Having no problems: how big business should defend itself

News of the company


Nataliia Osadcha, Co-founder of S&P Agency, Investment Risk Advisor.
Published specifically for Kyiv Post Doing Business.

“A new life” of Ukrainian business was expected to be improved. However, over the last few years, the burden of problems for big investors in Ukraine has not been reduced. On the contrary, the problems have become greater in extent and severity.

Ingenious raiding tricks

Big business has been confronted with an increasing number of criminal cases, both tax-related and non-tax-related. The Ukrainian Prosecutor General's Office has become much more active. The range of “issues” is so diverse that it is rather difficult to identify a system in their diversity. The only thing we can say almost for certain is that such problems arise in relation only to big companies, which are actively investing in Ukraine. This includes initiating criminal cases based on the facts of the following: economic damage caused to Ukraine (if a private company has established business relationships with state companies), exceeding authority by officials (if a private company has bought state property) and unauthorized seizure of land, although a company had a lease.

The legal and evidentiary basis in the criminal cases that are filed against our clients is very weak. Despite this, we have to do a huge amount of work to prove the absence of a crime and stop criminal prosecution against a company and its leaders. This is only the top of the iceberg. Business suffers from a variety of investigative actions, which are conducted within the framework of criminal cases initiated. These are searches, seizures of both documents and equipment, disclosure of bank secrecy and arrests of assets. All this ends with secret investigating actions, e.g. listening and recording of telephone conversations. Most importantly, the law has no time limits for the investigation period of such cases. If there is no suspicion in the case, it can drag out for years. Consequently, any investigative actions may last for such a long time. As practice shows, in 95% of cases courts satisfy any petitions of representatives of law enforcement bodies. Therefore, a person, against whom “investigative actions” are conducted, is absolutely disempowered and cannot even present evidence of his innocence.

More precisely, you can submit evidence, but law enforcement agencies do not accept such documents. According to the current criminal procedural legislation, a person does not have an official status in the case before being suspected, therefore, no petition will be considered. It is also disturbing that criminal cases are brought against large foreign companies that invest huge amounts of money in the economy, create jobs and officially pay all taxes. All this affects the image of the country and discourages potential investors. First of all, they are interested in the safety of investments and the fair rules of the game within the framework of the legislation, and it is a challenge Ukraine still has to tackle with.


There is no single answer why businesses have problems. Each case is individual. Implications can be found not only in the legal sphere. Many of our clients who suffer from illegal actions of state bodies have made mistakes in the initial stages of business processes. This allowed their opponents, including state agencies, to turn these mistakes into a serious problem. An example is the high-profile case of the Swiss company Risoil S.A., which is building a grain terminal in the Black Sea port. This was one of the most difficult cases in our practice. In order to avoid anthropogenic disaster and prevent a landslide, the investor began to build a retaining wall that was supposed to preserve not only his property, but also the property of the state enterprise. The work was slightly ahead of the issuance of land lease documents, which since 2014 was in the process of diverting the company.

According to calculations by Risoil S.A., this could entail an administrative fine, but everything turned out differently. This circumstance became the basis for opening a criminal case, which created problems not only for the economic activities of the company, but also for its top officials. The investigation was conducted by the Prosecutor General's Office. Cascades of searches were conducted in the company and its counterparties and a huge number of documents were seized. Besides, interrogations and examinations were conducted. To settle the case in favor of the company, it took a year of painstaking work, more than a hundred motions to the Ukrainian Prosecutor General's Office, more than 60 appeals to the court, official assistance to diplomatic missions, international organizations and media. A year to resolve such complex conflicts is a very quick result. Often they can last from five to seven years, completely paralyzing the business process.

One step ahead

As a rule, when the confrontation with state bodies constitutes a serious escalation, it becomes increasingly difficult for an investor to prove his or her rightness. Both sides have at their disposal evidence proving violations of their opponents, and it is quite easy to predict which decision the court will announce. In such circumstances, it is important to calculate the risks. Having done this, you deprive opponents of the slightest opportunity to create a business problem. Unfortunately nowadays we are working more on saving business instead of just minimizing their risks. However it is common for a person as well as for business to learn from his or its own mistakes. To be one step ahead of the opponents is one of such lessons.