Prominent Ukrainian investment banker Igor Mazepa, founder and CEO of Concorde Capital investment company, was released from a pre-trial detention facility after posting bail, Ukrainian media reported on January 24.

"Businessman and Concorde Capital investment company owner Igor Mazepa has been released from pre-trial detention on bail," Interfax Ukraine reports.

Mazepa was arrested on January 19 on suspicion of illegally seizing the land belonging to the Hydroelectric Power Plant's facilities by bribing officials to change the status of the land from industrial to agricultural thus allowing it to be sold. The court ruled that Mazepa should be kept in pre-trial detention until February 27 and set bail at UAH350mn ($9.3mn).

A well-known and widely respected businessman, Mazepa’s arrest caused tensions between Ukrainian businesspeople and authorities. He was released after a court ruled to reduce his bail to UAH21mn ($560,000), according to reports.

The arrest ignited a contentious debate surrounding the country's pursuit of justice and the rule of law, as Ukrainian President Volodymyr Zelenskiy begins to crack down on the oligarchs as well as corrupt business practices. As bne IntelliNews has reported, Ukraine still has a bad corruption problem.

“With this letter, we inform you that Concorde Capital is continuing to function without interruptions despite pressure against its head Igor Mazepa, and despite aggressive search in the company’s premises that the law enforcement bodies made on January 18,” Concorde Capital said in a letter emailed to bne IntelliNews.

“We relate the groundless pressure to Mazepa’s public activity and his criticism of dubious methods which Ukraine law enforcement bodies are using increasingly actively against local business. And we are glad to inform you that the government has recently committed to address this criticism,” the letter continued.

The oligarch Ihor Kolomoisky will remain in custody until March 2, with bail set at UAH2.65bn ($71mn), it was reported on January 22. Kolomoisky is the highest profile oligarch to ever be arrested and was charged with embezzling $250mn from his PrivatBank that was nationalised in 2016 after a $5bn hole was found in its balance sheet. Still in pre-trial detention since September, observers are watching closely to see if such a powerful oligarch will be actually sent to a trial and jailed.

Mazepa is a much more respectable businessman and Concorde Capital has been a leading investment bank in Ukraine for years alongside its larger peer Dragon Capital.

“The recent arrest of [Mazepa], a notable businessman in Ukraine, highlights the intricate and tough battle for justice and the rule of law. This is particularly challenging when the law enforcement agencies, even newly formed, are themselves viewed with suspicion,” Tymofiy Mylovanov, rector of the Kyiv School of Economics (KSE) and former economics minister, said in a social media post.

Mazepa has been accused of illegally privatising the land by the State Bureau of Investigation (DBR), a new law enforcement agency similar to the US’ FBI, which made the arrest.

The DBR has alleged a criminal organisation involving nearly two dozen individuals, comprising investors, lawyers, architects, and state agency representatives, all acting in the interests of developers and were involved in the scheme.

The group used loopholes in the legal status of the land plots which with corrupt ties in state bodies were re-designated as agricultural lands, allowing this land to be privatised to Ukrainian citizens, the DBR claims.

Concorde Capital said this was a normal business deal and everyone’s involvement was a legitimate part of a legitimate deal. Concorde Capital went on to say that the detention was retribution for Mazepa’s outspoken criticism of law enforcement agencies and judges that pressure businesses.

In its letter, Concorde Capital lists what it claims is pressure brought to bear on Mazepa, which “hint on excessive and disproportionate pressure on Igor Mazepa and Concorde Capital, which cannot be explained by the size of alleged “wrongdoings”,”:

· To present Mazepa in the maximum negative light, prosecutors detained Mazepa crossing the Ukrainian-Polish border on January 18, which “allowed” them to claim that he “made an attempt” to leave the country in order to avoid “criminal responsibility”. At the same time, Mazepa was in Kyiv over the last couple of weeks, visiting a series of public events, where he was fully accessible. It was well-known that Mazepa was heading to Davos for business meetings.

· Such an “extraordinary” detention “allowed” the prosecutors to perform a search of Mazepa’s living premises and the office of Concorde Capital without a court permission (which our lawyers see as unlawful).

· In an attempt to put more dirt on Mazepa’s image, officers “leaked” information to journalists in the first minutes after his detention claiming there is “russian trace” in the case. In the environment of Ukraine’s active resistance to russian aggression, any “linking” of a person to the aggressor-state affects his public image. The “russian trace” turned out to be a fake.

· According to public information from the case, the alleged “losses” in the case are UAH7mn. Meanwhile, the prosecutors demanded in court that Mazepa should be arrested or released on bail of UAH 700mn. This is multiple of 100x, which, based on public information, was never seen before (in other loud cases, the deposit amount was comparable to or lower than the size of claims).

Amongst his advocacy for better relations between business and the state, Mazepa has suggested the creation of a blacklist of corrupt officials and serves on the board of an organisation advocating for democratic and market reforms in Ukraine.

“The pressure of business has become so intensive in early 2023 that businessmen had to unite against it. In particular, in May 2023, Mazepa was among the initiators of the “Manifesto 42”, where 42 entrepreneurs had united to call the government to ensure enforcement of the 42nd article of the Constitution of Ukraine (declaring the protection of entrepreneurial activity),” Concorde Capital said in its letter. “The initiative drew the attention of top policy makers, so a couple of the initiators had small-group meetings with deputy-heads of the presidential office last summer. The meetings were not very fruitful: the pressure on business went on. Moreover, just in January 2024, law enforcement bodies made searches in the offices of two of the 42 manifesto signees, including Mazepa.”

The arrest has prompted a broader reflection on Ukraine's legal system, inherited from the Soviet Union, and the challenges in fully cleaning it up. Following Mazepa’s arrest and the public outcry it caused amongst the business community, Ukrainian President Volodymyr Zelenskiy called a special meeting of the Security and Defence Council on January 23 to address the issues of economic security and economic stability.

“We are thankful to the President’s leading role in the attempt to unite business and government around our primary goal – to ensure the Ukrainian economy is working stable and in the best interest of our resistance to russian aggression,” Concorde Capital said.

“So, who is corrupt? One side, another, both or none?” asks Mylovanov. “It is tough to form an opinion because the legal system Ukraine inherited from the Soviet Union has not been fully cleaned up and there are so many grey areas that many businesses are in violation of the law.”

Mylovanov suggests that part of the Zelenskiy administration anti-corruption drive should be a new social contract between business and the state. Reforming the legal and law enforcement architecture is needed to build credibility and trust for a successful business environment. The lack of explicit amnesty for past practices further complicates the path forward. Mazepa’s property deal happened a decade ago when the Ukrainian legal system was even more chaotic than it is today.

Mazepa’s arrest has sparked calls for clearer rules of the game negotiated between businesses and the state to establish a foundation for the rule of law, a process Russia went through in the early noughties after Russian President Vladimir Putin came to power and took on the Russian oligarchs. In Ukraine, the challenge is made harder by the ongoing war and external shocks.

“As Ukrainian businessmen are working in the environment of unprecedented security risks due to the war and unite with each other to support the armed forces, the least thing that they need is a hostile attitude from the government bodies,” Concorde said in the letter.

“Concorde Capital is committed to continue its uninterrupted work to the best interest of its clients. As a responsible business, we will continue our cooperation with various government institutions and think tanks in order to bring our contribution to the recent government initiative aiming to improve Ukraine’s business and investment climate. In this way, Ukraine will win and prosper,” the letter concluded.