Revealing the Hrynkevychs’ clandestine multi-million property empire

Ukrainian article of the week published in the 18th edition of the "What about Ukraine" newsletter on February 8th, 2024. The article was written by Illia Lukash and was translated for n-ost by Tetiana Evloeva. A corruption investigation into what happened to cash from dodgy procurement contracts for the Ukrainian Ministry of Defence by hromadske.

Check out the complete edition of this week's newsletter

Read the original article here

Lviv-based businessman Ihor Hrynkevyсh is accused of embezzling almost 25 million euros’ worth of funds from contracts with the Ukrainian Ministry of Defence for the supply of military clothing.

Former construction boss Ihor was arrested late last year while trying to bribe officials, and prosecutors extended their suspicion of wrongdoing to close members of his family.

In January, police arrested his son Roman in Odesa oblast, while he was attempting to leave the country.

The Hrynkevyсhs are suspected of pouring the extra cash into swanky apartments and houses in Lviv and Kyiv.

But how are the family trying to conceal these properties’ ownership status and protect them from seizure?

Investigative news portal hromadske is on the case.

The portal discovered that the wife and mother-in-law of Ihor Hrynkevych, suspected of embezzlement from the Army’s budget, failed to disclose ownership of their apartments and their 600-square-metre estate to investigating officers.

The news site also reported that on 11 January, the State Bureau of Investigations (SBI) announced it would seize some of the family’s assets. But as of late January 2024, none of the family’s assets uncovered by hromadske’s investigators were sequestered by the SBI.

Land and mansions: suspected profits of war contracts

Five apartments in Kyiv and Lviv, three plots of land and a luxury estate were bought by businessman Ihor Hrynkevych’s wife Svitlana and her mother, Iryna Fedak, after Russia’s full-scale invasion of Ukraine — during the period when Ihor Hrynkevych’s companies were receiving multi-million contracts from the Ministry of Defence for the purchase of military clothing. Only one plot of land was bought before the full-scale war.

Noteworthy, on 29 December 2023, the SBI declared the right to repossess the business of Ihor. The Lviv businessman then tried to bribe the investigators with 500,000 USD [~464,495 euros], asking them to stop the repossession of a consignment of military uniforms he was planning on supplying to the Ministry of Defence. The investigation found that companies belonging to Hrynkevych won 23 tenders worth over 1.5 billion hryvnias [37 million euros], failing to fulfil some of those contracts and partially fulfilling others with great delays, causing losses of almost one billion hryvnias (just under 25 million euros) worth of public funds.

As early as 11 January, the SBI announced the seizure of the Hrynkevych family property and bank levies on the businesses controlled by the family. However, there was an almost two-week-long gap between the arrest of Ihor Hrynkevych and the 11 January when the SBI finally placed a levy on their assets. During this period, the most interesting things transpired.

Shady mortgages appear

On 25 January, we checked the State Registry of Real Estate Rights and were perplexed to find that both the father and the son only had one title each, for a plot of farmland in the Kyiv region, with no other real estate in their name. So we looked at the assets of other Hrynkevych family members.

The businessman’s wife Svitlana turned out to be the person with the most titles in her name. We concentrated on the property acquired since the full-scale invasion. That includes two adjacent luxury apartments in the upscale neighbourhood of Novopecherski Lypky in Kyiv, purchased on 17 May 2023 — at the height of Ihor Hrynkevych’s involvement with embezzlement from defence contracts. Similar apartments in the same new development cost at least 20 million hryvnias [almost half a million euros].

One day after her husband was arrested on 31 December 2023, Svitlana borrowed five million hryvnias [123,773 euros] from an individual called Oleksandr Lapshyn, and on the 2 January, she took the details of the loan to her notary, which linked the apartments to the debt. Today, the Registry lists those apartments as those mortgaged.

Caption: On 31 December 2023, Svitlana Hrynkevych took a five million hryvnias [~123,773 euros] loan from Oleksandr Lapshyn.

Data from the State Register of Property Rights.

Lawyer Yaroslav Butyrin explains the reason behind this decision:

“This is a standard scheme for ‘holding back’ on the property,” says Yaroslav. “When people are afraid that something can be taken away from them, they approach a notary and tell them, ‘Here’s an IOU worth a million, and we want to secure its repayment with a mortgage.’ According to the Law of Ukraine on Mortgages, the mortgagee has the priority of claim. Which means that the assets secured by a mortgage can’t be taken away.”

