Ukrainian economy has a chance of survival if law enforcement agencies do not destroy businesses first, writes Alona Lebedieva for EU Today

Due to the current war on Ukraine, unleashed by Russia, the destruction of a significant industrial potential in the country, population outflow, and the reduction of business processes, the Ukrainian economy finds itself in an extremely difficult situation, Alona Lebedieva, founder and owner of Aurum Group writes for EU Today.
Specifically, it is critically dependent upon Western aid – both financial and military.

While both the USA and Europe assure unwavering support, we should focus maximally on developing our own capabilities. However, current challenges, including actions by the security forces against large businesses, raise concern.

Alona Lebedieva, the owner of the Ukrainian diversified industrial-investment group of companies “Aurum Group,” believes that this issue needs to be openly discussed.

Working businesses in Ukraine are needed like never before

In the summer of 2023, Ukrainian Prime Minister Denys Shmyhal stated that during the full-scale war, Ukraine lost about 30% of its economy and enterprises, along with 3.5 million jobs. By the end of 2023, the Minister of Finance revealed the cost of a day of war – 5 billion UAH. One doesn’t need to be an economist to understand that there is a shortage of funds.

Ukraine’s economy relies on thousands of enterprises and hundreds of thousands of entrepreneurs, specifically on the taxes they pay. Businesses fund the army, the state, and provide a chance for survival.

When it was scary, it was simple

At the beginning of the full-scale invasion of Russia into Ukraine, the situation actually helped business, because the authorities were afraid at that time.

Volodymyr Popereshnyuk (Nova Poshta) aptly expressed this during iforum2023: “When the authorities were afraid and understood that everything could be “covered up”, they gave freedom to entrepreneurs, when it is no longer so scary – entrepreneurs can be treated like geese again, and like rams that can be sheared and pinched.”

When the danger of defeat passed, so did the partnership approach to business. The country’s leadership focused on foreign policy and large-scale challenges, redistribution began in the rear. The security forces were the first to orient themselves.

Unlimited Powers

The Prosecutor General’s Office, the National Police, the Bureau of Economic Security, the Security Service of Ukraine and the State Bureau of Investigation, using martial law, expanding their powers, and lacking accountability, began to “work on” businesses.

The scheme was extremely simple.

By drawing up suspicions, even without sufficient grounds (fortunately, the law allows this), law enforcement officers can conduct searches, can seize property, can confiscate personal belongings such as watches, declared cash, etc., and calmly initiate criminal proceedings against top management: the list of possibilities and actions can be added to endlessly, and most unfortunately.

In this way, whist they have a serious leverage to pressure businesses for their genuinely corrupt benefits, which is good, unfortunately the situation is abused.

Not coincidentally, already in the war-torn 2022, reports began to emerge about “mask shows” and criminal proceedings against businessmen and their assets.

Aurum Group was not overlooked.

In the spring of 2022, a groundless criminal case was unjustly initiated against me – a raiding attack began.

I was accused of allegedly supporting the aggressor country by supplying civil pumping products from one of the group’s plants back in 2018. On this occasion, a wide PR campaign was carried out, property was confiscated, wagons, which are now operated by companies of famous persons, were confiscated.

In addition to fictitious criminal cases in Ukraine, there is another mechanism – sanctions!

I had to feel the pressure of these two innovations devised by Ukraine’s new Robin Hoods.

Last May, the same SSU that initiated the criminal case included my name in the sanctions list and proposed the President to sign it. The justifications are unknown to me, but we filed a lawsuit, and soon, I hope, the fantastic reasons for including me, a citizen of Ukraine, in the sanctions list will become known to me and everyone else! In all the actions of the security forces described above, I see one single reason – raiding, capture, and redistribution of my business assets.

A year and a half ago, when the first actions were taken against me, I appealed to many partners and business associations, urging them to unite and try to stop the pressure on businesses and this raiding lawlessness.

I warned back then that such phenomena would become mass avalanche-like events in the future and would reach all interesting businesses, unfortunately, they didn’t listen to me… Today we have the corresponding results.

Impunity breeds lawlessness.

And the “mask shows” have indeed gained momentum. In May of last year, employees of the Security Service of Ukraine (SSU) and the National Police conducted searches in the Chernivtsi office of the developer ImproveIT Solutions.

Their actions almost cost the company a significant contract with a U.S. client. Investigators seized equipment under unfounded accusations, and a few days later, they simply returned it without explanation.

In October of the same year, the Bureau of Economic Security blocked the activities of the !FEST restaurant holding.

Co-owner Yuriy Nazaruk wrote on the social network: “It seemed that during the war everyone was on the same side, because the enemy was one. But there are other sides and wars. Today at FESTrepublic we have classic masks.

In helmets with rifles, in body armour – everything as we sent to the front”.

This year, Yevhenii Chernyak (owner of Global Spirits) and Anton Kravets (founder of Kyivgum) received Christmas gifts from the SSU.

They were accused of continuing to do business with the aggressor country through companies they controlled during the war. In both cases, the companies denied the allegations, calling the cases baseless and fabricated.

