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FDI trouble in Yushni – Delta Wilmar suspends investment

January 21, 2018

Not without fanfare in October 2017 came the announcement of FDI from Singapore at Yushni – the deepest port on the Black Sea.

It appears however, that Delta Wilmar, one of the planet’s largest agricultural product processors has run into trouble in Odessa – perhaps unsurprisingly.

The Ukrainian leadership is known for making a lot of self-congratulatory noise and then disappearing in search of the next PR headline – leaving behind whatever then evolves often without so much as casting a nurturing eye over the well-being of inward investors.  It is a special form of self-defeating political folly in a nation where the leadership’s grasp upon the rule of law is decidedly and unambiguously weak.

Delta Wilmar planned to invest $150 million in creating a plant capable of agricultural processing 600,000 tonnes per annum and a berth for the shipping of 3 million tonnes of butter and meal per annum.

Much needed genuine (rather than Ukrainian recycled offshore) FDI, and promising for the development of Yushni (together with several other FDI announcements for the port).

It was clearly good news for all in Yushni, for the Odessa Oblast, and indeed for Ukraine – except Delta Wilmar has suspended work indefinitely.

The reason given by Dhruba Charan Panda, of the Board of Directors of Delta Wilmar, is extortion.

Extortion – Not the sort of public declaration that is likely to encourage more genuine FDI.

It would seem that the apparent extortion modus operandi is a classical one – rather than a new and complicated scheme.

Delta Wilmar states that it was sent a letter by a “charity” offering to “solve problems” with the local law enforcement and State entities – for a fee.

(Whether it be a “charity”or “NGO” is not clear, for at the time of writing no name was provided by Delta Wilmar),

If true, this is a form of racketeering that has a long history in Odessa.  The usual collusion to create problems and then an offer to solve those same problems for very generous (or extortionate) fees.

Delta Wilmar simply ignored this generous offer to resolve any current or future “problems” with the local institutions.

So far, so predictable.

A $150 million project is not about to be ignored by criminal structures however they be fronted – and they are surely connected by hook or by crook to somebody (or people) in power, so any repercussions would be perceived as minimal.

Naturally a reader is pondering what, if anything, the leadership of Ukraine knew about the problems that have led to the suspension of work by Delta Wilmar, prior to that decision to stop being taken?

Who knew what and when in Kyiv – if anybody knew anything at all?

No doubt Delta Wilmar will have raised the issue.  The Malaysian Ambassador is unlikely to have said nothing too.

However, it appears that the “charity” that offered to “solve problems” that Delta Wilmar were clearly expected to meet with the local institutions, also contacted the Ukrainian leadership Kyiv.

According to Mr Panda, the Board of Directors at Delta Wilmar are aware that President Poroshenko and Prime Minister Groisman received correspondence outlining numerous “issues” by the “charity” too – which resulted in additional checks and inspections of Delta Wilmar.  The allegations that apparently included money laundering and smuggling.

Ho humm.

Just because a “charity” is seemingly trying to extort money from Delta Wilmar, it does not necessarily follow that Delta Wilmar are automatically innocent relating to the claims made against it.

Indeed the “charitable entity” that Delta Wilmar claims is attempting extortion, also wrote to the Customs and Tax Committee of Indonesia, US Securities Commission, and the Singapore Stock Exchange where Delta Wilmar is traded.

There is also a law suit filed with the Jakarta High Court alleging money laundering and smuggling against Delta Wilmar by the “charity”.

It is the Jakarta law suit that has finally pushed Delta Wilmar to indefinitely and publicly announce it has suspend its work at Yushni – citing extortion.

A reader is now left to ponder whether the actions of the “charity” beyond its apparent attempts at extortion have any merit, whether it is a matter of a concerted act of belligerence in an effort to convince Delta Wilmar to take the route of least resistance to deliver their infrastructure project, or whether it is simply a particularly spiteful response after a rebuffing by Delta Wilmar.

At the time of writing there appears to be no comment from the government or any relevant ministry.

Perhaps there is shuffling behind the curtain to find a solution – perhaps not.

Whatever the case, until resolutions are found, this incident and the accusations made are not about to make Ukraine any more attractive as a location for corporate FDI.

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