Case of Rotterdam +. HACC’s decision, which may cost Ukrainians UAH 40 bln

by Vadym Valko, originally published at UP

On October 13, Kateryna Shyroka, the investigative judge of the High Anti-Corruption Court (HACC), refused to reopen the case of the Rotterdam + formula. At the same time, the latest forensics in the case established the losses of almost UAH 40 bln.

On May 20, the case was closed by a new head of the group of prosecutors, Denys Demkiv, who was appointed to replace his predecessor, who had previously illegally closed the case three times.

The NABU immediately declared the decision of Demkiv ungrounded, because he adopted it outside of working hours, without consulting with detectives, properly studying the case materials and ignoring the opinion of his colleague from the SAPO, who was ready to go to court with the case.

So far, each previous time the case has been saved: once through the HACC, twice more the decision to close was canceled by the acting head of the SAPO Maksym Hryshchuk.

This time, hope remains with the HACC’s appeal, as there are many questions related to Judge Shyroka’s ruling.

Why did prosecutor Demkiv close the case?

The prosecutor may close the proceedings only if there are clearly defined grounds.

The investigative judge has the power to verify whether there were such grounds in a particular case and, if so, whether the prosecutor’s decision is justified and motivated.

We at the AntAC believe that there have been no grounds to close the case and have described in detail why.

But first of all there is an important fact about the prosecutor of the SAPO Demkiv, who closed the case of Rotterdam +. This will help to understand who he is and whether his words can be trusted at all.

In May 2021, prior closing the case, Demkiv allegedly studied 108 volumes of written materials and 350 GB of video interrogations in just a few days, which contained a total of about 150 hours of continuous recording. For some reason, he made the decision in his spare time.

These were Demkiv’s explanations: “I was appointed head of the group of prosecutors on May 5, 2021, and I made the decision on May 20, that is, I had 15 days (to study the materials – ed.). As for making a decision during non-working hours, the decision was made by me during working hours, but after this publication, which appeared on the Internet, everyone started to download it, correspondence began, prosecutors-detectives, true or false, I was distracted. Accordingly, it was delayed in the process of signing and entering information into the ERDR. “

In fact, the prosecutor lied, as he was on leave from 5 to 11 May and had access to all the materials only on 12 May. That is, we could not talk about 15 days.

Well, as for the prosecutor’s answer about “distracted by publications and correspondence”, it just very clearly demonstrates the professional level of this prosecutor. And for such “reading of messengers during working hours”, in 2020 he received a salary of 1.5 million UAH. Well, he declared another 127 thousand dollars in cash as a bonus.

Let’s return to the prosecutor’s decision to close the case. It provides three grounds:

  • The investigation allegedly failed to prove that the members of the National Commission for State Regulation of Energy and Utilities (NKREKP) violated the procedure during the adoption of Resolution No. 289, which approved the Rotterdam + formula;
  • Forensics allegedly did not prove the consequences of the crime (in the form of significant losses or serious consequences);
  • The term of the pre-trial investigation allegedly expired.

We will now analyze them in turn, find out what investigative judge Shyroka said about this, and assess whether her conclusions meet the circumstances of the case and the requirements of the law.

Ground No.1: “Failure to prove violation of the procedure for the adoption of the Resolution approving the Rotterdam + formula by the NKREKP”.

In 2016, the National Commission approved a new method for determining the projected wholesale market price of electricity, which is now determined by the formula “Rotterdam +” (ie the average market price of imported coal in the ports of Amsterdam-Rotterdam-Antwerp for the previous year, to which was added “plus” in value ship freight, transhipment and delivery of coal to Ukraine).

The prosecutor claimed that the introduction of such a scheme was “at the discretion of the commission members.”

That is, the members of the commission had the right to act at their own discretion. And since the violation of the procedure for the adoption of a resolution established by law has not been proved, this is one of the grounds for closing the case.

Investigative judge Shyroka said: “the fact that decision No. 289 was lawful does not in any way affect the conduct of criminal proceedings and the proof of the corpus delicti, because even following the lawful procedure does not preclude the decision itself from being an‘ evil ’ assistance or benefits to certain legal or natural persons”.

