Office of the Prosecutor General is investigating money laundering by Novinsky’s structures // Vadim Novinsky deceived the state
Team “Stopbark”explored the details of the financial scheme by which Novinsky’s structures probably hid a quarter of a billion dollars from taxation
He hid $1.3 billion from declaration and evaded paying multimillion-dollar taxes: law enforcement agencies became interested in the origin of the fortune and financial machinations of three times the people’s deputy, and now the protodeacon of the UOC-MP Vadim Novinsky. According to the decision of the Supreme Anti-Corruption Court, the Office of the Prosecutor General registered the criminal proceedings. What is the pro-Russian businessman suspected of? And what is happening with his assets now?
The details of a large-scale financial scheme, according to which the budget of Ukraine lost $221 million, and the “Orthodox oligarch” Vadim Novinsky legalized property allegedly obtained by criminal means, was investigated by a team of StopKor analysts.
On March 21, 2023, the Office of the Prosecutor General of Ukraine entered into the Unified Register of Pre-trial Investigations information about the commission of a criminal offense under Part 3 of Art. 209 of the Criminal Code – legalization (laundering) of proceeds from crime, on an especially large scale. The basis is the relevant decision of the Supreme Anti-Corruption Court in case No. 991/1704/23.
Fragment of the decision of the Supreme Anti-Corruption Court in case No. 991/1704/23, // Novitnsky deceived the state
As indicated in the ERDR extract, a number of circumstances indicate the signs of a criminal offense. In particular, we are talking about the fact that during 2012, Vadim Novinsky, through companies controlled by him in Cyprus, probably received investment profit in the amount of $1.3 billion, did not declare it and evaded paying personal income tax in the amount of 221 million dollars. In the future, the funds illegally “saved” by Novinsky were legalized.
Extract from the ERDR on the registration of criminal proceedings involving Novinsky’s Cypriot firms // Novinsky deceived the state
How exactly did Novinsky deceive the state? How, according to the investigation, did the tax evasion scheme work?
In April 2012, businessman Vadim Novinsky exchanged 1,000 shares of the Cypriot company Trosilia Holdings Limited, the cost of which was 1,000 euros, for the same number of additionally issued shares of another Cypriot company, Lovitia Investments Limited (subsequently changed its name to Smart Ltd), with a par value of 1 000 euros (or 1,323 US dollars) placed with a premium of 1.3 billion US dollars.
So, de facto 1000 shares of Trosilia with a cost of 1000 euros were sold by Novinsky for 1.3 billion US dollars to his own company Lovitia in exchange for its additional 1000 shares.
In May 2012, another Cypriot firm of Novinsky, Majorone Trading Ltd, issued an additional 3,000 shares with a par value of 1.71 euros each, with a premium of 330,787 euros. Energees Investments Ltd (Cyprus, the ultimate beneficiary is also Vadim Novinsky), which at that time owned 60% of the total share capital of Majorone, waived the right to purchase any additional shares. Therefore, Lovitia, which at that time owned 40% of the total share capital, subscribed to all 3,000 shares. The total premium on these shares was EUR 992 million or USD 1.3 billion.
As part of the purchase of additional shares, Lovitia transferred Trosilia shares to Majorone, which were valued at $1.3 billion according to the accounting records.
Thus, according to the current edition of the Tax Code of Ukraine, Vadym Novinsky sold the investment asset and received investment profit in the amount of USD 1.3 billion.
Being a tax resident of Ukraine, according to the law, Novinsky must declare these incomes by May 1, 2013 and pay tax on them in the amount of $221 million by August 1, 2013, but this never happened. Moreover, as the People’s Deputy of Ukraine of three convocations and the subject of declaration, the billionaire did not indicate these incomes in his declarations for 2013-2022, filed with the NAPC.
In the future, Novinsky’s structures illegal income received from tax evasion were legalized. So, we are talking about the “laundering” of funds.
Why is Vadim Novinsky famous? How Novinsky deceived the state
Vadim Novinsky is a Russian and Ukrainian businessman and politician. At the end of the “brown 90s” he worked in the representative office of Lukoil-North-West (St. Petersburg), and in 1998 he took part in the privatization of assets in Ukraine – the Ingulets mining and processing plant and the Southern mining and processing plant.
In 2007, Novinsky became the founder of the Ukrainian financial and industrial group Smart-Holding, and then the owner of a blocking stake in Metinvest. He also founded a charitable foundation in Ukraine “In Honor of the Protection of the Most Holy Theotokos”. During 2010-2021, he repeatedly entered the top 10 richest people in Ukraine.
In May 2012, then-President Viktor Yanukovych, by his order, granted Ukrainian citizenship to Vadim Novinsky, as a person “having outstanding services to Ukraine.” And already in 2013, the oligarch was first elected to the Verkhovna Rada – in constituency No. 224 (Sevastopol) – and joined the Party of Regions faction. In the future, he became a people’s deputy twice more – both times from the pro-Russian political force Opposition Bloc.
