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- Eleonora Yemets
Counsel, Attorney, Head of White-Collar Crime Practice, ADER HABER
One of Eleonora Yemets’ key areas of activity is protecting business in criminal proceedings for economic crimes and international criminal law.
Eleonora Yemets’ expertise encompasses fraud investigation, money laundering, illicit enrichment, misappropriation and the theft of assets, tax evasion and fictitious bankruptcy, improper use/abuse of power, and protecting public figures from political persecution.
As part of support for projects in the field of White-Collar Crime, Eleonora Yemets successfully represents the interests of legal entities in criminal proceedings in order to minimize the possible risks and associated negative consequences.
Under the leadership of Eleanora Yemets, the firm’s White-Collar Crime practice has gained considerable experience in dealing with Interpol. ADER HABER’s lawyers now provide assistance to clients at every stage, from the cancellation of Interpol red cards to participation in the extradition procedure – appeals against extradition arrest and release from custody.
Eleonora Yemets was recognized by experts of The Legal 500 as a “rising star” of the legal market of Ukraine. She is the Chairman of the White-collar crime Committee of the Ukrainian Bar Association, a member of the NAAU Committee on International Relations, a member of UNBA NextGen, ASIS International, Internal Compliance Association.
Business in Wartime. Risks and Assets Security
How to Ensure the Operation of Business in Wartime (insurance, physical security of property, reserve funds, security system)
In wartime conditions, the issue of security of one’s own assets and the availability of tools to compensate for damage is especially topical.
Insurance seems to be the mechanism that will allow, if not fully, but partially to receive compensation in the near future.
In response to the significant demand on the part of businesses for insurance of their assets against the risks of damage or destruction as a result of military actions, only a few market players provide insurance policies for compensation in wartime.
As of today, there are insurance companies that have developed individual car insurance packages. For example, one of these packages covers the restoration of damage caused to a car by bullets, fragments from the explosion of mines or other devices (provided that the car is not completely destroyed and is subject to restoration), in the amount of 10% of the car’s market value.
Other insurance companies offer personal insurance from accidents that occurred as a result of military actions (exceptions – active participation in military actions, i.e., the military, law- enforcement officers) in the amount of 100,000-300,000 hryvnias.
As for the insurance of assets (commercial real estate, engineering insurance) against the risks of their damage or destruction as a result of military actions, when entering into an agreement you should check that the relevant clauses in respect of any wartime period are incorporated. If you concluded such an agreement before the war began, we suggest that you contact the insurance company with the initiative to amend the insurance agreement.
We also recommend that you look at those insurance companies that reinsure their risks with the involvement of foreign partners.
Security Service System
A security service is an integral element of the coordinated work of any well-structured and arranged business structure.
However, with the beginning of Russia’s full-scale war on Ukraine, businesses in Ukraine expectedly faced the wider phenomenon of mobilization of employees.
Despite the fact that Ukraine is currently experiencing its highest unemployment rate in the last 20 years, our own experience shoes that the search for qualified specialists in the field of business security requires a lot of time. Taking into account the fact that many security officers are currently mobilized, the question of how to select and form a new security service becomes relevant.
But before that we need to find out if the company needs it by conducting an audit and consider the tasks performed in recent years, their progress, identify existing problems and definitely identify any potential threats.
The criteria that, in our opinion, should be a guide during the selection of security personnel are divided into physical and psychological:
- physical criteria include a potential candidate’s good physical shape, weapons permit, first aid skills, no criminal record;
- psychological criteria include discipline, responsibility, attention to detail, emotional stability.
It is still a controversial issue as to whether law-enforcement authorities have such experience, since it cannot always be positive and help the company. If there are such candidates, it is necessary to consider their reputation and approaches to work on an individual basis.
One should also pay attention to the potential employee’s officer rank and establish whether he is in the reserve of the Armed Forces of Ukraine, because in this case the probability of his mobilization is extremely high and quite possible.
