Whether Supreme Court will allow Kolomoiskyi’s company not to return billions to state
However, if you have rejoiced, it is premature. According to Censor.NET's sources, this week the Supreme Court may issue another ruling that could actually disrupt the recovery of funds and undermine NABU's case regarding this scheme.
The article explores how filing multiple lawsuits can help avoid liability for the de facto theft of electricity.
In January 2024, NABU and SAPO exposed a scheme in the electricity market involving United Energy, which caused UAH 716 million in losses for state-owned NPC Ukrenergo.
The investigation established that in March 2022, United Energy LLC, at that time one of the largest traders in Ukraine, purchased electricity from NPC Ukrenergo for more than UAH 716 million.
"Despite the company's existing debt to the state-owned enterprise, the head of the relevant department of Ukrenergo failed to halt the transaction. At the same time, one of the commercial banks acted as a guarantor of payment, and the decision to issue the guarantee was made unilaterally by the chairman of the board, in violation of the procedure.
Subsequently, the electricity was sold to legitimate market participants, and the proceeds were transferred to the accounts of a foreign company controlled by the organiser of the scheme, who is also a business partner of a participant in NABU and SAPO's case on the embezzlement of PrivatBank funds. NPC Ukrenergo never received payment for the supplied electricity. When it turned to the guarantor bank with a request to repay the debt, its request was denied," NABU said in a statement.
Four people have been served with notices of suspicion in the proceedings, including a Ukrenergo official and businessman Mykhailo Kiperman.
Kiperman is suspected of committing crimes under Part 5 of Article 191 of the Criminal Code of Ukraine and Part 3 of Article 209 of the Criminal Code of Ukraine. In particular, it is a case of misappropriation, embezzlement or misappropriation of property through abuse of office and money laundering.
In January 2024, the ex-husband of singer Vira Brezhneva was put on the wanted list. Along with Kiperman, the wanted list also includes the former director of Ukrenergo, Dmytro Kondrashov, and the chairman of the board of Alliance Bank, Yuliia Frolova.
In September 2024, the case was submitted to court.
Before United Energy came under the scrutiny of the NABU and the SAPO, it had sufficiently annoyed the energy market.
This trader was part of Ihor Kolomoiskyi’s Privat Group, which in 2020 purchased significant amounts of electricity from state-owned generation companies Energoatom and Centrenergo. The company bought electricity at lower prices and resold it at higher rates.
At the end of 2020, state-owned Centrenergo held an auction at which it sold 3.27 million MWh to United Energy for delivery in January–March 2021 at a price of UAH 1,160/MWh. This is about 25% of Centrenergo's annual electricity generation. This price was significantly below Centrenergo’s electricity production costs and the day-ahead market (DAM) rates.
This electricity was then resold to other companies at a completely different price. The scheme was described in detail in a Business Censor article.
The NABU had served suspicion notices on United Energy at least twice before, precisely on the facts of abuses that took place in 2020.
The amount of damages in the latter proceedings is the largest and amounts to over UAH 716 million.
Although the history of the confrontation between Ukrenergo and the company from Kolomoiskyi's sphere of influence is quite old. Before that, the fight was fought in courts.
"United Energy" started accumulating debts under contracts with Ukrenergo in 2019.
In 2021, United Energy provided Ukrenergo with a bank guarantee from Alliance Bank in the amount of UAH 1.85 billion. When it came time to pay for the electricity it received, United Energy began to accumulate debts.
Having a bank guarantee, Ukrenergo submitted a claim to Alliance Bank. "During March 2022, Ukrenergo sent eight relevant claims to the bank via electronic and postal communication, which Alliance fulfilled only partially, in the amount of UAH 133 million," the NPC said in a commentary provided to Mind amid the ongoing dispute.
Then, in June 2022, Ukrenergo initiated a commercial dispute seeking to recover UAH 1.7 billion in debt.
In December 2022, Kyiv Commercial Court Judge Boiko partially upheld the claim, ruling to recover UAH 1.1 billion from Alliance Bank, which had issued a guarantee to United Energy without which the transaction would not have taken place.
Alliance Bank then appealed the decision to the Northern Court of Appeal. However, the proceedings were suspended.
