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Legal Opinion on the political motives of the criminal prosecution and violations of human rights in criminal proceedings of Konstantin Zhevago

15.07.2021
Yevgeniy Zakharov

Фото: Shutterstock © Artem Samokhvalov[ЄСПЛ]

Background

Konstantin Zhevago is a well-known Ukrainian businessman and politician. He started his business when he was 19, being a 2nd year student. He is an international economist with a master's degree in economics, in 2003 he defended his dissertation "International Investment and Effective Economic Development" at Kyiv University of Economics.

In 1998 Ferrexpo, one of Zhevago’s companies, was the first Ukrainian company to enter the main platform of the London Stock Exchange. In autumn 2007 Ferrexpo was included in the index of FTSE 250 — the index of the London Stock Exchange based on stock quotes of the 250 largest companies. He was giving his entire salary in Ferrexpo to charity. Konstantin Zhevago is recognized by Forbes as the youngest billionaire in Europe who made his fortune himself. His “Finance and Credit” bank was in the TOP-10 of the biggest Ukrainian banks with hundreds of branches in Ukraine (the bank’s license was revoked in 2015). He controlled the developed and successful enterprises in mining and metallurgy fields, shipbuilding and mechanical engineering, in the production of trucks, pharmacology and food industry in Ukraine, as well as in Western Europe and Central Asia. He owns a football team of the Premier League of Ukraine “Vorskla” (Poltava). According to the list of Forbes, in March 2012 Konstantin Zhevago held the 719th place in the world and the fourth in Ukraine with $1.8 billion[1], and in April 2021 – the third place with $2.4 billion[2].

Zhevago was never a member of any political party. Between 2008 and 2019 he was a deputy of the Verkhovna Rada of Ukraine (in 3, 4, 7 and 8th convocations as a self-nominated, and in 5-6 convocations – as a non-party member of the Yulia Tymoshenko Bloc). In 2019 he ran for parliament in Horishni Plavny (circuit No.150, where Zhevago won in two preliminary elections in 2012 and 2014), however, he lost to the candidate from “Sluha Narodu” party, Oleksiy Movchan.

Since the beginning of 2018 the Zhevago family becomes a majority shareholder (77.5%) of the “Espresso” TV channel. At the same time, the policy of non-interference in the editorial policy of “Espresso” is consistently pursued. Since 2019, the TV channel is in clear opposition to the current government.

In summer 2011 the human rights activists created the Civil Committee for Protection against Political Persecution in Ukraine[3]. Members of the Committee: Zynoviy Antonyuk, Arkadiy Buschenko, Yevgeniy Zakharov, Joseph Zisels, Lyudmyla Klochko, Mykola Kozyrev, Igor Koliushko, Kateryna Levchenko, Myroslav Marynovych, Vasyl Ovsiyenko, Olexandr Pavlichenko, Iryna Rapp, Yevgeniy Sverstyuk, Volodymyr Yavorsky – the well-known human rights activists, former dissidents and prisoners of conscience of the Soviet camps – declared political persecution in Ukraine. Later, the violations of human rights with political motives were confirmed by the European Court of Human Rights, which pointed to a violation of Articles 5 and 18 of the European Convention on Human Rights in cases “Tymoshenko v. Ukraine”[4] and “Lutsenko v. Ukraine”[5].

Circumstances of the criminal proceedings

The law-enforcement bodies opened several criminal proceedings, in which Konstantin Zhevago appears.

In particular, on 27 September 2019 the State Bureau of Investigations in absentia announced the suspicion of Konstantin Zhevago under pt. 3 of Art. 27, pt. 5 of Art. 191, pt. 3 of Art. 209 of the Criminal Code (CC) of Ukraine, concerning his involvement in a scheme to steal UAH 2.5 billion from the bank “Finance and Credit”[6]. It was reported by the deputy director of SBI, Olga Varchenko. According to her, the pre-trial investigation established that in 2007-2014 the offshore company opened the credit lines in foreign banks. Subsequently, “Finance and Credit” bank and foreign banks entered into collateral agreements worth more than $113 million, which the Ukrainian bank vouched for the offshore company at its own expense. “In 2015 the foreign banks withdrew from the accounts of the bank "Finance and Credit" exactly those 113 million dollars for non-fulfilment of obligations by an offshore company under loan agreements. The foreign banks withdrew the loan at once after the “Finance and Credit” bank was declared insolvent”, – said Varchenko.

