Golden Mandarin Case. Why is ex-MP Lohvynskyi on International Wanted List?

Author: Oksana Kopiichuk, Legal Advisor at Transparency International Ukraine

Andrii Tkachuk, HACC Case Monitoring Lawyer at Transparency International Ukraine.

In 2015, the ECHR ordered Ukraine to compensate UAH 54 mln to Golden Mandarin Oil, which the latter allegedly could not receive for 5 years under a decision of a Ukrainian court. This decision against Ukraine was adopted under the procedure of amicable settlement of the dispute; that is, Ukraine admitted its guilt. 

It would seem like an ordinary decision of the European Court, but for Ukraine it became a landmark. The NABU suspected that the judges of the ECHR were misled by people associated with ex-MP Heorhii Lohvynskyi. 

Find out in the material how the defendants appealed to the ECHR and where the NABU suspected fraud.

What was Golden Mandarin owed for?

The case dates back to 2008–2009, when Golden Mandarin Oil LLC took out a UAH 38 mln loan from the state-owned Rodovid Bank. According to the investigation, the company was actually controlled by Felix Kozakov — remember this name; it will be mentioned in our story. 

For credit funds, the company bought fuel oil from the state, which was used to produce electricity and heat at a CHP. The raw materials purchased for UAH 54 mln were transferred for storage to CHP-5 of Kyivenergo. The latter could use fuel oil under the terms of the contract but, on demand, had to return it in full.

When Golden Mandarin wanted to return the fuel oil, it failed to do so; this was the beginning of the 15-year story of the court case. The company went to court, and since then, Kyivenergo has become its debtor. 

Initially, the Commercial Court of Kyiv in April 2009 ordered to return the fuel oil to its rightful owner. After Kyivenergo “ignored” the decision for 20 days, the company filed a new lawsuit, after which the former no longer owed fuel oil, but its value — UAH 54 mln. 

But Golden Mandarin has not received the payment either because Kyivenergo is an enterprise of the fuel and energy complex and there is a moratorium that prohibits forcibly collecting debts from it. Then, in October 2009, this was confirmed by the Commercial Court of Appeal of Kyiv.

By the way, in 2012, the Constitutional Court of Ukraine would provide its opinion that belonging to the fuel and energy complex alone was not a basis for suspending enforcement proceedings. Therefore, it is quite possible that the payment of the debt then failed due to imperfect legislation.  

Meanwhile, the dispute between Golden Mandarin and Kyivenergo continued for years; the latter even asked to postpone the debt for 30 years. 

Having not received the desired result in Ukraine, the company went further to appeal to the European Court of Human Rights. The NABU began to suspect that this was part of a plan to deceive the judges of the ECHR and seize public funds. The investigation believes that to implement it, Kozakov appealed to MP Heorhii Lohvynskyi, who at that time held several positions in state and international institutions. In particular, he was an assistant to MP Mustafa Dzhemilev and his wife was a judge of the ECHR.

Appeal of Lohvynskyi and co. to the ECHR

According to the investigation, Lohvynskyi, together with the above-mentioned Kozakov, developed a plan according to which Golden Mandarin was to unreasonably appeal to the ECHR with a complaint that the state had not complied with the 2009 decision against Kyivenergo.

According to the investigation, several people joined Lohvynskyi’s scheme. The key participants were:

•     lawyer Oleksandra Volodymyrska, who represented Golden Mandarin in court,
•     managers of the Ministry of Justice Natalia Bernatska (Sevostianova) and Borys Babin, who lobbied for the decision to recognize the complaint to the ECHR,
•     accountant Liudmyla Trubchaninova and assistant to Lohvynskyi Mariia Shevkoplyas (Shvets), who helped legalize the funds received. 

A number of people, according to law enforcement officers, did not know about the criminal plan of the defendants, for example, expert Ihor Karaman, who drafted and sent complaints to the ECHR on behalf of the company.

Before filing a complaint, lawyer Volodymyrska helped Golden Mandarin sell the debt to a fictitious company Issachar-Zevulon Import-Export for UAH 54 mln. According to the NABU, this was done so that the funds won in the ECHR could not be recovered to repay Rodovid; the same loan for which the fuel oil had been purchased. 

In September 2013, Golden Mandarin filed a complaint for violation of Article 6 and Article 13 of the ECHR, as well as Article 1 of the First Protocol, regarding the prolonged non-fulfillment of the court’s decision and the deprivation of the right to an effective remedy. The complaint lingered in the European Court for another two years. 

Here, the investigation found another sign of deceiving the ECHR. Before filing a complaint, Golden Mandarin lost a court order that obliged Kyivenergo to return the money for fuel oil. Having appealed to the court, Golden Mandarin received its duplicate. Although the appellate instance later overturned the issuance decision, this did not prevent the defendants from using a semi-legal document to appeal to the ECHR.

In 2014, Lohvynskyi received the mandate of a Member of Parliament, and the scheme included people from the management of the Ministry of Justice. The first person was Bernatska, the Government Commissioner for the ECHR and the First Deputy Minister of Justice, and then Babin, her successor as Commissioner.

According to law enforcement officers, all the time, in collusion with the organizers of the crime, they promoted the idea of recognizing the guilt of the state in the ECHR so that it would voluntarily pay UAH 54 mln to Golden Mandarin. Although at that time the debt of Kyivenergo allegedly decreased to UAH 38 mln, the newly appointed Babin did sign and send a fateful declaration to the ECHR.  

