Kolomoyskyi’s claims against Ukraine in the Ukrnafta case reach $5.4 billion

The claims of Ukrnafta's minority shareholders controlled by Ihor Kolomoyskyi against Ukraine increased to $5.4 billion, according to Interfax-Ukraine with reference to the data of the Ministry of Justice published in Prozorro.

In September 2017, in the prospectus of Eurobonds of Ukraine, it was stated that claims of minority shareholders in accordance with the suit filed with the Arbitration Institute of the Stockholm Chamber of Commerce against Ukraine amounted to $4.7 billion. The arbitration hearings are scheduled for February 19 to March 2, 2018.

The proceedings were initiated in 2015 by Cypriot companies from the ‘Privat’ circle: Littop Enterprises Limited, Bridgemont Ventures Limited and Bordo Management Limited. Privat demands that the shareholder agreement of Ukrnafta from January 25, 2010 be validated and that Naftogaz be obliged to adhere to it.

According to the agreement from 2010, the head of the board should be selected from the candidates proposed by minority shareholders, and 6 out of 11 members of the supervisory board and its head should be nominated by the Naftogaz.

A quorum was achieved in the presence of 8 of the 11 members of the council, which did not contradict the law on joint-stock companies at that time. Now, the requirement for quorum has been reduced to a simple majority of votes.

Thanks to the agreement, Privat practically established complete control over the activities of the largest, semi-state-owned mining company. This control extended to the ability to appoint their top managers.
In September 2015, secret treaties between minority shareholders and top managers of Ukrnafta were published that allowed members of the company's board to undertake obligations for “additional fees” to act in the interests of offshore shareholders.

That same year, thanks to changes in the law "On Joint-Stock Companies” that reduced the quorum requirement for making decisions in shareholders' meetings from 60% to 50%, Briton Mark Rollins was elected Chairman of the Board of Ukrnafta. His candidacy and appointment were supported even by minority shareholders.

Naftogaz of Ukraine owns 50% plus one share of Ukrnafta. The companies belonging to the sphere of influence of the Kolomoyskyi’s Privat group own approximately 42%, with 13.6% going to Littop Enterprises Limited, 12.9% owned by Bridgemont Ventures Limited and 12.9% controlled by Bordo Management Limited while the remaining 9.9% went to other shareholders.

  Kolomoyskyi, Naftogaz, Ukrnafta, Ukraine