Ukrainian American's case is among unresolved business disputes

by Roman Woronowycz
Kyiv Press Bureau

KYIV - Doing business in Ukraine is not any easy task; some say it's impossible. Business contracts, financial kickbacks and criminal activity, and even politics, often go hand in hand, and the adage "it's not what you know but who you know" rises above a truism and becomes the law of the business jungle of Ukraine.

Ask Marijka Helbig, a Ukrainian American entrepreneur with a successful travel business in the United States. She experienced trickery, deceit, frustration, the physical beating of her attorney and, thus far, substantial financial loss after making her investment in Ukraine.

Mrs. Helbig, owner of Scope Travel located in Maplewood, N.J., turned to U.S. authorities for help after the hotel and tourist agency she and her partners established in western Ukraine in the early 1990s was wrested from her control by her general director. Ukraine's judicial and law enforcement system, which seems not to want to resolve the dispute, has only presented roadblocks, delays and excuses. According to Mrs. Helbig, the system is a major part of her problems.

"The Ukrainian courts do not want this case, because it will blow up in their face," said Mrs. Helbig. Too many public figures would be exposed as having taken part in the cover-up of the scheme to take her business from her, she charged.

Her case is one of nine business disputes between U.S. businessmen and their Ukrainian partners that the Kuchma-Gore Commission, a high-level, bilateral U.S.-Ukraine committee developing the strategic partnership between the two countries, is attempting to resolve.

The nine cases also have become the central focus of a requirement stipulated in the 1999 U.S. foreign aid bill that Secretary of State Madeleine K. Albright certify before congressional appropriations committees that Ukraine is making progress on U.S. investor disputes and on economic reforms.

Secretary Albright is required to make her certification by February 18. If she does not give the Congress the green light, Ukraine could lose up to half of its 1999 earmark of $195 million.

At the heart of Ms. Helbig's case are her allegations that Anatolii Popadiuk, an Ivano-Frankivsk businessman whom she and her Austrian partners appointed as general director of their joint venture, forged her and her manager's signatures onto documents that make him an equal partner of the business that she started and developed in Ivano-Frankivsk.

Mr. Popadiuk was not available to comment the four times that The Weekly called Auscoprut offices at the Roksolana Hotel in Ivano-Frankivsk.

Mrs. Helbig asserts that neither she nor Christine Bonacorsa, the manager of Scope Travel, could have signed documents making Mr. Popadiuk a partner in Auscoprut, the firm that Ms. Helbig established in 1991 along with Austrian and Ukrainian partners, because neither one of them was in Budapest at the time the agreement was supposed to have been made, and can prove it. In addition Mrs. Helbig alleges that documents that are part of the case were fabricated in Ukraine, and signed at times during which she and Ms. Bonacorsa could not have been there. She told The Weekly that it is ridiculous that Ukrainian courts have refused to accept the evidence she has presented.

"I was at my daughter's debutante ball in New Jersey on the date marked on Popadiuk's documents," explained Mrs. Helbig. "I was on the organizing committee. Furthermore, my passport shows no visa that I entered Hungary during that time."

Rebuffed by procurator

Mrs. Helbig has been rebuffed several times by Ukraine's court system and the Procurator General's Office in Kyiv in her attempt to retain control of her business, which includes two Roksolana Hotels in Ivano-Frankivsk, one completed in 1993 and the other a $5 million project still under construction.

Ms. Helbig said in an interview with The Weekly on January 12 that she is a victim of cronyism and organized rackets. She explained that Mr. Popadiuk has political connections with highly placed government officials and Ukrainian national deputies, and has used his influence to have her petitions to the local procurator's office and the Procurator General's Office in Kyiv rejected on dubious grounds.

The second rejection by the Procurator General's Office came days after a new head procurator had been appointed. Coincidentally or not, he hails from Ivano-Frankivsk and is a friend of Mr. Popadiuk, according to Mrs. Helbig.

She charges that Procurator General Oleh Lytvak, who has since been replaced, had her case thrown out as a political favor to Mr. Popadiuk after the previous head procurator had decided that the case had merit. Mr. Popadiuk is president of the Association of Ivano-Frankivsk Businessmen and wields considerable political clout in Ivano-Frankivsk Oblast.

According to Mrs. Helbig's attorney, Nestor Hnativ, two issues lie at the center of the case.

First, Mrs. Helbig has absolute proof that she was in the United States, and not in Budapest or Ukraine, where the signing of the documents allegedly took place, which means that she could have not signed them and thus they must be forgeries.

Second, Mr. Popadiuk has not been able to produce the original documents he says were signed in Budapest, which he asserts made him a partner in Auscoprut.

