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