AntAC: In general, the judge’s conclusion is very correct with one inaccuracy. There is no “fact of legality of the decision”, because it can be established only after considering the indictment on the merits with the examination of all evidence and questioning of witnesses in open and adversarial proceedings, which the prosecutor and judge want to deprive us of.

We hope that the appeal will correct this.

The Commission does have certain discretionary powers, in particular the power to determine the methods and procedures for setting tariffs (prices) for electricity.

But “discretionary” does not mean “absolute”, as the Commission was obliged to comply with the provisions of the Law on Prices and Pricing, which explicitly states: “the state regulated price may include only the costs actually incurred by the electricity producer during its generation “.

For some reason, the commission included non-existent costs for the delivery of coal from Rotterdam, which in fact did not exist. That is, the very decision of the NKREKP was just an “evil”, the purpose of which was to help one particular oligarch.

Even the then head of the NKREKP, and now a suspect in the case, Dmytro Vovk, spoke about the absurdity and illegality of the formula, pointing out that it was a banal repayment of the oligarch’s loans by ordinary people: “Everyone should understand that in this case we are financing DTEK and loan portfolio.”

According to him, every UAH 100 per ton of coal is UAH 2 billion for DTEK. He noted that this will be reflected in prices for both businesses and citizens. “We believe that this is an unjustified increase (prices – ed.), which is de facto benefiting only one company – DTEK.”

Vovk not only criticized Akhmetov’s company, but also spoke of direct blackmail: “In order to service loans, they are trying to blackmail us so that we raise the tariff for thermal power plants (generating companies of thermal power plants – ed.).

But later Dmytro Vovk radically changed his position and the National Commission approved the formula to the delight of Rinat Leonidovich.

That is, the prosecutor unreasonably identified the first of three grounds for closing the case on the illegality of the Rotterdam + formula.

Ground No.2: “Forensics did not prove the consequences of the crime (in the form of significant losses or serious consequences).”

Investigative judge Shyroka agreed with the prosecutor and stated that “the case file does not indicate with a sufficient level of evidence that the damage was actually caused.”

AntAC considers this is the wrong conclusion of the judge. The judge did not see any problem in the fact that the cost of delivery of coal from the ports of Amsterdam-Rotterdam-Antwerp for some reason was included in the cost not only for imported coal, but for all coal, including the Ukrainian one.

Coal was delivered from one Ukrainian city to another, but it cost as if the delivery came from abroad.

It should be noted that there are many forensics reports in the case. The judge says that all forensics reports in the case file can be divided into three types: forensics that establish the fact of damages, those that do not give a definite answer as to the presence of damages, and those that allegedly establish the fact of no damages.

The text of the decision states that there are at least six forensics reports that can confirm the damage. Among them is the key one, which establishes almost UAH 40 billion in losses from the Rotterdam + formula.

In contrast to these forensics, which can confirm the damages, judge Shyroka considered only one report concerning the commission’s decision, which neither refutes nor confirms the damages from the Rotterdam + formula.

Judge Shyroka decided only to “take into account” the forensics report, which shows UAH 40 billion in damages, but for some reason preferred the conclusion, which states about the damages: “these issues do not fall within the competence of forensic economists and forensic economic expertise or answering the question is not possible “.

In her decision, the judge refers to the Resolution of the Plenum of the Supreme Court, according to which the court must assess each forensic report and should not give preference to one or another conclusion of the forensics only because it was conducted “by commission, repeatedly, by an expert institution or who has more experience of expert work “. That is, Judge Shyroka contradicts herself.

Here is an interesting fact, one of the experts, who conducted a commission forensics in 2020, gave a different opinion in this case in 2019, and then he gave an affirmative answer about the existence of losses from the formula. But a year later he radically changed his mind and could no longer confirm or refute his own conclusions.

It is very likely that the expert was “worked on” after the first report, as they had done before with the head of the NKRKEP.

In addition, the grave consequences in this case are inextricably linked to the prosecutor’s obligation to establish other circumstances of the case and violations of the law with the help of other evidence. HACC’s investigative judge Oksana Oliynyk also came to this conclusion in October 2020, when she overturned the decision of former prosecutor Vitaliy Ponomarenko to close the case.

