Archive for the ‘Business Admin – Staying Legal’ Category

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Limits on cash transactions from 1st September 2013

June 8, 2013

Way back on 21st January this year, I wrote about proposals from the National Bank of Ukraine (NBU) to place a limit on cash transactions within the Ukrainian economy.

Currently only 11% of transactions in Ukraine are not made in cash according to the NBU – Ergo 89% of all transactions in Ukraine are cash transactions.  For example, whether it be $40,000 for a new car or $2,000,000 for a very nice home by the sea, such transactions almost always occur in cash.

With effect from 1st September, it seems that is now about to stop – or at least reduce dramatically – owing to the NBU putting an official cap of UAH 150,000 (about $18,750) on cash transactions.

Whilst this will undoubtedly be promoted as a way to move some of the economy from the black/grey into the light – and it will have some benefits in this direction – one can also speculate that this has much more to do with reducing the need to continually buy US Dollars, Euro etc to facilitate people withdrawing large sums to buy cars, apartments and homes etc., when all the time the foreign currency reserves held by Ukraine are on a continual downward trend.

Quite simply there is less need to buy the paper currency from the markets when larger transactions will now have to be accomplished by transferring numbers electronically internally for domestic transactions.  Over the course of a year, one has to suspect going to the markets and buying $ billions in physically held cash to facilitate domestic transactions is a fairly costly exercise.

Thus one is left to ponder if the lightening of a black/grey cash economy is the real driver for this decision and a substantial saving on buying foreign currency is a fortunate by-product of this move for the NBU and Ukrainian banking system – or vice versa.

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Ukraine climbs in World Competitive Yearbook rankings

June 2, 2013

As incredible as it may seem to many prima facie, Ukraine has managed to climb from 56th to 49th place in the World Competitive Yearbook – a rise of 8 places – and is now better placed than several EU nations.

Nice to see a fairly well respected league table in which Ukraine is heading the right way for a change!

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EU/Ukraine Mission DCFTA Workshop – 10th April 2013

April 7, 2013

For those of you who happen to be in Brussels on Wednesday 10th April, the Ukrainian Mission to the EU is holding a DCFTA workshop for business at the Press Club Brussels, 95 Rue Froissart, 1040 from 1500 – 1630.

Key speakers are the two main negotiators of the DCFTA Messrs V Piatnytskyi and P Cuisson.

Some may consider this somewhat hopeful given there are doubts the AA and DCFTA will be signed in Vilnius in November – however with the impending seemingly immediate release of Yuri Lutsenko, perhaps not.  His release will go a long way towards the “substantial progress” the EU has demanded over the issue of “selective justice”.  Possibly just far enough, as nobody really expects Tymoshenko to be released prior to 2016 and equally nobody expects much in the way of ratification before that date either due to German, French and EU parliamentary elections in 2013, 2014 and then Ukrainian presidential elections in 2015.

Who knows?  As is so often the case in Ukraine, it just manages to do enough by the eleventh hour – by hook or by crook – be it delivering a good Euro 2012 tournament on an international scale, or the tradesmen finishing and leaving a new shopping centre two hours before it is due to open domestically.

Whether the same time and effort will be spend within Ukraine making the same explanations to business and entrepreneurs  remains to be seen.  Perhaps it is felt better to leave that until any signing actually happens?  That said, signed or not signed, I fully anticipate mutually beneficial parts of the DCFTA to be implemented anyway – as is always the case with what is considered politically expedient to all concerned.  After all the framework is already agreed and initialed, sealing the framework.

I have to say, that despite my invitation to this event, I will not be traveling to Brussels for the sake of a 90 minute workshop – particularly one that is more focused towards the Europeans looking at the opportunities the DCFTA offers in Ukraine, rather than one aimed at Ukrainians and the opportunities it offers looking west.

If a traveling roadshow passes through Odessa attempting to educate on the specifics of the DCFTA and opportunities it offers Ukrainians looking west – then I will surely attend – just to let you know what was said!

