Tomorrow will be a meeting of the Northern Economic Court of Appeal, by the results of which the capital can lose a huge amount – UAH 4 billion. The plaintiff, Kyiv Terminal, the beneficiary of which is a Russian-Georgian businessman (he is now a British citizen) Tamaz Somkhishvili, won the tender for the reconstruction of Kharkiv Square in 2007. The company demands compensation from the Kyiv State City Administration (KSCA) for losses for work that has not even begun, and ‘lost profits’. Human rights advocates and city activists, who have been monitoring the situation since 2019, point to Tamaz Somkhishvili's proximity to Russian criminal circles. The activists state that the businessman is one of the founders of the Russian oil company Lukoil, which is the largest supplier of fuel to the Russian army. Experts call the high-profile trial and Somkhishvili's appeals to the Cabinet of Ministers and the President to satisfy his demands an act of Russian hybrid warfare against Ukraine.
Tamaz Somkhishvili
Reconstruction that never happened
This story began in 2007. The Kyiv administration announced a tender for the reconstruction of Kharkiv Square. The contest was won by the little-known company Kyiv Terminal, whose beneficiary is the Russian-Georgian businessman Tamaz Somkhishvili. Human rights activists believe that the company originally did not plan to carry out construction work, expecting to use either expensive land in the capital or obtain compensation for the denial of rights to lease it.
"Back in the days of Mayor Chernovetskyi, the Kyiv authorities signed an investment agreement with Somkhishvili’s company to reconstruct Kharkiv Square. The investment contract was terminated because of numerous violations. The square itself has not been reconstructed, which means that the Russian oligarch’s company has not spent a penny on the work," says human rights activist Alexander Aronets about the origins of the scandal.
Alexander Aronets
His words are confirmed by Viktor Gleba, a KSCA official at the time.
"At the time, I was Deputy Chief Architect of the city of Kyiv. I can confirm: there were no accounting or legal documents or any decisions between Kyiv Terminal and Kyiv City Council. This is a pure scam. Even the construction project for the interchange has not been developed and approved," answers the expert on urban planning.
Viktor Gleba
According to Victor Gleba, the investment agreement was terminated due to violation of the law, forged signatures and false information. In turn, as emphasized by the ex-official, the lease of the land with false documents and knowingly false information was canceled, permission for construction or reconstruction was not issued.
In 2007, the Kyiv City Council rejected Kyiv Terminal's right to lease the land. Nevertheless, in 2008, Tamaz Somkhishvili won the lease of the land plot where the interchange at Kharkiv Square is located through the court. However, no work has been started for five years.
For the capital, this stalemate was extremely painful because of the urgent need to reconstruct Kharkiv Square, which is of strategic importance to the city. The main route from the capital to Borispol airport passes through the square. Because of the obsolete traffic circle, cars are constantly piling up on it, causing traffic jams and congestion.
Only Ukrainian judges can understand and forgive the ‘British investor’ with a Russian passport
In 2013, the investment agreement was terminated by agreement of both parties. But at the end of 2018, when the statute of limitations to challenge this decision had long expired, Kyiv Terminal appealed to the Economic Court of Kyiv with a lawsuit against the Kyiv authorities. The plaintiff demanded $25 million in damages and another $75 million in lost profits. Although the plaintiff’s demands look absurd, the Economic Court decided to partially satisfy the claim.
"At the end of 2019, in a situation of complete secrecy, Judge Mudryi made a landmark decision to recover from the Kyiv budget in favour of Kyiv Terminal UAH 671 million ($25 million). For the reconstruction of Kharkiv Square, which in fact no one carried out. I think the judges’ share of the scandalous decision from that amount was fantastic too. The decision of the court of first instance is so alarming that the hearings in the appeal instance were postponed several times and the panels of the court were changed," says human rights activist Alexander Dziadyuk, being indignant with the court's decision.
