SBU conducts searches in Ukraine’s biggest investment firm
On April 26, the Security Service of Ukraine (SBU) conducted a search at Dragon Capital, Ukraine’s biggest investment firm, which specializes in investment banking and brokering services. The company was founded in 2000. In 2007-2017, one of the minority stakes in Dragon Capital was held by Goldman Sachs, one of the biggest world banks.
After the search was complete, Olga Beloblovskaya, head of the Dragon Capital press service, posted on Facebook: “The search was conducted within the framework of the law and decency. We willingly provided all the information the investigators needed, and currently the search seems to be finished. They did not take away all the computers. We are back to work”.
The SBU has not yet officially announced the reasons for the search. However, on the department’s official website there is a statement denouncing the management of eight companies for selling and using “prohibited Russian-produced spy software”. Dragon Capital was not named in the SBU post.
Later, the Dragon Capital explained on Facebook the reasons for the SBU search – they were conducted on account of the presence of a program for controlling the work time of company staff, recognized as “spy” software.
“As it turned out, the software which Dragon Capital LLC officially acquired from the Ukrainian company Stakhanovets PRO LLC, the proprietor of the software, and planned to use as a system to control the work hours of Dragon Capital LLC’s staff, was recognized as a “special technological means of covert information acquisition,” on the basis of an expert opinion, implemented in the context of criminal production,” the company’s press release states. According to the statement, SBU staff tried to seize all the company’s computers, which would paralyze its operation as a trader of securities and a depository institution.
Ukrainian Prime Minister Volodymyr Groysman instructed a government commissioner to find out what was going on with the searches at Dragon Capital. He noted that he cannot interfere with the SBU’s work, but he emphasized that the investment fund’s operation should not be made uncomfortable with inadequate procedures.
Ukrainian Finance Minister Oleksandr Danylyuk commented on the searches at Dragon Capital on his Facebook page, saying that Ukraine must create a new analytical service for financial investigations.
“I found out about the SBU searches at Dragon Capital during a meeting with investors in Boston. Yesterday we had similar meetings in New York. Of course, this kind of morning news from Kyiv does not help progress. And the public outcry it caused is an indicator of the low level of trust in the law enforcement agencies,” Danylyuk wrote.
He noted that Ukraine is building a liberal economy, to be able to ensure the country’s safety. The minister is convinced that in order to do this, there need to be the appropriate reforms in the law enforcement system.
“Creating a new analytical financial investigation service remains a necessary step for dealing with this problem,” the Finance Minister resumed.
In a comment for the publication “Ekonomicheskaya Pravda”, Tomas Fiala, CEO of Dragon Capital, assumed that the searches may be related to tension in the so-called Sky Mall shopping center case.
“I still don’t know where it all comes from, but it may be that they want to discourage the desire to fight for the implementation of the ruling of the London Court of International Arbitration regarding Sky Mall,” he said. According to Fiala, this is yet another piece of evidence of the urgent need for reformation of the law enforcement agencies, and also the judicial system. Fiala emphasized that “without this we will remain a poor state”.
The conflict surrounding Sky Mall shopping center emerged in 2010 between Dragon Capital CEO Tomas Fiala and his Estonian business partner Hillar Teder on the one hand, and Andrey Adamovsky on the other. Adamovsky’s company allocated $40 million to the further construction of the shopping center. Instead, it received from Arricano (Teder’s company) a 50% + 1 share in the Cypriot offshore company Assofit Holdings Limited, which owned the shopping center through the company Pryzma Beta. The high court of justice affirmed the ruling of the London Court of International Arbitration, which allows Arricano to purchase a share in the Sky Mall shopping center project. According to the verdict, all shares of the company Assofit Holdings must be transferred free of charge from Andrey Adamovsky’s Stockman Interhold S.A. to Hillar Teder’s Arricano Real Estate Plc by June 5.