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Old feuds – Odessa Airport

October 20, 2016

In 2011 when “The Family” Yanukovych was taking a tribute from anything and everything it didn’t actually steal, raid or otherwise take control of, Odessa Airport a hitherto publicly owned asset was “privatised”.

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The City entered into an agreement with “Odessa Airport development”, taking a 25% stake in the special purpose vehicle “International Airport Odessa”.

This SPV was used to attract investment of $90 million – of which the City put up 25%.  The remaining 75% supposedly to come from the other investors.

Those other investors were Viktor Levchenko, Alexander Kirichenko, Mikhail Chernetsky, Sergei Borodin, Sergei Korotkov, Alexander Shabalin, Oleg Gonchar, and Igor Posuhovskogo – notwithstanding two of Odessa’s most notorious businessmen Boris Koufman and Alexander Granovsky (whose political star is currently very much on the rise in Kyiv).

In 2001, the current Mayor of Odessa was merely the regional leader of Party of Regions (among his other activities as nefarious “businessman”).  For whatever reason Gennady Trukhanov was very much against the privatisation of Odessa Airport.  It may be that it was simply due to the fact he was not invited/asked to be a private partner, or it may be that the privatisation of the airport somehow interfered with his business activities and/or increased the cost of doing business.  He is, after all, very capable of a good scam as yesterday’s entry makes very clear.

Nevertheless, former President Yanukovych was insistent and thus Mr Trukhanov as Party of Regions leader was forced to lobby for something that he was actually against.  A reader should note that “investors” Messrs Koufman and Granovsky were very close to Alexander Yanukovych at that time.  (Indeed Mr Granovssky’s FINBANK was allegedly used to launder money for “The Family” frequently.)

A reader should also note that none of the “private investors” have ever ranked highly on Mayor Trukhanov’s Christmas Card list.  None are in his orbit.  To be blunt, he doesn’t particularly like any of them.

Since Gennady Trukhanov became Mayor he has sought to remove City Hall from the airport special purpose vehicle and re-nationalise it.  Several attempts have failed.  October 2015 witnessed a formal settlement between partners and City Hall to settle the feud.  It appears now to have been no more than an armistice.

Within that armistice/settlement there was a booby trap set by Mayor Trukhanov.

  • International airport” Odessa “pledged to July 1, 2016 to complete the construction of a new passenger terminal area of 29 thousand square meters with a capacity of 3-3.5 million passengers per year., And put it into operation no later than September 30, 2016 year.

Clearly 30th September has long since passed and the new terminal is not in operation.  In fact it is nowhere near being ready for use with no internal fit out whatsoever.  It is not ready, in part because City Hall “put a (covert) squeeze” on the construction work.

NABU has also opened a criminal investigation into the “privatisation” during the Yanukovych term.  Criminal Case 52016000000000214 was opened in late June of this year.

Without going into too much detail, on 19th October Mayor Turkhanov managed to steer City Hall through a vote to remove the City from “International Airport Odessa” SPV.  The City’s capital investment will now requiring returning – except, unsurprisingly, the other “partners” have not actually “invested” (yet) other than in a commitment to do so.

Perhaps then, in the absence of any capital return, a 25% stake in the new terminal on the terms of City Hall (rather than old Yanukovych diktats) will be the outcome.  Time will tell whether Messrs Kaufman and Granovsky will be accommodating (one way or another).  Mayor Trukhanov would consider the return of the airport to public ownership and a City Hall stake of 25% in the new private terminal something of a good outcome.

There will probably be numerous court cases regarding the re-nationalisation – or prevention thereof -despite the “investors” having never fulfilled their commitments to the existing and operating Odessa Airport.  It seems probable that City Hall will win and the current Odessa Airport will return to public ownership.  It will be a political and possibly very personal win for Mayor Trukhanov whose motivation for this, at least in part, is principled revenge over an issue he has always been against.

If Mayor Trukhanov is successful, and it appears he will be, then he too will have to be wary of revenge from the likes of Messrs Kaufman and Granovsky.  Another little local war behind the curtain may just have begun.

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