In July 2022, Novinsky resigned as a People’s Deputy of Ukraine, explaining this by the war and the occupation of Mariupol by the Russians, and focused on religious activities. So, back in 2020, the Primate of the Russian Orthodox Church, Metropolitan Onufry (Berezovsky), ordained Novinsky to the deacon of the UOC-MP. At the same time, the oligarch publicly served for the first time in the Kiev-Pechersk Lavra.
December 2020 became knownthat the Prosecutor General of Ukraine Irina Venediktova opened a criminal case against Novinsky. An application to the court with a request to open a case against Novinsky was filed by Gratant LLC, alleging that Novinsky unlawfully seized the property of the Amstor supermarket chain, including the mortgage and mortgage property of Ukreximbank.
What is happening now with the state of Novinsky?
Currently, officially, all of Novinsky’s business activities are concentrated in Ukraine. In addition to Smart-Holding and Metinvest, we are talking about the Yakovlevsky iron ore deposit, two shipbuilding plants – Kherson and Chernomorsky in Nikolaev, which were deliberately brought to bankruptcy, food holdings (“Veres”, “Kalityansky bacon”). “Dnepropress”, a number of development and construction companies.
Assets and fortune of Vadim Novinsky as of 2023 // Novinsky deceived the state
On December 2, 2022, President Volodymyr Zelensky put into effect the decision of the National Security and Defense Council on sanctions against a number of figures of the UOC-MP. The “black list”, in particular, included the abbot of the Kiev-Pechersk Lavra Metropolitan Pavlo (Lebed) and eight clergymen of the UOC-MP, mostly located in the occupied territories.
It also became known that Vadim Novinsky was included in this list. How reported The Forbes publication, citing a source in the President’s Office, allegedly was the oligarch’s many years of support for the “Moscow church.” The press service of Smart Holding then stated that they would not comment on the rumors. However, subsequently the decree, where Novinsky’s surname appears, was officially published on the website of the President’s Office.
Vadim Novinsky is included in the NSDC sanctions list // Novinsky deceived the state
It is reported that the assets of the Novinsky group were significantly affected by the war: production fell by more than 60%. Smart Holding temporarily does not control the work of Amstor shopping centers in Melitopol and Berdyansk, and on June 27, a Russian missile destroyed one of the largest shopping centers in Kremenchug. During the occupation of Kherson, the Kherson shipyard of the shipbuilding company was also officially stopped.
However, Kherson economist and political scientist Vladimir Molchanov assumed in the autumn of 2022, that the invaders replenished their own “flotilla” of barges on the Dnieper using the capacities of the Kherson shipyard, and “some of the management or personnel of the plant” could resort to collaborationism. PJSC “Kherson Shipbuilding Plant” (KhSZ) is part of the Smart Maritime Group (SMG) of Vadim Novinsky. In 2016, the Commercial Court of the Kherson region declared the enterprise bankrupt and opened a liquidation procedure.
How does the sanctioned deacon-oligarch himself comment on the large-scale tax evasion case opened against him?
According to media reports, Vadim Novinsky left Ukraine. How figured out journalists of Radio Liberty, on Sunday, April 2, 2023, businessman and cleric of the UOC-MP Vadim Novinsky served in the largest Russian Orthodox Church in Zurich, Switzerland.
Novinsky himself told reporters that he “does not live anywhere now,” and arrived in Switzerland from Germany. At the same time, the activist, in his own words, does not plan to return to Ukraine, where criminal cases have been initiated against him.
All recent publications by Vadim Novinsky in social networks are devoted to the topic of Orthodoxy and the “protection” of the UOC-MP and personally Vladyka Pavel (Pasha “Mercedes”) from being expelled from the territory of the Kiev-Pechersk Lavra.
The StopKor editorial staff turned to Mr. Vadim via personal messages on Facebook with a request to comment on the criminal proceedings for the legalization (laundering) of proceeds from crime.
And I received an answer (we give it in full):
In particular, Mr. Novinsky noted that the full text of the decision of the Supreme Anti-Corruption Court dated March 1, 2023 No. 991/1704/23 contains the position of the participants in the court session, where paragraph 5 says the following.
“The representative of the Office of the Prosecutor General did not appear at the hearing, however, from the prosecutor of the Specialized Anti-Corruption Prosecutor’s Office PERSON_5, objections were found to the court, in which he notes that “the report on a criminal offense does not contain reliable information about the commission of criminal offenses. Taking this into account, the prosecutor requests that the complaint be dismissed.”
Despite this, the investigating judge ordered the Prosecutor General to enter information into the ERDR according to a lawyer who, for some reason, is convinced that Novinsky earned 1.3 billion dollars from just one operation with shares worth 1 million euros at a time! Fantastic, nothing else. Take a closer look at the court register and you will see how many complaints and statements from representatives of Gratant LLC with far-fetched accusations against me it contains, and how this “legal spam” ends“, – added the ex-people’s deputy.
We will continue to monitor the further progress of this high-profile case. To be continued.
Hope Rogalskaya