According to the investigation, Zhevago, who is the beneficial owner of the bank, is involved in the scheme of stealing the money. Varchenko added that recently the investigators clarified the additional details of the case. “They established that the funds received on behalf of the bank, was used in favour of the foreign companies belonging to the people’s deputy himself”, – she stated.[7]

At the same time, concluding loan agreements is a common current practice of any bank. And to prove that it was in fact a crime, the investigators had to gather indisputable evidence, but there is no evidence of guilt. According to investigators, in June 2007 Zhevago allegedly gave an oral instruction to the chairman of the board of “Finance and Credit” bank to open a bank account on behalf of Nasterno Commercial Limited company (Cyprus) to receive a credit in East-West United Bank S.A. (Luxembourg). Such an agreement was signed by the Chairman of the Board of the bank "Finance and Credit", and the bank's funds were pledged. However, there is no evidence that Zhevago actually gave such an oral instruction.

According to the investigation, the use of the credit funds received from East-West United Bank S.A by Nasterno Commercial Limited is a legalisation of income obtained in a criminal way, which constitutes the event of a crime under pt.3 of Article 209 of the CC of Ukraine. However, there is no evidence of any connection between Zhevago himself and those transactions, nor a justification for the reasons why the investigator considers the execution of credit agreements as legalisation of funds obtained by criminal means. It is not stated in the official documents, what exactly crime resulted in reception of those funds, who committed that crime, and what is the role of Konstantin Zhevago, who in fact has nothing to do with Nasterno Commercial Limited.

It is noteworthy that the actions of Zhevago, which in this case are presented as criminal, took place in 2007 and for 12 years law enforcement agencies did not see a corpus delicti in these actions.

This criminal case also alleges that in 2015 Zhevago allegedly organized a criminal group with the help of which the property of the “Finance and Credit” bank was squandered (Article 191 of the Criminal Code of Ukraine).

According to the investigators, he created a criminal group of bank employees who, by concluding a surety agreement on the obligations of Nastemo Commercial Limited to another bank, seized other people's money. Meinl Bank AG withdrew funds from the bank due to default.

However, there is no evidence of any connection between Zhevago himself and these operations, nor a justification of the reasons why the investigator considers the bank's fulfilment of obligations under surety agreements the seizure of other people's money. It is also not specified who took possession of these funds, if the investigator decided to present it in this form.

The criminal proceedings are ongoing since 2015, but before September 2019 Zhevago was not seen as a participant of that case.

Also, allegedly in 2012 Zhevago performed several financial operations which investigators regard as money laundering. This is how the investigators qualify the use of the credit funds by Nastemo Commercial Limited for loan to another company.

However, there is no evidence of any connection between Zhevago himself and those operations, there are no substantiated reasons on the basis of which the investigator considers the execution of credit agreements as legalisation of funds obtained by criminal means. The official documents do not state, due to which crime exactly those costs were obtained, who committed that crime, and how Zhevago is related to it, who did not perform any operations.

The investigation is ongoing since 2015, but no claims have ever been made against Zhevago in this case until September 2019.

The presence of a political motive of the persecution

The persecution of a person is politically motivated if the actions of the state bodies and their officials and officers are caused by: а) illegitimate considerations of the social and political nature; or б) the actions of the persecuted person to protect the rights, freedoms and lawful interests of the citizens[8]. It does not matter whether the political reasons prompted the act incriminated as a crime or offence; only the political interest of the authorities as a result of the case is significant.

Since extra-judicial assessments and judgements are not allowed in principle in the field of law enforcement, political motivation in criminal prosecution can lead to various procedural and material violations, in particular, the following:

  • Elements of falsification in indictment;
  • Unreasonably severe preventive measures or punishments;
  • Unjust sentences or decisions on administrative offences;
  • The bias of the court in assessing the probative value of the arguments of the defence and the prosecution;
  • Various restrictions in the possibility to protect oneself, including with the help of the defender;
  • Arbitrariness during the selection of evidence, ignoring the obvious facts;
  • Application of the norms of law irrelevant to the committed acts;
  • Discriminative nature of the prosecution comparing to the similar cases of other persons[9].
  • Incriminating propaganda campaign, defamatory publications, often with the disclosure of covert investigative data[10].

