Vasyl Gostiuk: Kyivstar and VEON should be confiscated

Exclusive. The incessant arrogance of Russian oligarchs in Ukraine and further West has long attracted victims of their activities to fuel the aggressive regime of madmen. However, more important is how and what exactly the Ukrainian authorities are doing about this? It turned out that public activists should effectively help them to implement the law and protect national interests. We talked about this topic with the head of the NGO "European Association of Local Governments", a lawyer By Vasyl Gostiuk.

In your opinion, how effectively is Ukraine working to identify and confiscate assets owned or controlled by citizens of the aggressor country who are under Ukrainian and international sanctions?

First of all, I am not a supporter of the methods of the Red Army, when they took away people's legal property. But even they mostly acted by "expropriating" for the benefit of the "working people" and the state of that time.

In our country, which has enshrined in the legislation such a mechanism as the confiscation of assets of sanctioned persons, we clearly see an exclusively selective approach in its implementation. A kind of form of state racketeering.

Despite the fact that several hotels and shopping centers were confiscated, the truly large and critically important infrastructure facilities remain the property of the Russians in the fourth year of the war. For example, the issue of returning the former regional energy companies to state ownership has been indefinitely delayed. Moreover, instead of confiscation, the process has been in reverse since last year. By a strange coincidence, on June 25, 2024 investigating judge of the High Anti-Corruption Court (VAKS) canceled the arrest of Firtash's "Oblgaz", creating a very controversial precedent. Soon already investigating judge of the Shevchenkivskyi District Court of Kyiv By a decision dated 29.11.2024/XNUMX/XNUMX, the seizure of the assets of Fridman and other Russians associated with Kyivstar was lifted. By the way, it was after the lifting of these seizures that the only foreign founder of Kyivstar – VEON Ltd. – began and successfully completed an urgent reorganization and restructuring of its assets. The most valuable telecommunications asset of the Russians, which is Kyivstar, is being actively saved from confiscation. As a result of such reorganization, other assets belonging to VEON, were removed from his property on a newly formed Dutch company, active "promotion" of the idea " beganlisting» Kyivstar itself on NASDAQ. They even changed jurisdiction, this year the "relocation" of VEON Ltd. from the Netherlands to the United Arab Emirates was completed. This jurisdiction is the most common for the relocation of all Russian companies previously registered in the EU and EFTA countries.

What is special, in the aforementioned sense, about such a system-forming enterprise as Kyivstar? The fourth year of Russia's full-scale aggression against Ukraine has passed, and yet, doesn't it seem that there is still some uncertainty or opacity regarding the ownership structure of this company?

The peculiarity is that Kyivstar constantly generates a huge amount of cash, which is so needed by many. Even during the war, its revenue and profits are growing. And this is not the turnover in a supermarket that earns its margin, but its own income from the sale of its own services and at a price that they themselves set, mostly paid by consumers (subscribers) in advance.

While we are talking about the “complexity” of determining the owner of Kyivstar, others, for example in Britain, are actively and quite successfully using artificial intelligence even in medicine for primary diagnostics. By the way, recently one of the leading foreign specialized publications published my article, in particular, about the active use of artificial intelligence for dispute resolution, including in courts, mediation. No, this is not a hint at replacing our ministers with artificial intelligence, as a more effective and certainly cheaper tool.

In our time of the "global fight" against money laundering, when there is practically no banking secrecy, it is impossible to establish the ownership structure with its documentary confirmation, perhaps having only access to the "world wide web". Sometimes information from the registers may be paid, but the price is symbolic. Therefore, the ownership structure of "Kyivstar" is quite transparent. There is a reluctance, clearly not free, of some of our officials to comply with Ukrainian legislation.

It is no secret that Kyivstar is directly involved in ensuring state security, moreover, it is actively involved in resolving defense issues. Despite this, it was and remains the property of sanctioned Russian oligarchs.

There is a common saying, more often about banks: “Too big to fail” (TBTF). Kyivstar is undoubtedly the largest Ukrainian mobile operator. At the same time, the head of Kyivstar has personally and repeatedly stated that the sanctioned Russian oligarchs do not participate in the management of the company and do not influence its activities in any way. There are also their corresponding official written statements. And this is great, if this is really the case.

The experience of Switzerland and the infusion of their state funds in support of CREDIT SUISSE with its simultaneous takeover by UBS, which for a very long time was considered its “lifelong” direct competitor, is interesting. Small clients of both banks did not even notice much and of course did not lose anything. A notable detail is that the Swiss government made a decision to allocate funds, and it was more than 50 billion Swiss francs, not in a few years and through a referendum, as is common among them, but literally in a few hours.

