Fighting for breadbasket of Europe or the case of Arkadij Kornatsky

By 2050 the global agriculture will need to produce 70% more food in order to feed the ever-growing world population. Anyone involved in trade understands the challenges and profitable opportunities that the future holds. Thus the race over controlling the land, resources and agriculture has began.

Ukraine, a country known as thebreadbasket of Europe, could potentially become one of the important partners in global food production as it holds almost 42 million hectares of agricultural land – more than biggest 15 countries of the European Union combined.

Arkadij Kornackyj was one of the first entrepreneurs who saw the opportunity in his country. In 2002 in the Kherson oblast of Southern Ukraine, Kornatsky created an agricultural company called Agrocompany Kornatsky and acquired 1,753 hectares of land by buying land privatization certificates from local villagers who were not interested in keeping the land. The agricultural business was so successful that by 2009, company’s land bank grew to 16,000 hectares;it providedthousand jobs to the local population and started to expand from only growing grains to raising livestock and opening a production facility for diary products.

But in 2010, with President Yanukovych coming to power, Agrocompany Kornatskybecame under instant political attack, constant tax inspections and fabricated criminal investigations. In August 2010,the prosecutor of the Mykolaiv region,Mr. Stoyanov,opened first criminal case against the General Director of Agrocompany Kornatsky – Oleh Kyryliuk. In September, Arkadij Kornatsky decided to raise public awareness about this fraudulent criminal case. Thanks to media reports the case was closed. But political pressure only grew bigger.

In February 2011,the State Tax Inspection launched a detailed investigation. After not finding any tax violations the inspection was closed only to start again in March. This time, the tax inspection calculated additional fees that were not noted in the Tax Code. Agrocompany refused to pay additional fees and paid only what is asked by the law. In June of 2011, the Tax Administration beganа new tax investigation. The Agrocompany protested that theinvestigation didn’t have any legalgrounds. In July, the local tax police of the region of Mykolaiv started a secret criminal investigation against Agrocompany and fabricated a criminal law suit with confiscation of all of its assets. Agrocompany re-registered its address in the capital Kyiv and obtained the right to present its own lawsuit in court. The company won the lawsuit against the Mykolaiv tax police and the case created by the Mykolaiv authorities wasfound to not hold any legal grounds. The court canceled the arrests of Agrocompany’s assets.

But the case did not stop there. The secret police of Ukraine (HPU) took on the case as a tracking down operation. All phone conversationswere listened to, mail was opened, and office workers were followed.

Being well informed of the infamous Magnitsky case in Russia, Mr. Kornatsky and his management understood that the next step in destroying their company will be getting access to confidential information as well as access to theiroriginal company documents. Like in the Magnitsky case, Agrocompany will be accused of tax evasion and tax fraud. And just as Hermitage Capital Management was –Agrocompany’s assets and bank accounts will be taken over.

The main question that still needed to be answered was: who were the people behind all this? In the middle of a series of opened criminal cases against the company and all kinds of investigations and harassments against its workers, Agrocompany continued to fight in the Kyiv courts that were less corrupt than those in Mykolaiv and started its own investigations.

This leadto a very uncomfortable discovery: theorder to take over Agrocompany by appropriating all ofits original documents was given by the business owned by the son of the President of Ukraine – Olexander Yanukovych. The Yanukovych family accumulated its extremely quick multimillion wealth by exploiting the partially private partially state owned company Khlib-Invest-Bud. Franchises of Khlib Bud were created around the globe- now even in the USA – and its profits go directly to the presidential family instead of its shareholders.

Starting September 2011 and until the end of the year, the tax administration openedso many investigations against Agrocompany, that it paralyzed all of its operations. The worst period came in December when almost all of company’s cattle died of hunger because its feed was also under investigation and could not be delivered. The government even accused Agrocompany of destroying and looting ancient graves and accused Mr. Kornatsky and his personnel of other noncence crimes. All the cases were dismissed, as the accusations were notsupported by any proofs or legal documents.

Then on the 27^th of July 2012, the former accountant of the company, Liudmyla Nikitina, was kidnapped in front of her own house and her children and neighbors watching. She was taken to the local jail where she was beaten and tortured as a force to sign documents of falsified tax fraud.Liudmila Nikitina didn’t signed the false documents and is still in prison today.

A criminal case against Mr.Kornatskywas immediately opened. Hebecame afraid for the lives of his family members. He was also afraid that if he were arrested he would be tortured to the point of signing the rights of his company away. He and his family had to leave the country immediately. As a precaution, he gave his daughter a gift of 99% of his shares, which she invested into an American company. In that case Mr.Kornatsky hopes that the Ukrainian government would not be able to use its bullying tactics against his company.

There are 20 criminal cases by now opened by the government against Mr.Kornatsky and his people and none of them has a proof of a mischief on the part of the Agrocompany. All accusations, harassments and use the police and court force are used against a private enterprise simply because it was successful and those in power decided to take that success for themselves.

In order to fight this level of corruption the countries’ potential agricultural partners, including US should apply the same requirements to the Ukrainian officials as the Magnitsky’s act does to those in Russia. The global community should stop persecution of human rights in Ukraine now.Why? Ukraine is the land of opportunities but these opportunities have to be equal for everyone in order for the country to become a part of the solution in the approaching global food crisis.

Date: 2015-04-20; view: 834