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Sold – Odessa Oil Refinery (A crude and murky business)

March 12, 2013

Back in October 2011, I mentioned that the LukOil terminal in Odessa had just been put up for sale.

It has now sold.  At least it is sold subject to contract exchange.

The new owners are an umbrella company called VETEK LLC based in Kyiv.  VETEK was registered as a company in Kyiv on 28th February 2013 and is headed by a chap named Andrey Koshel.

VETEK LLC, appears to be a holding/umbrella company for Gaz Ukraine – fronted by Serhiy Kurchenko, the Kharkiv lawyer, owner of Metalist Kharkiv FC, and friend of Olexander Yanukovych, son of the current president of Ukraine.

If that seems simple, Gas Ukraine is indeed a holding/umbrella company for a number of companies and has its head office in Simferopol Crimea, and who owns what behind the front of Serhiy Kurchenko is far more difficult to determine.  Gas Ukraine, naturally, is an importer of gas, LNG, oil and owns a rapidly expanding empire of several hundred petrol stations dotted around the country.

It also appears that Odessa refinery was not the first choice acquisition for VETEK/Gaz Ukraine – It originally went after the Lysychansk refinery owned by TNK/BP who subsequently removed it from sale due to it being an asset it could charge Rosneft for during its take over.

Anyway, the net result is that whomever is behind VETEK LLC and Andrey Koshel – or should we say whomever is behind Serhiy Kurchenko who fronts Gaz Ukraine, now own the Odessa refinery – which has not operated since 2010.

In fact the only Ukrainian refinery to operate in the past 3 years has been Ukrtatnefta – who I mentioned exactly one month ago - embroiled in nefarious circumstances - naturally.

So, it will be interesting to see whether the new owners of the Odessa refinery will make it the second of the six existing oil terminals to be operating in Ukraine, or whether Ukrtatneft will be allowed to continue as the only refinery in the nation to be active.

Smelly? – Maybe it’s just the gas!

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Transparency in Extractive Industries in Ukraine?

November 8, 2012

Now here is something interesting, not just because it involves transparency within the murky world of extractive industries, but the fact that this even exists in Ukraine – even if only on paper:

МІНІСТЕРСТВО ЕНЕРГЕТИКИ ТА

ВУГІЛЬНОЇ ПРОМИСЛОВОСТІ УКРАЇНИ

НАКАЗ

02.10.2012 м. Київ № 785

Про створення багатосторонньої

групи заінтересованих осіб (БГЗО)

з питання імплементації в Україні

Ініціативи щодо забезпечення

прозорості у видобувних галузях

На виконання завдань, визначених постановою Кабінету Міністрів України від 30.09.2009 № 1098 «Про приєднання України до Ініціативи щодо забезпечення прозорості у видобувних галузях», пунктом 12 розпорядження Кабінету Міністрів України від 18.07.2012 № 514 «Про затвердження плану заходів з впровадження Ініціативи «Партнерство «Відкритий Уряд» стосовно імплементації в Україні Ініціативи щодо забезпечення прозорості у видобувних галузях відповідно до її критеріїв

НАКАЗУЮ:

1.Створити багатосторонню групу заінтересованих осіб (БГЗО) з питання імплементації в Україні Ініціативи щодо забезпечення прозорості у видобувних галузях за участі представників центральних органів виконавчої влади, компаній та громадських організацій у складі згідно з додатком.

2. Багатосторонній групі заінтересованих осіб у місячний термін розробити проекти Положення про БГЗО і Технічне завдання для її роботи.

3. Контроль за виконанням цього наказу покласти на заступника Міністра – керівника апарату Макуху В.О.

Міністр (підпис) Ю. Бойко

Додаток

до наказу Міненерговугілля

від 10.10.2012 № 785

Склад

багатосторонньої групи заінтересованих осіб (БГЗО) з питання імплементації в Україні Ініціативи щодо забезпечення прозорості у видобувних галузях

.

