Ukrainian Police Raid JKX Subsidiary

Eastern European producer JKX Oil & Gas confirmed June 15 that Ukrainian police raided the office and the homes of two senior employees of its subsidiary Poltava Petroleum (PPC) June 14.

They came unannounced in search of documents relating to the investigation of claims of alleged underpaid taxes which have been made by a local prosecutor, relating to a relatively recent period, according to company sources.

PPC said it was “co-operating fully with the authorities, but nevertheless believes that it is in full legal compliance with the matters outlined in the police warrant and that the prosecutor's action is completely unjustified. Furthermore the company believes the police action to be in violation of the emergency awards that have been granted in favour of JKX and PPC and against the Ukrainian authorities by the Hague Tribunal and is currently considering its next steps. No disruption to the business has occurred as a result of this action.”

poltava petroleum group (Photo - JV Poltava Petroleum Company)

The arbitration hearing in The Hague is due to start July 4. The case has not collapsed, despite the previous board’s fears that if it were replaced with new directors, there would be no witnesses to testify in court. In a statement to NGE, JKX said June 15 it remained confident on the merits of its case adding that the relevant former directors have all been cooperating as witnesses. A new board took control of the company in late January.

On February 29, the new CEO, Tom Reed, after a month spent going through the company’s books, warned of litigation risk, and “many challenges facing the company, not all of them easily understood from previous communication.”

William Powell