The cases of Konstantin Zhevago have a clear political nature

In the criminal proceedings, in which Konstantin Zhevago was a witness, he was essentially transferred to the status of a suspect only after he lost the election to the parliament in July 2019 and publicly stated his intentions to organize a political power for the participation in the local elections in October 2020. This is seen as the undoubted political motive for the persecution. In addition, the investigation of all episodes of the case against Zhevago has the following common features:

1. Zhevago is accused of actions that were committed by other persons and not him;

2. There isn’t any connection between Zhevago and the actions he is accused of;

3. The investigation in criminal cases is not completed, although it lasts for more than five years;

4. None of the persons who personally committed the acts, the coordination of which Zhevago was accused of, were convicted;

5. Throughout the investigation, Zhevago always responded to investigators in a timely manner, testified as a witness, and never had any complaints against him.

It should be highlighted that according to the law, the questioning of a person as a witness, if that person was later notified of suspicion, is considered a significant violation of human rights. The evidence obtained as a result of such questioning should be considered inadmissible by the courts.

On 23 September 2019 Zhevago was invited to SBI on 27 September, however, he could not appear due to receiving medical treatment abroad, about which the investigator was notified in advance with the subsequent provision of supporting documents. These circumstances are a valid reason under Article 138 of the CCP. However, the notice of suspicion was handed in absentia without the special pre-trial investigation, within which it is only possible to hand it. On 9 October SBI declared him wanted. It was pointed during the briefing by the head of SBI, Roman Truba: “Several days have passed, after Zhevago was called for providing the testimony. And it is one of the proceedings, in which the principal position of the SBI investigators is shown – regardless of the status, connections and resources. Zhevago did not appear, therefore the notice of suspicion was handed in absentia. After that there were normal investigative actions: obtaining permission in court for the possibility of detention, as well as the announcement of the suspect in the relevant search. This process has begun. It is currently ongoing. We have applied to the court in order to obtain such permission. Currently he is declared wanted, but the measures are being taken to subsequently declare him internationally wanted”[11].

The procedural actions of the SBI are illegal. The handing of the notice of suspicion in absentia is not provided by law at all, and only a person whose whereabouts are unknown can be declared wanted and only when he does not appear before the investigator without good reason, therefore, declaring Zhevago wanted is illegal. Nevertheless, on 2 December, the investigating judge of the Pechersky District Court of Kyiv, Ms. Svitlana Volkova, granted the prosecutor's request that Zhevago be remanded in custody and placed on the international wanted list.[12]. This decision was overturned by the Kyiv Court of Appeal on 25 May 2020, which found that Zhevago was not and is not internationally wanted, did not hide and is not hiding from the pre-trial investigation and court, and that there are no legal grounds for taking Zhevago in custody[13]. However, on 10 June 2020 Pechersky District Court of Kyiv again upheld the decision to choose a preventive measure for Zhevago in the form of custody[14], and on 22 September the Kyiv city Court of Appeal upheld that decision.

The political nature of the persecution is evidenced by the lack of automatic division of the case in the Pechersky District Court and the course of consideration in the Court of Appeal. The case was referred to Pechersky Court Judge Svitlana Volkova, who at the time was a defendant in criminal proceedings for a knowingly unjust court decision, and the charges against her were supported by prosecutors from the Prosecutor General's Office. Sometime after she made an unlawful decision on Zhevago, Judge Volkova was acquitted and all charges dropped. In the Court of Appeal, two of the three judges who were to consider the appeal refused to participate in the case (they recused themselves). Apparently, this was the result of pressure from investigators, as the judges themselves had previously considered previous motions to impose preventive measures against Zhevago, and at that time they did not refuse to participate. As a result, two judges were replaced by others, and only then was the Court of Appeal able to rule and uphold the investigators' finding that Zhevago should be detained and remanded in custody. At the same time, the Court of Appeal had previously considered the same circumstances based on which the investigators had requested the arrest, and found them unfounded and refused the investigators. For the second time, the same Court of Appeal considered the same circumstances, but ruled otherwise.

It should be noted that more than 100 banks were withdrawn from the financial market, the activities of many of which were questionable, but for some reason the claims arose only against Konstantin Zhevago – not as an employee of the bank, but as its shareholder.

Thus, we have a situation of selective justice, falsification of some facts and complete disregard of others, falsification of evidence, application of the norms of law inappropriate to the actions in question, and, as a consequence, the commission of unlawful procedural actions by the law-enforcement bodies that show an unbridled desire of the government to deprive Konstantin Zhevago of freedom. All this testifies to the clear political nature of the criminal prosecution of Konstantin Zhevago.