"The point is that neither the procurators nor the court have made a demand that he produce the original," explained Mr. Hnativ. "They look at the photocopies with the attached notary seals, and take them to be authentic at face value. They then reject the petitions with the explanation that the allegations are groundless."

Ms. Helbig began her investment in Ukraine after she was contacted by representatives of the Austrian firm Auktions und Handelsgeselschaft Gmbh, who were looking for partners for a Ukrainian joint venture that would develop a travel agency and a series of hotels in Ukraine.

She contacted the Ivano-Frankivsk-based Agrofirm Prut, whose director she had known through her U.S. travel agency. Ms. Helbig's company specializes in tours to Ukraine.

JV formed in 1991

In October 1991 the three sides signed an agreement forming the joint venture Auscoprut, which was registered by Ukrainian authorities in November.

Three months later, in January 1992, the Ukrainian partner, Agrofirm Prut, withdrew from the joint venture after its director was thwarted in his attempt to bring in another Ukrainian partner and was bought out by the two remaining sides. Mr. Popadiuk, who had been assistant general director of Agrofirm Prut, was retained by Auscoprut as its general director and resigned his position in the Ukrainian firm.

Although the joint venture began operating and even finished restoring the Roksolana Hotel and opened it for business, Mrs. Helbig did not see any profit. She simply kept sending money, which she said she later discovered was not always used for the purposes intended.

In 1993-1994 she began receiving information that Mr. Popadiuk was purchasing automobiles from the Austrian partner and selling them in Ukraine. "I saw that it had become a money-laundering operation," claimed Mrs. Helbig, "I told him that I wanted no part of illegal activities." She added that she also had obtained evidence that Mr. Popadiuk was embezzling Auscoprut money.

But when she approached her Austrian colleagues to fire their general director, they told her that without Mr. Popadiuk the business would fail. She did not know at the time that Mr. Popadiuk, as she now alleges, was shuffling money to the directors of Auktions und Handelgeselschaft, and that the firm was not properly registered in Austria and undergoing bankruptcy proceedings there.

By late 1994 Ms. Helbig decided that she wanted out of the joint venture. She approached Gennadii Genschaft, the owner of the Grand Hotel in Lviv, who she had heard was looking to buy more hotels in Ukraine, only to be told after a meeting with Mr. Popadiuk and Mr. Lytvak that he was not interested in working with Mrs. Helbig.

"Mr. Genschaft told me that Mr. Popadiuk's documents showed him to be the owner. They told him that I was not a partner because I had made no investment in the company," said Mrs. Helbig.

She knew she needed hard evidence before she could begin any legal action, so in 1995 she hired Ukraine's largest law firm, the Kyiv-based Ukrinjurkolegia, to investigate the matter. The law firm obtained copies of the documents that Mrs. Helbig alleges Mr. Popadiuk forged.

The Kyiv law firm, along with Lviv-based lawyers, also investigated what happened to the $900,000 that she and her U.S.-based investors had sunk into Auscoprut, because Mr. Popadiuk had denied her access to the firm's financial accounts.

Legal actions initiated

With evidence in hand, Mrs. Helbig initiated a civil action on April 18, 1997, against Mr. Popadiuk, asking the Ivano-Frankivsk municipal court to rule that the agreement presented by Mr. Popadiuk was invalid.

Almost simultaneously a petition was filed with the Procurator General's Office requesting that it begin a criminal investigation against Mr. Popadiuk on charges of forgery. That petition never made it to the required office. To this day no one can say what happened to it - whether it was misplaced, trashed or stolen.

Meanwhile, Mrs. Helbig filed a second petition with the Ivano-Frankivsk Oblast procurator, which coincidentally or not, also turned up missing.

She also wrote letters to the Ukrainian ambassador to the United States, to the Ukrainian Consulate General in Chicago and to Ukrainian government officials in Kyiv, including the director of the organized crime committee, detailing her situation and asking for help.

Little was forthcoming. On June 2, 1997, the Ivano-Frankivsk procurator rejected Mrs. Helbig's criminal petition without explanation. Mrs. Helbig then filed an appeal with the Procurator General's Office in Kyiv, which three weeks later remanded the case back to the Ivano-Frankivsk procurator's office. A month later it was rejected a second time - this time with the most unusual of reasons.

According to the newspaper Vechirnii Kyiv, the Ivano-Frankivsk procurator's report stated that the accusations are baseless because Mr. Popadiuk had told them that he was innocent of all charges.

"Presented with all the facts as laid out in the complaint of Mrs. Helbig, Popadiuk explained that he did not falsify a single document, nor did he forge any signatures," stated the report according to Vechirnii Kyiv.

