IBRC effort to seize mall must clear murky world of politics in Ukraine

“Maybe it is more complicated. Maybe there is still some connection with the Quinns. We don’t know.”

The Quinn family’s international property group included intergroup arrangements whereby companies in Russia and the Ukraine owed money to a company based in Derrylin, Co Fermanagh, called Demesne Investments Ltd. The structure facilitated the movement of cash back to Ireland.

At the time the family first embarked on its effort to place its foreign assets beyond the reach of the IBRC, Demesne’s right to a Univermag debt of $45 million was assigned onwards, ending up with a British Virgin Islands (BVI) company called Lyndhurst Development Trading SA.

The movement of the debt to the BVI company was challenged in the courts in Belfast and the BVI. However, the Lyndhurst rights were then moved on to a Ukrainian company called Elegant Invest and its right to the debt has been recognised by the Kiev courts.

“The move to Elegant Invest is very important,” according to the Kiev source. “They obviously felt they cannot win outside Ukraine. It was a strategic decision to move it into Ukraine and put it out of the reach of western justice.”

Recently, articles in a Ukrainian publication, The Left Bank, and a publication specialising in business and politics in central and eastern Europe, Business New Europe, have raised the possibility that parties associated with Ukrainian president Viktor Yanukovych may be linked to Elegant.

A request for a comment from the president’s spokeswoman met with no response.

In Kiev the involvement of parties with links to Yanukovych is seen as possible. However, it is also noted that the most recent article appeared soon after the announcement that the IBRC was discussing going into a partnership with the Russian Alfa Group in an attempt to seize former Quinn property in Russia and the Ukraine.

A second possibility being discussed in Kiev is that someone in the courts system is continuing to co-operate with whoever is controlling Elegant, knowing that it is politically difficult for politicians to interfere with court decisions.

Asset recovery

Either way the Kiev source believes the bank’s decision to partner with Alfa is a good one.

The group is owned by a number of very powerful Russian oligarchs, two of whom were born in Ukraine. The plan is that Alfa Group’s asset recovery arm, A1, would recover the assets with the spoils then being split between the bank and A1 according to an agreed formula.

“Alfa is a very powerful player. The move by the bank is a very smart one that I think creates a good chance of recovery. They [Alfa] have the ability and they have the reputation. Many people would not be comfortable to mess with them. Just the fact of the name itself could prevent some of these hostile actions.”

The source was certain that Alfa would have assessed the financial and reputational risks involved before going into any deal over the Ukrainian property. It will not want to be seen to fail.

“The coming few months will be fascinating.”