According to law enforcement officers, we have the following situation: the ECHR received incomplete information from Golden Mandarin, and the persons controlled by Lohvynskyi in the offices of the Ministry of Justice ensured the “defeat” of Ukraine in court. On October 20, 2015, the ECHR issued a decision against Ukraine, which indicated the need to comply with the 2009 court order. 

This created another plane of misunderstanding. The investigation claims that Bernatska contributed to the incorrect translation of the ECHR decision: instead of paying UAH 38 mln, in fact, Ukraine had to pay all UAH 54 mln to Golden Mandarin. Thus, the state found itself in an even more disadvantaged position. 

Finally, in 2016, the state paid UAH 54 mln to Golden Mandarin, which was transferred to the accounts of the previously mentioned LLC Issachar-Zebulon Import-Export (a company to which the right to claim the debt was sold). Then Lohvynskyi, with the help of Trubchaninova’s accountant and his assistant Shevkoplyias (Shvets), legalized the funds received through fictitious companies.  

The NABU is confident that instead of patiently waiting for the debt collection from Kyivenergo in Ukrainian courts, Lohvynskyi and his accomplices decided to recover money from the state through the ECHR, partially deceiving the court and lobbying their interests in the Ministry of Justice. 

Serve Lohvynskyi with suspicion notice whatever the cost

The epic with Golden Mandarin did not end because in 2020, the NABU-SAPO served all the defendants with suspicion notices, except for one, MP Heorhii Lohvynskyi, because he had immunity from his wife Hanna Yudkivska, then judge of the ECHR.

Despite the prosecution’s attempts to lift this immunity, all this was in vain: the ECHR refused and uncovered previously unknown and staggering facts about the Golden Mandarin case. 

The European Court pointed out that the NABU could put pressure on the participants in the trial, and its actions against Lohvynskyi contradicted immunity and risked undermining the integrity of the procedure for lifting immunity by the Court. In addition, the ECHR drew attention to the fact that there were no guarantees that the NABU would not use illegally collected evidence against Lohvynskyi to prove his guilt.

All because the Bureau allegedly forced lawyer Volodymyrska to record their conversations with Lohvynskyi. Therefore, Lohvynskyi and other defendants appealed to the ECHR in 2021 regarding Ukraine’s violation of Art. 8 (right to respect for private and family life), Art. 6, part 2 (presumption of innocence), Art. 18 (limitation on use of restrictions on rights) of the European Convention. 

In addition, Lohvynskyi complained to the ECHR that the NABU had launched criminal prosecution to worsen his reputation and create a positive image of the National Bureau. Allegedly, the state launched a media campaign against him, thus attacking his private life. 

Finally, Lohvynskyi was served with a suspicion notice in absentia. This happened a year later, when his wife resigned as a judge of the ECHR. Currently, the ex-MP is on the international wanted list, and the process of imposing an interim measure on him, also in absentia, has lasted for several months. 

So, was there a scam? 

The case of Golden Mandarin is exceptional in the unprecedented statement of law enforcement officers that the ECHR was “misled.” However, not everyone thinks so; in particular, human rights activists opposed it. 

The Kharkiv Human Rights Protection Group defended Lohvynskyi and provided a controversial opinion regarding the fraud he was accused of. The organization believes that the appeal of Golden Mandarin to the European Court was legitimate and that the Government Commissioner had the right to sign the Declaration of Amicable Settlement of the Dispute by law. Therefore, the Kharkiv Human Rights Protection Group and ex-MP Mustafa Dzhemilev, immediately after Lohvinskyi was served with a suspicion notice, called on the NABU to close the criminal proceedings, considering them politically motivated.

Another stumbling block in the case is UAH 54 million. Unlike NABU law enforcement officers, the Ministry of Justice does not believe that the payment of funds to Golden Mandarin was illegal. What is more, the Ministry believes that the state rightfully recognized the violation of the rights of Golden Mandarin and was correct in paying the funds in the amount of UAH 54 mln and not UAH 38 mln. Allegedly, it was in its interest because otherwise Ukraine would have had to additionally allocate UAH 150 mln from the budget for fines and compensation. 

In addition, there is a real chance to recover the money to the Ukrainian national budget. Court hearings are now continuing on the recovery of UAH 54 mln in a regressive lawsuit from the state against Kyivenergo. The state paid for the energy supplier, and after it was privatized by Rinat Akhmetov, Kyivenergo went bankrupt with billions in debts. The achievement of recovering the funds to the budget allegedly withdrawn by Lohvynskyi has already been reported by the Ministry of Justice. 

Interestingly, according to Lohvynskyi’s defense, during the investigation, law enforcement officers tried to initiate a review of the ECHR decision on Golden Mandarin through the Ministry of Justice, but the information about this is still classified.

Already at this stage, we can state that the case is quite controversial. This was confirmed by the investigating judge of the HACC, who imposed an interim measure on the suspect. He stated that there was not enough evidence to confirm that all the defendants were in a criminal collusion, according to the NABU and the SAPO. Therefore, only a court verdict will determine whether the national budget really suffered millions of losses, as well as whether Lohvynskyi and co. really misled the ECHR.

Currently, the evidence in the case is still being collected. The process was stalled for six years because SAPO prosecutors suspended criminal proceedings; some suspects are abroad, thus making it more difficult to obtain information. 

TI Ukraine experts will continue to monitor the consideration of this exceptional case.