If one talks the Ukrainian pharma industry, Mykola and Ludmyla Bezpalko need no introduction. They have been at the helm of Borshchahivskiy Chemical-Pharmaceutical Plant for more than two decades. Once in good shape, nowadays this pharma manufacturer is gradually withering away. But with their 60% of shares the Bezpalko family keeps a tight grip over the plant’s management and operations. Being in their mid-seventies, the Bezpalko may be willing to sell the plant. But the potential buyers are scared off by the long term legal war between the Borshchahivskiy Chemical-Pharmaceutical Plant (BCPP) and Darnitsa, a major pharma company in Ukraine which happens to own 30% share in BCPP.
Darnitsa claims that Bezpalko family in cahoots with BCPP management is basically embezzling the corporate funds of BCPP via various offshore schemes, which Darnitsa, as a 30% shareholder, cannot accept. The forensic firm Darnitsa engaged to investigate believes that their client had been defrauded for millions in lost dividends. The fraudulent proceeds are said to have been stashed away on the Swiss bank account, held by Iryna Rzhepetska, who happens to be one of the senior BCPP executives and a daughter of Ludmyla and Mykola Bezpalko.
The Bezpalko family denies wrongdoing and accuses Darnitsa of unfair competition and hostile takeover attempts. With their offshore structured shareholding, the Bezpalko totally control the board of directors and the management board of BCPP. They would not let Darnitsa into BCPP management board. Neither would they let Darnitsa audit the corporate financials, despite court ruling prescribing such audit. It could be the case that the Bezpalko just cannot afford it. Should Darnitsa got its hands on BCPP books, a long-term fraud may be exposed, a fraud going back for many years.
When Darnitsa bought 30% of BCPP back in 2015, Bezpalko were not happy. That was a public auction, which Bezpalko did not win. They challenged Darnitsa’s title to the shares in 2019, but lost in the Supreme Court of Ukraine.
Though denied access to the management board and corporate accounting records, Darnitsa attacked the Bezpalko offshore schemes. The European detective firm engaged by Darnitsa discovered that a Hamburg-based pharma trading firm assisted Bezpalko to syphon more than 5 million USD out of BCPP to the private Swiss bank account of Iryna Rzhepetska, the junior Bezpalko. Further criminal investigation by the German police confirmed that German pharmaceutical supplier Farmaplant managed by the ethnic Russians was involved in Bezpalko embezzlement schemes for many years, this trading firm being basically used as a money syphoning tool. The German criminal case was initiated at the end of 2018, no indictments issued so far. The investigation is pending on accounts of embezzlement and money laundering.
Further to the German criminal proceedings, the Geneva prosecution office launched criminal investigation in connection with money-laundering suspicions at the end of 2019. Apparently the Bezpalko family used a Swiss fiduciary firm Privaxis Services S.A. and a Swiss bank PKB Bank. Hence the Swiss connection.
In 2020 Darnitsa brought a legal action for 6,8m USD of damages in the Ukrainian courts against the Bezpalko family and a number of executives, including the current CEO Mykhaylo Pasichnyk. The damages claim was secured by the worldwide freezing order issued by the UK court with regard to Metabay Export/Import Limited, a UK shell company used by the Bezpalko family to accumulate the “loot”. The legal drama is exacerbated by the recently launched criminal proceedings in Ukraine against the Bezpalko family and BCPP management on accounts of abuse of office and corporate embezzlement.
The Ukrainian criminal investigation is at an early stage, but it appears to cover the period ending 2018, when Ludmyla Bezpalko, the CEO since 1998, stepped down to avoid investigation. Presently Borshchahivskiy is led by Mykhaylo Pasichnyk, a pharma industry long-timer and a former chief of the state regulator for pharmaceuticals. But the new management seems to change nothing in the deeply rooted habits of fraud.