You're reading: Lawmaker from Yatsenyuk’s party accused of wresting distillery from French company EXCLUSIVE

Lawmaker from Yatsenyuk’s party accused of wresting distillery from French company

ByMark Rachkevych, Mariana Antonovych, Yves Souben . Published Aug. 7, 2015 at 6:17 pm Sobieski Distillery (Destylarnia Sobieski S. A.) in Starogard Gda\u0144ski is one of the four production works within the Sobieski Sp\u00f3\u0142ka group with its seat in Warsaw that belongs to Marie Brizard (Groupe Belvedere). Photo by Marie Brizard To foreign investors, the following scenario is all too familiar. A Western firm buys an asset in Ukraine, makes millions of dollars of upgrades, and then loses the business in court to a local entity or erstwhile partner. It happened this year to Zurich-based Swissport, a leading airport cargo handler, which lost its $25 million local subsidiary to Ihor Kolomoisky’s Ukraine International Airlines. It happened in 2004 to Canada’s Northland Power, owned by Ukraine-born businessman James Temerty of Toronto, who was forced to give up Kyiv’s Darnytsia Heat & Power Plant. And it happened in 2010 to Ukraine-born Yuri Leshchinsky of New York when he and his American partners were ousted from candy maker Zhytomyr Sweets. And it is happening now to France’s third biggest spirits producer, Marie Brizard – formerly Belvedere Group until July 1. It lost its Cherkasy Distillery, where it made €5 million in upgrades and produced its famous Sobieski vodka brand. And lawmaker Georgiy Logvynsky of Prime Minister Arseniy Yatsenyuk’s People’s Front Party is accused of involvement, a charge he denied in a written response to the Kyiv Post. Belvedere was the first foreign company to buy a plant in Ukraine to produce its vodka domestically when it purchased the distillery in December 2007 for an estimated $5-8 million, according to investment house Dragon Capital. It employed almost 100 people at the end of 2013, according to Belvedere company data. Like all corporate takeover cases in Ukraine, the Cherkasy Distillery, which the French company values at Hr 65 million, is complicated. A series of court rulings starting in July 2011 enabled the asset to be sold at auction at 265 times less than its estimated value. In July 2011, Rafinad Media LLC, an advertising service provider, started bankruptcy proceedings in court over an unpaid debt of Hr 9.7 million that Belvedere owed. This represented 15 percent of the company’s outstanding debt at the time. Eighty-five percent of the local unit’s debt was secured by the French parent company. Kyiv’s Commercial Court subsequently declared Belvedere Ukraine bankrupt and ordered the assets to be auctioned, including the Cherkasy Distillery which had a daily capacity to produce 32,500 bottles. In November 2014, Avigal, a company that was originally founded by lawmaker Logvynsky, successfully bid Hr 244,495 ($15,713) for Belvedere’s Ukrainian assets. The two companies that Avigal purchased for Belvedere’s corporate rights, as a result, had been used by the parent company to secure 85 percent of its local unit’s loans. Logvynsky would only confirm that he had been a “member,” of Avigal, without elaborating, while the company register lists him as the company’s founder. A trained lawyer, Logvynsky criticized Belvedere for what he says was the way it sheltered itself from debt obligations through other firms. “I am aware of this case from my legal practice,” Logvynsky wrote the Kyiv Post on Aug. 6. “The way how this enterprise (Belvedere Ukraine) built the scheme allowing it not to pay its creditors, state budget and Ukraine’s Pension Fund was widely discussed in professional circles.” Marie Brizard CEO Jean-Noël Reynaud told the Kyiv Post that Logvynsky is the mastermind of the asset takeover. “We know who is behind Avigal,” Reynaud added. “This is a politician … Logvynsky. This information has been public already through the Ukrainian media,” Reynaud said by phone on Aug. 5. “It is not acceptable that … corrupt politicians can technically take advantage of a foreign company in Ukraine.” Two of Logvynsky’s unpaid parliamentary aides, Maria Shvets and Serhiy Topchiy, are also tied to the case, a circumstance that that the lawmaker dismissed as coincidence. Shvets is an attorney of Rafinad Media that took Belvedere to court for the unpaid debt. Topchiy is the current co-owner of Avigal to which the Cherkasy Distillery belongs. “It is wrong to identify (the) lawmaker with his assistants,” Logvynsky said, noting that many young lawyers, driven by the desire to protect human rights, have joined his team when he was elected a member of parliament. Logvynsky’s assistant Shvets said the value of Belvedere Ukraine’s assets did not amount to Hr 65 million. Otherwise, it would have paid its debts already. “Despite numerous negotiations and promises, in seven years Belvedere Ukraine did not find a possibility to pay its multi-million hryvnia debts,” Shvets said. “That is why its property went under the hammer at the auction (block).” Meanwhile, Belvedere’s attorney, Anton Polikarpov, maintains the opposite. He said “Belvedere Ukraine would be able to right a wrong in this case, despite obvious violations made by the local court and illegal actions of the liquidator officer.” The only thing he is afraid of is that the assets get resold, which will make it more complicated to recover in court. The French Embassy in Ukraine has been monitoring this situation alongside the European Union delegation and hopes that justice will eventually be served. “At a time when Ukraine is crucially looking for foreign investors, this kind of situation cannot be tolerated,” the French embassy told the Kyiv Post on Aug. 5 in an emailed statement. There’s still a glimmer of hope. Belvedere has challenged the previous court ruling and secured a favorable decision in the appellate court. However, on July 21, the High Commercial Court sent the case back to the lower court for more fact finding. Waiting for litigation to conclude, Reynaud said he is ready to resume production at the plant which is standing idle. “Our intention is to push for our brand Sobieski,” Reynaud said. “But first we have to figure out how much damage was done to the brand while it was out of (our) control.” Kyiv Post staff writer Yves Souben
can be reached at [email protected] and Mariana Antonovych at antonovych@kyivpost.com. Kyiv Post editor Mark Rachkevych
contributed to this report.

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