This document does not consider the disputes of the companies that belong to Konstantin Zhevago, with the state authorities. However, the recent decision on the sanctions also indicates the political motives of the persecution of Zhevago. On 24 June 2021 the Presidential Decree No. 266 put into effect the decision of National Security and Defence Council of 18 June, which supported the suggestions submitted by the Security Service of Ukraine on the application of personal special economic and other restrictive measures (sanctions) against 540 legal entities. 28 of them are registered and function in Ukraine, among them an enterprise, one of the main beneficial owners of which is Konstantin Zhevago. The sanctions provide indefinite revocation or suspension of licenses and other permits, obtaining (availability) of which is a condition for carrying out a certain type of activity. This is another element of Konstantin Zhevago's political persecution for the following reasons.

Sanctions are international legal mechanism of a political nature, which is used by one state against another state, its natural or legal entities, since there is simply no other way to combat the enemy influence. The law “On sanctions” does not contain any indication that the sanctions can be applied against the residents of Ukraine and Ukrainian legal entities. The only possibility for that is seen in an interpretation of the wording “as well as the subjects performing terrorist activity”, that it also means the residents of Ukraine and Ukrainian legal entities. In such cases there necessarily has to exist indisputable evidence of terrorist activity, in order to persuade in the reasonable nature of such decision: the need for protection of national security, sovereignty and territorial integrity forced to introduce the sanctions. However, for the residents of Ukraine and Ukrainian legal entities there are various mechanisms of bringing to responsibility – ranging between the administrative and criminal law, and applying sanctions to such entities means the complete mistrust of the leadership of the state to the national law-enforcement and judicial systems, which are unable to qualify the offence, gather evidence and bring the case to a lawful and fair court decision in adversarial proceedings.

The application of sanctions to individuals and legal entities under the jurisdiction of the Ukrainian state, in fact, means the replacement of law enforcement agencies and the court with policy management, ie the usurpation of power. In this case, the principles of justice will be offset by the political expediency that guides the executive branch. Using sanctions instead of a fair trial will mean destroying the democratic foundations of our society. 

After the coming to power of Volodymyr Zelensky and the “Sluha Narodu” party, Konstantin Zhevago, who lost the parliamentary elections, became a convenient target for PR of the new government. Given the great public demand for repressive methods of fighting corruption and oligarchs, presidential candidate Volodymyr Zelensky promised in his election campaign to quickly "imprison" the suspects. The main slogan of his election campaign was the saying: "Spring will come – we will imprison"[15]. This campaign promise is another important political motive for prosecuting Zhevago.

The editor-in-chief of LB.ua Sonya Koshkina wrote on her Facebook page: «The President's Office did hold more meetings with security officers on the subject of 'where are the imprisonments?'. and not just imprisonments, but the ones that would be “quick and liked by the people”. The un/lawfulness I unimportant (I’m not kidding). It was discussed with that tone. The key words are “quick” and “liked by people”. During the discussion they defined four priority cases. First – Poroshenko (everything clear here). The second – Pashinsky. The third – Zhevago (he was declared wanted yesterday). I don’t know the fourth yet. I’m on it. To be fair, I did not believe at first. I thought that the source does not convey the sense correctly – omits or twists something etc. Because OP cannot discuss the order (!!) and priority (!!) of the cases to be “quick” and “liked by the people”… However, it turned out that the issue was not only discussed in OP, but also with a narrow circle of the deputies who ... voted with their hands (eight persons voted against it) »[16].

On 10 October 2019 the President of Ukraine, Volodymyr Zelensky, stated: “Former whom? Mr. Zhevago? Six enterprises, he is the owner, and not the former owner. The affairs go through he bank and the money laundering [...] Then – Mr. Mykytas. We know that many problems and criminal cases are related to that person. What, were there not suspicions? Doesn’t it have to be considered in the court?».

On 15 November 2019 the Prosecutor General of Ukraine, Ruslan Ryaboshapka in the interview given to “Radio Svoboda” directly said that Konstantin Zhevago will be imprisoned.[17] Here is a quote from the interview (the journalist’s questions are provided in italic):

«– Concerning the imprisonments allegedly demanded by Ukrainian society – will there be any?

