Dragon Capital's Fiala speaks out about pressure on business from Ukrainian law enforcement

Dragon Capital, an investment firm headed by Tomas Fiala, who also owns Ukrainska Pravda, says Ukrainian law enforcement is continuing to exert pressure on business. In particular, Dragon Capital has complained that the Bureau of Economic Security (BES) has been paying excessive attention to Victoria Gardens, a shopping centre in Lviv.

Source: Dragon Capital

Details: Dragon Capital says that over the last several months it has seen the BES take a growing interest in Victoria Gardens, one of the firm’s key assets, which it acquired in March 2018 from its former Turkish owners.

"First, in the course of criminal proceedings opened in 2017, i.e. before we acquired the asset, BES investigators from Kyiv made accusations of tax evasion in the sale [of the Victoria Gardens shopping centre] by Phoenix Capital LLC to Europolis Property Holding LLC [the current owner of the centre – ed.]," Dragon Capital said.

The investment firm insists that it submitted all the explanations and documents required for the deal. Dragon Capital employees were also questioned by BES investigators in Lviv Oblast. 

But earlier this month, Europolis Property Holding LLC received a request from BES investigators in Lviv Oblast working on a different criminal case from 2017 to provide explanations and supporting documents with regard to the same transaction.

Dragon Capital says that after Europolis Property Holding LLC once again provided explanations and stated that these circumstances had already been the subject of an investigation by another BES department, it received another demand from the BES Lviv investigators, warning of possible seizures and searches.

Dragon Capital believes that the BES’s actions are a form of pressure on their firm and has urged the BES to put an end to such practices and create a supportive environment for foreign firms doing business in Ukraine.

For reference: Dragon Capital acquired Europolis Property Holding LLC, which owned the Victoria Gardens shopping centre at the time, in 2018. At the time of the acquisition, Europolis Property Holding LLC had racked up losses totalling about half a billion hryvnias (approximately US$12.5 million), most of which was due to exchange rate differences on a loan from a non-resident company. The purpose of the acquisition was to increase the investment value of the mall by renovating and upgrading it and transforming it from a loss-making business into a profitable one.

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