Court case over alleged non-payment for landscaping services by Elena Pinchuk also raises questions about how the nation's elite are able to acquire prized land at firesale prices.
Hidden behind a three-meter fence, the landscaping at “Villa Elena” in the posh residential area of Koncha Zaspa near Kyiv came with a price tag reportedly over $500,000.
The estate, which allegedly belongs to billionaire Viktor Pinchuk and his wife Elena, is at the center of a court battle in the United States after the landscaping firm that carried out the work filed a suit in a U.S. federal court against Elena Pinchuk over allegedly unpaid fees.
Viktor Pinchuk is one of Ukraine’s richest men, with an estimated fortune of around $2 billion. He snapped up major state assets for cut-rate prices in privatization sales while Leonid Kuchma, his wife’s father, was president from 1996 to 2005.
For years, the Pinchuks have carefully constructed an image as Ukraine’s “good oligarchs,” courting global political and cultural icons such as former U.S. President Bill Clinton and musician Elton John, as well as creating a charity foundation and a modern art gallery.
But the allegations by Washington, D.C.-based Oehme van Sweden, if true, provide a rare insight into how some of Ukraine’s richest and most influential families apparently obscure ownership of their own extravagant estates behind webs of offshore companies. The case also raises questions about how the nation’s elite are able to acquire prized land at firesale prices.
Elena Pinchuk did not respond to faxed questions about the lawsuit by the time this edition of the Kyiv Post went to press.
Landscape architecture firm Oehme van Sweden on Jan. 3 filed a lawsuit in the U.S. District Court for the District of Columbia against Elena Pinchuk a Cyprus-based company called Maypaul Trading & Services Limited.
Oehme van Sweden accused Elena Pinchuk and Maypaul of not paying for landscape design work at a vast estate near Kyiv where, according to the plaintiff, the Pinchuks reside. The plaintiff claims that Elena Pinchuk and Maypaul are responsible for the alleged debt of $486,985.
The U.S. firm, known for designing North Point Park in Boston and Francis Scott Key Memorial Park in Washington D.C., claims that the Pinchuks ordered landscape design services through companies controlled by the couple.
Neither of the Pinchuks were party to the contract with Oehme van Sweden. However, the International Centre for Dispute Resolution, an international arm of the American Arbitration Association, last year ruled that their services were destined for Elena Pinchuk through a contract signed by the head of Maypaul.
Oehme van Sweden says it started work in 2004, with staff working under the guidance of Elena Pinchuk and her representatives.
The land plot outside of Kyiv where the work was carried out was acquired in 2004 by Transport and Forwarding company Svit Shlyakhiv based on a government decree when President Viktor Yanukovych was prime minister and Kuchma was president.
In April 2004, Yanukovych’s government approved the lease agreement and in July of that year 114 hectares of prized land in the upscale residential area was transferred to Svit Shlyakhiv’s ownership. In October of that year, then governor of Kyiv Oblast Anatoliy Zasukha signed a property ownership deed that gave the company 135 hectares.
Svit Shlyakhiv reportedly paid only Hr 6.8 million (around $1.3 million at the time) for the land plot, significantly below the market value in this area. The discount came thanks to classification of the land as a rehabilitation and wellness center.
It was under a similar scheme that, according to investigations by Ukrainska Pravda news website, a company called Tantalit received 105 hectares of land north of Kyiv through a lease agreement and for a low price. That company is reportedly affiliated with Yanukovych’s son.
Lawyers representing Oehme van Sweden said that the area where they conducted landscape work does not look like a rehabilitation center.
“It was most assuredly a private estate,” said Paul S. Thaler from the Thaler Liebeler law firm, which is representing Oehme van Sweden in the lawsuit. He further said that on all of the architectural drawings it was designated as “Villa Elena,” an apparent reference to it being Elena Pinchuk’s villa.
Shortly after Svit Shlyakhiv acquired the land plot in Koncha Zaspa, the Orange Revolution brought President Viktor Yushchenko and Prime Minister Yulia Tymoshenko to power.
One of Tymoshenko’s first orders came on Feb. 12, 2005, canceling previous decrees by Yanukovych, including those which transferred this land to Svit Shlyakhiv.
At the time, Tymoshenko said the order was “taken in favor of structures of … Viktor Pinchuk.”
Tymoshenko also issued an order to cancel the privatization of Kryvorizhstal steel mill, which in 2004 was sold at a very low price to companies owned by Pinchuk and billionaire Rinat Akhmetov.
The dispute over the land eventually went to court. Years passed, but Svit Shlyakhiv continues to claim ownership over this plot. The company’s director, Anatoliy Halas, told the Kyiv Post that this territory has nothing to do with the Pinchuks and the place is actually a health and rehabilitation center. But he refused to provide further details. The State Land agency did not respond to Kyiv Post questions to clarify the current ownership status of this land plot.
The compound is currently fenced off and tightly guarded. When a Kyiv Post journalist approached one of the guards and asked to pass on a letter with interview questions to Viktor Pinchuk, he called someone on the phone and then advised to contact Pinchuk’s central office in Kyiv. Villagers in the area say the Pinchuks have for years lived behind the gates at the territory which Svit Shlyakhiv claims to own.
According to Oehme van Sweden’s representatives, their staff provided Pinchuk with architectural and landscape design services back in 2004. They say that before Oehme van Sweden signed a contract with Maypaul, the Pinchuks were not in contractual relations with Oehme van Sweden, but were covering invoices for work provided by Oehme van Sweden.
Oehme van Sweden claims that Maypaul appeared at the last moment just before the signing of the contract.
According to court documents, a representative of Victor Pinchuk’s Interpipe company told Oehme van Sweden that Maypaul’s representative would sign the contract.
A contract between Oehme van Sweden and Maypaul on providing landscaping of the estate near Kyiv was signed on Feb. 2, 2007. The agreed cost was $447,600 plus various additional costs.
Everything went well until 2008, when Elena Pinchuk allegedly started to complain about what she considered to be overpayments, court documents say. Oehme van Sweden says it was billing for additional work beyond the scope of the original contract.
In a letter to Oehme van Sweden dated Jan. 26, 2009, Elena Pinchuk questioned the additional charges. “We have been making regular and timely payments to you under the Contract to the total of US $622,572.89,” Elena Pinchuk wrote, apparently confirming that she and her husband, not Maypaul, were paying for the work.
On Oct. 26, 2011, the International Center for Dispute Resolution ruled that Maypaul did not own the estate where the company Oehme van Sweden provided its work. Instead, it said this area is owned by Svit Shlyakhiv, which, according to the arbitrator’s opinion, was owned by a firm controlled by Viktor Pinchuk’s EastOne Group.
Svit Shlyakhiv’s Halas denied that his company belongs to the companies owned by the Pinchuks or is affiliated with them, but refused to name his company’s founders.
He also denied that his firm has ever signed a lease agreement with Elena Pinchuk, despite the fact that the Kyiv Post has a copy of this preliminary lease agreement between his company and Elena Pinchuk.
In the court documents, Pinchuk’s legal representatives confirmed that she rented this plot from Svit Shlyakhiv, which is why she was authorized to decide what landscape design to do there.
Halas didn’t respond to a written request to see the “rehabilitation center.”
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Kyiv Post staff writer Yuriy Onyshkiv can be reached at [email protected].
