Three more heads of regional gas companies charged with embezzling gas from Ukraine's GTS

Three more managers of regional gas companies – JSC "Volyngaz", JSC "Kryvorizhgaz" and JSC "Chernigivgaz" have been charged with involvement in the theft of gas from the gas transportation system (GTS) of Ukraine, according to the website of the Prosecutor General's Office.

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"They are charged with taking possession of someone else's property in particularly large amounts and legalizing property obtained in a criminal manner," the message reads.

According to the investigation, a sanctioned businessman (Dmytro Firtash – ed.) organized a scheme to acquire natural gas. For this purpose, he involved regional operators of gas transport networks – regional gas companies, as well as other controlled entities, to which the funds received for the distribution of natural gas in the regions of Ukraine were transferred.

The businessman provided company managers with instructions on the mechanisms of withdrawing funds and tried to hide traces of illegal activity, the Prosecutor General's Office reports. The organized crime group carried out unauthorized withdrawal of the resource, which was in the gas transportation system and belonged to the state.

In order to compensate for the unauthorized withdrawal of gas from the "Operator GTS of Ukraine" company, regional gas companies transferred funds to the company under the control of the sanctioned oligarch in a much larger amount than was provided for gas to cover the company's expenses.

"According to this scheme, the officials of the businessman's oblgaz companies embezzled the funds that were allocated for the purchase of excess gas. RGCs transferred the tariff funds received from consumers to a controlled company owned by the businessman, supposedly as a prepayment of more than 100% for the supply of gas, but in fact, these deliveries did not take place. The money was further transferred to controlled companies and appropriated," prosecutors note.

According to forensic and economic expertise and other evidence, the suspects caused more than UAH 4.2 billion ($113.7 million) in losses to the state during 2021. At present, the issue of choosing preventive measures for the suspect is being resolved.

In the criminal proceedings, charges have already been pressed against 15 persons – a sanctioned businessman-owner of a gas holding, two heads of RGCs, a director of the company and 11 heads of regional gas companies. At the request of prosecutors, six heads of regional gas companies were taken into custody.

The movable and immovable property of the suspects in the total amount of UAH 246 million ($6.7 million) and the corporate rights of the sanctioned businessman in the total amount of more than UAH 7.4 billion ($200.4 million) were seized.

At the end of June, Naftogaz gained control over Kyivoblgaz, Zhytomyrgaz and Lvivgaz, and on July 18 it added three more gas distribution companies – Sumygaz, Vinnytsiagaz and Dnipropetrovskgaz to the list.

In May 2022, the Cabinet of Ministers authorized the Naftogaz Group to manage stakes in a number of regional and city gas distribution enterprises.

Immediately after that, the Pecherskyi District Court of Kyiv arrested and transferred the corporate rights of 26 regional and city operators of gas distribution systems to the Asset Recovery and Management Agency (ARMA). Later, the Cabinet of Ministers ordered the transfer of these seized assets to Naftogaz.

In September, Naftogaz created Gas Distribution Networks of Ukraine as a national operator of the gas distribution system. Subsequently, five gas distribution companies from RGCs, including Kharkivmiskgaz, Kryvorizhgaz, Dniprogaz, Kharkivgaz and Kirovogradgaz from Kropyvnytskyi, joined the Gas Network. RGCs called the transfer of assets of these companies raiding.

On August 15, the gas distribution companies Ivano-Frankivskgaz, Khmelnytskygaz and Mykolaivgaz joined the Naftogaz Group.

On March 15, 2023, businessman Dmytro Firtash was charged within the scope of the case of allegedly causing losses to the state of more than UAH 18 billion ($487.5 million) with the help of regional gas companies of the RGC group.