Макуха

Володимир Олексійович

заступник Міністра енергетики та вугільної промисловості України – керівник апарату, голова

Представники центральних органів виконавчої влади:

 

Кирюшин

Ігор Володимирович

директор Департаменту з питань нафтової, газової, торф’яної, нафтопереробної промисловості та альтернативних видів палива Міністерства енергетики та вугільної промисловості України

 

Меркушов

Віктор Тимофійович

 

член Національної комісії, що здійснює державне регулювання у сфері енергетики України (за згодою)

 

Гребеннікова

Лариса Костянтинівна

 

начальник управління розвитку ринків Департаменту розвитку реального сектору економікиМіністерства економічного розвитку і торгівлі України (за згодою)

 

Наврата

Артем Ігорович

 

заступник директора Департаменту фінансів виробничої сфери та майнових відносин

Міністерства фінансів України (за згодою)

 

Ігнатов

Андрій Петрович

 

заступник Голови Державної податкової служби України (за згодою)

 

Мормуль

Дмитро Дмитрович

 

заступник Міністра екології та природних ресурсів України – керівник апарату (за згодою)

 

Представники компаній:

 

Касянчук

Сергій Васильович

 

начальник Управління видобування газу, газового конденсату та нафти Департаменту з видобування гази та нафти Національної акціонерної компанії «Нафтогаз України» (за згодою)

Нестеренко

Олексій Григорович

 

член комісії з припинення діяльності,

заступник директора з питань перспективного розвитку та взаємодії з органами влади дочірньої компанії  «Укргазвидобування» (за згодою)

Депелян

Анжела Мартіросівна

 

начальник Департаменту з фінансово-економічних питань – член комісії з припинення діяльності дочірньої компанії «Укртрансгаз» (за згодою)

 

Рапута

Ірина Вікторівна

 

комерційний директор з розвідки та видобування підприємства з іноземними інвестиціями «ТНК -Україна» (за згодою)

 

Тайлі Грехем

директор товариства з обмеженою відповідальністю «Шелл Юкрейн Експлорейшн енд Продакшн І» (за згодою)

 

Кларк Пітер генеральний менеджер товариства з обмеженою відповідальністю «Шеврон Україна» (за згодою)

Представники громадських організацій:

 

Тодійчук

Олександр Сергійович

 

Президент міжнародної громадської організації «Київський міжнародний енергетичний клуб» (за згодою)

 

Гончар

Михайло Михайлович

 

керівник енергетичних програмгромадської організації «Центр сприяння вивченню геополітичних проблем та Євро-Атлантичного співробітництва Чорноморського регіону «Номос» (за згодою)

 

Павленко

Олена Михайлівна

 

засновникгромадської організації«ДІКСІ ГРУП» (за згодою)

 

Ігнатьєв

Станіслав Євгенович

 

виконавчий директормолодіжної громадської організації «Інститут сталого розвитку» (за згодою)

Дейнеко

Владислав Валентинович

 

директор енергетичних програмгромадської організації «Аналітичний центр регіонального співробітництва» (за згодою)

Алтухов

Вадим Вікторович

 

керівник Донецької обласної громадської організації «Народний контроль» (за згодою)

 

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Sky high pricing – Ukrainian National Aviation University

August 7, 2012

How much does a trainer aircraft cost?  Do you get discount for volume?  As a government entity, do you go through a foreign unknown finance agency for the funds?

It seems the National Aviation University of Ukraine, on 23rd July, signed a contracted with Diamond Finance Services GmbH (Austria) for 7 training aircraft at a cost of Euro 2.85 million – excluding VAT and import taxes etc.  One presumes this is the credit arm of Diamond Aircraft Industries.

To be exact, 5 x DA40 NG Club (refurbished) @ Euro 345,ooo each

DA40NG

and 2 x DA42 NG @ 562,000 each.

DA42NG

If that seems a little pricey – that is because it is!

Shenanigans with the budget? Something seem a little smelly?  Just a bit!