Prospects for Work and Earning Profit (Israeli experience)
Will the business be able to continue working? What are the prospects and how should you assess whether to work in Ukraine or transfer assets abroad?
The existing situation in Ukraine is often compared to Israel, which still finds itself facing the permanent threat of missile attacks and regularly conducts military operations in the Gaza Strip.
However, even in such conditions Israel is a high-tech state and a leading manufacturer of plenty of goods, both military and civilian.
As of now, Israeli residents can receive up to EUR 20,000 for property lost due to shelling, and a business receives compensation of the estimated value of damaged or destroyed assets, so perhaps a similar system will be introduced in Ukraine some time down the line.
It is important to understand that it is necessary to form budgets today for their further use for needs to maintain business operations.
We recommend consideration of two sections with respect to security at work under conditions of war; physical and corporate security.
The war has caused the migration of business from the frontline to safer regions of Ukraine, but even such relocation cannot fully protect against the threat of missile attacks and their consequences.
Therefore, one of the main elements of physical security is the construction, or fitting out, of bomb shelters. At present, this is a statutory requirement for new buildings, but we would like to consider Israeli experience with relation to buildings that already exist. By understanding what system is expected to be established in Ukraine, it is possible to form reserve funds for the construction of bomb shelters now.
If we take the experience of Israel as an example, each floor of a residential or commercial building should have a separate room with thickened walls and metal doors, which is used as a bomb shelter.
Renovation of old buildings, whose design does not contain bomb shelters, is also quite common in Israel, although one should note that in order to carry out the reconstruction, 75% of the residents of such a building shall provide their consent, and such works are quite expensive.
Therefore, despite the possible difficulty and high cost of construction, the construction of bomb shelters today is vital for ensuring the operation of any business and to save lives, so we can borrow this experience even before special regulations have been adopted.
This section is based on the development and implementation of an action plan that will address the following issues:
- employees: there is a necessity to understand who will be dismissed, retained in a company, and who can potentially be called up for military service to the Armed Forces of Ukraine and who can replace them;
- the procedure for business organization in the event of military actions: transportation and storage of financial and other important documents;
- procedure of actions during an air raid alert. Informing employees of the evacuation plan and the locations of the nearest bomb shelters;
- in the event of an accident with the owners or their enrollment into the Armed Forces of Ukraine, it is necessary to prepare a will, provide for the procedure for transferring business management to other partners, the procedure for safe inheritance and possible alternatives for senior management;
- preparation of separate algorithms of actions for the financial department/accounting or any other strategic departments;
- algorithm of actions for servers, ensuring copying of information to backup servers;
- transfer of important documents to safer places;
- preparation of an action plan and appointment of persons responsible for recording damages and submitting documents for further compensation;
- insurance of important infrastructure facilities/vehicles;
Now it is necessary, more than ever, to choreograph these issues and provide employees with a clear instruction of the algorithms of action during stressful situations, since in wartime there are many unpredictable and unknown situations that can have a serious effect on the emotional and psychological conditions of employees.
New Risks within the Framework of Criminal Proceedings (arrests, sale of assets through confiscation, seizure, searches)
For the period of martial law in Ukraine, the prosecutor-general’s office has received new powers that were previously only conferred on investigating judges.
On 25 August, 2022, new amendments to Article 615 of the Criminal Procedure Code of Ukraine came into force, which, among other things, provide for the possibility of the head of the prosecutor’-general’s office to perform certain functions of an investigating judge.
The head of the prosecutor-general’s office may, by his/her resolution, instruct, or decide instead of the investigating judge the following:
- seizure of documents (including originals) according to the order on temporary access to things and documents;
- seizure of property (including seized during a search);
- extension of pre-trial investigation;
- conducting a search (even without the presence of witnesses and continuous video recording).
We would like to emphasize that even such a mandatory condition for the head of the prosecutor-general’s office to adopt a resolution, as the reasonable inability of the investigating judge to exercise his/her powers, is not a guarantee against illegal investigative actions and seizure of company assets.
