The complaint also mentions alleged co-conspirators including prominent Wyoming businessman, Nicholas Piazza.
Gramercy Funds Management LLC, the US emerging markets investment firm and one of the largest investors in ULF, filed the complaint in the US District Court for Wyoming on December 7 under the Racketeer Influenced and Corrupt Organizations (RICO) Act.
The complaint alleges a campaign of misinformation and deception that reportedly culminated in the siphoning of over US$1bn of assets from ULF.
ULF is one of Ukraine’s top agricultural corporations as measured by land holdings and also one of the country’s leading five agricultural exporters. It has been growing and selling grain - corn, wheat, barley, and rapeseed – and producing feed, eggs, and livestock since its establishment in 2007.
Exporting its products to 40 country markets, ULF’s clients include Cargill, Glencore, Marubeni, Bunge and Noble Resources, with whom it trades through its Switzerland-based trading arm, ULF Trade AG.
Gramercy alleges that Bakhmatyuk and Piazza perpetrated a “complex, multi-faceted scheme” designed for Bakhmatyuk to maintain control over ULF and its egg production subsidiary, Avangardco IPL (AVG), and also to interfere with Gramercy’s ability to recover its investment.
Piazza purportedly formed Wyoming shell companies to assist Bakhmatyuk in shielding foreign assets by exploiting Wyoming law.
In addition to the allegations made under RICO, the US complaint includes claims for fraud, tortious interference, aiding and abetting and civil conspiracy, and seeks, inter alia, treble damages under RICO.
Gramercy said it has also commenced a separate proceeding in Cyprus alleging additional illegal transfers of material assets from ULF Group to a Cypriot entity owned and controlled by Bakhmatyuk.
Commenting, Gramercy’s founder and chief investment officer, Robert Koenigsberger, said, on behalf of its investors, Gramercy devoted substantial time and resources to attempting to bring Oleg Bakhmatyuk to the table in good faith to negotiate a comprehensive restructuring of the company’s capital structure in accordance with international standards.
“If a fair deal cannot be reached, Gramercy is left with no choice but to resort to litigation given that it has uncovered transfers of more than US$1bn of company assets that were not disclosed, and which have caused Gramercy's investors substantial losses," he alleged.
ULF strenuously denies allegations
In response to the US litigation, ULF issued a statement, stressing that it strongly denies the allegations. “We are ready to defend our case in court.”
The Ukrainian company said it was “surprised and disappointed” by the move on the part of Gramercy, with which it had been conducting a constructive dialogue over the past two and a half years.
“They are aware that, amid such tough circumstances, this group is doing its best to save both assets and jobs. At the same time, it is widely known that the persecution of this group by the Ukrainian law enforcement authorities has caused some of the operating companies to shut down and put employees out of a job.
“All our partners know, however, that no assets have been stripped out of this group, all those assets are operating here, in Ukraine. And creditor rights will be honored in an equitable manner under the respective contracts.
“We are ready to defend our rights and the rights of all our creditors through the courts in all relevant jurisdictions. That said, we remain in favor of constructive dialogue.”
Gramercy Funds Management is a dedicated emerging markets investment manager based in Greenwich, Connecticut with offices in London and Buenos Aires.
It has assets of around US$5bn under management.