“Black” Notaries on Guard for Sanctioned Interests

The opposition to the sanctions process is enormous. All sorts of resources are being utilized for protecting assets and removing them from sanctions. We have already talked about the “postal terror” from former owners, the substitution of constitutional documents, and even the dubious issuance of shares. This time, we'll use an example to show how “black” notaries help counteract the sanctions process, and how the High Qualification Commission of Notaries covers up for their colleagues instead of monitoring their integrity.

 

At one time, there were dozens of betting shops in Ukraine, including those with parent companies in the Russian Federation. After the outbreak of the full-scale war, some of them ceased to operate on their own. Some were sanctioned by the Ukrainian state. However, since the industry has long gone online, betting shops require not only websites where players place bets, but also a certain financial infrastructure that provides tools for money circulation between players and bookmakers.

Thus, after February 24, 2022, both bookmakers (e.g. PariMatch) and related financial companies (e.g. Royal Pay Europe) were subject to sanctions in Ukraine. The latter will be discussed below.

Before Russia’s full-scale invasion, there was a Megabank in Ukraine that was struggling to get by. I think the vast majority of you are not familiar with this name, because the bank was more of a regional bank than a national one. At the end of 2021, Megabank had clearly defined financial difficulties, so in early February 2022, it mortgaged its real estate in Kharkiv to two foreign companies — Latvian SIA Royal Pay Europe (owned by Russian citizen Sergey Kondratenko) and Cypriot Startling Limited (owned by Russian citizen Galina Kondratenko). An exchange took place: Kondratenko Bank received loans, and Kondratenko Bank received collateral in the form of several buildings.

In July 2022, the National Bank of Ukraine revoked Megabank’s license and launched the liquidation procedure due to the financial institution’s poor liquidity and non-compliance with the mandatory criteria. Megabank’s court appeal with the participation of the Deposit Guarantee Fund against the two aforementioned companies was not quite successful.

We will not analyze the complicated relationship between the Kondratenkos and the bank in detail, but they are obviously not strangers to each other.

In particular, according to the terms of the initial deposit of EUR 1.5 million, the property was not to be secured by the bank. In addition, the bank assigned its property rights to an LLC called Option-Trade, owned by Viktor Subbotin (who was the main shareholder of Megabank) and his wife, Olena Subbotina (CEO of 75%-owned Turboatom). Later, the bank mortgaged some of the premises to the Kondratenkos, who helped to “bail them out.”

In this way, the Kondratenko spouses' firms were eventually able to resell the real estate owned by the bank and pledged by it for UAH 361 million. It is clear that the state planned to use this real estate to pay off Megabank’s debts. And the transfer from one legal entity to another controlled by the Kondratenkos was intended to avoid further collection of the state's revenue, and I will now explain why.

On January 12, 2023, President of Ukraine Volodymyr Zelenskyy imposed economic sanctions and restrictive measures against the Latvian company Royal Pay Europe for five years. According to these measures, the National Security and Defense Council has provided for the freezing of assets in Ukraine, prevention of capital outflows from Ukraine, and suspension of economic and financial obligations.

As a result, the sale of property that was mortgaged to a foreign company is a direct violation of the current legislation, including its sanctions part. Already on March 10, 2023, similar sanctions were imposed on the Cypriot company Startling Limited for 50 years. And immediately, personal sanctions were imposed on both Kondratenko and the director of one of their companies, Cypriot citizen Aaron Mkhitaryan.

The reason for such a radical turn of the state machine against the above-mentioned individuals is their connection with the Russian betting company 1xBet. There were even rumors in the market that Sergey Kondratenko had or has a stake in the bookmaker, but this has not been proven so far.

Now the key point is that a certain Natalia Jun bought the mortgaged real estate provided by Megabank from the Latvian Royal Pay Europe and the Cypriot Startling Limited. However, as of the date of purchase, namely February 16, 2023, the same Latvian company was already under sanctions. Why didn’t notary Mykola Zhuravel check in the register whether the seller was under restrictions, despite the fact that without this he would not have been able to approve this transaction? He must have forgotten...

Why did the Kondratenkos want to do this? To get these several properties out of the crosshairs of the Ministry of Justice and avoid their collection into the state's revenue. So they are selling off various properties. Probably by prior agreement with buyers and dishonest notaries.

It gets even more interesting. Megabank appeals to the Anti-Raider Commission of the Ministry of Justice, claiming that the alienation was illegal and aimed at avoiding sanctions. After that, the said commission decides to send a request for revocation of the notary's certificate. Fair enough, because the notary should have verified that the parent company was under sanctions and refused to perform the notarial acts.

However, as it turned out, the Ministry of Justice cannot currently deprive this notary of his certificate, because the High Qualification Commission of Notaries, which mostly consists of notaries, has delayed the proceedings to the point where there is no one and nothing to decide.

While the Qualification Commission was dragging its feet, the notary who had performed the abovementioned re-registration actions went to court and obtained a decision to prohibit the Ministry of Justice and the Commission from considering the application for the revocation of the certificate. In turn, the Qualification Commission also waited until the end of its members’ terms. And in order to assemble a new commission, a congress of all Ukrainian notaries is required. This is not easy, because the president of the notary chamber (a meeting of all notaries — O.L.) does not want to hold this congress (because in fact, no notary is happy that the qualification commission exists at all). Therefore, the commission is currently not authorized, so neither our particular notary nor any other can be held accountable.

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The emerging picture is not particularly attractive: some notaries across the entire vertical are fighting on the side of the sanctioned persons by legal and not-so-legal means, ignoring the legal requirements of the Ministry of Justice. And the judicial system helps them by providing them with rulings prohibiting the revocation of a notary’s license. A wide window of opportunity for all those planning to remove their assets from government sanctions has been created by some government officials.

Read this article in Ukrainian and russian.