The court declares invalid the contracts between Ukrnafta PJSC and Kotlas LLC, totaling UAH 2.94 billion, which became the subject of investigation of the National Anticorruption Bureau.

The board of judges of Kyiv Appellate Economic Court approved such decision, based on the results of investigation the complaint of NABU’s detective, Slovo and Delo reports.

NABU asked to declare invalid 71 contracts on petroleum supply, totaling UAH 3.48 bln, concluded between Ukrnafta and Kotlas in violation of the statute of the society and law on joint stock companies.

Motivating this complaint, the detective indicated that as the result of the crude oil sale auction, held by Ukrnafta in 2015, Kotlas LLC was recognized as one of the winners.

The contract for oil sale, totaling over UAH 3 bln, was concluded; however, its supply was not paid and was postponed, based on the respective letters from Kotlas’ executives.

According to the investigators, later they did not pay for oil supply either, appropriating and disposing it at their discretion.

Then, in July 2015, new agreements were concluded between Ukrnafta and Kotlas, but for petroleum supplies, made by the private company to Ukrnafta, totaling UAH 3.4 bln.

Irrespective of the non-payment by Kotlas for crude oil supply, Ukrnafta transferred UAH 3.4 bln of advance payment to the company.

According to the statute of Ukrnafta PJSC, the decision on conclusion of purchase and sale contracts for the amount, exceeding UAH 50 mln, falls within the competence of the supervisory board of the company.

However, by previous concert between the executives of Ukrnafta and Kotlas, the petroleum supply contracts were divided into smaller ones – the cost of each of them did not exceed UAH 50 mln.

NABU indicates that except for the violation of Ukrnafta’s statute, the law on joint stock companies was also violated, which forbids to divide the subject of transaction in order to evade the prescribed by law procedure of decision-making on concluding a large deal.

The detective noted that the large deal is considered to be the conclusion of contracts, exceeding 10% of the cost of assets on the data of last annual financial reporting of the joint stock company.

According to this report, as of late 2014, the cost of Ukrnafta’s assets was UAH 33.6 bln; consequently, the said deal was 10.37% of the cost of Ukrnafta’s assets.

The board of judges of Kyiv Appellate Economic Court agreed with the opinions of detectives, but declared invalid 60 out of 71 contracts, totaling UAH 2.944 bln.

The said decision may be challenged in the Supreme Court.