CEO: Smart Holding’s business grinding to halt due to seizure of group’s gas assets

The business of the Ukrainian industrial and investment group Smart Holding is grinding to a halt due to the seizure of corporate rights, wells, gas in underground storage facilities and restrictions on settlements, Group CEO Yulia Kiryanova has said.

“Now, due to name of our former beneficiary Vadym Novynsky, the entire team of Smart Holding is accused of destructive activities and financing of terrorism. Thus, a separate pro-government decision threatened the jobs of 3,000 employees in two weeks. Our large transparent business is now on the verge of stopping,” she told Interfax-Ukraine on Tuesday.

Kiryanova said the trust was created before the imposition of Novynsky-related sanctions, and this is confirmed by legal opinions and expertise, which no one has requested.

According to her, criminal proceedings against Smart Holding and the gas producing enterprises Ukrgazvydobutok and Enwell Energy (Regal Petroleum) on the illegality of creating a trust to which Novynsky transferred his assets were opened at the request of a private individual. However, his illegal restoration as the ultimate beneficial owner occurred selectively, and not at all enterprises of the group, since gas licenses can be revoked under the adoption of new legislation in the country that allows for such a possibility.

“Why crime? Crime requires treason. Where did you find the treason? The reproach of treason was found in the fact that the assets were allegedly transferred to a representative of the aggressor state, which, in the opinion of the SBU, is one of the representatives of the trust – a licensed lawyer in Cyprus. Anything less fantastical?” She said.

Kiryanova said Smart Holding never supported an aggressor country, and from the $27 million dividends received by the gas business in 2022, the group sent $13 million to help the Ukrainian military and citizens affected by the war. The remaining funds were used to support jobs in other businesses of the group, which are currently not profitable. The group for the entire time of its existence has reinvested almost all of its profits in Ukraine.

“We are transparent, we are audited by the Big Four, all calculations go through the NBU, through financial monitoring. Why is there no case on the facts of the accusations? Why is the story about Cypriot spies so stupidly invented? So that no one sees the real state of affairs under the darkness of war – the redistribution of property,” the CEO said.

Kiryanova believes that such actions of law enforcement agencies set themselves the goal of a raider seizure, since during the searches, geological and technical information on gas wells was seized in a large volume, followed by the suspension of the license for the development of one of the fields in Kharkiv region, which continued its work, despite Russian shelling. This was followed by the seizure of other wells and gas in UGS facilities in Ukraine.

“What do we have? Fabricated cases against a transparent efficient business, where people will lose their jobs, the government – taxes, the army – support, since everything will flow into the pockets of government and law enforcement officials,” she said.

The Smart Holding CEO said every day of idle time of Ukrgazvydobutok, which produced 450,000 cubic meters of gas per day, daily costs the budget UAH 5 million in lost taxes. However, the group continues to invest in gas production during the war, three wells with a depth of 6.5 kilometers, worth $10 to %11 million each, are being drilled.

Kiryanova also said the next step is expected to be the transfer of assets to the management of the Asset Recovery and Management Agency (ARMA), corruption in which is being investigated by the National Anti-Corruption Bureau of Ukraine (NABU), and this will not work for the benefit of the companies.

According to her, there are three scenarios for further developments. In the first of them, the facts of the accusations are carefully checked, the courts’ opinions confirm the Smart Holding position, which continues to operate and invest in Ukraine further.

In the second, after similar checks and courts’ opinions, the authorities make it clear that it is undesirable for Smart Holding to invest in Ukraine. Then a gradual exit from all businesses is carried out, for which strategic foreign investors who are interested in investing in the economy of the post-war country will be involved.

“In the first two scenarios, the authorities should stop the illegal removal of new beneficiaries from public registers, thereby unblocking operational activities – returning licenses, releasing gas in storage facilities. At that time, assets may remain seized until the end of court processes. The key thing is that business should work for the economy, taxes should fill the budget, gas should be produced, people should be paid wages,” she said.

In the third case – in case of an irreversible decision of the authorities to transfer business and property through the ARMA mechanism – Smart Holding will continue to fight in Ukrainian and international courts, since the destruction of the business created over the years with the recruitment of teams and the creation of jobs is the worst thing that can happen in country, especially in times of war.

“We are ready for a frank conversation with the authorities about the scenarios for the development of events and the consequences. I believe that in any crisis there should be a dialogue. Our initiatives are set out in an open proposal to the authorities,” the CEO said.


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