A prominent Ukrainian investment banker, founder and CEO of the Concorde Capital investment company, Igor Mazepa, has been released on bail, the Ukrainian mass media reported on 24 January.
Mazepa was arrested on 19 January on suspicion of illegally seizing land belonging to Hydroelectric Power Plant’s facilities by bribing officials to change the land’s status from industrial to agricultural, allowing it to be sold. The court ordered Mazepa to remain in custody until 27 February and set bail at 350 million UAH ($9.3 million). He was reportedly released after the court decided to lower the bail amount to 21m UAH ($560,000).
Mazepa’s arrest has sparked a contentious debate around the country’s quest for justice and the rule of law as Ukrainian President Volodymyr Zelensky has launched a crackdown on oligarchs and corruption in all spheres of the state’s life.
Another Ukrainian oligarch Igor Kolomoisky will remain in custody until 2 March, with bail set at 2.65 billion UAH ($71 million), it was revealed on 22 January. Kolomoisky is the highest-ranking oligarch ever to be arrested. He is accused of embezzling $250m from his PrivatBank, which was nationalised in 2016 after a $5bn hole was found in its balance sheet. Having been in pre-trial detention since September, observers are watching closely to see whether such a powerful oligarch will actually be sent to trial and jailed.
Mazepa is a much more respectable businessman, and Concorde Capital had been for many years the leading investment bank in Ukraine alongside its larger counterpart Dragon Capital. Tymofiy Mylovanov, rector of the Kyiv School of Economics (KSE) and former economics minister, said in a social media post:
The recent arrest of [Mazepa], a notable businessman in Ukraine, highlights the intricate and tough battle for justice and the rule of law. This is particularly challenging when the law enforcement agencies, even newly formed, are themselves viewed with suspicion.
The State Bureau of Investigation (DBR), Ukraine’s new law enforcement agency similar to the US FBI, accused Mazepa of illegal land privatisation and made an arrest.
The DBR says the scheme involved a criminal organisation of nearly two dozen people, including investors, lawyers, architects and representatives of government agencies, who acted in the interests of the developers.
The group exploited loopholes in the legal status of land plots, which, thanks to corrupt connections in state bodies, were re-registered as agricultural land, allowing the land to be privatised in favour of Ukrainian citizens, DBR claims.
Concorde Capital stated that this was a normal business transaction and everyone’s participation was a legitimate part of a legitimate transaction. The organisation’s representatives further stated that the detention was payback for Mazepa’s open criticism of law enforcement and judges putting pressure on businesses.
In its letter, Concorde Capital lists what it believes to be pressure on Mazepa that “hints at excessive and disproportionate pressure on Igor Mazepa and Concorde Capital that cannot be explained by the size of the alleged offences”:
- According to public information from the case, the alleged “losses” in the case amount to UAH 7 million. Meanwhile, prosecutors have demanded in court that Mazepa be arrested or released on bail of UAH 700m. This is a multiple of 100x, which, judging by public information, has never been seen before.
- This “extraordinary” detention “allowed” prosecutors to search Mazepa’s living quarters and Concorde Capital’s office without court authorisation.
- In order to portray Mazepa in the most negative light possible, prosecutors detained him on 18 January while crossing the Ukrainian-Polish border, which “allowed” them to claim that he “attempted” to leave the country to avoid “criminal liability”. At the same time, Mazepa had been in Kyiv over the past couple of weeks, attending a number of public events where he was fully accessible. It was known that Mazepa was travelling to Davos for business meetings.
Following Mazepa’s arrest and the public outcry it caused in the business community, Ukrainian President Volodymyr Zelensky convened a special meeting of the Security and Defence Council on 23 January to address issues of economic security and economic stability. Concorde Capital said:
We are thankful to the President’s leading role in the attempt to unite business and government around our primary goal – to ensure the Ukrainian economy is working stable.
Tymofiy Mylovanov asked:
So, who is corrupt? One side, another, both or none? It is tough to form an opinion because the legal system Ukraine inherited from the Soviet Union has not been fully cleaned up and there are so many grey areas that many businesses are in violation of the law.
Mylovanov believes that a new social contract between business and the state should be drawn up as part of the Zelensky administration’s anti-corruption campaign. Reforming the legal and law enforcement system is necessary to build credibility and trust for business success. The lack of an explicit amnesty for past actions further complicates the way forward. Mazepa’s real estate transaction took place ten years ago, when the Ukrainian legal system was even more chaotic than it is now.
