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Sergiy Groza and Volodymyr Naumenko, former ultimate beneficial owners of GN Terminal Enterprises, sentenced to 21 months in prison by English High Court judge, Mr. Justice Bryan.
Groza and Naumenko breached an asset disclosure order, made in support of a worldwide freezing order (“WFO”).
London, UK, 15 October 2024 – The former ultimate beneficial owners (“UBO”) of the Ukrainian import-export business GN Terminal Enterprises (“GNT”), Sergiy Groza and Volodymyr Naumenko, have been sentenced to 21 months in prison by a judge of the English High Court for failing to comply with a worldwide freezing order (“WFO”). Groza and Naumenko were found to be in contempt of court by Mr Justice Bryan during a committal hearing on Friday, 30th August for breaching an asset disclosure order made in support of the WFO, before being sentenced on Friday 4th October 2024.
The disclosure order was made in April 2024, pursuant to the US$118 million English High Court WFO over Groza and Naumenko’s assets, in order for Madison Pacific Trust Limited to be able to police Groza and Naumenko’s compliance with the WFO. But the Ukrainian businessmen actively refused not to comply with the disclosure order, which has ultimately led to their committal for contempt of court (to the criminal burden of proof) and them being sentenced to prison.
Groza attended the sentencing hearing remotely, but did not respond when asked by the Judge if he wished to say anything in his defence, despite being given the use of a Ukrainian translator, while Naumenko did not appear at all. Mr Justice Bryan issued warrants of committal for Groza and Naumenko meaning they will be arrested when they next set foot in the United Kingdom.
Nicholas Cherryman, a barrister instructed by Groza and Naumenko only the night before the hearing, requested an adjournment which was rejected by Mr Justice Bryan. The judge condemned the late appointment of lawyers (which was only notified to the court an hour before the sanction hearing commenced) as “the hallmarks of a last minute ploy to secure an adjournment.” Groza and Naumenko are represented by Fortior Law SA, Solsidus Law, Appleby and M.B. Kemp LLP in various proceedings around the world.
The WFO was originally obtained by Madison Pacific on behalf of GNT’s secured lenders, Argentem Creek Partners (“ACP”) and Innovatus Capital Partners (“Innovatus”), in January 2023. It was upheld after an unsuccessful challenge by Groza and Naumenko in February 2024. The presiding judge, Mr Justice Jacobs, stated that he was concerned about the “very real risk of dissipation [of assets].” He added that the asset dissipation case is “one where the evidence is as strong as any that I have ever seen.”
The disclosure order required Groza and Naumenko to provide further information about US$97 million of dividends received over a 10-year period from their shareholding in GNT; nominees holding their assets; and funding of their legal fees in these and related proceedings via Waylink Assets, a company owned by Groza.
Mr Justice Bryan, Judge of the Commercial Court, noted in his sentencing that “I am satisfied that the Claimant continues to suffer very real prejudice as every day goes by when the Defendants continue to fail to comply with the Disclosure Order the very purpose of which is to police the freezing injunction.”
He also noted that an 80-page witness statement submitted by Naumenko shortly before the committal hearing highlighted “the lengths to which [Groza and Naumenko] have gone to fight and, the Claimants would say, seek to frustrate, the Claimant's debt enforcement steps around the world.” He also referred back to the "fierce resistance" Mr Justice Jacobs found in his judgment upholding the WFO.
Daniel Chapman, CEO and founder of Argentem Creek Partners, commented:
“Any entity, private or public, which is working with Groza and Naumenko should stop conducting business with these bad actors. Case after case in Ukraine and across the world have laid out the truth: Groza and Naumenko are flagrantly breaking the law and ignoring court orders. With them now being sentenced to prison in England, it is the time for legitimate businesses and local government entities alike to truly stand up for the rule of law. Facilitating unlawful behavior cannot be tolerated at any level.”
John Patton, Head of EMEA & Asia at Argentem Creek Partners, said:
"This is a step toward justice. The decision by the English High Court reinforces that Sergiy Groza and Volodymyr Naumenko have continued to break the law for personal gain. They have consistently taken deliberate steps to hide and strip their assets from GNT Group and avoid disclosure of any information even when ordered by competent courts. Finally, they are being held responsible for their actions.
“At a time when Ukraine needs its companies to pay taxes in full and support the country’s war effort, Groza and Naumenko are hiding millions of dollars offshore, using a company run by Russian citizen, Mikhail Ipatov.”
Ana Firmato, Managing Director at Innovatus, added:
“Justice Bryan’s decision is clear and unequivocal. Sergiy Groza and Volodymyr Naumenko have consistently and deliberately exploited the law for personal and financial gain, and this sentencing holds them accountable for their repeated wrongdoing. We appreciate the support of the English High Court and look forward to bringing the former ultimate beneficial owners of GNT to justice."
In 2019, ACP provided a US$75 million loan to GNT Group under a secured English law facility agreement. This loan benefits from security over the majority of GNT's assets and guarantees from most of GNT's subsidiaries, as well as personal guarantees from Groza and Naumenko. In January 2021, GNT also obtained a US$20 million working capital facility from Innovatus.
GNT repeatedly failed to pay interest on these two loans and failed to repay them at their maturity date in December 2021. When the creditors began to investigate why they were failing to reimburse their debts, an asset dissipation scheme worth millions was revealed. This revelation caused the creditors to enforce to protect their position.
The criminal sentencing in the UK is separate to ongoing criminal investigations into fraud and asset stripping alleged to have been undertaken by Groza, Naumenko and certain of their associates including Serbian Dusan Denic and Russian Mikhail Ipatov. Denic is also facing a civil fraud case in New York arising out of his part in the scheme.
ENDS
Notes to editors:
You can find the full judgement here.
About Argentem Creek Partners
Argentem Creek Partners is an emerging markets specialist investment firm committed to delivering value for investors and partners. The firm seeks to deliver uncorrelated emerging market alpha by investing in special situations, private credit, high yield, trade finance, and bespoke capital solutions. Argentem Creek was founded in 2015 by Daniel Chapman and his former team from Cargill, Inc. subsidiary, Black River Asset Management. https://www.argentemcreek.com
About Innovatus Capital Partners, LLC
Innovatus Capital Partners, LLC is a New York based registered investment adviser and portfolio management firm with over US$1.8B in assets under management; focused on creating value across special situations, emergent asset classes, private credit and asset-based investments. Innovatus adheres to an investment strategy that identifies disruptive and growth opportunities across multiple asset categories with a unifying theme of capital preservation, income generation, and upside optionality. The Firm has a dedicated team of agriculture finance investment professionals with deep experience in emerging market lending and a strong network of relationships across local contacts and industry participants. www.innovatuscp.com
Contact Details
Argentem Creek Partners
media@argentemcreek.com
Company Website
https://www.argentemcreek.com/
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