Simferopol real estate developer, Kiev IT leader. Ukraininan businessman Vasily Khmelnitsky and his Crimean assets

How a Ukrainian patriotic businessman and former Verkhovna Rada deputy and his European companies have been working in Crimea for three years, despite the EU sanctions.

“There is no better place in the world than Ukraine and no better time than now to start your own business and earn money”, – writes Ukrainian businessman Vasily Khmelnitsky on his Facebook page. Back in 2017, Ukrainian Forbes called him “one of the most non-public businessmen in the country”, and now posts by Khmelnitsky are published on YouTube and Facebook literally every day. In the first three months of 2019, he gave two large interviews.

Vasily Khmelnitsky is the co-owner of the Kiev airport Zhulyany and a deputy of five convocations of the Verkhovna Rada. He’s engaged in construction and IT. Prior to the annexation of Crimea, he owned the “Zhigulina Roshcha” residential complex and “Meganom” shopping and entertainment complex in Simferopol on the peninsula. Current Time and “Municipal Scanner” found out that Khmelnitsky retained control of these assets after the annexation, despite the European sanctions.

Edited political biography

“People’s deputy of five convocations. First elected to parliament in 1998 from the Green Party. During the cadence, he was a member of various factions and deputy groups. In 2014, he retired from political activities as part of the «Sovereign European Ukraine» deputy group”, – says K.Found, the website of Vasily Khmelnitsky’s foundation.

However, his official biography omits several important details. For example, the fact that Khmelnitsky was first a member of the “Yulia Tymoshenko Bloc”, and then a member of the pro-Russian “Party of Regions” during two parliamentary convocations. The deputy was among those who supported the “laws of January 16” during the Euromaidan. The amendments included prison sentences for blocking administrative buildings, introducing the status of foreign agents, arrests for participating in a rally in masks and for setting up tents. Opponents of their adoption called the laws “dictatorial”.

In 2014, Khmelnitsky announced his retirement from politics.

Three years later, he created the investment group UFuture. It includes nine Ukrainian companies, including Kiev Airport (Zhulyany), UDP construction company, UDP Renewables energy company, Biopharma pharmaceutical company and Unit.City innovative park in Kiev. The latter is a separate microdistrict on the territory of a former motorcycle factory. Offices of financial and IT companies, housing for employees and a business academy are gathered in one place. The press calls the project “Ukrainian Silicon Valley.”

Not a single company working in Crimea is listed on the website of the UFuture group. Before the annexation, Khmelnitsky’s companies were engaged in construction and trade on the peninsula.

Costruction. “Zhigulina Roshcha”

The residential complex “Zhigulina Rosshcha” near Simferopol is advertised by the Crimean pro-Russian media as a city within a city. They say that there will be a modern kindergarten and school. “Rossiyskaya Gazeta” reported that the money for the construction came not only from the developer company, but also from the Crimean budget. The government paid for the communications and the construction of administrative and social buildings. In October 2018, the administration of Simferopol District, appointed by Russia, bought an apartment “for citizens from the rehabilitated peoples of the Crimea” for 2.4 million rubles, about $37 thousand at the exchange rate of that time, from the developer company, the “Capital Commercial Group” (CCG).

On the website of the residential complex there are red stars, an offer to buy apartments “on a military mortgage” (9.5% per annum for the Russian military) and a quote from the Soviet film “Officers”: “There is such a profession – to defend the homeland”.

The head of the Center for Investment and Regional Development of the annexed Crimea, Irina Berezhnaya, in February 2016 called “Zhigulina Roshcha” the largest investment project with investments totalling 17 billion rubles, ($220 million). The first phase of the construction of the residential complex opened in June 2018, the Russian head of the Simferopol region Sergey Donets attended the ceremony.

The developer of “Zhigulina Roshcha” is SKG, a member of the Association of Developers of the Republic of Crimea. Among its partners, the association lists the Russian ombudsman for the protection of entrepreneurs of Crimea.

The “Metropolitan Commercial Group” was created in 2011. In November 2014, it was registered in the Russian register of legal entities. Since then, the owners of the company have changed several times.

In 2016-2017, Cypriot Synestra Trading Limited was the sole founder of SKG. Until May 2016, a share in Synestra – from 50% to 66.7% – was owned by Ukrainian Property Development (UPD) Holdings Limited. Vasily Khmelnitsky called UPD his company in response to an inquiry from Current Time.

Since May 2016, Cypriot Synestra has changed its ownership structure – today 66.7% of it is owned by Cypriot Laortem Holdings Limited, 16.6% – by a company the British Virgin Islands and 16.7% – by Aronte Group INC, also from the British Virgin Islands.

In December 2014, the EU Council banned European companies from investing in real estate and developing infrastructure in Crimea. This rule across extends to the British Virgin Islands through the UK.

By 2019, the share of Synestra in the Metropolitan Commercial Group has decreased to 14%.

Since May 2016, Laortem Holdings Limited (the main owner of Synestra) has been owned by Russian Sergei Martynov. In 2013, the company received a loan of $3.726 million from its previous owner, Nyland Union Limited (British Virgin Islands).

Now the chain of owners of the “Capital Commercial Group” leads to two Russians. The aforementioned Sergey Martynov controls 20% of SKG through the companies “Medpromstroy” and “Invest Project”. Another 65% of the developer is owned by Roman Mitrofanov through West Group Consulting.

The owner of a 0.1% symbolic stake in the “Capital Commercial Group” is “Palace and Park Ensemble”. Until November 2018, the owner of 99% of this company was Khmelnitsky’s UPD Holdings Limited. Now “Palace and Park Ensemble” is owned by the aforementioned Sergey Martynov and Roman Mitrofanov.