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The trials and tribulations of being an independent TV station in Ukraine

July 23, 2012

Normally I stay away from the headline news in Ukraine, quite simply because you can read about that in other places, albeit I wouldn’t guarantee the objectivity, accuracy or unbiasedness of the reporting in those places necessarily.

Like so many foundational pillars of society in Ukraine, the media here also too often sets low standards and routinely fails to achieve them.  That is not necessarily a criticism of the journalists themselves, although you are oft left to ponder if they ever bother to check facts or the validity of what comes from “sources”, but one of editorial policy and quite probably in some cases, ownership influence.  That accounts for media outlets that have a bias for any side of the political line.

In fact it is sometimes quite difficult not to feel sorry for those journalists who try to provide a balanced, factual and thoughtful article considering the hurdles that lay in wait when trying to get anything published.  Naturally this can lead to self-censorship just to earn a crust.

Anyway, amongst the very few media outlets that appear genuinely neutral and will give critical coverage to both government and opposition alike, is television channel TBi.  It is a channel that I regularly watch if I want to know what is happening in Ukraine rather than just Odessa and feel confident there is at the very least some element of balance in the reporting.

For events in Odessa, I tend to watch C Odessa which is biased towards the current opposition parties, hardly surprising when they share the same offices as Arseny Yatseniuk’s Front for Change political party, and occasionally Art TV which is owned by my neighbour and leader of Party Rodina, Igor Markov, which is equally as biased in favour of his own party naturally.  Nevertheless for local news of events, current and future, in Odessa, they are both fairly good and I am very well aware of their bias.

Returning to TBi, back in 2011 they were involved in a tax situation with the tax authorities which went to court and they lost.  They then appealed and won.

Unsurprisingly, the tax authorities then changed their centre of attention from TBi itself to those individuals who own and control it.

Now, as already declared I am something of a TBi regular when it comes to daily viewing and it would therefore be quite easy for me to simply say this is government pressure on a television network that is often rightly critical of it.  That said, having lived in Ukraine for a decade I also know that tax avoidance is a national pastime for rich and poor alike on a daily, if not hourly basis for the vast majority of 46 million people.

Even I, who pay my taxes in Ukraine, at the end of last year had to cough up an additional few thousand US$ in taxes, not because I wanted to avoid paying, but because the tax system is simply so difficult to navigate even the tax authorities regularly work things out wrongly (or indeed are bribed to work things out wrongly by those who pay paxes).

So, knowing that even with the very best of intentions and a complete openness with the tax authorities can lead to being wrongly taxed even by their calculations, I accept that there may be a tax case to answer.  Quite simply, I very much doubt anybody at a personal level, ever actually pays exactly the right amount of tax either deliberately or inadvertently.

The issue here is therefore not necessarily that the owners of TBi are being investigated for tax issues, but the timing of the investigation immediately prior to the official 90 day electioneering campaigns.

A popular national television channel and the people within, who are openly critical of the current government when appropriate, being subjected to tax investigations on the eve of parliamentary electioneering screams indirect government pressure via the tax authorities.

Quite simply the investigation could have been delayed until after the elections to avoid the inference of political pressure.  Any evidence of any wrong doing is not going to disappear during the electioneering window.

Further to that, apparently, TBi disappeared from the screens of those viewers in Dnipropetrovsk, Kyiv, Luhansk, Zaporizhya, Donetsk, Poltova, Symferopol, Sumy, Kharkiv and Odessa from 20th July.

Except it didn’t.  My coverage of TBi in Odessa has not been interrupted at all.

It appears that those people who watch TBi via Triolan cable provider are affected but no others.  How many people are subscribed to Trilan, I have no idea, however if my cable provider pulled TBi then I would dump them and use another, watch TBi via the Internet or get it via satellite if dumping the provider proved a severe pain contractually.