The actions of the head of one of the district prosecutor’s offices in Kyiv, who, despite the fact that the courts of Kyiv were working in their ordinary course, decided by his resolution to instruct a range of investigative actions, including searches in companies actually operating located in other cities, are an example of such abuses. The consequence of such illegal actions by the head of the prosecutor’s office was the seizure of property with a value running into several million hryvnias.
Therefore, taking into account the above, we recommend the taking of a number of preventive measures in order to avoid any negative consequences:
- to enter into a preliminary agreement on the provision of legal assistance with an attorney and immediately notify him/her of any visit by law-enforcement agencies. Provide the attorney with an algorithm of actions (on strategically important points) and information on the system of access to the premises;
- appoint a person responsible at the enterprise for communicating with law-enforcement agencies and calling an attorney;
- to conduct training for a lawyer/security officer at the enterprise in respect of the requirements for documents that can be accepted by the prosecutor (search, seizure, arrest). It is necessary to ensure that before the arrival of an attorney, a lawyer or security officer can communicate properly with law-enforcement agencies and be present until the attorney arrives.
- carefully check counterparties for any connection with Russia, using information and analytical services YouControl or Contr Agent from Liga. It is advisable to establish a verification system and appoint persons who will be responsible.
Risks of Joint Business with Russian Investors in Ukraine
In March 2022, Article 111-1 entitled “Collaboration” was added to the Criminal Code of Ukraine.
Punishment in the form of a fine of up to UAH 17,000 or imprisonment for a term of 3 to 5 years, with simultaneous deprivation of the right to hold certain positions or carry out certain activities for up to 15 years and confiscation of property, was established.
In the event of an authorized person of a legal entity committing a criminal offense, including such crime as those provided for in Article 111-1 of the Criminal Code, the court shall liquidate the legal entity with confiscation of its assets.
If we thoroughly analyze the provisions of Article 111-1, responsibility for committing a criminal offense occurs in the following cases:
- transfer of material resources to illegal armed or paramilitary groups formed in temporarily-occupied territory and/or armed or paramilitary groups of the aggressor state and/or
- carrying out economic activities with the aggressor state, illegal authorities established in temporarily-occupied territory, including the occupation administration of the aggressor state.
Since the incorporation of Article 111-1 to the Criminal Code, law-enforcement officers began to immediately register criminal proceedings for conducting economic activities with the aggressor state, and today there are already judicial precedents for the seizure of funds and other assets of Ukrainian companies, including cases based on the fact of contractual legal relations with counterparties from the Russian Federation. Therefore, there is a need for you to check your counterparties today for the absence of: (1) business owners who have Russian citizenship (2) Russian origin in legal entities (3) checking the databases for existing lawsuits with persons who may be related to Russia.
Below you can find the key aspects of risks of cooperation with counterparties from Russia based on the provisions of Part 4 of Article 111-1 of the Criminal Code of Ukraine:
- Conducting economic activities, and therefore, even entering into any agreements with a resident of the Russian Federation, as the aggressor state, constitutes a crime under part 4 of article 111-1 of the Criminal Code of Ukraine;
- the location of the crime, namely in relation to the economic activities (temporarily occupied territory or territory controlled by Ukraine) is not a mandatory element and does not matter for qualification;
- The subject of the crime is general, which means that criminal prosecution is possible both against individuals (foreigners and stateless persons) and legal entities;
Furthermore, please note that in addition to punishment for collaboration in the form of a fine or imprisonment, an additional punishment is the liquidation of the legal entity with the seizure of its assets.
Taking into consideration the fact that the law-enforcement agencies of Ukraine are today focused, among other things, on identifying and prosecuting persons engaging in collaborative activities, if there are Russian citizens among your partners or contractual or binding relations with representatives of this country, your business is a potential target for law-enforcement.
Therefore, in this case we highly recommend that you take immediate measures to terminate any partnerships (termination of agreements) with such persons, including their withdrawal from your joint business project as either participants or founders of it.