Archive for April 10th, 2010

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Lech Kaczynski

April 10, 2010

This man was probably the father of modern day Poland and whilst no doubt it will not be long before his good deeds are sacrficed on the alter of his extremely conservative catholic views on some issues, it should not be forgotten what he did for Poland from the days of Solidarity to the present day.

Sadly my Polish is nowhere near good enough to post this in the Polish tongue, but it is truly a sad loss to Poland and all the post Soviet States as one of the leading lights of reform has been extinguished whilst others still struggle to follow his lead in the region.

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UK complicity in Ukrainian Constitutional Court Ruling?

April 10, 2010

Well dear readers, here is a link to a bit of a yaaaaaaaaawwwwwwwwwn article by the EU Observer.

http://euobserver.com/7/29831

At least I was yawning my way through it until I reached these paragraphs:

According to press reports, a day before the 11 March approbation of Prime Minister Mykola Azarov’s government in the Verkhovna Rada, the new Ukrainian President consulted the ambassadors of the G8 countries about whether they would accept a government elected by individual MPs, including deserters from other parties, as opposed to one which had the backing of political blocs.

Allegedly, either the majority or all of the ambassadors gave Mr Yanukovych green light under the condition that he would ask the Constitutional Court to rule on the legality issue. To Western eyes, the question may have seemed to be a purely judicial one. But Ukraine is not yet a consolidated democracy with a deeply ingrained rule of law.

Now, our own Mr Turner (UK Ambassador to Ukraine) is no naive public schoolboy better suited to conkers than diplomacy.  He is in fact a mandarin of serious note, with whom I find it difficult to see serious grounds for fault, particularly given the restraints put upon him by David 006 Miliband…….who is better suited to playing conkers than representing the interests of the UK.

Is it the case that 006 back in London gave the “green light” for what many would consider the complete disregard of the existing Ukrainian Constitution and Leigh was to relay such inferences?

If so, how duplicitous can it be to fund the drive for “rule of law” in Ukraine with EU taxpayer money and yet be complicite in trampling the Constitution of such a nation at the same time?

I find it difficult to believe that it would be the personal position of Leigh himself, as he, like myself, has blogged about the disregard for the local elections being postponed indefinitely……and then some elections scheduled to be held, but not all, as mentioned by my good self although not by Leigh.

He, to be fair has made his point and given his position is not really as able to comment on, or pursue issues as far as I am able to, without extreme due care and attention.  I, at least at present, am neither Honourary Consul for the UK or Ukraine, so therefore am able to take things a little further and with slightly less due care in so much as the inferences that can be drawn from my ramblings here.

The question is though, was the G8 and Mr Miliband, complicite as is indicated in this article?

Certainly our good Ambassador would have informed the boy Miliband that such a move would certainly make it through the Constitutional Courts…..rightly or wrongly……. but international condemnation is something which Mr Yanukovych does not need when walking a tightrope between East and West.

It is not a question of whether the outcome of the Constitutional Court would have changed, in so much as, would the current government have even been formed if the G8 would not have recognised its legitimacy and cried “foul” very loudly and very publicly?

From a G8 and global viewpoint, of course a stable government aligned with the President, rather than what there has been for the past 5 years, is certainly a good thing, but what price stability over law?

(A rhetorical question when it comes to the current Labour masters of our Ambassador somewhat…..but there we enter UK domestic politics which would be a completely different blog.)

I know our people in Kyiv read my blog…….so greetings one and all…….and indeed I have posted replies to posts on my blog from HM Embassy in the past, with their consent of course.

(I am after all no competition for WikiLeaks and as far as I know, still subject to The Official Secrets Act I signed many moons ago (and may even still have my PV status for secret information although that has probably lapsed), whilst in the employ of The Crown).

I will not be expecting any confirmation or denial from Kyiv over these accusations and no doubt someone somewhere will seek such information under the Feedom of Information Act if they are that keen to establish the truth (or not) behind what the EU Observer has written…..as far as HM Government involvement is anyway.

