Sanctions are for nothing: Kyiv City Council and State Service of Geology and Mineral Resources help sanctioned businessman Vadym Yermolayev to continue his business

The summer of 2024 was a surprisingly happy one for Ukrainian businessman Vadym Yermolayev, who has been under sanctions by the National Security and Defence Council since December last year. He was included in the sanctions list because of his activities in the occupied Crimea and his payment of taxes to the budget of the occupying country.

According to the decision of the National Security and Defence Council, Ermolaev’s assets should be blocked, and any trading operations of his companies should be completely stopped. However, at least five companies associated with Yermolayev intensified their activities this summer, and government agencies helped them in this.

Communist flavor of Kyiv construction

In the spring and summer of 2024, when Vadym Yermolayev had been under sanctions by the National Security and Defence Council of Ukraine for six months, members of the Kyiv City Council passed decisions on land lease agreements for two companies where the businessman was a direct beneficiary. Moreover, the decisions are tinged with scandal.

On 4 July 2024, the Kyiv City Council published a decision on the renewal of the lease agreement for a land plot at 25 Volodymyr-Lybidska Street for E&M Office Centre LLC. The explanatory note states that the lease is renewed for a period of 5 years.

In accordance with the urban planning conditions and restrictions of 26 March 2021, the land plot is being reconstructed into a non-residential two-storey building for a multifunctional public complex. The non-residential building at 25 Volodymyro-Lybidska Street with a total area of 384.20 sq m is owned by the LLC under a sale and purchase agreement dated May 2006.

According to the rendering, the site is to be used for construction of a 14-storey Class A office building with 85 parking spaces.

The same explanatory note to the decision states that the ultimate beneficial owners of E&M Office Centre LLC are Vadym Yermolayev, who was sanctioned, and Oksana Kaletnyk, who is now a resident of the UK.

Oksana Kaletnyk is a former MP from the banned Communist Party of Ukraine. Her cousin, Ihor Kaletnyk, is the odious former head of the Customs under fugitive President Yanukovych. Hryhoriy Kaletnyk, a member of several convocations of the Party of Regions, is Oksana Kaletnyk’s cousin.

She is the founder of the FIM-group, which is also involved in construction. About 10 years ago, the Alef group, which unites Yermolayev’s companies, bought out half of Kaletnyk’s company, and they became business partners.

Thus, the Kyiv City Council, realising that E&M Office Centre LLC is partially owned by a sanctioned person, did not bat an eye when it extended the lease agreement for the land in the centre of Kyiv.

Interestingly, while one rendering at 25 Volodymyr-Lybidska Street shows an office centre, according to information on real estate websites, a 30-storey residential complex with a multifunctional roof and an outdoor swimming pool may appear at this location.

Yermolayev and Kaletnyk have another company with a similar name - LLC "E&M Office Centre-3". It is known for having long been leasing a land plot in Kyiv at 17 Linyina Street for the construction of an office building. In 2020, a major scandal erupted when Yermolayev’s company was obtaining urban planning conditions for the site. Law enforcement officers detained an "intermediary" who promised to obtain construction documents for E&M Office Centre 3 LLC in return for a bribe through the mediation of Mykola Povoroznyk, the first deputy head of the Kyiv City State Administration.

Povoroznyk was then suspended from his post, but was later reinstated. The "intermediary" who passed on the bribe pleaded guilty and was fined in court. When the scandal died down a bit, Yermolayev’s firm was granted the planning conditions and the right to build an office centre at the address.

On 7 July 2024, the Kyiv City Council was supposed to consider a decision to renew the lease for E&E Office Centre 3 LLC. However, the decision has now been postponed, but it is likely that, as in the case of Yermolayev’s previous company, it will be granted a lease extension.

The explanatory note to this decision contains even more interesting information than in the previous case. According to the inspection report dated 15 March 2024, the unauthorised occupation of land plots with a total approximate area of 760 square metres by E&M Office Centre 3 LLC is found to be unauthorised. The act also states that, according to the State Land Cadastre and the City Land Cadastre, part of the fence is located outside the land allocated to A&E Office Centre 3 LLC.