In our case, there is no need to attract state funds at all; on the contrary, the state budget will receive billions of US dollars, only officials must fulfill the requirements of Ukrainian legislation and their direct functional duties. Transferring a controlling stake in Kyivstar from Russian ownership to the Ukrainian state will in no way affect the stability of the company's operations or the quality of its services.. However, it will allow to legally withdraw to the budget of Ukraine part of the profit accumulated during the war, which is TENS of billions of hryvnias. Find an effective new owner, having received a fair price for it, already in billions of dollars. The current capitalization of the sole founder of Kyivstar (Market Cap) is 3 billion US dollars.

I emphasize that we are talking about the controlling stake in Kyivstar, owned by sanctioned Russian oligarchs.

Yes, according to official notification From 11.08.2023/XNUMX/XNUMX, the Office of Foreign Assets Control (“OFAC”) of the US Department of the Treasury applied personal sanctions to the following persons: FRIDMAN Mikhail Maratovich, AVEN Petr Olegovich, KHAN German Borisovich, KUZMICHEV Alexey Viktorovich[1].

The report also states that these individuals are already under sanctions by Australia, Canada, the EU, and the United Kingdom. The introduction of sanctions are blocked any legal entities that are directly or indirectly owned by one or more blocked persons by 50 percent or more.

According to information posted on the exchange EURONEXT Among the owners (shareholders) of VEON Ltd are listed:

– LetterOne Investment Holdings SA with a share of 47,90%;

– Stichting Administratiekantoor Mobile Telecommunications Investor ("IMTIS") with a stake of 8,30%.

Also on the website of VEON Ltd these same details are listed shareholders.

In turn, "IMTIS" is part of the LetterOne group. The relevant information is widely available. For example, it is posted on the official website US Securities and Exchange Commission. Therefore, VEON Ltd is at least 56,2% owned by LetterOne, directly (47,90%) and through IMTIS (8,30%), and not 46,85% as operated by individual Ukrainian state bodies.

The founders and owners of Letterone Investment Holdings SA are: Alexey Kuzmichev, Andrei Kosogov, German Khan, Michael Fridman, Petr AvenThe ownership of Letterone Investment Holdings SA by these individuals has been repeatedly established by decisions of Ukrainian courts, for example, by the decision of the Kyiv Court of Appeal dated 16.04.2024/XNUMX/XNUMX in the case No. 761/35853/23.

Thus, the individuals subject to sanctions, namely Andrei Kosogov, Alexey Kuzmichev, German Khan, Mikhail Fridman, Petr Aven, collectively own more than 50% of PrJSC "KYIVSTAR". With reference to §587.406 of the US Code of Federal Regulations (The Code of Federal Regulations), I claim the extension of US sanctions to LetterOne Investment Holdings SA, VEON Ltd., VEON Holdings BV, KYIVSTAR PrJSC and legal entities related to them (Ukraine Tower Company LLC, Halsey Ukraine LLC, etc.).

[1] According to the US Code of Federal Regulations – The Code of Federal Regulations (CFR):

Ҥ587.406 Entities owned by one or more persons whose property and interests in the property are blocked.

Persons whose property and property interests are blocked under §587.201 have an interest in all property and property interests of the business entity in which such persons directly or indirectly own, individually or collectively, 50 percent or more of. Thus, the property and interests in the property of such a legal entity are blocked, and such an organization is a person whose property and interests are blocked pursuant to § 587.201, regardless of whether the entity's name is included on OFAC's List of Specially Designated Nationals and Blocked Persons (SDN List)".

What exactly is currently happening with the assets and personal property of those individuals who have or had a relationship with Kyivstar, while simultaneously being on Ukrainian and international sanctions lists – in the EU countries, the USA, the UK, and other countries that have joined the sanctions?

In short, everything is going well for the Russians and their Ukrainian property, the property is working and making money for them. Moreover, also at the end of last year, Ukraine lifted the seizure of another valuable and highly liquid asset that belonged to them at that time - 19,8% of the shares of another telecommunications operator, Lifecell LLC, trademark "LIFE". This share Ukrainian assets of sanctioned Russian oligarchs, with a value according to various estimates ranging from 500 million euros to 1,5 billion euros., was them successfully soldThis was reported, in particular, by Bloomberg, emphasizing once again that the information about the ownership of this Ukrainian asset by Russian sanctioned oligarchs is widely known. By the way, the shareholder of LLC "Lifecell" was the already mentioned IMTIS. It is IMTIS through VEON Ltd. that remains a shareholder of "Kyivstar".

