Last year, Brooklyn-Kiev began implementing a joint project with Louis Dreyfus, one of the world's leading agro-businesses, and obtained a loan of USD 60 million from the EBRD for the project. This project was demonstrative, considering the fact that investors are currently afraid to invest in Ukraine. If successful, it could demonstrate that the situation in the country is changing for the better. This makes it even more surprising that on 27 April 27 Brooklyn-Kiev came under attack from the Regional Prosecutor's Office, which seized documents dating back three years from the company. These actions essentially dealt a blow to what is perhaps the only major international investment project to begin implementation in Ukraine in wartime.

Brooklyn-Kiev’s General Director Yurii Hubankov believes that we are all witnessing the resumption of the old scheme: prosecutors are looking for someone to assist and a company is looking for someone to help it enter the port. "The perfect coincidence of interests. Public-private partnership is again in the form in which it was one and a half years ago," the entrepreneur explains, smiling.

Tell us how prosecutors seized documents from Brooklyn-Kiev

As soon as Prime Minister Arsenii Yatsenyuk began his speech at the EU-Ukraine conference on the progress of reforms and the attractiveness of Ukraine to investors, seven prosecutors and two witnesses led by Prosecutor Todorov entered the office of one of the largest investors in the Odessa region, a subsidiary of the British company Brooklyn-Kiev. They presented a court warrant issued by Judge Kovalenko of the Primorsky District Court of Odessa and began searching for and seizing documents dating back three years.

Are you implying that these two events are linked?

Coincidence or not, judge for yourself. Prosecutor Todorov obtained the court warrant to seize documents, computers, servers, and other electronic media more than three weeks ago, specifically on 3 April 2015. However, the search began on 27 April 2015, just as the EU-Ukraine conference was beginning. Is it a coincidence? Perhaps, but it was too suspicious. A random or pre-planned action.

Did you receive inquiries from the Odessa Regional Prosecutor's Office to provide any documents before the search?

No, we did not receive any inquiries or inquiries from the Odessa Regional Prosecutor's Office to provide any documents. Moreover, I twice sent written requests for a meeting with the Odessa region’s Deputy Prosecutor Hornostaeva, who is trying to find any compromising materials against our company. She sent inquiries to various agencies and inspectorates. The last three inquiries were sent to the tax inspectorate for major taxpayers in the Odessa region. However, the tax inspectorate refused to investigate the same episode for a third time and participate in the farce organized by the prosecutor's office and Hornostaeva personally. As a result, the prosecutor's office had no choice but to focus on one episode of alleged nonperformance of work. However, this is only an invention by them because the work was performed, as confirmed by inspections, the tax inspectorate, and even the Deloitte audit firm.

Can you provide details about the work that attracted the attention of the prosecutor’s office?

Based on concluded agreements, the Eurostroy Service company performed design, installation, and general construction works, as well as maintenance of engineering networks, when Brooklyn-Kiev was constructing a grain transshipment complex.

During our three years of work with this company, the turnover amounted to UAH 77.9 million, including UAH 43.5 million in 2013. The VAT amounted to UAH 12.9 million, including UAH 7.3 million in 2013. As of today, all the work has been completed and confirmed by certificates of completion based on Article 198.1, Section B.

Was the construction legal?

We started obtaining all the permits back in 2010. We spent two years obtaining only documents and began construction work in 2012. In November 2014, we received inquiries from Deputy Regional Prosecutor Hornostaeva regarding the legality of the construction work. In February 2015, we provided a detailed report and a response containing a list of more than 20 permits, including the relevant decisions of the Ministry of Infrastructure of Ukraine and the State Property Fund on the integral improvements, as well as the decisions of all the necessary authorities that allowed us to perform construction work absolutely legally. Moreover, we have expert conclusions confirming that investments were made and that our actions were legal.

Are you talking about a project financed by the EBRD?