That is, the borrower becomes the priority owner of the real estate, and said assets become immune to seizure and confiscation. That scheme was used for another of Svitlana Hrynkevych’s assets, namely an apartment in a gated community in the Nyvky neighbourhood in Kyiv. Despite being just 30 sqm, the apartment is not cheap: a smaller (and the least expensive) apartment in the same complex was recently sold for 1.5 million hryvnias [~37,132 euros]. Svitlana’s apartment can be valued at approximately two million hryvnias [~49,509 euros].

Here, the ‘mortgage’ situation is more complicated. The real estate was bought on 8 December 2023, three weeks before Ihor Hrynkevych was arrested. The title formally belongs to the businessman’s mother-in-law, Svitlana’s mum. On 15 December, the two women went to a notary to secure the loan with a mortgage: the daughter was said to have loaned her mother 135,000 USD [~125,414 euros], which is almost five million hryvnias, back in November, yet they suddenly “remembered” the debt more than a month later, and only after purchasing another apartment. What might the explanation be?

Caption: On 15 December, the two women went to a notary to secure the loan with a mortgage.

Data from the State Register of Property Rights.

“Under the usual circumstances, the loans and the mortgages are finalised on the same day,” clarifies lawyer Yaroslav Butyrin. “It’s done at the same time and in the same place because signing the IOU is an act of a person’s goodwill. Say, the IOU is issued today, and the mortgage is signed three days (or a month) later, that’s perfectly legal, albeit a dumb thing to do. In such a case, it’s impossible to establish the real date when that IOU was issued.”

Which means, nobody can tell for certain whether that loan was ever issued. As if to confirm our hypothesis, on the very same day of 15 December, the mother-daughter duo signed yet another mortgage agreement, for an apartment in Lviv. That luxurious 130 sqm apartment in a fashionable residential complex cost the family at least seven million hryvnias [~173,282 euros]. It was bought by Svitlana’s mum in November 2023 and subsequently mortgaged to her daughter in December.

So why do those mortgage agreements between Svitlana and her mother look dubious?

First and foremost, Iryna Fedak is listed as the owner of shares and even entire businesses of the Hrynkevych family group. According to online company verification service YouControl, that group includes 25 companies engaged in many businesses, from quarries and construction to advertising and trade in textile goods (supplied to the Ukrainian army). Every owner is a family member, be it Ihor Hrynkevych’s son, daughter, wife or mother-in-law. That is to say that Mr Hrynkevych has been registering his assets in his mother-in-law’s name for quite some time now, and she is an intrinsic part of their empire.

Secondly, all those hustles with loans and mortgages by Svitlana Hrynkevych and her mother were executed in November and December 2023 when uniforms produced by Ihor Hrynkevych’s companies for the Ministry of Defence were seized. Now, it’s up to the investigation to prove the fictitious nature of these transactions and the origin of the money in court.

“Should the investigator deem it necessary and find good evidence the court will impose another seizure on this property. And even if the mortgage is lifted, court-prescribed seizure stays in place,” assures Butyrin.

Thirdly — remember those two luxurious apartments in the Novopecherski Lypky neighbourhood in Kyiv that Svitlana purchased in May 2023? In summer 2022, her mother Iryna Fedak bought an apartment in a neighbouring apartment building. That 85 sqm property couldn’t have cost her less than six million hryvnias [~148,527 euros]. July 2022 was precisely when her son-in-law’s companies got their first contracts with the Ministry of Defence.

Finally, our main find is the ace-in-the-hole of the Hrynkevych family real estate portfolio — yet it has no trace in the registers.

CAPTION: Illegal construction of Hrynkevych family mansion, photographed from a drone.

Schrödinger’s Palace

Svitlana Hrynkevych is listed as the owner of the modest plot of land in the Prolisok gardening community on the outskirts of Lviv, in a cosy place right next to the Vyllyky urban forest.

That land with a single-family residence was listed as Svitlana’s property on 1 August 2022. However, the plot is much larger than the 600 square metres listed in the title, consisting of three plots of land combined, with an overall area of 2,000 sqm, with her mum, Iryna Fedak, listed as the owner. The two plots of land were registered in March 2022, while the main one, covering 1,000 sqm, was bought by Ms. Fedak back in 2019. In that same year, the woman listed a 300 sqm house on that land in her declaration.