Vasily Khmelnitsky told Current Time that “Zhigulina Roshcha” no longer belongs to him.

“I don’t know who owns the complex now. Last year, we sold our stake in the company that owned the complex”, – he wrote.

Thus, a possible violation of sanctions – in the form of investing in Crimean real estate – lasted at least three years (until 2018).

Trade. “Meganom” complex

At tourist forums, cape Meganom is called one of the most beautiful, mysterious and warm places in Crimea. The name of the cape was borrowed by the owners of a large shopping and entertainment complex in Simferopol. Prior to the annexation, two phases of the complex were built by companies associated with Vasily Khmelnitsky: UTG and the “Crimean Development Company” (CDC), which registered the “Meganom” trademark.

In August 2014, Vasily Khmelnitsky announced that he was putting up the “Meganom” shopping mall for sale.

The developer of this shopping complex, CDC, has existed since 2009. In 2014, it “split”: the Russian register of legal entities says that the company’s office is in Simferopol, and the Ukrainian register says that it is in Kiev. Until this April, the same Cypriot Mosonco Holdings Limited was listed as the owner in both registers. Until December 2018, half of this company belonged to Vasily Khmelnitsky’s UPD (Ukrainian Property Development) Holdings Limited. In the Ukrainian registry, Khmelnitsky is now listed as the ultimate beneficiary of CDC.

However, the Russian registry shows a different picture. According to the information from the Unified State Register of Legal Entities, in October 2019, Cypriot Mosonco Holdings Limited owned 80% of the share capital, the remaining 20% ​​was divided by the Moscow company “Rustech” and Sevastopol businessman Alexander Reyer.

On December 1, 2015, KDK bought a 50% stake in OOO “Oldi-Simferopol”. This company operates an Oldi building materials store in the “Meganom” shopping mall. In response to an inquiry from Current Time, Khmelnitsky wrote that he did not know about the purchase. “I do not know anything about this acquisition. Perhaps you should clarify such an operation, if it took place, with the management of these companies”, – he explained.

Director of “Crimean Development Company” (its office is in Simferopol) Inna Pushkina, through her secretary, conveyed her refusal to comment. “At the moment, Inna Yuryevna is not ready to meet with reporters, give any explanations and generally talk about something”, – said the secretary, who refused to introduce herself. The secretary refused to say when, according to the director, the moment for comment would be more appropriate, asking not to “quibble over words”.

The telephone number of the office in Kiev listed in the Ukrainian registration documents of “Crimean Development Company” turned out to be invalid.

According to Vasily Khmelnitsky, in December 2018, his group sold its stake in the “Meganom” shopping mall. The shopping mall operates in Simferopol today. There are stores of international brands there, including Samsung, Tom Tailor, Xiaomi, ruStore (Apple store in Crimea), Yves Rocher, United Colors of Benetton, Calliope, Geox and others.

Capital, government contracts and a common offshore company

European sanctions against Crimea prohibit European companies from acquiring new companies or expanding their shares in the existing ones on the annexed peninsula. In January 2016, “Crimean Development Company”, which at that time was owned by Khmelnitsky’s UPD (Ukrainian Property Development) Holdings Limited, increased its authorized capital by almost 100 times – from 2.3 million rubles to 200 million rubles.

Since 2017, “Crimean Development Company” (with an office in Simferopol) has signed three government contracts with Russian structures of the peninsula for 14 million rubles. The largest of them is the 13.7 million ruble one ($236 thousand at the exchange rate of 2017) signed with the Russian “National Commercial Bank”, which since 2014 has been under sanctions by both the EU and the USA. “Crimean Development Company” leased non-residential premises to the bank.

“Crimean Development Company” and “Capital Commercial Group”, already mentioned in connection with the construction of the “Zhigulina Roshcha”, are linked through the Cypriot Laortem Holdings Limited. For the “Capital Commercial Group”, this company is one of the owners. For “Crimean Development Company” – a permanent lender.

In March 2014, Laortem Holdings Limited was the guarantor of the loan that “Crimean Development Company” took from the Ukrainian “Delta Bank”.

In March 2018, the Russian-controlled Crimean Arbitration Court considered the lawsuit of Laortem Holdings Limited against CDC. The plaintiff demanded to recover the debt of $1.2 million on a loan issued in 2011. The respondent company immediately recognized the claim, the court ordered it to pay the money.

Current Time found out that the Ukrainian company UPD (Ukrainian Property Development) Holdings Limited was in the ownership structure of “Crimean Development Company” until December 2018. UPD owned Cypriot Mosonco Holdings Limited for 10 years, and Mosonco, in turn, was the founder of CDC.

Now the owners of Mosonco are five companies, three of which are also included in the chain of owners of “Capital Commercial Group”. These are Cypriot Laortem Holdings Limited and two companies from the British Virgin Islands: Fiolent Limited and Aronte Group INC. Two other companies are Adlon Invest Corporation from BVI and Cypriot AB Pillar Holding (СY) Limited.

Current Time sent an inquiry to the Cyprus Ministry of Justice and the special sanctions compliance committee of the Ministry of Finance about a possible violation of the sanctions by all of the aforementioned companies. The responsible authorities said that they fully comply with the EU sanctions requirements, and in the case of specific companies, advised to contact them directly.

Sergey Martynov, the owner of the Cypriot Laortem Holdings Limited, which partially owns both “Capital Commercial Group” and “Crimean Development Company”, did not respond to the inquiry from Current Time.