MP suspected of UAH 2.1 bln natural gas misappropriation

On Oct. 10, 2023, NABU and SAPO charged a Member of the Ukrainian Parliament with organizing the misappropriation of state property (natural gas) worth over UAH 2.1 billion and laundering unlawfully obtained income.

He is the sixth suspect in this case. Other participants in the scheme were notified of suspicion in January 2018 (misappropriation of gas worth UAH 1.4 billion) and in August 2020 (misappropriation of gas worth UAH 729.8 million).

MP's actions fall under Part 5 Art. 191 of the Criminal Code of Ukraine.

As the lawmaker did not appear at NABU to be notified of suspicion by the authorized SAPO prosecutor, he was charged in absentia.

Organization of natural gas misappropriation

According to the investigation, from 2013 to 2017, the MP organized a scheme to misappropriate natural gas by officials of the controlled Novoyavorivska and Novorozdilska thermal power plants (the Lviv region) worth over UAH 2.1 billion.

The heads of the LLCs (owners of Novoyavorivska and Novorozdilska thermal power plants) concluded a number of agreements with Naftogaz of Ukraine NJSC to purchase natural gas for the production of heat for population. In order to reduce the cost of heat for this category of consumers, Naftogaz supplied gas at prices significantly lower than market prices.

However, as NABU detectives established, Novoyavorivska and Novorozdilska TPPs misappropriated the cheap gas and used it to generate electricity, which they sold at market prices.

Organization of money laundering

As a result, the electricity generation brought the TPPs profit up to 100% , while the Energy and Utilities National Regulatory Commission of Ukraine set the tariff with 3-5% profit based on the documents and justifications submitted by the TPPs. 

Therefore, according to NABU detectives, the TPPs received an illicit excess profit totaling over UAH 3.5 billion.

Between 2013 and 2018, the MP organized the legalization of a part of the mentioned funds worth over UAH 450 million. The money was transferred to the accounts of a controlled LLC and non-resident companies, including those registered in the Republic of Cyprus and the Marshall Islands. Ultimately it reappeared in Ukraine under the guise of foreign investments to finance new businesses in the Lviv region.

Currently, indictments against five participants of the scheme have been sent to court. The integral property complexes Novorozdilska and Novoyavorivska thermal power plants valued at approximately UAH 800 million have been seized as part of the ongoing legal proceedings.

A motion to apply a preventive measure against the MP is to be filed. The investigation is ongoing.

The case of Novoyavorivska and Novorozdolska TPPs, which detectives opened in 2016, is one of the most sophisticated economic cases in the history of NABU and SAPO. Its case file exceeds 350 volumes. 17 requests for international legal assistance have been sent to nine foreign jurisdictions, including the Swiss Confederation, the United States, the Republic of Cyprus, the Republic of Latvia, the Slovak Republic, Canada, the Republic of the Marshall Islands. Getting replies to some of these requests took up to two years, which explains the lengthiness of the investigation. 

Furthermore, thanks to cooperation with foreign colleagues in one of the European countries, it was possible to trace and freeze EUR 2.3 million deposited by an MP's relative.