Yes. Negotiations with the European Bank for Reconstruction and Development on provision of a loan for such a large-scale construction project that the country’s infrastructure needs so badly began sometime in 2010-2012. If someone thinks that it is easy to obtain a loan from the EBRD, then he is deeply mistaken. We were examined for two years by auditors from one of the Big Four audit firms. A detailed technical analysis of the project was performed, the cost of each phase of construction was fully checked, and, ultimately, construction companies, contractors, and the estimated cost of the project, which amounted to USD 107 million, were approved. The company experienced what due diligence by the EBRD means. You can believe me when I say that it is better to undergo three inspections by the Tax Inspectorate or better yet by the prosecutor’s office than one such inspection. The conclusion: "The company is transparent, has no questionable ties, and it is worthy of a credit of USD 60 million."

What are the terms of this credit?

The credit agreement was signed in 2014. An essential role in the development of the complex and particularly in obtaining the credit was played by one of the largest traders in the world, Dreyfus Commodities, which became a partner of Brooklyn-Kiev in the new project. The first cargo departed in 2014, thanks to the commissioning of the first phase of the terminal, 150 new jobs, new and modern expensive equipment, and unique energy-saving and environmentally friendly systems.

How much money have you invested in the past few years?

In total, the company invested and attracted foreign investment totaling USD 280 million during this period. Thanks to this, the Brooklyn-Kiev company is becoming a real leader in the port of Odessa with a transshipment volume of more than 1 million tons of cargo, about 700 employees, and a payroll of UAH 9 million with multi-million-hryvnia deductions into the budgets of the country, the region, and the city.

Do you feel supported by the Ministry of Infrastructure?

The current leadership of the Ministry of Infrastructure actively supports our efforts to develop, and it is taking the first steps to assist in its implementation. However, it was impossible to assume that there were any grounds for the prosecutor’s office to take action throughout the history of the company, particularly in light of the past inspections and audits, but it turns out that there are grounds.

"We have repeatedly informed the prosecutor that her actions amount to lobbying for the interests of another company at the expense of one of the largest investors in the Odessa region"

In your opinion, what was the aim of the attack on Brooklyn-Kiev?

I can speak for the entire Odessa: everyone here knows whose and which companies operate here, how they operate, from whom one can obtain something and how to obtain it, and who should not be touched. Specifically thanks to this reliable information, it has become known why the prosecutor’s office is so active. We have repeatedly informed the prosecutor that her actions amount to lobbying for the interests of another company at the expense of one of the largest investors in the Odessa region.

How can the prosecutor's office lobby for the interests of your competitors?

The most important thing in the prosecutor's office is not to highlight a particular customer but to try to convince a superior at the level of deputy regional prosecutor that a particular company committed one financial violation or another. Then, the only thing left to do is to prepare inquiries and submit the inquiries for the signature of a deputy regional prosecutor, who sometimes has no time or desire to dig deep into the core of the problem. The creation of problems for the company will allow a competing company to gain additional benefits in the future and force its competitor to retreat in exchange for solution of its problems with the prosecutor’s office. In our specific case, the number of inquiries signed by Deputy Regional Prosecutor Hornostaeva and sent to various agencies has increased since the end of 2014. The State Property Fund has received inquiries related to the leased territories, the GASKA has received inquiries related to building permits and the start of operation of the terminal, the tax inspectorate for large taxpayers with which the company is registered also received inquiries.

How do you plan to defend yourself?

There have already been two court cases at various levels related to one of the decisions made by the tax inspectorate, and we won both of them. Therefore, talk of any collusion with the tax inspectorate is not only impossible, but also laughable.

I have already informed the British embassy and the ambassador personally. Our partners should inform the French embassy. The EBRD knows about this situation. I am scheduled to deliver a speech at the annual meeting of the EBRD in Tbilisi, which will be attended by ministers of economy and finance, on 15 May. I will certainly raise this issue there. In addition, we have sent the relevant letter to parliamentary deputies and the governor of the Odessa region. In addition, I am negotiating with the Financial Times regarding publication of an interview.

Are you counting on a response from the authorities?

I am sure that if the president and prime minister of the country and parliamentary deputies are not indifferent to the fates of investors in Ukraine and they really want to make the country attractive to investors, they will definitely set up a commission to demonstratively sort out this particular situation in Odessa and prove to the entire world that reforms are really being implemented in the country and that there will never be a return to lawlessness. The actions of the prosecutor’s office completely refute the words of the president and prime minister of Ukraine regarding protection of investment and attractiveness of Ukraine to foreign investors, and it is anti-state and criminal.