Case against ex-Naftogaz chief: political persecution or effective anti-corruption work?
Analysis
A former CEO of Ukraines state-owned oil and gas company Naftogaz, Andriy Kobeliev, faces charges of the High Anti-Corruption Court of Ukraine concerning a case on the alleged embezzlement of around $10 million. This case has stirred heated debates among Ukraines political pundits, lawyers, and anti-corruption activists.
Public opinion in Ukraine concerning the case against a former top-ranking official is divided. While one group of experts and activists insists that the case against an ex-Naftogaz chief has signs of political persecution, others believe that anti-corruption institutions must be allowed to get their job done without unnecessary pressure.
Who is Andriy Koboliev?
According to the National Anti-Corruption Bureau of Ukraine (NABU) investigation, ex-Naftogaz CEO Andriy Koboliev is suspected of embezzling a large sum of money. Kobolyev denies any wrongdoing by Naftogaz officials and himself during his administration.
Koboliev took over as CEO of the National Joint Stock Company Naftogaz in March 2014. In the two years since taking over the company, Andriy Koboliev cut the dependence of Naftogaz on gas from Gazprom, which was a crucial change for the energy security of Ukraine. In 2014, Gazprom supplied 90% of Ukraines domestic needs.
Since 2015, Ukraine has stopped buying natural gas directly from Russia. The financial performance of Naftogaz significantly improved under Kobolev. The company lost billions of dollars annually before he took over Naftogaz in 2014. In 2018, it turned a profit and contributed 15% of the governments revenue through tax and dividend payments. Kobolyevs attempt to loosen the grip of business and political leaders on Naftogaz led to his conflict with an influential Ukrainian billionaire and oligarch, Ihor Kolomoiskyi, who openly supported Volodymyr Zelenskyy during the 2019 presidential elections in Ukraine that Zelenskyy won.
Naftogaz won the Gas Sales Arbitration and successfully collected $4,63 billion from Gazprom. According to the annual report of Naftogaz, the arbitral tribunal issued the final award on the case of Naftogaz against Gazprom relating to the Gas Transit Contract on 28 February 2018. In April 2018, Naftogazs Supervisory Board voted to award the employees who contributed to the gas Sales Arbitration victory $46 million, or 1% of the prize money. Koboliev received a multimillion bonus for the Gas Sales Arbitration victory, but only half of it was paid to date. His bonus is $22.4 million, or UAH 609.3 million, according to the average annual currency exchange rate of 2018.
On 28 April 2021, the Ukrainian Government dismissed Andriy Koboliev, bypassing the Supervisory Board and violating formal procedures. Koboliev had held the post of Naftogaz CEO for seven years.
Ukraines anti-corruption institutions against Andriy Kobolyev
On 19 January2023, the NABU and the Specialized Anti-Corruption Prosecutors Office of Ukraine (SAPO) notified Andriy Koboliev of suspicion of embezzling more than UAH 229 million ($6.2 million) in 2018.
According to the NABUs investigation, Koboliev, contrary to the law, issued an order to bonus the companys employees, based on which he was paid almost UAH 261 million (around $10 million) for winning the Gas Sales Arbitration. According to the Supervisory Board of Naftogaz decision, apart from Koboliev,41 Naftogaz employees lawfully received a bonus for the Gas Sales Arbitration victory.
The SAPO suspects Andriy Koboliev took possession of a much larger bonus for his work than is allowed by law. The SAPO asked the court to give a warrant for the arrest of Andriy Koboliev or set bail for him at UAH 365 million ($9.9 million).
At first, the High Anti-Corruption Court (HACC) completely rejected the prosecutors request on 23 January 2023. The HACCs judge Oleh Fedorov did not impose either arrest or bail on Koboliev. Fedorov ruled that Koboliev could not take possession of the bonus because the companys Supervisory Board allocated it. And the head of the board cannot influence its members. Fedorov also called untenable the prosecutors claim that Koboliev misled the Supervisory Board members by hiding information about the Cabinet of Ministers resolution regulating the size of bonuses from them, as the legislation is open and, therefore, the board members could have read it themselves.
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In his decision, Fedorov also referred to the explanations of three former members of the Supervisory Board of Naftogaz, Claire Spottiswood, Bruno Lescua, and Ludo Van der Heyden, in an open letter published on 23 January 2023. In the letter, three former members of the Supervisory Board of Naftogaz noted that they consciously decided to award bonuses to Andriy Koboliev and 40 other Naftogaz employees and that there was no pressure on them.
However, an appeal chamber of the HACC overturned the previous decision of the HACC and set bail for Koboliev at UAH 230 million. After the former Naftogazs CEO did not pay the full amount of the bail, prosecutors went back to court to arrest him or increase his bail.
Koboliev now faces seven to 12 years in prison. While the NABU and the SAPO believe Koboliev illegally rewarded himself with an extraordinary bonus in 2018, the ex-Naftogaz chief claims he did not reward himself. It was the Supervisory Board of Naftogaz that legally decided on the bonus. The NABU insists that the statutory amount of such bonus payments for Ukrainian officials could not exceed UAH 37.48 million, according to Ukraines legislation, namely resolution no. 859 of the Cabinet of Ministers (Ukraines government) regulating the size of bonuses.
The Supervisory Board of Naftogaz approved the bonus proposal. After that, Koboliev issued a corresponding order. According to the SAPOs prosecutor Olena Drobotova, Koboliev should have warned the Supervisory Board members about the restrictions on the size of bonuses set out in Ukraines Cabinet of Ministers resolution, but he did not do so.
I am sure I did not violate any laws. The Supervisory Board of Naftogaz legally did the right thing. Our activity was in the best interest of Ukraine, Koboliev said in his interview with Forbes.
According
to Kobolievs lawyer Oleksiy Nosov, the SAPO and NABU refer to the resolution on bonus restrictions that did not apply to the head of Naftogaz in 2018, at the time when the said bonuses were awarded to Koboliev. Therefore, the Supervisory Board of Naftogaz made the decision about bonuses in a legal way, Oleksiy Nosov said.
Koboliev did not issue bonuses to himself and only himself. This is an assumption of the investigation, not a legal construction. Koboliev, as the Chairman of the Board, was obliged to sign the documents, including the bonus order, to implement the decision of the Supervisory Board of Naftogaz. This is a direct requirement of the companys internal documents. The bonus order contains the names of forty-one people to whom the bonus, 1% of the tot
Friday, April 7, 2023 at 4:25 pm