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Criminal proceedings against Canadian investor closed

10.10.2019

Subject of complaint: Prosecutor General's Office of Ukraine (PGO)
 
Complaint in brief: A company with Canadian investments approached the Council with a complaint against law enforcers actions. The Complainant disagreed with charges against him in a criminal case.
 
According to the Complainant, when planning a solar power plant construction in Mykolaiv Oblast, the company purchased solar batteries worth over UAH 200 mn from the supplier. The vendor formed a tax credit for this transaction. One third of the amount, UAH 17 mn, was refunded to the Complainant  in early 2019 after the performed audit.
 
Two months later the foreign investor faced Ukrainian realities. A local prosecutor initiated criminal proceedings against the company. According to law enforcers, the Complainant agreed with the supplier and SFS officials in Mykolaiv Oblast and divided illegally received budget VAT refund among themselves. The investor could not even imagine law enforcers would initiate criminal proceeding based on a refunded tax, the amount of which had been confirmed by the fiscal authority itself. 
 
Due to open criminal proceeding, the Complainant's economic activity was blocked. It also significantly harmed the foreign investor’s reputation before international financial institutions and partners.

Actions taken: So, the Council faced with such a difficult situation in the course of case investigation.
 
After examining the case file, the Council’s team concluded tax credit formation during construction, provided absence of other business transactions of the company, was a common practice, as a company consolidating fixed assets and selling nothing yet, acted as a construction works and materials end -customer. 
 
The Council upheld the company’s position and concluded it was unreasonable to continue criminal proceeding. The Council informed the Prosecutor General’s Office of Ukraine in writing thereof and asked the government agency to impartially consider the company’s application for closing criminal proceedings. Moreover, the Complainant's case was brought up for the Expert Group consideration within the framework of permanent cooperation between the Council and the Prosecutor General's Office of Ukraine.
 
Result achieved: Law enforcers accepted the Council's arguments. The criminal proceedings against the company, which lasted 5 months, were finally closed. According to the government agency, there was no crime in the Complainant’s actions. The company thanked the Council’s team for assistance in restoring its legal rights “and emphasized: “Our case is a clear message to all international investors that the rule of law in Ukraine is respected.”