Why ex-Naftogaz head Kobolyev is facing prison once more

On March 1, the "Stockholm" story of former head of Naftogaz Ukraine, Andriy Kobolyev, received an unexpected continuation. The Appeals Chamber of the Higher Anti-Corruption Court reviewed a previous court decision and decided to take Kobolyev into custody. To avoid this, Kobolyev must post bail of UAH 229 million ($6.2 million) within five days.

The amount is not random. According to the investigation, Kobolyev illegally received this amount as a bonus for winning against Gazprom in the Stockholm arbitration.

Here is a brief overview of what is known about this case and what it means for the former head of Naftogaz.

(Im)proper payment

The National Anti-Corruption Bureau (NABU) and the Specialization Anti-Corruption Prosecutor’s Office  (SAPO) announced charged against Kobolyev on Jan. 19. According to an anti-corruption investigation by the two bodies, he illegally seized more than UAH 229 million ($6.2 million) in the form of a bonus for winning an arbitration case in Stockholm, Sweden, against Russian state-owned gas company Gazprom. This case lasted for four years and ended in 2018 with a defeat for the Russian gas monopoly.

By the decision of the arbitration, Gazprom had to pay Naftogaz $2.6 billion ($2.9 billion, including fines) for violating the "take or pay" principle fixed in a contract between the two enterprises. Then, in April, the supervisory board of Naftogaz decided to award bonuses to 41 key employees who participated in this legal battle, allocating 1% of the winnings for this purpose.

Read also: Anti-graft agency appeals against court ruling to release ex-Naftogaz head Kobolyev

According to the investigation, it was Kobolyev who issued the order to award company employees in May 2018. He himself then received the first part of the bonus - almost UAH 261 million, equivalent to $10 million at the time.

"This amount significantly exceeded the normatively defined amounts of such payments (UAH 37.48 million or around $1 million),” NABU said.

“Moreover, for the same achievements, former company executives were paid a bonus of UAH 12.49 million  ($337,000) in 2017.”

The size of bonuses for heads of state-owned companies is regulated by a Cabinet of Ministers resolution approved back in 1999. The difference between the normatively defined and actually received rewards amounted to UAH 229.25 million ($6.2 million), the department noted.

Variable justice

In January, Kobolyev won the first court case against him. The prosecution asked the Higher Anti-Corruption Court to detain him, or post bail worth UAH 365 million ($9.85 million). The judge refused.

Read also: NABU suspects former Naftogaz head Kobolev of embezzling over $6 million

"The court did not establish that Andriy Kobolyev had the authority that would have allowed him to influence the decision to establish the size of his remuneration," summarized lawyer Oleksiy Nosov after the hearing.

A month later, the prosecution won on appeal. Why would the judges have made a different decision? The justification is expected to be published later in the State Register of Court Decisions.

A interesting detail from the hearing was reported by the Telegram channel of the Anti-Corruption Action Center.

"One of the lawyers at the hearing claimed that the $10 million bonus allegedly was not subject to distribution among other employees,” the APC wrote.

"Although the Supervisory Board granted Kobolyev the authority to distribute the agreed part of the bonus among the company's employees, he did not exercise this right,”

Time for reflection

The former head of Naftogaz was brief in his comments after the hearing.

"The VAKS appeal overturned the previous decision and set bail at around UAH 230 million ($6.2 million),” he wrote on Facebook.

"I am still thinking about what to do with this and will not comment further.”

Kobolev has five days to think. If he does not post bail, he will have to wait for further developments behind bars.

Read also: Shutting winter gas supply to Europe would spell Gazprom’s end, former Naftogaz chair says

According to NABU, the former head of Naftogaz is also required to: appear on demand to detectives, prosecutors, and the court within two months, not leave Kyiv without their permission, report changes of residence, not communicate with witnesses or other suspects in the case, and surrender his international passport – which would prevent him from leaving the country.

Kobolev's actions have been classified by the investigation as typical for officials and heads of state-owned companies under Article 191, Part 5 of the Criminal Code of Ukraine. He faces imprisonment for a term of 7 to 12 years with a ban on holding certain positions or engaging in certain activities for up to three years, as well as confiscation of property.

Is there a political context to this story? Shortly before Kobolev's return to Ukraine, he reportedly had a conversation with presidential chief-of-staff Andriy Yermak, according to a source in Kobolev's circle who spoke with NV Business. Yermak allegedly suggested that he return to Ukraine and think about what role he could play in helping the country.

But according to Kobolev himself, his return to Ukraine was not related to this proposal.

"While abroad, I learned about the suspicion being prepared and returned to Ukraine to talk to the investigators and prove my innocence in court," he told U.S. financial news magazine Forbes.

Now he has that opportunity.

We’re bringing the voice of Ukraine to the world. Support us with a one-time donation, or become a Patron!

Read the original article on The New Voice of Ukraine