As Ukrainian Week opens in Lon­don, UK in­vestor vestor warn warns: Think be­fore you in­vest

Kyiv Post - - Front Page -

I am a British cit­i­zen and the ex-owner of the Kyiv Post, the only in­de­pen­dent English lan­guage news­pa­per in Ukraine.

I made my first Ukrainian in­vest­ment in 1993 in the Odesa Port and since then as, of to­day, my ISTIL Group has in­vested more than $400 mil­lion into var­i­ous fields of the Ukrainian econ­omy.

Ukraine is striv­ing to at­tract for­eign di­rect in­vest­ment, which is cur­rently at its low­est ebb. Road­shows show­cas­ing the at­trac­tive­ness of in­vest­ment in Ukraine are be­ing or­ga­nized in nu­mer­ous dif­fer­ent coun­tries. From Oct. 8 to Oct. 14, there will

be a full week of Ukrainian Week in Lon­don, where the Ukrainian lead­er­ship will at­tempt to cre­ate the im­pres­sion that Ukraine is an in­creas­ingly at­trac­tive and safe coun­try for for­eign in­vestors.

Cham­pion of truth

I owned the Kyiv Post for nine years and, with­out fear or fa­vor, I strove to bring to pub­lic knowl­edge both the pos­i­tive and neg­a­tive as­pects of Ukraine. I fre­quently high­lighted all the pros and cons and then left it to the read­ers and in­vestors to make their own minds up with re­gard to in­vest­ment.

I sold the news­pa­per on March 21, 2018 but have not changed my at­ti­tude to­wards cham­pi­oning the truth. For some years we made it a pri­or­ity to re­port in­vest­ment is­sues that for­eign com­pa­nies and in­di­vid­u­als were ex­pe­ri­enc­ing in Ukraine, such as cor­rup­tion, raiders, judges, the pros­e­cu­tor’s of­fice, po­lice, tax au­thor­i­ties, city au­thor­i­ties, mafia, ban­dits etc.

In 2000, I had per­sonal ex­pe­ri­ence of the per­ils of do­ing busi­ness in Ukraine, when af­ter hav­ing in­vested more than $150 mil­lion in Donetsk Steel Works I was told to leave. With the help of the Kyiv Post and the di­plo­matic com­mu­nity, I was able to with­stand that at­tack.

Af­ter that, I had no prob­lems un­til I took over the Kyiv Post. There were re­quests through my Ukrainian em­ploy­ees to stop the pub­li­ca­tion of cer­tain ar­ti­cles in the Kyiv Post. But we never ac­ceded to them. In re­sponse, there was an ef­fort to ex­ert ad­min­is­tra­tive pres­sure on my other busi­ness en­ti­ties through both the tax and pros­e­cu­tor of­fices. Yet through all this we stood tall.

Since I sold the Kyiv Post, the vengeance has be­gun again.

Poroshenko dis­ap­points

This stems in part from the fact that, although the Kyiv Post wrote sup­port­ively in edi­to­ri­als about Pres­i­dent Petro Poroshenko in the be­gin­ning of his term in of­fice, which started on June 7, 2014, we no­ticed that cor­rupt prac­tices are not be­ing tack­led prop­erly.

On the con­trary, th­ese is­sues are mush­room­ing. There­fore we started crit­i­ciz­ing him and his team.

In re­sponse, just re­cently the Se­cu­rity Ser­vice of Ukraine, or SBU, filed a com­plaint with the Gen­eral Pros­e­cu­tor’s Of­fice that we have al­tered the his­toric façade of the for­mer ho­tel Leipzig we own (where we have in­vested up­wards of $90 mil­lion and count­ing).

This is the agency, with 40,000 em­ploy­ees, that is sup­posed to be fo­cused on counter-in­tel­li­gence is­sues and pro­tect­ing na­tional se­cu­rity, not ho­tel fa­cades. For some rea­son, how­ever, th­ese agents seem to see this as the big­gest threat to state se­cu­rity. How­ever, the truth of the mat­ter is that we pro­vided all the doc­u­ments and per­mis­sions con­firm­ing that noth­ing was al­tered and the case was closed.

Yet right now we are un­der an­other raider at­tack by the Min­istry of De­fense, un­der the sa­cred slo­gan of “Hous­ing for Sol­diers.” The min­istry and some of the usual sus­pects are try­ing to snatch a piece of land that legally be­longs to us.

Cor­rup­tion chronol­ogy

Here is a chronol­ogy of events show­ing how rot­ten the sys­tem is and how metic­u­lously or­ga­nized the raiders are:

— July 2009 — We pur­chased a prop­erty com­plex con­sist­ing of sev­eral build­ings in dire con­di­tion lo­cated on the land plot of 0.6 hectares on 24-A Artema Street (cur­rently Sechevykh Streltsov) in Kyiv. The prop­erty was pri­vately owned and was pur­chased from a com­pany that had all the nec­es­sary ti­tle doc­u­ments and who had paid around $1 mil­lion to the Min­istry of De­fense for this prop­erty. How­ever, im­me­di­ately af­ter the pur­chase, our own­er­ship over the prop­erty was chal­lenged in court by the min­istry.

— Sept. 16, 2009 — The Eco­nomic Court of Kyiv con­firmed our proper- ty own­er­ship right. his de­ci­sion was up­held and con­firmed by all sub­se­quent court in­stances, in­clud­ing the Supreme Court of Ukraine (Dec. 24, 2009).

— Dec. 28, 2010 — The Kyiv City Coun­cil passed a res­o­lu­tion to sell the land ad­ja­cent and un­der the build­ings to us.

— Fe­bru­ary 2011 — The con­tract of sale and pur­chase of this land plot was signed on an in­stall­ment ba­sis within five years.