Of course, in other countries where laws work and decisions are implemented, personal sanctions are successfully implemented, reliably blocking the property of such individuals. Unlike Ukrainian realities, there are currently no known facts of alienation of property by its sanctioned owners, which is located in the jurisdictions of the EU, the USA or the UK. There, the processes are clearly reversible and predictable.

Yes, November 20, 2024 High Court of London dismissed LetterOne's appeal, which asked the court to overturn a decision taken by the UK government under the new law About National Security and Investment (NSIA) on the forced sale of the company (its shares) Upp's, a fiber optic internet provider in the east of England. It is noteworthy that LetterOne acquired Upp's in January 2021, a year before the NSIA came into force.

The UK government decided, and the UK Court of Appeal upheld the legality and validity of that decision. In particular, the court found that the company LetterOne Holdings, founded by businessmen Mikhail Fridman, Peter Aven and German Khan, cannot own an English internet provider for national security reasons. An extremely interesting decision in general, especially in terms of substantiating the protection of national interests. Its detailed analysis requires a separate discussion. Our high-ranking officials, and especially judges, have something to learn.

At the same time, in Ukraine, LetterOne Holdings owns a controlling stake in the strategic Kyivstar, in relation to the establishment of the actual owners of which the poor Ministry of Justice of Ukraine has admitted in writing its complete helplessness. The corresponding letter No. 48218/2926-4-25/38.3.3 dated 03.04.2025 to the Ministry of Justice was addressed to our Association. Indeed, we see a huge gap in consciousness, which will be extremely difficult to overcome.

Now there is constant talk about the so-called “Europeanization” of Ukraine (a very unfortunate term) as a desire to approach European standards. However, When in Rome, do as the Romans do, is definitely not our strong point, quite the opposite.

Let me remind you that at the end of last year, Ukraine kindly lifted the seizure of all assets of Russian oligarchs in Kyivstar and other Ukrainian companies related to it (Ukraine Tower Company LLC, Health Ukraine LLC, etc.). Probably not everyone knows that the Ukrainian National Medical Service Helsi through "Kyivstar» from August 2022 also belongs to the same Russians under sanctions. Has anyone still managed to figure out that all this happened without the direct interest of our officials?!

What is the current case law – Ukrainian and international – on issues that have arisen in recent years regarding individuals (and legal entities related to them) who are likely (or actually?) and still are hidden (or no longer?) beneficiaries of Kyivstar?

Through the Ukrainian Kyivstar, Russian oligarchs earn and successfully invest their earnings in the acquisition of other valuable assets. And this is not only the aforementioned Helsi. Yes, recently "Kyivstar» acquired international service UKLON.

Today, despite the direct ban on the acquisition of Ukrainian lands and participation in privatization for Moscow oligarchs (see Decrees of the President of Ukraine №726 / 2022 and №727 / 2022 dated October 19, 2022), they continue their expansion. Again, through Kyivstar, they are privatizing Ukrainian lands (cases No. 926/844/25; No. 926/814/25) and are trying to "squeeze" even more, but already private land through the court (cases No. 926/3602/23; No. 926/3604/23; No. 926/3616/23). At the same time, the position of some Ukrainian judges, who stubbornly make decisions in favor of sanctioned Russian oligarchs, is, to put it mildly, very surprising.

However, a recent attempt to lift EU sanctions on Friedman at Orbán's insistence successfully failed, and the sanctions remain in effect.

In addition, we are aware that the US Securities and Exchange Commission (SEC) has already considers question about delisting VEON Ltd. on Nasdaq.

How open and effective are the central executive authorities of Ukraine in, on the one hand, implementing existing Ukrainian and international legislation in the field of sanctions, in particular with regard to the individuals and legal entities discussed above, and on the other hand, public organizations and activists who are trying to help the government implement the law and increase national budget revenues?

According to the logic of the genre, there should be a positive in this place. But the realities are different, on the one hand, the state loudly speaks about the imposed personal sanctions and the arrests of the assets of such persons. On the other, it quietly gives permission to sanctioned persons to sell especially valuable ones, such as LIFE shares, or, instead of confiscation, it also quietly lifts all arrests, as happened with KIISTAR.

There are probably no such adequate public organizations that would have as their statutory goal to help the government enforce the law. This is still a task for state law enforcement agencies, but our people work there too and we all see how. It is not worth idealizing any person or body in the current system of power. Despite all the agitation and propaganda today, we soberly see the realities, but we look to the future with optimism.