Furthermore, this year the law on strengthening the independence of the Specialized Anti-Corruption Prosecutor’s Office (No. 3509-IX) came into effect.

Several provisions of this law repeal some of the “Lozovyi’s amendments,” including the pre-trial investigation deadlines for law enforcement officers.

Now they can investigate criminal cases for decades without notifying individuals of suspicion, which is absurd and a basis for abuse.

In the summer of 2023, the founder of the investment company Concorde Capital, Ihor Mazepa, also reported a visit from law enforcement.

Business is under the greatest pressure from law enforcement in the last 20 years. In some places, the government has surpassed the times of Yanukovych,” emphasised Ihor Mazepa at that time.

Moreover, he initiated the creation of an anti-rating of law enforcement officers, judges, or anyone else who illegally uses their powers. Mazepa was supported by more than four dozen influential Ukrainian businessmen.

On January 18th, 2024, during the crossing of the Ukrainian-Polish border, the workers of the State Bureau of Investigations demonstratively detained Ihor Mazepa in a case related to the legality of allocating land for an elite recreation complex, which was built back in 2013, some 10 years ago. In addition to the businessman himself, his brother and colleagues were also detained. The court chose a preventive measure in the form of detention with an alternative of bail in the amount of UAH 349 million. Although the losses in the case amount to UAH 7 million.

Mazepa’s case caused an extraordinary resonance, and the arrest itself took place precisely on the days when the World Economic Forum was held in Switzerland, where Ukraine sought comprehensive support, and President Zelensky invited world corporations not to be afraid to invest in our country.

There is already a reaction from the Federation of Employers of Ukraine. They believe that there is actually a fact of extremely unclear actions of the investigators of the State Bureau of Investigations regarding a domestic investor who actively opposes pressure from law enforcement on business and is one of the co-founders of the civic initiative “Manifesto 42”. They promise to appeal to the President of Ukraine, the Prosecutor General, the Temporary Special Commission of the Verkhovna Rada on the Protection of Investors’ Rights with a demand to assess the actions of law enforcement officers.

The world press, including Bloomberg, also emphasises that Mazepa criticises law enforcement agencies and judges, accusing some of them of corruption and abuse of power.

The Union of Entrepreneurs of Ukraine called on authorised bodies not to engage in selective justice and pressure on Ukrainian businesses, which is perceived by the community only as a desire to destroy people who have a decisive influence on Ukraine’s economy.

Businessmen point out that many receive suspicions only because their uncontrollable counterparts conducted commercial transactions with the aggressor country. In business circles, there is also a tendency to think that they detained an investment banker because of his open protest against pressure on business and the fight against law enforcement abuse. They want to punish him demonstratively and show others that the law enforcement system in Ukraine is untouchable and ready to destroy anyone who doubts it.

Mazepa himself is of the same opinion. It is not excluded that today’s fire in the businessman’s country house is a kind of warning: “You will speak, you will have consequences”.

The public movement “Manifesto 42” has already announced that it will start a warning protest against “the lawlessness of the rear security forces in relation to business”. If the state does not react and does not begin to solve the problem by February 1, entrepreneurs promise to stop the work of companies for 1 hour.

So, if we don’t unite and resist, Mazepa’s case will be just one of many, not the last.

The flip side…

At the same time, companies close to the authorities have no problems. In particular, this applies to KD Energy 2 LLC and Zaporizhzhya Renewable Energy LLC, which own solar plants located in the occupied territories.

The co-owner of these companies is Oleg Shurma, the brother of Rostyslav Shurma, an official of the Office of the President of Ukraine.

According to the journalists of the Bihus.Info project, from July 2022 to July 2023, these companies received payment for electricity at the “green tariff” from SE “Guaranteed Buyer”.

Although, probably, they did not have a connection to the unified energy system of Ukraine. However, it seems that the law enforcement agencies have no questions for them.

To win, the Ukrainian economy must endure.
Experts from the Center for Economic Recovery claim that according to their research, 65% of entrepreneurs were under pressure from law enforcement agencies.

The majority of businessmen complain about the tax commission, 11% of respondents suffered from the arbitrariness of the police, many from the prosecutor’s office, customs and other state institutions.

The business ombudsman provides his numbers, tax officials and law enforcement officers are also leading here.

And although the President promised to meet business, it is not possible to talk about improving the situation at the moment.

For example, the Ministry of Finance complains about a huge hole in the budget. At the same time, the law enforcement officers block and stop the work of working enterprises under fabricated pretexts, increasing the lack of money.

It is important to support domestic manufacturers, and not to “pursue” them with law enforcement agencies and inspections.

Creating transparent and fair business control mechanisms is extremely important. Double standards lead to corruption and loss of trust in the authorities. Ensuring independent audits and fair inspections will help create a level playing field for all businesses and support the idea of fair and open business.

In general, Ukraine has every chance of survival and prosperity, but this is possible only if the above conditions are met.

By promoting innovation, supporting domestic producers and implementing fair control mechanisms, Ukraine can meet the needs of today and create a strong economic foundation for its future.

But if nothing changes, business will remain silent, and the authorities will pretend that everything is under control… Ukraine risks losing everything!