Let’s have a look at the 2018 “for sale” advertisement of this very plot: there we see a similar-looking grey fence, and recognise the neighbouring houses. The asking price was 110,000 USD [~102,190 euros], however, it is the text of the offer that is worth looking into: “The documents list it as a 2,000 sqm plot, however, it’s 2,500 sqm in reality, with an unfinished single-family home.”

CAPTION: Plots of land owned by Iryna Fedak and Svitlana Hrynkevych
illustration by hromadske

We can assume that Iryna Fedak de facto purchased all 2,500 sqm at once, and the process of their de jure registration was stretched over four years.

On 31 January 2024, hromadske obtained a Compliance Audit Report, issued by a respective Commission of the Lviv City Hall at the request of our editor’s office. It turns out that besides the 2,500 sqm on the title, the Hrynkevych family seized a further 2,600 sqm of the forest.

“About [2,100 sqm] are state-owned land assigned to the State Corporation Lvivskyi Lishosp,” informs Liubomyr Zubach, Lviv’s deputy mayor on urban planning, “which means that that forest and that land is a part nature reserve and it’s illegal to do anything there, except perhaps pick mushrooms. What you definitely can’t do is cut down trees or pave a road. Still, that’s exactly what the Hrynkevych family did.”

Officials also noted that the swimming pool is built on the land assigned for horticulture and that the road leading to the house was arbitrarily cut and paved through the forest.

But the main source of confusion is the houses. The mother’s 2019 Deed lists a 300 sqm single-family residence house, and the daughter’s 2022 Deed lists a 60 sqm hut. Despite different postal addresses assigned to all four plots, they are adjacent and are now surrounded by a common fence. The mansion on those merged plots is much bigger than 300 sqm, and even bigger than 60 sqm. Having studied the specifications for the house, we can state that it’s a 600 sqm mansion.

Taking into consideration the fact that both the houses belonging to Ihor Hrynkevych’s wife and the mother-in-law no longer exist, we can assume that they demolished both structures and built a luxury mansion, complete with sauna, cinema, gym, spa, reading room, five bedrooms and other rooms, from scratch.

According to the neighbours, the construction was at its peak until the New Year 2024, before Ihor Hrynkevych was arrested. As of today, the property looks abandoned, with no trace of even security or other activities.

Evaluation of such an asset is a tedious task. As a reminder, the plot itself cost 110,000 USD [~102,190 euros], or five million hryvnias. Mansions of similar size in the adjacent neighbourhoods of Lviv cost between 25 and 28 million hryvnias [~618,863 – 693,127 euros].

And so the real estate of just two members of the Hrynkevych family summed up to 60 million hryvnias [~1,485,272 euros], with 55 million hryvnias [~1,361,499 euros] worth of real estate purchased during the two years since the full-scale invasion began.

What was seized by the SBI?

On 11 January 2024, the ARMA.gov.ua portal announced that they uncovered the Hrynkevych family assets at the request of the SBI. They mentioned Svitlana’s apartments in Kyiv and Lviv, her companies and vehicles, but… they failed to mention a word about Hrynkevych’s mother-in-law, Iryna Fedak, and their 600 sqm mansion. Indeed, the mansion doesn’t exist on paper, yet the thought of inspecting Svitlana Hrynkevych’s plot of land never crossed the minds of SBI investigators.

Moreover, on the very same day of the 11 January, the SBI stated that all the assets they uncovered were seized, mentioning the wife's apartments that we discussed earlier — however, it took the investigators 20 days to finally get to the Registry. However, proclaiming the seizure in front of the Press is one thing, and serving the respective papers to the respective agencies.

Let us emphasise: as of 29 January, there is no information on the aforementioned assets of Svitlana Hrynkevych and her mum Iryna Fedak being seized.

Should the SBI prove that the Hrynkevychs’ companies embezzled one billion hryvnias [24.8 million euros] of Ministry of Defence funds, only the assets uncovered in this article can make up for at least 60 million hryvnias [~EUR 1.5 million euros] of that money. But first, the estate in the Lviv suburbs, as well as Svitlana Hrynkevych’s apartments, must be actually seized, not just proclaimed as seized in the media.