However, the lack of denial more than the lack of condemnation (which has been now muted by the obvious court decision) is quite deafening at the moment.

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Rule of law starting to appear with regard to foreign investment?

April 10, 2010

Errrrm, yes dear readers, I did qualify the “rule of law” with “foreign investment”……it was not a carte blanche statement.

It is way to early to say the rule of law is changing for the average person since the new administration took charge, if it ever will change.  The jury…….if there was one……..is still out.

However, for the foreign investor, there is positive signs appearing that Ukraine is not the wild east as is continually infered in the foreign press.

Interfax-Ukraine:  

The Ukrainian Prosecutor General’s Office (PGO), after conducting checks on the observation of Ukrainian law with regard to the execution of court rulings in the sphere of privatization, has found evidence of criminal actions by officials of the Ukrainian State Treasury, PGO officials say.

“[The actions include] abuse of office and blocking the execution of court rulings. The said persons did not return UAH 800 million to bidder companies within six months of the holding of the tender to sell a stake in OJSC Odesa Port-Side Plant, so the courts imposed a fine of over UAH 3 million on the State Property Fund, which caused losses to the state,” the press service of the Ukrainian PGO reported on Thursday.

Yes, you read it correctly, the PGO and the courts are kicking some high level backsides past and present over the non return of “comfort, confidence, commitment”……. call it what you like……. payments made up front from foreign bidders for Ukrainian assests.

Before those of you who do not normally get involved in large asset deals start saying only in Ukraine would people have to put money up to even bid on an asset, I will tell you that this is quite normal further afield than Ukraine.

Basically the system is simple, having acted as a consultant in several such deals here and in Russia.

The would be buyer submits a Letter of Interest (LOI) in the asset.  The problem here is people with no serious interest are capable of writing such a letter, as are people who may be seriously interested but either do not have the cash behind them or have the banking relationships to get the cash behind them.

It is therefore quite normal for a LOI to be submitted followed by a financial sum to prove the seriousness of the potential buyer, which will be returned if they lose the bid.  Depending upon the asset size and cost, depends upon the size of the comfort payment for the seller.  Everything is relative in this regard.

After this comes the Non Disclosure Agreement relating to documents that are viewed in order to do due dilligence on the asset in question and occasionally a Non Circumvent Agreement if going through a intermediary such as myself.  Thus a NDA or NCND is signed prior to due dilligence beginning.

Depending upon the sturcture of the deal and the involvement of someone like myself, an IMFPA is also lodged at the bank of one or other party paying my fees, should the sale be structured over a period of time and my fee also be structured to match the payment schedule for the asset. 

An IMFPA is an Irrevocable Master Fee Protection Agreement and guarantees my simultaneous payment when asset payments occur.

Simple eh?

Anyway, it seems persons past or present at the State Property Fund have not returned “comfort payments” which accompnaied LOI’s for the Odessa Port Side asset when it’s privatisation was cancelled by the State, contrary to the agreements signed.  Even after court rulings to do so, they have failed to return monies, incurring further penalties by way of fines impossed by the courts to the State.

No doubt such money, if it has not yet been returned to the interested parties already, will now be promptly returned, which should be an encouraging sign to foreign investors interested in Ukrainian assets either being sold publically or privately.

Nobody I have acted for has ever been screwed in Ukraine or Russia despite the bad press it gets, whether the assets has been sold for $200 million or $500,000.

For the record, Odessa Port Side will once again be put up for privatisation soon, along with a 75% stake in UkrTelecom (25% retained by the State) and several other very plausable assets.

Before you all say that all the good assets will be sold to Russian and Ukrainian oligarchy, I will say that in the case of Odessa Port Side (as an example), the serious consideration was being given to foreign bidders…….although I can’t say who………because as I explained above, there are NDA/NCND arrangements.

Still, this is definitely good news for foreign investors who are not quite sure if they want to dip their toe into Ukrainian water, as it clearly displays that they actually do have some recourse here if things do not go according to plan…….or contract!

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