How Ukrainian notaries help Russians evade sanctions in Ukraine

There is significant resistance against the sanctioning process. All possible resources are being deployed to protect assets and remove them from under sanctions.

The publication ZN.ua together with Trap Aggressor shows how "black" notaries help to counteract the sanctioning process, and the Higher Qualification Commission of Notaries covers for colleagues instead of controlling their integrity.

At one time, dozens of betting companies operated in Ukraine, including those with parent companies in the Russian Federation. After the start of the full-scale war, some of them independently ceased their operations. Some received sanctions from the Ukrainian state. Since the industry long ago moved online, betting companies require not only websites where players place bets but also a financial infrastructure that provides tools for monetary circulation between the player and the bookmaker. Thus, in Ukraine, after 24.02.2022, both betting companies (such as "PariMatch") and related financial companies (for example, Royal Pay Europe) were sanctioned. The latter will be discussed below.

Before the full-scale invasion of the Russian Federation, there was a bank called Megabank in Ukraine, albeit with difficulties. I think most of you have never heard this name since it was more regional than national. By the end of 2021, Megabank had clearly outlined financial difficulties, so at the beginning of February 2022, it transferred real estate in Kharkiv as a mortgage to two foreign companies — the Latvian SIA Royal Pay Europe (owner: Russian citizen Sergey Kondratenko) and the Cypriot Startling Limited (owner: Russian citizen Galina Kondratenko). An exchange took place: the Kondratenkos provided loans to the bank, and the bank provided mortgages on several buildings.

In July 2022, the National Bank of Ukraine, considering the pitiful liquidity state of the financial institution and non-compliance with mandatory criteria, revoked Megabank’s license and initiated its liquidation process. Legal challenges from Megabank involving the Deposit Guarantee Fund regarding the two aforementioned companies were not very successful.

We will not delve into the complex relationships between the Kondratenkos and the bank in detail, but it is clear that they are not unrelated to each other.

Specifically, according to the terms of the initial deposit of 1.5 million euros, the property was not supposed to be secured by the bank. Additionally, the bank transferred its property rights to a certain LLC "Option-Trade," owned by Viktor Subbotin (the primary shareholder of Megabank) and his wife Olena Subbotina (general director of the 75% state-owned "Turboatom"). Later, the bank transferred part of the premises to the Kondratenkos as a mortgage, who helped "withdraw" them.

This is how, in the end, the Kondratenko couple’s companies were able to resell 361 million UAH worth of real estate that belonged to the bank and which it had mortgaged. It is clear that the state planned to use this real estate to settle the debts of Megabank. And transferring from one legal entity controlled by the Kondratenkos to another aimed to avoid it being seized by the state, and now I will explain why.

On January 12, 2023, the President of Ukraine, Volodymyr Zelenskyy, imposed economic sanctions and restrictive measures against the Latvian company Royal Pay Europe for five years. According to these measures, the National Security and Defense Council provided for the blocking of assets in Ukraine for this firm, preventing capital withdrawal beyond Ukraine, and halting the fulfillment of economic and financial obligations.

As a result, the sale of properties that were mortgaged to a foreign firm is a direct violation of the current legislation, including its sanctions part. On March 10, 2023, similar sanctions were imposed for 50 years on the Cypriot company Startling Limited. Additionally, personal sanctions were imposed on both Kondratenkos and the director of one of their companies, a Cypriot citizen, Aaron Mkhitaryan.

The reason for such a radical turn of the state machinery against the above-mentioned individuals is the connection with the Russian bookmaker company 1xBet. There were even rumors in the market that Sergey Kondratenko might own a stake in the mentioned bookmaker, but this has not been proven yet.

Now the key point is that the pledged real estate of the Latvian Royal Pay Europe and the Cypriot Startling Limited, provided by Megabank, was purchased by a certain Nataliya Dzhun. However, as of the purchase date, namely February 16, 2023, that same Latvian firm was already under sanctions. Why didn’t notary Mykola Zhuravel check the registry for whether the seller was under restrictions, despite needing to agree on this transaction? Perhaps he forgot...

Why do the Kondratenkos want this? To remove these few real estate objects from the Ministry of Justice’s sight and avoid their seizure by the state. Hence, they are selling off different properties. Presumably, in collusion with buyers and unscrupulous notaries.

It gets even more interesting. Megabank approached the Anti-Raider Commission of the Ministry of Justice, claiming that such alienation occurred illegally and to avoid sanctions. Consequently, the commission made a decision to file a submission for this notary’s certification revocation. Fair, because the notary should indeed have checked that the parent company was under sanctions and refused to perform notarial actions.

However, as it turned out, the Ministry of Justice currently cannot strip this notary of certification because the Higher Qualification Commission of Notaries, which mostly consists of notaries, delayed the review so much that there’s almost nothing left to decide on or anyone to do it.

While the qualification commission dragged its feet, the notary, who conducted the aforementioned registration actions, went to court and obtained a ruling prohibiting the Ministry of Justice and the commission from considering the submission for certification revocation. Furthermore, the qualification commission delayed the time so much that its members’ terms expired. Mere coincidence?

To convene a new commission, all the notaries of Ukraine must gather. This is not easy because the president of the notarial chamber (an assembly of all notaries - O.L.) does not wish to conduct this meeting (since, in reality, no notary is thrilled that the qualification commission exists at all). Thus, the commission is currently not authorized, meaning neither the specific notary in question nor any other can be held accountable.

A rather unflattering picture emerges: some notaries vertically, through legal and not-so-legal methods, fight on the side of sanctioned individuals, ignoring the legal demands of the Ministry of Justice. The judicial system assists by providing rulings prohibiting notary license revocations. A vast window of opportunity for all those planning to withdraw their assets from state sanctions is created by individual representatives of this same state.