Author: Roman Olearchyk
Posted on: Financial Times | Saturday 6th January, 2018


Rinat Akhmetov, Ukraine’s richest man, has been served with an order from a Cyprus court freezing $820m of his assets in a long-running legal dispute with a rival over the country’s biggest fixed-line telecoms group.

Mr Akhmetov, estimated by Forbes magazine last year to have a fortune of $4.6bn, has assets spanning coal, steel, energy and telecoms, as well as Shakhtar Donetsk, the Uefa Champions League football club.

Assets potentially affected by the freeze include an apartment in London’s One Hyde Park development in Knightsbridge. When it was bought, that property was the most expensive private residence in the UK.

The Cyprus ruling means that three out of Ukraine’s five richest oligarchs now have asset freezes of varying sizes in place against them. In an unrelated case last month, the High Court in London granted an order to freeze more than $2.5bn of assets belonging to Igor Kolomoisky and Gennady Bogolyubov, linked to the near-collapse of PrivatBank, Ukraine’s biggest commercial lender which they then owned, in 2016.

The interests of Ukraine’s powerful oligarchs are being challenged by disputes and investigations, as well as the economic downturn since Ukraine’s pro-democracy revolution in 2014 that toppled Viktor Yanukovich and led to Russia’s annexation of Crimea.

The decision by the District Court of Nicosia related to Mr Akhmetov and nine other parties was made on December 27. A copy was provided to the Financial Times by Raga Establishment, the claimant.

Raga, which is owned by Denis Gorbunenko, a former Ukrainian banker, has been pursuing Mr Akhmetov and others seeking full payment for the sale of the fixed-line telecoms group Ukrtelecom. Raga said it sold Ukrtelecom to Mr Akhmetov for $860m in 2013, with Mr Akhmetov paying $100m upfront but nothing since.

Under the freeze order, Mr Akhmetov and other respondents are free to deal with their property so long as assets worth at least $820.5m — the amount sought by Raga in the litigation — are preserved and certain large transactions are notified to Raga in advance.

Raga won an award at the London Court of International Arbitration against Mr Akhmetov’s company, SCM Financial Overseas, in June last year based on a parallel claim.

Mr Akhmetov has the right to appeal against the asset freeze on January 8.

In a late Friday statement, Mr Akhmetov’s SCM group said: “We disagree with the order in its entirety and will contest it.”

It was not immediately clear how the asset freeze might affect Mr Akhmetov’s rights over Ukrtelecom. His ownership of the former state telecoms group is being challenged by Ukraine’s government, which is seeking through the courts to renationalise the company on the grounds that initial privatisation obligations have not been upheld.

The case also potentially affects the interests of another Ukrainian oligarch, Dmitry Firtash, now in exile in Austria awaiting possible extradition to the US on corruption charges that he has described as trumped up. His company, Group DF, is owed $300m by Raga, according to Mr Gorbunenko, after having partially financed the initial privatisation of Ukrtelecom in 2011.

Asked if Group DF was a creditor to Raga and to the initial privatisation of Ukrtelecom, the group declined to comment because “the legal process is still ongoing”.

Ukrtelecom was privatised through a tender in 2011, when it was sold to the Vienna-based Epic investment group for $1.3bn.

At the time, Mr Akhmetov and Mr Firtash were political backers of Mr Yanukovich, then Ukraine’s Moscow-friendly president.

The involvement of Yanukovich-linked oligarchs in the initial Ukrtelecom privatisation was long suspected by industry insiders but information has only surfaced as a result of Raga’s claim.

Mr Gorbunenko purchased Raga, which owned the rights to Ukrtelecom, from Epic in 2013. But the London arbitration ruling from June 2017 stated it was SCM’s case that discussions about Mr Akhmetov’s purchase of an Ukrtelecom stake began in August 2012 at “the request” of Mr Yanukovich.

After Kiev’s appellate business court upheld a lower court’s ruling last month that Ukrtelecom be nationalised, Mr Akhmetov’s SCM Group said it would appeal against the decision and take “all procedural steps to protect our rights”.

This story has been updated to include a response from SCM group.


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