In addition, the bank filed a claim with the commercial court to have the bank guarantee declared unenforceable. The bank won in both the first and appellate instances. However, the Supreme Court overturned both rulings. In an interview with RBK-Ukraine, the bank's shareholder, Oleksandr Sosis, claimed that the bank was merely a victim of the entire situation and had no obligation to pay.
"The NABU said it had seized UAH 665 million and EUR 36 million on the accounts of companies associated with United Energy. This means that Ukrenergo has enough funds to cover its losses (UAH 770 million), if any, with a margin. Then what is the problem and what does the injured party, a commercial bank, have to do with it?" - Sosis said in a comment to the publication.
However, Sosis then forgot to explain why his bank signed the guarantee in the first place because according to Mind, he did not have the proper funds to provide the guarantee at all. As of 1 September 2021, its equity capital reached UAH 650 million. However, the bank provided an irrevocable and unconditional guarantee under the agreement between Ukrenergo and United Energy.
United Energy has not publicly stated its position, but court rulings, including those of the HACC, indicate that the company "does not deny the fact that it has debts to NPC UKRENERGO for the supplied electricity under the Electricity Imbalance Settlement Agreement No. 1196-01024 of 18.07.2019, but argues that the actual debt amount is significantly lower than claimed by NPC UKRENERGO."
One way or another, despite Ukrenergo having won its case against the bank in the Supreme Court, this does not mean that NABU has secured victory in the case. United Energy has waged another successful legal battle.
In 2022, United Energy LLC filed a lawsuit with the Commercial Court against NEURC, the National Energy and Utilities Regulatory Commission, seeking to recognize clause 5.17.2 of the Market Rules, approved by the Commission's Resolution No. 307 of 14.03.2018, as unlawful and void with regard to IMSPz,t, min, and max.
This formula establishes the principle of purchasing electricity at a lower price for the Private Joint Stock Company National Energy Company Ukrenergo while requiring market participants to purchase the same product at a higher price during the same period.
On 18 December 2023, this administrative claim was satisfied. Accordingly, clauses 5.17.2 of the Market Rules were declared unlawful and invalid.
It is hard to imagine what such a court decision could have resulted in, so the NEURC and NPC Ukrenergo filed appeals, and the Sixth Administrative Court of Appeal cancelled the decision of the Kyiv District Administrative Court.
But this did not stop United Energy LLC, and in May 2024, they filed a cassation appeal with the Supreme Court.
In addition, the Commercial Court suspended the consideration of administrative case 910/3270/22 at the company's request in connection with the consideration of case No. 640/17271/22.
According to the said ruling, the court noted that the examination of the claim's subject matter in case No. 910/3270/22, which is expected to confirm or refute the existence of UNITED ENERGY LLC`S debt under the disputed invoices, depends on the conclusion to be made in case No. 640/17271/22 during its review by the administrative court. This is because the claims in this case were calculated based on the invoices issued by NPC Ukrenergo for electricity payments to settle imbalances, with the imbalance price in these invoices calculated using the formula disputed in case No. 640/17271/22 regarding clause 5.17.2 of the Market Rules.
Ukrenergo attempted to appeal this decision to the Northern Court of Appeal but was unsuccessful. In December 2024, presided over by Judge Sibiga (the brother of the Minister of Foreign Affairs), Ukrenergo's appeal was dismissed.
This ruling effectively prevented the recovery of funds from the company in favor of NPC Ukrenergo.
Meanwhile, United Energy LLC again lodged a claim against PrJSC NPC Ukrenergo with the Kyiv City Commercial Court, requesting:
- to declare unlawful the actions of PrJSC NPC Ukrenergo regarding the calculation of imbalance costs under the Electricity Imbalance Settlement Agreement No. 1196-01024 dated 18.07.2019, concluded between PrJSC NPC Ukrenergo and United Energy LLC, based on the aforementioned NEURC rules;
- to declare the termination of United Energy LLC’s obligations under Agreement No. 1196-01024 on the settlement of electricity imbalances dated 18.07.2019, in the amount of UAH 248,901,546.36 as a result of the set-off of mutual claims;
- to declare the termination of United Energy LLC’s obligations under Agreement No. 1196-01024 with PrJSC NPC Ukrenergo in the amount of UAH 851,620,076.96 due to the fulfillment of these obligations by United Energy LLC;
- to declare the absence of PrJSC NPC Ukrenergo’s right to recover from United Energy LLC under Agreement No. 1196-01024 on the settlement of electricity imbalances dated 18.07.2019, concluded between PrJSC NPC Ukrenergo and United Energy LLC, in the amount of UAH 1,520,269,803.95.
