Stepan Ivakhiv and Serhiy Lahur, owners of Continuum Ggroup of Companies (WOG gas stations) are making their own company go bankrupt to not pay the debts off.
Vitalyi Antonov, owner of OJSC Concern Galnaftogaz (OKKO gas stations network), said in his recent interview that the network WOG didn’t cost a penny. He also added that the buyer of the company would be just wasted ferreting around a worthless thing.
How could such a situation happen to a company that took 10% of total fuel market in 2007 and was the leader of oil products import in 2015 with a turnover of 35 billion UAH?
The group of companies ‘Continuum’ started to decline after Ihor Yeremeyev’s death. Ihor was among the group’s owners and its leader. WOG was one of the most rapidly developing operators on the Ukrainian market under the leadership of Ihor Yeremeyev. It was also included in the top-5 leading operators on the oil products retail market.
The inheritance of Mr. Yeremeyev was estimated at 400mln USD: At the time of Ihor’s death Continuum Group assets included 500 gas stations, WOG Café, tens of milk enterprises, more than 20 fuel retail trade enterprises and other assets (The only company WOG yields to in the number of gas stations is Privat Group that informally integrates 1500 gas stations).
After Ihor Yeremeyev’s death his partners Stepan Ivakhiv, Serhiy Lahur and Petro Dyminskyi started to divide the business and tried to get the money out of it. Petro Dyminskyi was the first to resign from being a shareholder. After that Mr. Lahur and Mr. Ivakhyv did their best to kick the heirs of the deceased out of the business. These couple also tried to come to an agreement with Dmytro Firtash and sell the company to him, but the deal was not meant to be stroke as well.
According to the article published by the Ekonomichna Pravda (The Economic Truth), 6.55% of OWG Oil West Limited (WOG parent company) shares belong to Dmytro Firtash to date and this company was listed among Continuum Group founding members. Based on the data reported by the Economichna Pravda, the amount of funds invested by Mr. Firtash in WOG Company ranged from 200mln USD to 250mln USD.
300mln USD of debts to commercial banks should be added up to the above mentioned amount. 60mln USD out of that 300mln USD was indebted by the group to Forum bank managed by the Deposit Guarantee Fund.
However, the existing value of WOG ranges from 300mln USD to 400mln USD based on the estimations of analysts.
Besides creditor-generated troubles, the company faced fiscal pressure: in 2016 WOG was accused of tax evasion by the State Fiscal Service of Ukraine and obliged to pay the excise tax in the amount of 416.7mln UAH to the budget.
Analyzing court records registers in search of information about the confrontation between the State Fiscal Service and Continuum Group, we found out that the Specialized Tax Inspectorate on Large Taxpayers of Lviv State Fiscal Service initiated a check-out at WOG Retail Company in July 2016 with respect to the period from July 2011 to December 2015. It was disclosed in the course of the inspection that in 2015 the excise taxes had been underrated by an amount of 530mln UAH. The State Fiscal Service emphasized that the excise free sales had been carried out through the gas stations network that is by retail.
However, WOG representatives filed a suit to a court asking to preclude the decisions. And the charges imposed by the State Fiscal Service were annulled by Volyn Regional Administrative Court and by Lviv Administrative Court of Appeal a bit later. It most likely happened owing to the private connections of certain individuals in the western region of Ukraine (WOG owner Mr. Ivakhiv comes from Volyn).
To get to know how exactly the charges were cancelled, one should study the lawsuit filed by WOG to Volyn Regional Administrative Court (Case No. 803/1118/16). It’s stated there that on August 2, 2016 WOG Retail filed a payment order through court registries as to paying the court fee in the amount of 1mln UAH.
At the same time WOG Retail filed an application for deferral of the rest of the court fee payment in the amount of 5.2mln UAH. The company grounded the application referring to a difficult financial situation WOG Retail was in the middle of. The court ruled in favor of the company and deferred the payment of 5.2mln UAH.
Oleksandr Lozovskyi was the judge at Volyn Regional Administrative Court who passed that judgement. He was later assigned as head of the court and in February 2018 he and his brother who worked as a lawyer were caught taking a bribe in the amount of 3.6k USD.
The case had already reached the Supreme Court of Ukraine. It precluded the decisions of Volyn Regional Administrative Court dd. August 26, 2016 and Lviv Administrative Court of Appeal dd. January 25, 2017 by its ruling as of November 28, 2018 and new decisions were made. The lawsuit filed by WOG Retail was denied.
At the same time the instalments period given by the Deposit Guarantee Fund was expiring (it concerned 1.1 billion loans at Forum bank). Apparently, the owners of WOG decided to make the company go bankrupt under such circumstances.
To have this task accomplished they involved Naftotrade Resource Company that referred to Continuum Group as well and had started its active operation since 2016 ‘dealing’ with all of major deliveries.
LLC Naftotrade Resource filed a suit against the principal founder of Continuum Group that is LLC West Oil Group asking Volyn Regional Economic Court exact 473.9mln UAH from West Oil Group. 462.6mln UAH out of the sum was the debts incurred upon the interest-free financial aid contract concluded on a repayment basis (No.№ 06/03/17П dd. March 6, 2017) + 8.8mln UAH was losses as a result of inflation and 2.2mln UAH made the annual interest.
The lawsuit was substantiated with the repayment delay of West Oil Group upon the financial aid contract.
On November 8, 2018 the court accepted the claim for a judicial review to be held and brought the case to trial.
LLC Naftotrade Resource functions in WOG Group as the company mediating in purchase of petrol products by individuals using fuel issue vouchers.
The voucher scheme is one of the most popular on the shadow market for cashing out. In Ukraine the product is often sold via one channel and documented via another one. Trade in papers allows making billions on fake VAT. The fuel sold at these stations does not appear in any accounting reports.
LLC Naftotrade Resource has already been caught using similar schemes. It was involved in fictitious operations on selling diesel fuel and (unleaded) gasoline, regrading and creating a fake tax credit along the supply chain of 2015-2016.
The companies of Continuum Group were buying goods identifying them as cheese, chicken meat, lady shoes, baby carriages, chandeliers, umbrellas, tires, lamps, toys, sugar etc. and selling them with the identification of diesel fuel making its total VAT value at 52.4mln UAH.
It means that the company Naftotrade Resource was included in the scheme to just cash the funds of WOG out from the very beginning.
And now the company is used to just declare WOG bankrupt.