Unable To Take Flight
Visitors of state-owned aircraft maker Antonov are greeted by the statue of Vladimir Lenin that overlooks the factory premises in Kyiv. Apple trees and greenhouses for growing cabbages are another relic from the Soviet era here.
So is the man effectively in charge of the giant aircraft maker, Dmytro Kiva, who has worked at the company since 1964.
He has held several jobs here since the early 1980s. He was Antonov’s chief designer in 1987-1991, and after a break got the same job back in 2006, before getting appointed the company’s president two years later.
Despite accusations of corruption and failure to modernize the aircraft maker, Kiva, 72, has resisted attempts to remove him as head of the company. His staying power is not for the lack of government effort in trying to plough through the cumbersome procedure to remove him.
Kiva said all accusations against him are “lies.”
“Ruslan International and Ruslan SALIS have been audited by Ernst & Young,” Kiva said. “These are just accusations made by people who have gotten used to stealing themselves.”
Antonov is Ukraine’s largest aircraft producer and also has airline and airport service units. That doesn’t mean it is terribly successful – it produced just two aircraft last year, three in 2013 and eight in 2012.
In 2013, its net profit fell 0.71 percent to Hr 39.05 million ($1.5 million), while its net revenue dropped 1.47 percent to Hr 3.27 billion – or $130 million a year at an exchange rate of Hr 25/$1.
To its critics, Antonov stands as a monument to Ukraine’s Soviet-era graft, low production and inefficiency If Antonov were properly man-
aged, critics say, it could sell billions of hryvnias more in commercial and military aircraft in its niche as a low-cost alternative to Boeing and other global giants.
Kiva is seen as a living symbol of the obstacles holding Antonov back.
Technically, Kiva was removed in July 2014, but his replacement, Serhiy Merenkov, has been prevented from performing his duties by armed guards.
“For me, Kiva and corruption are synonyms,” said Merenkov, who was appointed by the Industrial Policy Ministry as president of Antonov in July 2014.
Kiva disputed Merenkov’s appointment in court, arguing that the ministry had no grounds for firing him, and has prevented him from entering Antonov’s premises.
In September 2014, the Kyiv District Administrative Court reinstated Kiva as Antonov’s president, and the decision was upheld by the Kyiv Court of Appeals in November.
On Feb. 3 Kiva’s employment contract with Antonov expired, and the Economic Development and Trade Ministry, the heir to the Industrial Policy Ministry, which oversees Antonov, appointed him as acting president of the company.
The ministry plans to select a new head of Antonov in a competitive hiring process by the end of this year. It is not clear if Kiva will be eligible.
Meanwhile, on Feb. 18, the Supreme Administrative Court ruled that the Industrial Policy Ministry’s order to appoint Merenkov was legal. But Kiva told the Kyiv Post that the ruling did not make Merenkov president because it applied only to the Industrial Policy Ministry and did not invalidate the Economic Development and Trade Ministry’s order to appoint Kiva.
(The ministry) “de facto recognized that in the period from August 2014 to February 2015 there were two presidents at Antonov, Kiva and me,” Merenkov said by phone.
The lengthy saga of Kiva’s removal started because of mounting accusa- tions of crimes against him. Some of them are related to highly profitable business activities by Antonov’s subsidiaries outside of Ukraine.
For example, in October the Prosecutor General’s Office opened a negligence, abuse of power and embezzlement case against Antonov’s management. The company’s top executives failed to transfer dividends from cargo airlines Ruslan International and Ruslan SALIS to the budget, the Prosecutor General’s Office said.
London-based Ruslan International and Leipzig-based Ruslan SALIS are joint ventures between Antonov and Russia’s Volga Dnepr group. Ruslan SALIS has lucrative contracts to deliver cargoes for NATO and E.U. governments. In 2006 the company signed a 600 million euro contract with NATO that was valid until 2012 and was subsequently extended.
The Prosecutor General’s Office told the Kyiv Post, in response to an inquiry, that these foreign-registered companies failed to share their income with Ukraine’s government, which is effectively a beneficiary owner of the cargo transporters.
The companies kept their incomes in foreign accounts, the prosecutors said, and the government incurred at least Hr 37 million worth of losses. It did not, however, clarify over what period of time the losses occurred. Meanwhile, Ukraine’s Military Prosecutor Anatoliy Matios told UNN news agency in October that the state incurred Hr 502 million in losses between 2006-2012 because of Antonov’s management.
Merenkov, who was appointed president of Antonov but never took over, said that Ruslan International and Ruslan SALIS had cooked their books to hide the profits.
But Antonov denied accusations in a statement on their website in October 2014, saying that it received $9.4 million in dividends from the two companies for the period of 2006 to 2013, and transferred the funds to the budget.
Ukraine’s Military Matios also said in October 2014 that Kiva owned stakes in Ruslan International and Ruslan SALIS, but Kiva denies this.
But the company itself continues to co-own the foreign businesses. The Prosecutor General’s Office told the Kyiv Post that it had proposed transferring Antonov’s shares in the two companies to the government.
Former Prime Minister Mykola Azarov is also a suspect in one of the cases related to Antonov manage- ment’s alleged misdeeds. According to the prosecutor’s office, he is charged with illegally suspending a probe by a government commission into financial violations by Antonov. In February an arrest warrant was issued for Azarov in relation to this case.
Azarov’s name is the only one released by the Prosecutor General’s Office in relation to abuse of power, negligence and embezzlement cases, but Merenkov says Kiva is also involved. The names of Antonov executives linked to the case have not yet been released because they have not been informed about being suspects as of now.
Merenkov claimed that top officials of the Industrial Policy Ministry used to be “in Kiva’s pocket,” but the prosecutor’s office refused to release details about ongoing investigations.
Kiva has also been accused of nepotism because his son, 52-year-old Oleksandr Kiva, has held a number of senior jobs in the state company also. He was appointed vice president and a deputy chief designer before his father became president in 2008, and kept his job after his father was promoted to president.
Kiva Jr. also topped the list of potential successors for the company’s top job, compiled by Antonov itself in January 2014.
“When Kiva became the company’s head, ethical principles dictated that he should change his son’s position,” Merenkov said.
But Dmytro Kiva dismissed the accusations, saying that his son is no longer on the list of contenders for the president’s job. “Previously dynasties were believed to be a good thing,” he added.
Antonov President Dmytro Kiva at a ceremony devoted to the certification of An-158 aircraft on Feb. 28, 2011, in Kyiv.
A protest held by Antonov staff in support of Antonov President Dmytro Kiva on May 21 near the Cabinet of Ministers in Kyiv.
From left, Antonov President Dmytro Kiva, then-Verkhovna Rada Speaker Oleksandr Turchynov and Interior Minister Arsen Avakov speak during the Arms and Security 2014 exhibition on Sept. 24 in Kyiv. (Volodymyr Petrov)