Events 2022-06-15T07:38:21+03:00
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General Director Hlazunov: Suspicions That Smart Energy Is Fictitious Are Groundless

General Director Hlazunov: Suspicions That Smart Energy Is Fictitious Are Groundless

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energy, smart, smart energy, hlazunov, Fictitious

The Smart Energy group’s General Director Serhii Hlazunov has said that the law enforcement agencies’ suspicion that the group is a fictitious entity is groundless.

Hlazunov was speaking at a press conference at the press center of the Ukrainian News information agency on Tuesday.

"Exertion of pressure on businesses is becoming a pressing issue in Ukraine today, and the situation involving Smart Energy is an example of this. The State Fiscal Service raided all the Ukrainian offices of our company simultaneously on November 10 at the initiative of the Prosecutor General's Office. The main suspicion and charge are that the Smart Energy management company is a fictitious entity, shows the relevant signs, and avoids paying taxes," Hlazunov said.

Hlazunov was referring to the investigation that the Prosecutor-General’s Office launched against officials of PJSC Ukrgazvydobutok on suspicion of evasion of UAH 6.5 million in value-added tax during operations with Smart Energy.

Law enforcement officials believe that the gas company avoided paying VAT from January 2016 to May 2017.

Law enforcement officials believe that these operations and Smart Energy itself "show signs of fictitiousness."

"The accusation made against the company has nothing in common with reality. The group’s companies have been operating on the market for a long time, they are always open to cooperation, and they are ready to provide all the necessary documents to law enforcement agencies. To this end, we have repeatedly reached out to the Prosecutor General's Office and the State Fiscal Service officially. We are interested in proving that these charges are baseless," Hlazunov said.

According to him, the operations of the group’s administrative office and production facilities have been blocked as a result of the raids.

"It is necessary to understand that production of oil and gas is a rather complicated technological process and that it is a high-risk production operation. The blocking of these processes can be dangerous because employees need to monitor the operations of wells and make corrections if there are deviations in their operations. However, these people have actually been removed from their places of work... We always talk about the importance of protecting businesses in this country, but it is impossible to be attractive to investment under such circumstances. No investors will invest their money after seeing such a situation," Hlazunov said.

Hlazunov added that his home was also raided, during which his personal belongings that were not involved in the operations of the companies were removed.

"The criminal proceedings involving the alleged fictitiousness of Smart Energy were initially entered into the Unified Register of Pre-Trial Investigations only on the basis of a certain analytical note and later on the basis of an absolutely incompetent ‘research’ by an employee of the State Fiscal Service’s Office of Major Taxpayers. The employee of the State Fiscal Service expresses doubt about performance of real financial and business operations without conducting a tax inspection. The analytical note by the State Fiscal Service mentions only Vadim Mokhov, who is the head of one of the group’s companies (Ukrkazvidobutok), and Vadim Novinsky. The rest is only the analyst's assumptions that are not based on any real evidence," said Oleksandr Minin, a senior partner at the KM Partners law firm.

According to the Smart Holding company’s Risk and Security Director Ivan Gerasimovich, the actions of the law enforcement agencies are systematic in nature.

"The group’s companies have been under pressure for more than one year, and 75 criminal proceedings have been opened against Smart Holding’s companies and assets. Unfortunately, 80% of these cases show signs of falsification of evidence in order to obtain unjust decisions. In addition, most of the cases that were opened ended only in searches, seizure of documents, and freezing of assets. They are not followed by further investigative actions. This can definitely be classified as illegal pressure on businesses," he said.

In particular, the basis for searches at locations of assets belonging to the Regal Petroleum company (part of Smart Energy) was a contract for sublease of office space between Smart Energy and Regal Petroleum, as well as the existence of contractual relations between Regal Petroleum and companies such as Bloomberg Finance, IHS Global, and P.D.F. Ltd, which were seen as an attempt to minimize tax payments.

As Ukrainian News reported, production of natural gas by the Smart Energy group of companies increased by 4.5 million cubic meters or 2.2% to 208.4 million cubic meters and production of gas condensate fell by 750 tons or 4.3% to 16,800 tons in 2016, compared with 2015.

Smart Energy is a management company within the Smart Holding group. It develops projects involving geological exploration and industrial mining of hydrocarbon fields, as well as alternative energy.

The oil and gas division of Smart Holding consists of the Regal Petroleum company (Britain), the Ukraine-based Prom-Energo Product gas producer (became part of Regal Petroleum in 2016), and the Ukrgazvydobutok gas producer (Ukraine).

Smart Holding is controlled by Member of Parliament Vadim Novinsky (Opposition Bloc faction).

To order an audiotape of this press conference, please contact the press center of Ukrainian News by telephone 494-31-65 or e-mail [email protected]

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