Alexander Dziadyuk
After the decision of the Economic Court, a scandal broke out. The KSCA was accused of insufficient activity in the issue of repelling the attack of the owner of Kyiv Terminal. However, for the next instance in the spring of 2021, the lawyers of the city administration were well prepared and on May 27, 2021, the Northern Court of Appeal fully denied the claim, deciding to charge Somkhivshvili’s company more than UAH 1 million court fee.
The case was referred to the Economic Court of Cassation of the Supreme Court. Here famous Judge Grigory Machulskyi ‘distinguished himself’. On October 13, 2021, he sent the case back for review on appeal. The decision was not the first scandalous episode in Machulskyi's career. According to Nashi Hroshi (Our Money), it was this judge, who bought an apartment in the housing estate of the former director of Ukrbud Maksim Mykytas. And shortly before that, the judicial board, of which Machulskyi was a member, had ruled in favour of Mykytas on just this construction.
On November 18, 2021, Tamaz Somkhishvili sent an open appeal to the Government of Ukraine, in which he outlined his version of events. The entrepreneur said that since 2018 he had not been able to reimburse his losses of USD 98.5 million, incurred as a result of the termination by the Kyiv authorities of the investment agreement on the reconstruction of Kharkiv Square in 2013. According to him, during the negotiations the authorities recognized his right to compensation in court, but after the start of the process they took a diametrically opposed position.
In his appeal, the businessman called on the Ukrainian Cabinet of Ministers to peacefully resolve the investment dispute on compensation for losses under the government agreement between Ukraine and Great Britain on the promotion and mutual protection of investments. According to Tamaz Somkhishvili, if he and the state of Ukraine fail to reach an amicable solution to the dispute within three months of receiving the notice, he will be ready to initiate arbitration proceedings against Ukraine.
Judicial dispute or Russia’s hybrid subversion?
On November 22, 2022, the session of the Northern Economic Court of Appeal will be held, where the lawsuit of Kyiv Terminal against the KSCA will be considered again. Activists and human rights advocates are outraged by the very fact of the continuation of the trial, noting that, given the biography of the beneficiary of Kyiv Terminal, his activities in Ukraine during the war with Russia should have long been suppressed by law enforcement authorities.
"Somkhishvili, known in certain circles as ‘Tamaz Tobolskyi’, graduated in physics and mathematics from Tobolsk, received financial education in Tyumen and is one of the co-founders of the Lukoil Tennis Club ANCO. Kyiv Terminal is not just a mafia, but a Russian mafia. This is a Georgian thief-in-law who is fueling Russian tanks right now. I personally wrote a statement to the SSU. The officer who was in charge of the investigation was killed. This issue should be dealt with by the SSU, it is a matter of national security," said Victor Gleba.
Kyiv activists also believe that there are all the signs of sabotage and hybrid warfare of the Russian Federation against Ukraine.
"In my opinion, this trial is nothing but a hybrid special operation of the Russian special services, because it takes place when every hryvnia is important, there are power outages in the city and it is unknown when the next missile and drone strike may occur that will cause new damage to the capital," continues Nazar Prikhodko.
Nazar Prikhodko
Human rights activists call for putting Tamaz Somkhishvili on a sanctions list and seizing his property in Ukraine.
"If the judges rule in favour of the Russian oligarch, it is not just treason. This is also a way to drive every Kyiv citizen into debt, because we are the ones who will have to pay back these funds. I think there will be a lot of eager Kyivans who will ask each judge what legal reasoning guided them in making such a treasonous decision. And I would also like the SSU to take a closer look at the panel of judges of the Supreme Court, who ruled in favour of the Russian. Somkhishvili was General Director and is a shareholder of the Russian Lukoil. Hey, National Security Council! Why isn't Somkhishvili still under sanctions?" demands human rights advocate Alexander Aronets.
The editorial staff will be following the course of the case of Kyiv Terminal against the KSCA and inform about the judges’ decision.
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