In July 2024, this claim was partially satisfied and cancelled the fulfilment of Ukrenergo's claims for more than 800 million.
However, this was not enough for United Energy LLC and it filed an appeal with the Northern Commercial Court of Appeal, in which it requested that the decision of the Kyiv Commercial Court of 30.07.2024 be cancelled and that the claims of United Energy LLC against NPC Ukrenergo be fully satisfied.
By the decision of the NCCA (Northern Commercial Court of Appeal), composed of the panel of judges Vovk, Sybiha and Honcharov, the appeal proceedings in case No. 910/15231/23 were opened. The panel for consideration was then formed of judges Vovk, Sybiha and Stanyk. And after the repeated automated distribution of the court case among judges on 28.10.2024, the case was accepted for consideration by a panel of judges consisting of: presiding judge - Vovk I.V., judges - Sybiha O.M., Kravchuk H.A.
The case file, according to Censor.NET, comprises more than 30 volumes. However, the very next day, by the decision of the NCCA of 29.10.2024, composed of the panel of judges Vovk, Kravchuk and Sybiha, the appeal of NPC Ukrenergo was dismissed, and the appeal of United Energy LLC was partially satisfied.
"Considering the above and the fact that the Court of Appeal established the unlawfulness of PrJSC 'NPC Ukrenergo' applying the indicators 'IMSPz,t', 'min', 'max' provided for in clause 5.17.2 of the Market Rules in calculating the cost of electricity imbalances for United Energy LLC for the period from February to March 2022 under Agreement No. 1196-01024 dated 18.07.2019, and since the claim in the initial lawsuit to recognize the absence of the right of the defendant in the initial lawsuit to recover UAH 1,520,269,803.95 from the plaintiff in the initial lawsuit is derived from the first initial claim, the panel of judges of the Court of Appeal concluded, taking into account the amount of offset of counterclaims in the sum of UAH 248,901,546.36, that PrJSC 'National Energy Company 'UKRENERGO' has no right to recover UAH 1,271,368,257.59 from LLC 'UNITED ENERGY' under Agreement No. 1196-01024 dated 18.07.2019 concluded between them," the resolution states.
At the same time, the NCCA took into account in its decision the expert opinion provided by United Energy LLC on the illegality of charging the cost of imbalances, and also independently evaluated clause 5.17.2. in terms of the indicators "IMSPz,t", "min", "max" of the Market Rules.
It is worth recalling that another panel, which included the same judge, Oleksandr Sybiha, suspended the proceedings to evaluate these NEURC rules, although the Supreme Court was already considering case No. 640/17271/22 at that time.
Obviously, this decision will greatly benefit a company within Kolomoiskyi's sphere of influence. However, this is likely to be of little interest to the presiding judge, Ivan Vovk, who was dismissed by the High Council of Justice two days after the decision. But the fact that Judge Kravchuk had only 1 day to study 30 volumes of the case adds a certain unsympathetic shade to the decision.
The fact that United Energy is not going to pay the money can also be evidenced by the developments that emerged during the consideration of the defendants' arrest in the HACC.
It then became known that a forged letter, allegedly sent on behalf of a NABU detective and a SAPO prosecutor, claimed that there was no need to fulfil the request for international legal assistance to the competent authorities of the Swiss Confederation (vol. 1, pp. 194-197) regarding the seized funds of United Energy.
Now, after the decision of the Northern Court of Appeal, the decision of the Supreme Court on 18 February remains to be seen. And whether it will side with a company within Kolomoiskyi's sphere of influence.
Tetiana Nikolaienko, Censor. NET