— May 2017 — All pay­ments were made by us on a timely ba­sis and we reg­is­tered the own­er­ship right for the land plot;

— De­cem­ber 2017 — We came to know that the Min­istry of De­fence signed a con­tract in March, 2017 for con­struc­tion of a res­i­den­tial com­plex on the Land plot owned by us with some bo­gus com­pany reg­is­tered in some re­mote area of Ukraine, hav­ing no con­struc­tion li­cense and ex­pe­ri­ence and less than euro 300 char­ter cap­i­tal;

— April 2018 — I sold the Kyiv Post and we chal­lenged the fic­ti­tious agree­ment be­tween the Min­istry of De­fense and ven­dors and re­ceived a de­ci­sion in our fa­vor. They ap­pealed.

— May 22, 2018 — As we ex­pected, Judge Vla­dyslav De­my­dov of the Eco­nomic Court of Kyiv de­cided in the fa­vor of the Min­istry of De­fense, an­nulling the Kyiv City Coun­cil res­o­lu­tion about the sale of land to us. We ap­pealed. The judg­ment that we won was stayed pend­ing the re­sult of our ap­peal. The next hear­ing is on Oct. 22.

— May 23, 2018 — Just one day af­ter pass­ing the judg­ment in the Min­istry of De­fense's fa­vor, iron­i­cally, Judge Vla­dyslav De­my­dov’s man­date as a judge ex­pired.

— June 2018 — We filed a crim­i­nal case with po­lice against a "Mr. Soban" of the Min­istry of De­fense, who ini­ti­ated the ten­der for the con­struc­tion of res­i­den­tial com­plex on our land.

— Septem­ber 2018 — The case file was taken from the po­lice by the Gen­eral Pros­e­cu­tor’s Of­fice. We are now in­quir­ing what has hap­pened to the file.

No-win sit­u­a­tion

I am sure that the cor­rupt judges and ju­di­cial sys­tem of Ukraine will never let me win. How­ever I am not giv­ing in and even if I lose all the cases here, then I will con­tinue to fight in the Eu­ro­pean Court for Hu­man Rights, where I am al­ready fight­ing a case with Ukraine, which I filed in 2008 and is now near cul­mi­na­tion.

In the mean­time, in or­der to avoid th­ese ex­pen­sive court bat­tles, and so as not to lit­i­gate against an­other raider case, in March 2018 I ap­proached Daniel Bi­lak, di­rec­tor of UkraineIn­vest and chief in­vest­ment ad­viser to Prime Min­is­ter Volodymyr Groys­man, to ask whether his of­fice can help to re­solve this mat­ter.

Bi­lak found the case to be very dis­turb­ing and this is not the first in­stance they’ve come across. He ar­ranged for me to meet with Ok­sana Markarova, the gov­ern­ment in­vest­ment com­mis­sioner (at that time, also the first deputy min­is­ter of fi­nance) and a head of the in­ter-agency work­ing group es­tab­lished by Groys­man to deal with cases in­volv­ing ex­ist­ing in­vestor is­sues.

I had a very pos­i­tive and en­cour­ag­ing meet­ing with Markarova and the work­ing group’s coun­sel, Iryna Krasko, on March 22, 2018. They were in­formed about the facts of the raid to­wards my ISTIL Group's land plot that is be­ing car­ried out with the di­rect in­volve­ment and sup­port of the state author­ity of the Min­istry of De­fense of Ukraine, and the neg­a­tive in­flu­ence such facts may cause to the Ukrainian in­vest­ment cli­mate.

Markarova as­sured us that the Ukrainian gov­ern­ment is mak­ing con­sid­er­able ef­forts to cre­ate an at­trac­tive in­vest­ment cli­mate in Ukraine. She promised to in­form Groys­man about th­ese facts and ap­proach the Min­istry of De­fense as well. She also asked whether we were will­ing to go to anti-cor­rup­tion court, if the out­come is neg­a­tive. I told that we most cer­tainly would. How­ever, af­ter this meet­ing Markarova dis­con­tin­ued any fur­ther com­mu­ni­ca­tion on this mat­ter with­out any ex­pla­na­tion and all our emails went unan­swered. Later she be­came the act­ing min­is­ter of fi­nance.

Politi­cians don't get it

We tried to re­solve this mat­ter with­out hurt­ing Ukraine's dire need for for­eign in­vest­ments but it seems that no­body cares about it in the higher ech­e­lons of the Ukrainian gov­ern­ment. Th­ese in­clude of­fi­cials from UkraineIn­vest, the agency that is sup­posed to be the in­vestors’ voice, as­sist­ing in­vestors to solve their is­sues in this coun­try.

I hope the di­plo­matic com­mu­nity, busi­ness as­so­ci­a­tions, om­buds­man, fi­nan­cial in­sti­tu­tions, Ukraine­friendly coun­tries abroad, and other agen­cies work­ing on the pos­i­tive image of Ukraine will read this ar­ti­cle and use their in­flu­ence to make the Ukrainian lead­er­ship un­der­stand that if the present in­vestors in the coun­try are not happy, es­pe­cially one who has in­vested more than $400 mil­lion in this coun­try, then all their ef­forts to por­tray a rosy pic­ture of the Ukrainian in­vest­ment cli­mate will never pre­vail.

Mo­ham­mad Zahoor is the chair­man of the ISTIL Group and ex-pub­lisher of the Kyiv Post.

MO­HAM­MAD AMMAD ZAHOOR OOR

The Lady of Jus­tice stands by the en­trance of the Kyiv Ad­min­is­tra­tive Court of Ap­peals on April 4, 2017. (Kostyan­tyn Ch­er­nichkin)

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