Ukraine court tells government to pay for Tymoshenko firm failed deal

KIEV Wed Sep 19, 2012 11:08am EDT

Supporters of Ukraine's jailed former Prime Minister Yulia Tymoshenko shout slogans as they hold up posters of Tymoshenko, during a rally near the high court building in Kiev August 29, 2012. REUTERS/Gleb Garanich

Supporters of Ukraine's jailed former Prime Minister Yulia Tymoshenko shout slogans as they hold up posters of Tymoshenko, during a rally near the high court building in Kiev August 29, 2012.

Credit: Reuters/Gleb Garanich

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KIEV (Reuters) - A Ukraine court on Wednesday ordered the government to pay Russia $382 million over a failed deal involving a company once run by former prime minister Yulia Tymoshenko, a move that could prompt fresh legal action against the jailed politician.

Tymoshenko, the key political opponent of President Viktor Yanukovich, was sentenced to seven years in prison last October on abuse-of-office charges in a case the West saw as an example of selective justice.

Despite calls from Brussels and Washington for her release, Ukrainian prosecutors have heaped more charges on Tymoshenko, bringing her to court in a tax evasion and embezzlement trial and investigating her over a 1996 murder case.

In a case that could have further legal repercussions for Tymoshenko, a court in Kiev ruled on Wednesday the Ukrainian government owed Russia's Defence Ministry 3.1 billion hryvnias ($382 million) over a deal in which she was involved.

According to the ruling, Unified Energy Systems of Ukraine (UES), a now-defunct company run by Tymoshenko in the 1990s, signed a deal with the Russian ministry in 1997 to supply it with various goods.

The Ukrainian government had acted as a guarantor to the firm, the court said, which then failed to deliver the agreed supplies, prompting a lawsuit from the Russian side.

"The court has decided to partly uphold the complaint," Judge Anatoly Ivchenko told the courtroom. The court slightly reduced the payout from the 3.2 billion hryvnias ($394 million) sought by Russia.

Lawyers for both sides declined to comment on the ruling.

EXPOSED

The move exposes Tymoshenko to further legal action, either as part of her current embezzlement and tax evasion trial which also dates back to her time at UES, or in a separate case.

According to Ukrainian law, the government must seek compensation from companies to which it acts as a guarantor if it has to assume their liabilities.

Tymoshenko, 51, who has been receiving treatment for back trouble in a state-run hospital since May, is challenging her initial abuse-of-office conviction in the European Court of Human Rights and has denied any wrongdoing.

A leader of the 2004 "Orange Revolution" protests which derailed Yanukovich's first bid for presidency, she has accused him of extracting revenge and trying to weaken the opposition ahead of the October 28 parliamentary election.

The European Union shelved a landmark agreement on free trade and political association with Ukraine after her conviction, and the United States said this month the upcoming vote could further distance Kiev from the West.

(Writing by Olzhas Auyezov; Editing by Sophie Hares)

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