Mrs. Helbig then appealed for a second time to the Procurator General's Office, which this time took a different view of the matter. After meeting with the Scope Travel owner on August 1, it decided to withdraw the oblast procurator's decision and open a criminal investigation.

The procurator general's report called the conclusions of the Ivano-Frankivsk office "premature" and stated that "it is necessary to do a signature analysis and several other investigative actions."

It was at this juncture that Mrs. Helbig thought she had finally received a long-awaited break. However, within weeks Mr. Lytvak was appointed acting procurator general of Ukraine, and on September 8, 1997, the Helbig case was again remanded to Ivano-Frankivsk. The official decision was based on a request by the Ivano-Frankivsk procurator to return the case because it had done all the previous investigative work.

In November, while Mrs. Helbig waited for what she knew would not be a finding in her favor by local procurator's investigation, her attorney, Mr. Hnativ, was badly beaten in his Lviv office. As he explained it, three young men entered his office late in the day and proceeded to pummel him. Nothing was taken. The office was not ransacked. Mr. Hnativ ended up with a broken jaw and a lengthy hospital stay.

On Christmas Day 1997 the local procurator handed down the predictable finding: there was insufficient evidence to proceed with the charges.

To this day the incorporating documents of Auscoprut that show Mr. Popadiuk to be a founding owner have not been analyzed to determine their authenticity, nor have the signatures been scrutinized by handwriting experts.

While Mrs. Helbig was experiencing only frustration in trying to make headway with Ukrainian law enforcement officials, Mr. Popadiuk filed documents with the International Arbitration Court of the Ukrainian Center of Commerce and Industry in May 1997 in which he demanded $145,000 from Scope Travel, money he alleges the firm owes his Auscoprut as part of the investment agreement signed in 1991.

The Arbitration Court was to look at the suit on January 5 of this year but delayed the hearing, at the request of U.S. Ambassador Pifer, and rescheduled it for January 27. The president of the court, Yurii Pobirchenko, has indicated that he will throw the suit out, according to Mrs. Helbig.

Meanwhile, the civil suit brought by Mrs. Helbig back in April 1997 was decided against her on February 10, 1998. No one was present from her side; her attorney was still recuperating from the injuries he sustained in the attack against him, and Mrs. Helbig was in the United States suffering from an illness. Mrs. Helbig said that the court ignored her request to reschedule the court date.

As a result of the decision, Mrs. Helbig lost her interest in Auscoprut and the firm was re-registered with only the Austrians and Mr. Popadiuk as partners.

In August 1998 the Procurator General's Office, with a new head procurator in charge after the Verkhovna Rada failed to confirm Mr. Lytvak in that position, again became involved in the Auscoprut affair when it requested that the municipal court re-examine its decision in the civil suit. The court refused to do so.

As a result, the Procurator General's Office turned to the Supreme Court of Ukraine with an appeal that it review the finding of its lower court. Mrs. Helbig would also like the case to be moved to a venue outside of Ivano-Frankivsk.

With Mrs. Helbig increasingly stymied in her efforts to find justice, she requested help from U.S. Commercial Attaché Andrew Bihun and the new ambassador to Ukraine, Steven Pifer.

Their help has been indispensable in keeping the matter alive, said Mrs. Helbig. "What Ambassador Pifer and Mr. Bihun are doing is incredible," she said.

The U.S. officially has placed the Auscoprut matter on its list of U.S. business claims that need to be resolved with the Ukrainian government before Ukraine receives further foreign aid. Letters from Ambassador Pifer and Mr. Bihun have raised the matter to the highest levels of the Ukrainian government.

The Kuchma-Gore Commission has sought to resolve the matter by bringing Mr. Popadiuk and Mrs. Helbig together to work out a settlement. A U.S. delegation of the commission spent several days in Kyiv the week of January 17 reviewing the situation of the nine outstanding claims of U.S. investors in Ukraine, including the Auscoprut case.

On January 22 both parties to the Auscoprut disagreement were asked to present their sides before the representatives of the Kuchma-Gore Commission, which included Jan Kalicki, head of the Committee for Trade and Investment from the U.S. side. The meeting did not produce a settlement. Mr. Bihun of the U.S. Embassy's Commercial Service would not comment on the meeting nor on any aspect of the case.

The U.S. Embassy has set a loose deadline of February 2 for finding a solution to the Auscoprut affair.

Mrs. Helbig said that although she is willing to talk with Mr. Popadiuk, her demands are firm and non-negotiable. "He can either step down as general director, or return my investment with interest," she stated.

Copyright © The Ukrainian Weekly, January 31, 1999, No. 5, Vol. LXVII

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