Sergiy Oberkovych: As 2017 wraps up, Ukraine re­mains ‘land of op­por­tu­ni­ties’

Kyiv Post - - National - BY BRIAN BONNER [email protected]­POST.COM

The Kyiv-based Gvozdiy & Oberkovych law firm never eas­ily rolled off the tongue. So the main part­ners, Va­len­tyn Gvozdiy and Sergiy Oberkovych, last year short­ened it to GOLAW.

It's def­i­nitely a catchier and eas­ier way to re­mem­ber the 50-lawyer firm that started 15 years ago and that, ac­cord­ing to the lat­est rank­ing by Yuridich­eskaya Prak­tika (Le­gal Prac­tice) mag­a­zine, is now the eighth best law firm in the na­tion.

Be­sides a re­brand­ing ex­er­cise, Oberkovych said the name GOLAW is also meant as a sug­ges­tive mes­sage for Ukraine, where the firm does most of its busi­ness: "Stick to the law."

In an in­ter­view with the Kyiv Post, Oberkovych said that he sees signs that Ukraine is do­ing so — grad­u­ally be­com­ing a rule-of-law na­tion, to the con­ster­na­tion of its au­to­cratic en­emy in the Krem­lin. Con­sid­er­ing that the firm re­lies mostly on for­eign in­vestors as clients, Oberkovych has keen in­sights into the state of Ukraine's in­vest­ment cli­mate.

"From my point of view, there is sub­stan­tial progress against cor­rup­tion," Oberkovych said.

Yet, de­spite the im­prove­ments, in­vestors are still sit­ting on the side­lines and afraid to come to Ukraine. He thinks it's a mis­take for them to wait. He still views his na­tive Ukraine as "a land of op­por­tu­ni­ties."

Bright spots

"There are a lot of very good ed­u­cated peo­ple with skills, and tremen­dous nat­u­ral re­sources in Ukraine," Oberkovych said. "There is not a high level of com­pe­ti­tion be­cause not a lot of in­ter­na­tional com­pa­nies have come here. It's dif­fi­cult for cer­tain for­eign in­vestors to be brave enough come here at this mo­ment. But if they come later, when the judi-

“Do what you re­ally like to do and just be in­sis­tent in what you are do­ing. It’s noth­ing dif­fer­ent from be­ing suc­cess­ful else­where. I'm a very happy per­son.” cial sys­tem is im­proved, there will be other com­peti­tors here def­i­nitely. The rev­enue they can gen­er­ate will not be what they can gen­er­ate now, with some de­gree of risk."

He sees bright spots in the newly con­sti­tuted Supreme Court, the Na­tional Anti-Cor­rup­tion Bureau of Ukraine, the Busi­ness Om­buds­man's Coun­cil and the State Fis­cal Ser­vice of Ukraine.

He is more crit­i­cal of the un­re­formed Gen­eral Pros­e­cu­tor's Of­fice, the Se­cu­rity Ser­vice of Ukraine and other law en­force­ment agen­cies, par­tic­u­larly at the lo­cal lev­els, which still cre­ate too many ob­sta­cles — some of them il­le­gal — for com­merce to thrive.

He is look­ing ahead in 2018 to the cre­ation of the State In­ves­tiga­tive Ser­vice, which is sup­posed to take over in­ves­tiga­tive du­ties from the all-pow­er­ful Gen­eral Pros­e­cu­tor's Of­fice, whose 15,000 dis­cred­ited em­ploy­ees have es­sen­tially fol­lowed po­lit­i­cal or­ders in dic­tat­ing jus­tice since Ukraine re­gained in­de­pen­dence in 1991.

Such a tran­si­tion will im­prove the Ukrainian ju­di­cial sys­tem by mak­ing it re­sem­ble more closely the Western model.

He also wants to see the cre­ation of a state Fi­nan­cial In­ves­tiga­tive Ser­vice, re­spon­si­ble for com­plex fi­nan­cial crimes which are go­ing un­in­ves­ti­gated and un­pros­e­cuted to­day.

As a sign of op­ti­mism about Ukraine's fu­ture as an in­vest­ment des­ti­na­tion, GOLAW opened an of­fice in Ber­lin, Ger­many, to go with its Ukraine of­fices in Kyiv and Odesa. "We do ex­pect more Ger­man com­pa­nies to come to Ukraine," Oberkovych said.

2018 to-do list

The 16th Kyiv Post Le­gal Quar­terly, pub­lished on Dec. 22, ex­am­ines gov­ern­ment pres­sure on busi­ness as well as bar­ri­ers to com­pe­ti­tion, rule of law and il­le­gal cor­po­rate raider­ship. A new law is sup­posed to re­duce ex­ces­sive gov­ern­ment in­ter­fence with busi­ness dur­ing crim­i­nal in­ves­ti­ga­tions. Find the Le­gal Quar­terly at the Kyiv Post's top dis­tri­bu­tion points: dis­tri­bu­tion. kyiv­post.com Yet there is also a long list of un­fin­ished work needed to spur in­vest­ment, not least of which is win­ning the war against Rus­sia, and do­mes­ti­cally by wag­ing "a non-stop war on cor­rup­tion," in­clud­ing cre­ation of an agri­cul­tural land mar­ket and sell­ing off thou­sands of state-owned en­ter­prises.

"The real pri­va­ti­za­tion didn't hap­pen," Oberkovych said. "Hope­fully it will hap­pen next year."

