Volodymyr Yakubovskyy: Ukrainian lawyer who fo­cuses on strength­en­ing Ukraine-ger­many busi­ness ties

Kyiv Post Legal Quarterly - - CONTENTS - By Vy­ach­eslav Hnatyuk [email protected]­post.com

Volodymyr Yakubovskyy is prob­a­bly go­ing to spend his Christ­mas hol­i­days the hard way. He al­ready caught the flu dur­ing cold sea­son and there’s no time left for him to take leave. He needs to chug through piles of papers from nu­mer­ous cases at Nobles law firm.

Yakubovskyy’s firm has ad­vised on sev­eral merger-and-ac­qui­si­tion trans­ac­tions each worth roughly $1 bil­lion. And Nobles has to be hawk­ish when it com­petes among other bid­ders to win par­tic­u­lar cases at an­nounced ten­ders.

To in­crease its out­put, the law firm merged with Phe­nom­ena law firm in 2017. That boosted its ca­pa­bil­i­ties and hu­man cap­i­tal, al­low­ing it to take on more clients and projects. To­day Nobles has a team of over 20 pro­fes­sion­als and 5 part­ners, with seven of them com­ing from Phe­nom­ena.

“Nobles is cur­rently Ger­many-ori­ented,

be­cause it emerged as a spin-off from the Ger­man law firm No­err,” Yakubovskyy told the Kyiv Post dur­ing an in­ter­view at the Hy­att Re­gency ho­tel in Kyiv.

Cur­rently, Nobles and No­err still have a co­op­er­a­tion agree­ment for when­ever No­err’s Ger­man clients are in­ter­ested in Ukraine. “The Ger­man gov­ern­ment and Chan­cel­lor (An­gela) Merkel want to spur Ger­man in­vest­ments into Ukraine,” he said.

Con­vinc­ing Ger­man in­vestors

But con­vinc­ing Ger­man busi­nesses to in­vest in Ukraine is an­other thing en­tirely. There are sev­eral crit­i­cal ob­sta­cles stand­ing in the way.

First, “the Ger­man econ­omy nowa­days at­tracts lots of for­eign in­vest­ments it­self,” Yakubovskyy said. Ger­many has a strong eco­nomic cli­mate with pos­i­tive 2.2-per­cent gross do­mes­tic prod­uct growth. This pro­vides plenty of op­por­tu­ni­ties for Ger­mans to in­vest do­mes­ti­cally.

Sec­ond, “they are re­pulsed by Ukrainian cor­rup­tion, and are in­ter­ested in see­ing cor­rup­tion up­rooted.”

Third, Ger­man com­pa­nies want to “make their prof­its and bring them to Ger­many with­out the need to deal with the reg­u­la­tions of the Na­tional Bank of Ukraine di­rected against sy­phon­ing of money to off-shores.”

But be­sides ad­vis­ing large Ger­man cor­po­ra­tions, NOBLES is also look­ing to­ward the Ger­man Mit­tel­stand, or fam­ily-run busi­nesses with in­ter­na­tional as­pi­ra­tions. These firms are more ag­ile than cor­po­ra­tions and they con­tinue to eye in­vest­ment op­por­tu­ni­ties in Ukraine. One suc­cess­ful case is a 5-mil­lion-euro in­dus­trial as­set in­vest­ment by a Ger­man pri­vate en­tre­pre­neur a year ago.

Yakubovskyy would not dis­close the name of the com­pany, but says the in­vestor is happy with the in­vest­ment. “He is even con­sid­er­ing new op­por­tu­ni­ties worth about 20 mil­lion eu­ros, per­haps in­vest­ing in a ho­tel,” the lawyer said.

An­other ex­am­ple is an el­e­va­tor project by Ger­man grain com­pany Wen­deln in Kher­son Oblast at the turn of the mil­len­nium. The whole project was worth 10 mil­lion eu­ros.

But it never took off due to its bad lo­ca­tion, poor lo­gis­tics, and dis­tance from crit­i­cal in­fra­struc­ture. Last year it was sold for less than 1 mil­lion eu­ros.

‘Ukrainian way’

To avoid sit­u­a­tions like this, Yakubovskyy ad­vises Ger­man in­vestors to “do the busi­ness the Ukrainian way.” Pri­mar­ily, this means the owner must be per­son­ally in­volved in de­vel­op­ing his or her busi­ness in the coun­try.

“The en­tre­pre­neur must stay here and con­trol the busi­ness per­son­ally, or through a very trusted per­son,” Yakubovskyy said.

At the same time Ger­man in­vestors “shall re­main true to them­selves, as Ukraini­ans re­spect them here be­cause of their so­cially-minded ap­proach of do­ing Ger­man busi­ness.”

One rea­son Ger­man com­pa­nies com­mand re­spect is be­cause there are no huge salary dif­fer­ences be­tween the rank-and-file em­ploy­ees and top-man­age­ment, Yakubovskyy says.

It’s also bet­ter for the in­vestor if their busi­ness is ex­por­to­ri­ented, as it will more likely be suc­cess­ful. A good ex­am­ple of this is Yakubovskyy’s pre­vi­ous em­ployer: No­err’s for­mer of­fice in Ukraine. It en­tered Ukraine with ex­pec­ta­tions of charg­ing Euro­pean-level billing rates and “faced strong lo­cal com­pe­ti­tion.”

Even­tu­ally No­err had to re­struc­ture. But Yakubovskyy says Nobles’ founders learnt the les­son: they low­ered the rates and be­came more suc­cess­ful.

On­go­ing war

Beyond the or­di­nary chal­lenges of do­ing busi­ness in Ukraine, Rus­sia’s on­go­ing war against the coun­try and the gov­ern­ment’s re­cent de­ci­sion to in­tro­duce mar­tial law are also hurt­ing the coun­try’s im­age among in­vestors. Busi­nesses sim­ply can­not pre­dict whether the busi­ness en­vi­ron­ment is sus­tain­able.

For for­eign busi­ness­peo­ple, the mere men­tion of mar­tial law or war is enough to make them turn their backs on Ukraine and look to in­vest their money else­where.

This sit­u­a­tion “post­pones in­vest­ment projects in the same way as it hap­pened dur­ing the Euro­maidan Rev­o­lu­tion” in 2014, Yakubovskyy says.

Some planned projects have been al­ready frozen, and “no­body will ini­ti­ate (new projects) nowa­days as only per­form­ing pre­lim­i­nar­ies like le­gal and fi­nan­cial due dili­gence brings sub­stan­tial ex­penses,” Yakubovskyy added.

And in­vestors who al­ready work in Ukraine are “get­ting wor­ried about the pos­si­ble con­fis­ca­tions and other ac­tions” by the state — ei­ther through raider at­tacks or other am­bigu­ous ac­tiv­ity jus­ti­fied on the se­cu­rity grounds.

“For­eign busi­ness­peo­ple are pre­pared to live with the com­mer­cial risks,” Yakubovskyy said, “but not with po­lit­i­cal and cor­rup­tion-re­lated risks in Ukraine.”

(Volodymyr Petrov)

Nobles part­ner Volodymyr Yakubovskyy speaks with the Kyiv Post at the Hy­att Re­gency Kyiv ho­tel on Dec. 12, 2018.

(Wla­dys­law Musi­ienko)

Ger­man Chan­cel­lor An­gela Merkel (L) talks with Ukrainian Prime Min­is­ter Volodymyr Groys­man at the Ger­man-ukrainian Eco­nomic Fo­rum in Ber­lin on Nov. 29, 2018, in Ber­lin.

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