According to the lease, such violations may result in a refusal to renew the lease, but judging by the loyalty of the Kyiv City Council, it is unlikely that they will.

Close to this plot is the FIM Centre business centre, the land under which is leased by E&M Office Realty LLC. Vadym Yermolayev used to be a co-founder of this company. Now the beneficiary is Oksana Kaletnyk.

The plot at 17 Linyina Street is located in the Protasov Yar district. The urban planning conditions for designing on it have certain restrictions, as the land is located within the historic centre of the city. This means that the documentation must be approved by the cultural heritage authorities.

Yermolayev also has another interesting property in Kyiv - a modernist puck market at 1 Kudriashova Street, near the Railway Station. In 2021, the land plot under the market was leased by Zaliznychnyi Rynok LLC, whose ultimate beneficiary is Vadym Yermolayev, according to the decision of the Kyiv City Council. The lease term is 10 years.

At the time, activists feared that the new owner would demolish the building, which was built in 1973 and designed by modernist Alla Anishchenko. However, representatives of Yermolayev’s company promised not to do so, and, in fact, the building has remained in disrepair until now.

In early 2024, when Yermolayev was already under NSDC sanctions, the market was put up for sale. The advert, in addition to actual photos of the facility, included a picture of what Yermolaiev’s company apparently wanted to build instead of the promise to preserve the market building. The visualisation, as aptly noted by the Solomianskyi district communities, looks more like a shopping centre or even a residential complex.

Before Russia’s full-scale invasion of Ukraine, the location of the market-puck could be considered quite good for building offices. It was close to the railway station and metro. But the war probably ruined Yermolaiev’s plans for a successful investment, and now this site can be considered potentially dangerous, as it is close to critical infrastructure. This may be the reason for the sale of the property. Unless, of course, it is just a formal transfer of the building from one company to another due to sanctions.

Is the State Service of Geology and Subsoil in the service of a sanctioned businessman?

This summer, Yermolayev received a big gift from the National Security and Defence Council. On 24 June 2024, the decision to impose sanctions on him was amended. Two days later, the State Service of Geology and Subsoil renewed the special permits for subsoil use, which had been suspended due to sanctions against the ultimate beneficial owners. Among the companies that have had their permits renewed are Korostyshiv Quarry PJSC and Potoky LLC. Both companies are part of Vadym Yermolayev’s Alef Group.

The National Security and Defence Council does not explain the reason for such a relaxation for a person who did business in the occupied Crimea and thus supported the aggressor.

On 29 July 2024, the State Service of Geology and Subsoil made another curtsy to Yermolayev. Based on the decision of the Chernihiv District Court, the service postponed the cancellation of the special permit for subsoil development for Trends System LLC. Yermolayev withdrew from the company’s founders in July 2024 in favour of Hanna Yermolayeva. Former President of Ukraine Viktor Yushchenko is also among the co-founders of this company.

The dispute is over the right to develop the Fedorivska oil and gas condensate field. Trends System LLC claims that it transferred the special permit in favour of STC Real Estate LLC in December 2023, before sanctions were imposed on Vadym Yermolayev, so it should not be cancelled on their basis.

The nuance is that STC Real Estate LLC is part of Vadym Yermolayev’s Alef Group, and one of the co-founders is his long-time business partner Stanislav Vilenskyi. Therefore, even if the right to a special permit was transferred to another company, it did not leave the business group.

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It is hard to say what the loyalty of the authorities to the Cypriot citizen Vadym Yermolayev is about. But the trend that sanctions against him are gradually being reduced, and his business has continued to operate, is very clear. If a person who openly traded with the occupiers after the occupation of Crimea, which financed, among other things, the Russian army, can so easily get away with sanctions, then this should be a bright beacon for the authorities that something has gone wrong. Especially in the third year of Russia’s full-scale invasion of Ukraine.

Author: Olena Dobrodiy