Judge Shyroka also disagreed with the fact that the formula harmed the entire population, although in fact Rotterdam + led to an increase in the cost of electricity for industry, which led to higher prices, ie in the end ordinary citizens still paid for the “banquet”.

During the examination of the complaints, the applicants pointed out that the prosecutor’s decision was unfounded also because he often did not state his own reasons for disagreeing with the experts’ conclusions. This is especially true of the latest forensic report, which established about UAH 40 billion in losses.

The applicants drew judge Shyroka’s attention to the fact that the prosecutor had not explained in the closure order why he had not taken this forensic report into account, although he had been obliged to do so.

Interestingly, there is no reaction from the judge’s decision to this argument of the complainants, although it is one of the key ones in the case. The Opinion of the Advisory Council of European Judges on the quality of judgments draws attention, inter alia, to the need to respond to the arguments of the parties and the relevant arguments capable of influencing the resolution of the dispute.

In fact, the prosecutor made erroneous conclusions about the absence of violations of the law by the NKREKP and took into account only those forensics reports that were convenient for him.

This indicates an improper and incomplete investigation by the prosecutor of all the circumstances of the case.

That is, the prosecutor also unreasonably identified the second ground for closing the case. However, judge Shyroka for some reason did not notice or did not want to notice that.

Ground No3: “The term of pre-trial investigation has expired”

Investigative judge Shyroka said: “The term of the pre-trial investigation in the criminal proceedings has expired, taking into account that as of 27.08.2020 there were 3 (three) days of the pre-trial investigation left, taking into account the cancellation of the decisions on closing the criminal proceedings 25.01.2021, 15.04 .2021, as well as the resumption of the pre-trial investigation to close the criminal proceedings on 20.05.2021 “.

Meaning, the judge said: on August 27, 2020, there were 3 days left before the end of a pre-trial investigation, and they expired on January 25, 2021, April 15, 2021 and May 20, 2021.

But this is not true, as the pre-trial investigation has not expired, and even one day will be enough to complete the investigation and send the indictment to court. Let’s take a closer look at the judge’s statement from the text of the decision.

Judge Shiroka noted that as of August 27, 2020, there were 3 days left before the end of a pre-trial investigation. This statement is not true, because as of 27.08.2020 there were 4 days left, not 3.

Article 219 of the CPC provides that the period of pre-trial investigation does not include the days of the decision to suspend the proceedings, as well as the period between the suspension and resumption of proceedings.

That is, when calculating the terms, the day of the decision to suspend the pre-trial investigation is not included in the general term of the pre-trial investigation, while the day when the pre-trial investigation is resumed by the resolution is included in the general term.

The last day of the investigation in this case was 08.08.2020 inclusive, but on 03.08.2020 the investigation was stopped for the first time.

As we do not include the day of the decision to suspend the proceedings in the investigation period, the detectives have 6 days left to complete the investigation.

On August 20, 2020, the pre-trial investigation was resumed by a separate ruling and stopped again on the same day. We have minus one day, because the investigation was resumed before the suspension. There are 5 days left.

On August 27, 2020, the pre-trial investigation was resumed by SAPO prosecutor Ponomarenko, and on the same day he closed the proceedings for the first time.

We have minus one day and there are 4 days left. That is, already on the first statement the investigating judge Shyroka makes the first mistake, as as of 27.08.2020 there are 4 days left, instead of 3.

Judge Shyroka noted that the CPC of Ukraine does not directly determine whether the day of revocation of the decision to close the criminal proceedings is included in the pre-trial investigation.

However, in her opinion, the term of the pre-trial investigation was reduced, taking into account the cancellation of the decisions on closing the criminal proceedings on 25.01.2021 and 15.04.2021, as from that moment it is possible to conduct investigative (search) actions, even if in this case the pre-trial investigation body to conduct them, and immediately stopped the pre-trial investigation.

On October 27, 2020, the investigating judge of the HACC Oliynyk overturned the illegal decision of prosecutor Ponomarenko to close the proceedings. The pre-trial investigation was suspended on the same day. That is, we do not include this day in the investigation period.

