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Representatives of the prosecutor’s office (OPG) ordered Ukrainian banks to halt all transactions on these accounts, based on a court ruling from November 30, 2021.
“This action is related to the way the company calculates tax payments for the use of subsoil for mining,” ArcelorMittal said. “It is a matter which has been going on for some time and has previously been dealt with through the appropriate legal channels.”
On November 4, 2021, the, the administrative district court upheld ArcelorMittal Kryvyi Rih’s position by dismissing the civil case against the company brought by the State Tax Administration.
The court ruled that ArcelorMittal Kryvyi Rih had paid all the appropriate taxes in full and in line with Ukrainian state tax legislation, the company said.
The company did not respond at the time of publication to Fastmarkets’ request for information about the effect that blocking these accounts might have on the company’s purchasing and sales activities. But Fastmarkets has heard that the company was doing all it could to ensure that its operations were unaffected.
Meanwhile, other market participants refrained from comment, waiting for more clarity to emerge.
Background of the issue OPG explained the reasons for its actions in a note published on an official social media page on January 5, saying that non-cash funds in separate accounts held by AMKR provided the basis for a criminal investigation.
According to this investigation, no deductions had been made from the arrested bank accounts to pay taxes, fees or other mandatory payments, nor for salary payments.
The OPG said that the financial director and chief accountant of ArcelorMittal Kryvyi Rih had been informed about suspicions of official fraud and deliberate tax evasion on an especially large scale.
According to the investigation, one person was suspected of deliberately giving false information in a declaration of rent for the use of subsoil for the extraction of mineral deposits of iron ores, thereby avoiding rent payments of more than 2.24 billion Ukrainian hryvnia ($81 million), the OPG report said.
“All procedural actions take place exclusively within the framework of the current legislation and within the framework of criminal proceedings,” the report said.
Because of their concerns, the OPG and the Security Service of Ukraine (SBU) opened a criminal case against one of the senior executives of ArcelorMittal Kryvyi Rih on November 17 last year.
AMKR, however, described the suspicions as “baseless and a clear example of political pressure on a major foreign investor.”
“Criminal charges have been brought against an individual, not the company,” AMKR said. “There is no current tax-related civil proceeding against ArcelorMittal Kryvyi Rih and therefore no legal grounds to freeze the company’s accounts.”