, the rights of the minority shareholder can be completely trampled.
“What every business owner must understand about doing business in Ukraine is that… the risk of a successful raider attack is impossible to avoid,” says Yuriy Nechaev, senior associate of Avellum Partners law firm in Kyiv.
Having a strong foreign partner, shareholder or creditor are effective ways of protecting one’s business. “Often raiders prefer to avoid a strong international reaction, which is more likely to happen if the interests of an influential foreign partner are affected,” explains Nechaev.
Peter Teluk, a managing partner at Squire Patton Boggs Ukraine LLC, emphasizes the need to do business by the book. “Run the business in a legal manner… It may take longer and be more expensive, but it pays off in the long run.”