It is also not included in judge Shyroka’s decision and this indicates its inconsistency. After all, in the decision she points out that it does not matter how exactly the decision to close the proceedings (by a court or a higher-level prosecutor) was revoked. But for some reason, in case of cancellation of the closure by the prosecutor, she includes these days in the investigation period, and in case of cancellation of the closure by the court, this day is not included.

On January 21, 2021, the prosecutor of SAPO Ponomarenko resumed the investigation and closed it against the suspects. We have minus one day of the investigation period and we have 3 days left.

This position completely coincides with the conclusions set out in the decision of the investigating judge Oksana Oliynyk dated 04.03.2021 in the same criminal proceedings (case № 991/1127/21), according to which: “on the date of the first suspension (03.08.2020) there were six days left term of pre-trial investigation, and on the date of acceptance by the detective of the appealed resolution – 25.01.2021, there are three days of term left. “.

That is, the days 25.01.2021 and 15.04.2021 are not included in the term of pre-trial investigation. And here’s why:

  • 25.01.2021 Maksym Hryshchuk, the acting head of the SAPO, as a high-level prosecutor, revoked the decision to close the case and the pre-trial investigation was suspended on the same day.

Judge Shyroka points out that the CPC of Ukraine does not determine whether the day of revocation of the decision to close the case is included in the investigation period.

In contrast, the CPC explicitly states that “the day of the decision to stay the proceedings is not included in the investigation period.” This position completely coincides with the conclusions set out in the decision of the investigating judge Oksana Oliynyk dated 04.03.2021 in the same criminal proceedings (case № 991/1127/21), according to which: “are not included in the pre-trial investigation in this criminal proceeding. “

  • further, on April 9, 2021, the prosecutor of SAP Ponomarenko resumed the pre-trial investigation and closed the criminal proceedings for the third time. However, already 15.04.2021 acting Maksym Hryshchuk, the head of the Supreme Administrative Court, as a high-level prosecutor, not only cancels the decision to close the case, but also cancels Ponomarenko’s decision to resume the pre-trial investigation, which Judge Shiroka does not mention in this part of the decision.

That is, on that day the detectives did not even have a theoretical opportunity to conduct any investigative actions, because the pre-trial investigation at that time was again suspended by the decision of 25.01.2021, ie the statement of the investigating judge in this part is erroneous.

Judge Shyroka noted that the term of the pre-trial investigation had been reduced, taking into account the resumption of the pre-trial investigation to close the criminal proceedings on 20.05.2021.
This statement of Judge Shyroka is true, but it still does not confirm the argument of the judge and the prosecutor that the term of pre-trial investigation in the criminal proceedings has expired, as all the above indicates that there are still two days of pre-trial investigation.

If the pre-trial investigation period has not yet expired, then the judge’s and prosecutor’s conclusion that as of 20.05.2021 all possibilities to obtain evidence have been exhausted, on the basis of which it is possible to establish the existence of serious consequences caused by the Rotterdam + formula.

Moreover, given the forensics report available in the case file and the remaining two days, there is sufficient time to complete the investigation. All that remained was to replace the prosecutor and overturn his illegal decision to close the case.

Conclusions

Investigative Judge Shyroka did not assess the merits of the criminal proceedings, her task was only to establish whether the prosecutor’s decision had proper grounds for closing the proceedings and, if so, to what extent the decision was well-grounded and motivated. But for some reason she made many mistakes.

If we analyze in detail all the circumstances of the case, the legality and validity of judge Shyroka’s decision raises reasonable doubts, and the decision of Prosecutor Demkiv is unfounded, premature and adopted without a full and comprehensive investigation of the circumstances of the case.

Even Prosecutor Demkiv himself said that the investigation into the case was incomplete. He said at a court hearing during the video broadcast: “why then do we not determine the difference in the cost of coal in Rotterdam and in Ukraine. These facts are, in fact, completely unexplored. “

So we are waiting for the appeal and hope for a legal decision. After all, the HACC was created to solve such cases.

After all, only by transferring the case to court, where it will be represented by an impartial prosecutor, prosecutor Demkiv will be able to get answers to questions he still does not know, because he has closed the case.

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