– There will be. You see the number of high-ranking officials who were already brought to criminal responsibility. That very Pashinsky (Sergiy Pashinsky, a former deputy of Verkhovna Rada), Gladkovsky (Oleg Gladkovsky, former First Deputy Secretary of the National Security and Defence Council), Dubnevych (Bogdan Dubnevych, former member of the Verkhovna Rada), Oleg Bakhmatyuk (great businessman), Zhevago (Konstantin Zhevago, former member of the Verkhovna Rada).

Suspicions or searches have been announced – far from imprisonment. In the last convocation, I remember, many were also stripped of their immunity.

– It was in the last convocation, and it was in the past. And now we will have a completely different story. There will be a completely different amount of time between the announcements of suspicion and the indictments in court».

However, since November 2019 nothing has been done in the investigation of the case, except declaring the person wanted.

On 6 March 2020 the President of Ukraine asked the General Director of the Kremenchug Automobile Plant to send a request to the owner of the enterprise, Konstantin Zhevago, to get in touch. He announced this during a visit to the Kremenchug Automobile Plant (KrAZ) together with the Minister of Infrastructure Vladislav Krykliy.

«Tell the owner to contact us. Then it would be possible to resolve the issue of bankruptcy and get out of all these claims and lawsuits. From what we hear now, this is the only way out. In parallel, we will do everything you asked for, but there may be problems», – stated the President. «The plant returns to us its owner, we return the state orders. Everything is fair», – added Vladyslav Krykliy. «Fair in principle», – agreed Zelensky[18].

The President, the Prosecutor General and the Minister of Infrastructure have grossly violated the principle of the presumption of innocence enshrined in Art. 62 of the Constitution of Ukraine and §2 of Art. 6 of ECHR. In the case of Kryvolapov v. Ukraine, the ECtHR stated that careless public statements by state officials about the guilt of a person at the stage of investigation violate the principle of the presumption of innocence and affect the impartiality of the court. The ECtHR emphasized that in accordance with the established case law, §2 of Art. 6 of the Convention prohibits officials from finding a person guilty until convicted by a court. The court also noted that such statements by state officials had prompted the public to believe the applicant's guilt and had influenced the assessment of the facts by the relevant judicial authority[19]. The existence of systemic violations of the presumption of innocence by the state bodies was stated by the European Court of Human Rights in the case of Shagin v. Ukraine: “The Court reiterates that the principle of the presumption of innocence enshrined in Article 6 §2 of the Convention is one aspect of the right to a fair trial in the criminal case guaranteed by Article 6 §1 (see Allenet de Ribemont v. France) of 10 February 1995, § 35, series A, No. 308). This principle not only prohibits the premature expression of the court's own opinion that a person "accused of a crime" is guilty, while this has not yet been proven in accordance with the law, but also applies to statements made by other public officials. in ongoing criminal proceedings, and the ones which motivate the public to think of the suspect's guilt and determine in advance the assessment of the facts by the competent judicial authority (see the findings from the relevant case law of the Court, for example in the judgement in Khuzhin and Others v. Russia, No. 13470/02, para.93, of 23 October 2008)[20].

Conclusion

Konstantin Zhevago is a victim of political persecution. Aggregate analysis of the facts of the case indicates that the political motives for the persecution of Zhevago are caused by illegitimate considerations of socio-political nature of senior officials and officers of the state. In a criminal case that has been under investigation for more than five years and in which Konstantin Zhevago was a witness, he was transferred to the status of a suspect immediately after he lost the parliamentary elections in July 2019 and publicly stated his intention to organize a political force for participation in local elections in October 2020. Claims against Konstantin Zhevago as a shareholder of “Finance and Credit” bank, rather than a bank employee, indicate selective justice, as there were no other such proceedings against more than a hundred banks withdrawn from the financial market. The falsification of some facts and the complete disregard of others, the falsification of evidence, the application of rules of law inconsistent with the actions in question, have resulted in the commission of illegal procedural actions by law enforcement agencies. The administrative decision on indefinite sanctions against the company in which Zhevago is one of the beneficial owners also indicates the political motives for the persecution of Zhevago. Another motive is President Zelensky's desire to show with his new team that he is fulfilling his promises to fight crime, including fight against corruption and oligarchs, to initiate criminal prosecutions and to secure the "imprisonments" of prominent members of the previous government, and thus to increase his political rating. Senior state officials brutally violated the presumption of innocence, claiming that Konstantin Zhevago would inevitably be imprisoned.

 

[7] Ibid.

[8] Definition of the Civil Committee for Protection against Political Persecution: http://khpg.org/en/1297738493

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