Thus, with the support of the people's deputies of Ukraine, our initiative regarding draft laws aimed at ensuring the lasting effect of negative legal consequences for the aggressor has been successfully implemented. The relevant documents have already been posted on the website of the Verkhovna Rada of Ukraine:

On amendments to Article 1 of the Law of Ukraine “On the Basic Principles of Forced Expropriation in Ukraine of Objects of Property of the Russian Federation and Its Residents” regarding the improvement of mechanisms for the expropriation of property belonging to citizens of the aggressor country

https: //e.t.c.rada.gov.ua/billInfo/Bills/Card/56141

On amendments to certain legislative acts of Ukraine regarding strengthening the protection of national interests https: //e.t.c.rada.gov.ua/billInfo/Bills/Card/5614213153

On amendments to Article 114 of the Civil Code of Ukraine regarding strengthening the protection of national interests in conditions of military aggression against Ukraine

https: //e.t.c.rada.gov.ua/billInfo/Bills/Card/56143

Next, we await their approval by parliament.

In your opinion, can efforts to confiscate and nationalize the assets of influential individuals and legal entities that are on Ukrainian and international sanctions lists be realistic if there is harmonious interaction between public organizations, the media, lawyers, and government agencies?

I am sure that they can and should be like that. Moreover, I actively contribute, drawing the attention of our foreign partners and the media, to the truly serious problems in the work of our state bodies responsible for implementing the sanctions policy. Today, we can firmly state that in the fourth year of the war, these bodies not only do not properly implement the legislation on the confiscation of Ukrainian assets of sanctioned Russian oligarchs regarding the most valuable and strategically important objects, but on the contrary, they lift the arrests from their property, thereby facilitating its sale or further concealment in order to avoid confiscation.

Operating and very profitable strategic assets like Kyivstar, regional energy and gas companies should not belong to Russian oligarchs under sanctions. Ukraine must immediately implement the legislation on the imposed sanctions, take comprehensive measures to sell them to effective Western investors. And these are not ephemeral subsoil and other agreements on which Ukraine recently signed with the USA, but “living” assets that are already capable of significantly filling the state budget of Ukraine, and not the pockets of the oligarchs.

Vasyl Gostyuk

How visible, on the one hand, and how morally acceptable, in principle, do you think lobbying by individuals and legal entities that have fallen under the relevant legislation (although they apparently had other choices) looks in Ukraine, as well as in countries that support the sanctions regime?

Thank you for such an important question. Information is a really serious weapon. Today, using social networks and electronic media, it is possible to declare your ideas and thoughts to almost the whole world, to spread any information. This benefit of civilization has a downside. Information becomes known to an indefinite circle of people. Among them are many smart people who are able to independently analyze and draw conclusions that are often opposite to the author's intentions.

I will give a simple example, at the beginning of the war, the activity of foreigners, organizations and states in providing humanitarian aid to Ukraine was frantic and seemed inexhaustible. The spread of numerous, even true, information about the theft of such humanitarian aid in Ukraine quickly destroyed the enthusiasm of its providers. This does not mean that it was unnecessary to talk about the theft, it means that it was unnecessary to steal! And for the revealed facts, it was necessary to severely and publicly punish, and not transfer in the worst case to other positions, including work in our diplomatic missions abroad.

What you called lobbying, in our realities, looks like an open-ended bribery for necessary actions or even inaction. There is probably no other reasonable explanation for the activities and individual decisions of our officials. It is really better to use artificial intelligence than to retain individual officials.

I constantly communicate with foreigners, many of whom read information about Ukraine and information from Ukraine quite carefully. They draw their own conclusions, often significantly different from official propaganda.

We are aware that the world is undergoing a frantic defragmentation, there is no longer a single rules-based international order. Sanctions, as one of the instruments of such a policy, will not exist forever. Moreover, their main ideologist, once a world hegemon, is currently negotiating with our main enemy and is already talking about lifting some of the sanctions. And we are still talking about the problems of non-compliance with our own laws regarding the imposed sanctions.

Our task is not to "jump on the last train" now, we need to clearly outline our civilizational choice with practical actions and firmly follow it. The word "statesmen", corrupted by abuse, are those people who are practically invisible now. Those who are not ready to betray the next generations of their citizens for momentary gain.

Sanctions and confiscations are not a goal or an end in themselves, conscientious implementation of the law by all parties, even if this law is not very pleasant, readiness to defend oneself with dignity from the encroachments of a strong enemy, this is the real goal. As the poets say, “You need not reason why, but obey and die.”

Гtinа NGO "European Association of Local Governments", Vasylь Gostiuk