The Security Service of Ukraine on April 26 searched investment bank Dragon Capital, accusing it of using prohibited Russian spyware. Dragon Capital was among eight companies searched for the same reason, according to the law enforcement agency known as the SBU.
Dragon Capital CEO Tomas Fiala said law enforcers took three computers after initially threatening to take all, which would have paralyzed the company’s work. Fiala said that “all software we use is licensed and officially purchased.”
Fiala said the company learned from the court search warrant that the software, purchased from a local supplier in Dnipro for Hr 40,000 in 2015, has been considered since last year by the SBU as illegal spyware, a suspicion never made public.
“Obviously we did not use it for any ‘spying,’ but just internal control that protects internal company data and property,” Fiala said.
The software was produced by Stakhanovets Pro, a firm co-owned by companies based in Russia, the city of Donetsk in Ukraine’s Russian-occupied territories and Cyprus.
The searches were criticized by Prime Minister Volodymyr Groysman.
“I’ve just found out that there are searches at Dragon Capital,” he said at a Cabinet meeting. “… I can’t interfere. But what kind of investment portfolio will Ukraine get? You can’t create a (good) investment climate like this.”
Sergii Leshchenko, a reformist lawmaker from the Poroshenko Bloc, also lambasted the SBU.
“The intelligence agency of a country at war is losing the remnants of its reputation, while Ukraine is losing the remnants of its investment climate,” he wrote on Facebook. “What happened is racketeering by the intelligence agency.”
He said, citing a letter from a company searched by the SBU, that one of the companies involved had paid Hr 3 million to have their equipment returned to them.
“Such software is installed at major corporations worldwide and is a means of preventing leaks, not spyware,” the letter read. “The Russian trace is used as a beautiful facade.”
Fiala said the searches could be an effort to pressure the bank in its corporate conflict over Kyiv’s Sky Mall with Oleksandr Hranovsky, a top ally of President Petro Poroshenko, and his business partner Andriy Adamovsky. Hranovsky and Adamovsky are accused of illegally seizing the mall, which used to be co-owned by Dragon Capital, and deny the accusations.
“Maybe they’re trying to prevent us from fighting for the implementation of a ruling by the London Court of International Arbitration (in the Sky Mall case in favor of Dragon Capital),” Fiala told the Yevropeiska Pravda online newspaper. “This confirms again that we will remain a poor country unless we reform law enforcement and the judiciary and create a financial investigation agency and anti-corruption courts.”
Pavlo Demchyna, a deputy chief of the SBU, is an associate of Hranovsky and Poroshenko’s grey cardinal Ihor Kononenko, while Fiala has been a vocal critic of Poroshenko, Kononenko and Hranovsky.
Dragon Capital was linked to the reformist wing of ex-Prime Minister Arseniy Yatsenyuk’s government, including ex-Economy Minister Aivaras Abromavicius, ex-Finance Minister Natalie Jaresko and Deputy Economy Minister Max Nefyodov. Last year Abromavicius resigned after accusing Kononenko of large-scale corruption.
The SBU has also clashed with other opponents of Poroshenko.
Specifically, it has investigated Kateryna Vezeleva-Borisova, a deputy department head at the National Anti-Corruption Bureau of Ukraine, over lectures that allegedly contradict anti-corruption law and ex-customs official Yulia Marushevska over an $18 bonus, devoting dozens of officers to her case.
In March the SBU also searched the premises of YouControl, an IT company that gathers corporate data from public registers – a tool often used to track down corruption schemes. Critics accused the SBU of pressuring YouControl to prevent civic activists from exposing corruption.
Dragon Capital said the search was based on a warrant by Shevchenko District Court as part of an investigation into the “illegal purchase or sale of special technical means of getting secret information, as well as their illegal use.”
In a statement, Dragon Capital said that publicity helped mitigate the scope of the search.
“The SBU intended to remove all of the company’s computers, which would lead to a halt in the company’s operations, primarily as a securities trader and a depository institution,” the company said. “Due to the response from Ukrainian Prime Minister Volodymyr Groysman, other public figures and the media, the search took place without violations and political pressure from SBU employees, and the company is working normally.”