Triolan are citing technical difficulties in continuing to carry TBi – a strange phenomenon considering on 19th July and for the previous years they had encountered no technical difficulties carrying TBi and yet on 20th, there were technical difficulties. – Hmmm

Fortunately, no other cable providers are following suit or intending to do so.  Thus I will continue to have uninterrupted coverage of one of my preferred channels.

One wonders though, how such a move will effect the subscriptions to Triolan as time passes.  Maybe they will resolve their technical problems with TBi just after the elections are over?  Now that wouldn’t surprise me at all.

With TBi standing firm to the inferred governmental pressure, maybe the Triolan was put under the similar pressure.  Maybe it is owned by a member of the government who simply made a decision not to carry a channel critical of themselves and colleagues.

Whatever the case, I very much doubt that technical issues are the cause of TBi being dropped.

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Ukraine sows whilst China reaps?

July 12, 2012

Ukraine sows and China reaps?  Not yet, but very soon.

Last year I mentioned China’s expansion into Ukraine several times.  In fact I wrote a rather link heavy post called China Watch at the end of last year that listed just a few Chinese expansions across almost every serious political and trade sphere in Ukraine.

A few days ago, whilst writing about the controversial language law, completely blinding the knee-jerk opposition parties to anything else, I mentioned a plethora of laws that went through the RADA unnoticed including a law on leased land.

As a very clever and wise Russian diplomat once stated, “Everything is connected, even when it appears not to be”.  To put that into context he was talking about negotiations, levers, carrots and sticks etc.  In effect carrying out action A can have repercussions with agreement Z if we want it to.  Quite true.

What has this to do with my China Watch post and the raft of legislations past in the RADA last week whilst the opposition were navel gazing?

Well amongst everything pushed through was the ratification of a Ukrainian/Chinese agreement relating to agriculture.   After all, with the EU in a state of flux and also somewhat displeased with Ukraine, Russia with some headlining issues of a global nature (see Syria, domestic unhappiness etc) and also not exactly overly friendly with Kyiv at the moment, Ukraine can seek partners elsewhere (as I stated it would in last December’s China Watch post).  The two most obvious are China and Turkey, but not only those.  Keep a close eye on Indian/Ukrainian relations in the near future.

The ratification of this Ukrainian/Chinese agreement immediately releases $3 billion of initial Chinese investment into Ukrainian agriculture, part of which according to the government of Ukraine, will be spent building an organic fertilizer plant.  The rest will be spent on importing Chinese made agricultural equipment, seeds and associated farming requirements.  China in return will get more oil, corn and soybeans as a direct result of increased Ukrainian yields from Chinese investment.  There is even ambitious talk of converting some of Ukraine’s alcohol producing facilities into bio-fuel producing facilities.

Everyone’s a winner right?

Well, I have mentioned the law on leasing land a few times in this post and since it was passed last week, in others.  When it comes into effect next year, it will allow China and Chinese companies to lease and purchase agricultural land.  It also seems to allows the Ukrainian government to commandeer leased land in certain circumstances from an initial glance at the legal text.

Rumour has it that when this law comes into effect, China many well throw in excess of $30 billion at Ukrainian agricultural land and production and thus Ukraine may well sow and China reap.  Possibly not a bad thing for Ukraine given the definite need for serious agricultural investment to assist some very skilled if under-resourced farmers and agricultural managers.  The downside, if there turns out to be one, could be huge areas of prime agricultural land (with the best black soil in Europe) leased long-term, or indeed owned by (indirectly if the ban on non-residents owning agricultural land continues), China.

It would be no surprise to see large numbers of Ukrainian agricultural companies (many owned by those connected to the RADA) suddenly appear buying up agricultural land, to then be bought by a Chinese umbrella company allowing a form of grandfather rights over and above what is directly leased (which has no barriers regarding citizenship) by China and the Chinese.

Once more, quick turnover business and the separation of politics from economics and trade, a trade mark as far as the Chinese government is concerned, looks to leave Russian and EU business interests in the backseat in a very promising area of development in Ukraine.

You can’t say I didn’t tell you a serious trade partnership with China wasn’t coming though!

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