Open letter of Arricano Real Estate Plc to the Minister of Justice of Ukraine Mr. P.D. Petrenko

Dear Pavlo Dmytrovych,

On behalf of Arricano Real Estate Plc (hereinafter, “Arricano”) we present our compliments and offer our thanks for the effective advance in the activities of the Ministry of Justice of Ukraine as well as for the anticorruption efforts that you have declared and the measures carried out to protect the rights of foreign investors.

It is a pleasure for us to read the news that the Ministry of Justice never overlooks any matters related to corporate conflicts between Ukrainian partners and foreign investors and communicates its prepared materials to the NABU so that they decide thereon in a due manner.

Arricano also represents a European investor in Ukraine. Arricano Real Estate Plc is a public company whose shares are listed on the Alternative Investment Market. The aggregate Arricano’s investments in the Ukrainian economy are over 420 million US dollars out of the planned program of investing 700 million US dollars in the Ukrainian economy. As of 2016, we constructed and commissioned six large-scale shopping and entertainment centers in Kyiv, Kryvy Rih, Zaporizzhia, and Simferopol of 274,200 sq. m in total area. Three more company properties are under construction.

The shopping and entertainment center Sky Mall is among Arricano’s strategic projects. We regret to inform, however, that the company has become the victim of a hostile takeover attempt on the part of the Ukrainian partner and a local businessman. Making use of illegal methods of influence on State registration bodies of the Ministry of Justice, Sky Mall was simply stolen and registered as a property of third parties (Bank Pivdennyi).

Nevertheless, over recent years, Arricano keeps up asserting its right for returning its own property in both international and Ukrainian jurisdictions within applicable legislation. On May 5, 2015, the London Court of International Arbitration made its award within the dispute between the shareholders of the company that used to own Sky Mall. Pursuant to that award, the ownership of all shares in Assofit Holdings Limited, previously owned by Stockman Interhold S.A. (beneficiary: А. Adamovsky), was to be transferred to Arricano by June 5, 2016.

We regret to state that, at the time of this application, the said award of the London Court of International Arbitration remains unenforced.

Considering the anticorruption efforts and protection of the rights of foreign investors that you have declared, Arricano hereby requests that you:

  • initiate a comprehensive inquiry into the actions of the law enforcement bodies and officers, including, but not limited to, the Prosecutor’s Office of Dniprovsky District in Kyiv (Kyiv City Prosecutor’s Office No. 14) and the Kyiv City Prosecutor’s Office in respect of illegal omission on the part of officers of those Prosecutor’s Offices, which omission resulted in the unlawful disposal of Sky Mall in favor of third parties (Bank Pivdennyi);
  • assist to enforcement in Ukraine of the award of the London Court of International Arbitration, dated May 5, 2016;
  • initiate an impartial inquiry into the illegal withdrawal of the proceeds from lease of the Sky Mall premises by the directors of Pryzma Beta LLC through entities, whose actions contain an element of fictitiousness, to avoid taxation;
  • initiate an impartial inquiry into the actions of the officers of Pryzma Beta LLC in connection with illegal prevention of Arricano from generating any proceeds from maintenance of the Shopping Center and economic operations of Pryzma Beta LLC; and
  • initiate an impartial inquiry into the activities of the State Registrars of the Ministry of Justice who were involved in the withdrawal of Sky Mall in favor of the bank Pivdennyi.

We trust in supremacy of law in Ukraine and full execution of the award of the London Court of International Arbitration to become an important and vivid example of improved investment climate in Ukraine and protection of the rights of international investors in Ukraine.