17.02.2025 Construction Corruption Kyiv

Pushcha-Vodytsia and court wars to deprive investors of their homes 

Stolitsa Group’s Varshavsky residential complex in Kyiv is one of the most scandalous developer’s projects. The battles around the construction of the residential complex continue. The reason for this is the illegal allocation of land plots by the Kyiv City State Administration, environmental violations and their consequences, the ownership of the land by a state-owned enterprise, as well as numerous violations of construction standards. So what should you know about Varshavsky Residential Complex in Kyiv?

History of construction of Warshavsky Residential Complex

In March 2013, Citibudservice LLC (the investor) and SE NDVA ‘Pushcha-Vodytsia’ (the land user) entered into an investment agreement for construction in the Podil district of Kyiv.

The procedure for transferring the land for construction looked questionable. There were insufficient public checks and investigations, and despite this, large-scale construction began soon afterwards without proper control.

The general contractor for the construction of the Warshavsky residential complex was Stolitsa Group, a company founded in 2008. The owners and beneficiaries of this company, including well-known companies from Cyprus, have close ties to Ukrainian politicians, especially the Batkivshchyna party. For example, Vladyslava Molchanova, who is the head of Stolytsia Group, has close ties to members of the Kyiv City Council, which allows her to easily obtain the most favorable and expensive land plots in the capital. Moreover, often at a price much lower than the real one.

In addition, Molchanova was a confidant of Yulia Tymoshenko, the leader of the Batkivshchyna party, in the 2019 elections.

Litigation wars around SE “Research and Production Association ”Pushcha-Vodytsia”

Back in 2013, the Prosecutor General’s Office opened a criminal investigation into the illegal alienation of 950 hectares of land owned by SE Research and Production Association ‘Pushcha-Vodytsia’. The company’s management and representatives of the Ministry of Agrarian Policy were suspected of transferring the land to third parties without proper compensation for agricultural losses, causing UAH 370 million in losses to the state.

During further investigations, investigators discovered another problem: the transfer of land to affiliates associated with the Stolitsa Group association.

In 2019, law enforcement officers drew attention to possible violations in the amount of compensation for land transferred for construction. Investment agreements under which a state-owned enterprise transferred dozens of hectares of land in exchange for 4-5% of the cost of future apartments raised reasonable doubts about their legality. According to experts, this ratio of land value to built-up square meters was unfair to the state. After all, land has a much higher value than the number of apartments a state-owned enterprise receives for its participation in projects.

One of the most high-profile cases occurred in May 2021, when SE “Research and Development VA ‘Pushcha-Vodytsia’” filed a lawsuit against Concord-DS Plus LLC regarding the invalidity of an investment agreement concluded in 2011. Initially, the Kyiv Commercial Court dismissed the claim, but despite this, the conflict continued.

The plaintiff, referring to the law, argued that the agreement did not meet the requirements of investment activity. However, the courts of first instance and appeal confirmed that the agreement was a mixed investment and contracting agreement that fully complied with the law.The court also found that the land plots on which the development was carried out remained in state ownership. Thus, the execution of the contract did not result in the withdrawal of land from state ownership or violation of the rights of SE “Research and Development Enterprise ‘Pushcha-Vodytsia’.

On January 23, 2025, an important court decision was made that became a key milestone for protecting the rights of investors in the Warsaw Residential Complex. The Commercial Court of Cassation dismissed the cassation appeals of SE “Research and Development Enterprise ‘Pushcha-Vodytsia’”, the State Property Fund of Ukraine (SPFU) and the Cabinet of Ministers of Ukraine, confirming the legality of the previous decisions of the Kyiv Commercial Court and the Northern Commercial Court of Appeal.

Having considered the case, the court found that the agreement concluded between the parties is a mixed investment and contracting agreement that fully complies with the requirements of the applicable law. Contrary to the plaintiff, the court confirmed that the fulfillment of the contract did not result in violation of the rights of the state-owned enterprise or withdrawal of land from state ownership.

Housing stock for the military

Particular attention should be paid to an important aspect of this case – the housing stock related to housing for the military personnel of the Armed Forces of Ukraine. According to the order of the Cabinet of Ministers of Ukraine, some of the apartments received by the SE “Research and Development Company ‘Pushcha-Vodytsia’” from the investor were to be transferred to the military personnel of the Armed Forces of Ukraine who have the title of Hero of Ukraine. But was the real estate really distributed in a fair manner and in the amount required by law?

According to our materials on the Stolitsa Group’s developments, the authorized persons of the TU BES in Kyiv region registered information in the URPI under No. 72024111400000021 under Part 2 of Art. 364 of the Criminal Code, and the SSU MID under No. 22024000000000814, Part 1 of Art. 275 of the Criminal Code.

However, despite numerous lawsuits and criminal proceedings, none of the persons involved in these corruption schemes has been brought to criminal responsibility.

We continue to investigate the activities of Kyiv developers and send materials to the controllers.

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