The in­ter­view with Oberkovych took place on Dec. 15, the date that the newly ap­pointed Ukrainian Supreme Court took power af­ter be­ing sworn in.

"This Supreme Court gives a lot of hope. I was look­ing at the list of judges. Quite a lot of them are known to me and some of them, from my point of view, have very good rep­u­ta­tions and are very good peo- ple," Oberkovych said. "This ju­di­cial re­form will make for­eign in­vestors more com­fort­able."

He also sees mixed progress at the trial court level.

"Judges are mak­ing their rul­ings now on the mer­its rather than on the phone calls from the var­i­ous of­fices or other in­flu­ences they have had in the past, but such kinds of in­flu­ences are still hap­pen­ing on the low level courts," he said.

He also fa­vors the cre­ation of an in­de­pen­dent anti-cor­rup­tion court, at least on a tran­si­tional ba­sis, un­til reg­u­lar judges re­gain the public's trust.

As for the Busi­ness Om­buds­man's Coun­cil headed by Lithua­nian Al­gir­das Semeta, "prob­a­bly twothirds of the cases which we re­fer­rred to the busi­ness om­buds­man were suc­cess­fully re­solved with their as­sis­tance and our le­gal work," Oberkovych said.

Spoil­ing in­vest­ment

But the sit­u­a­tion re­mains far from per­fect, Oberkovych said, with law firms like GOLAW and oth­ers spend­ing an in­or­di­nate amount of time and "neg­a­tive en­ergy" sim­ply try­ing to de­fend clients' le­gal rights. He'd much rather work pos­i­tive le­gal av­enues such as reg­is­ter­ing new busi­nesses and in­vest­ment, do­ing merg­ers and ac­qui­si­tions, work­ing on new loan agree­ments and so on.

One big dis­pute is tak­ing place in Vil­no­hirsk, a Dnipropetr­o­vsk Oblast city of 23,000 peo­ple nearly 400 kilo­me­ters south­east of Kyiv.

There, one of the largest pro­duc­ers of glass con­tain­ers for bev­er­ages, Vil­no­hirske Sklo, is fight­ing off its obli­ga­tions on a $21-mil­lion loan it took in 2012 from a pri­vate Czech lend­ing in­sti­tu­tion, Ex­pobank.

Ac­cord­ing to Oberkovych, the com­pany il­le­gally di­vided its build­ings, the col­lat­eral on the loan, in four parts, mak­ing the orig­i­nal col­lat­eral seize to ex­ist.

"There are so many tricky ways that bor­row­ers are try­ing not to pay," said Oberkovych.

The Czech bank took the com­pany to court — only to get en­tan­gled in a now year-long se­ries of tri­als.

"Such cases are def­i­nitely not mak­ing Ukraine more at­trac­tive for for­eign in­vestors and for­eign busi­ness," Oberkovych said. "Such cases are hap­pen­ing less and less of­ten, but they are a night­mare for any for­eign in­vestor and bank mak­ing for­eign loan."

Be­cause of the dis­pute, the Czech Repub­lic'sn state-owned Ex­port Guar­an­tee and In­surance Cor­po­ra­tion, which in­sured the loan, was hes­i­tant to in­sure loans to Ukraine.

In other cases, GOLAW is fight­ing the pros­e­cu­tor's of­fice and in­ves­tiga­tive au­thor­i­ties for their in­ter­na­tional clients, achiev­ing “only very mod­er­ate re­sults."

One in­volves an at­tempt by a com­pany's share­hold­ers to change its name in the of­fi­cial regis­ter to es­cape a bank debt.

"It's prim­i­tive but very ef­fec­tive" in ty­ing up the case in le­gal pro­ceed­ings and pre­vent­ing fore­clo­sure, Oberkovych said.

Other times raiders ap­pear to be work­ing with pros­e­cu­tors in Kyiv to thwart crim­i­nal in­ves­ti­ga­tions into at­tacks.

"They're not do­ing their job at all," Oberkovych said of the Pros­e­cu­tor Gen­eral's Of­fice led by Yuriy Lut­senko. "So the pros­e­cu­tor's of­fice has to be def­i­nitely re­formed."

Lawyers want re­form

Oberkovych takes is­sue with crit­ics of Ukraine's le­gal pro­fes­sion who con­tend that lawyers are ben­e­fit­ing by the cor­rupt sys­tem in place and thus have no in­cen­tive to see the coun­try move to a rule-of-law so­ci­ety.

"I to­tally dis­agree with that state­ment. We as lawyers have to face a lot of prob­lems of our clients and help them to re­solve them," Oberkovych said. "We are also nor­mal hu­man be­ings. Be­ing in­volved in some­thing with only neg­a­tive en­ergy, it doesn't help us."

As for his as­sess­ment of the state of Ukraine's cor­rup­tion war, Oberkovych said:

"The fight is still on. We can­not say the cor­rup­tion is de­feated. Now it is pos­si­ble to fight it with more suc­cess. Those newly in­tro­duced in­sti­tu­tions only re­cently be­gan their op­er­a­tions and are wit­ness­ing ag­gres­sive at­tacks by those not happy with their ef­fec­tive work," Oberkovych, 49, said. "Lit­tle by lit­tle, Ukraine is mov­ing to a nor­mal civ­i­lized state where rule of law is pre­vail­ing. We're go­ing in the right di­rec­tion."

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