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The next big scandal of Odessa City Hall waiting to happen?

September 19, 2018

Such is the scale and breadth of corruption within Odessa City Hall under Mayor Gennady Trukhanov, it takes circumstances quite special for the next major scam and criminal activity to stand out as either brazen or of significance by way of future implications.

When such particular circumstances form, the blog usually tries to identify them before (or at the very least as) they happen so a reader can watch events unfold.  Unfortunately there are simply too many such incidents commented upon by the blog to link to them all.  A reader is therefore left to employ the search engine within the blog.

The planets are currently aligning for the next big criminal scandal to occur within Mayor Turkhanov’s Odessa City Hall – and despite 4 or 5 large NABU investigations into City Hall, a reader will be all too aware that this is unlikely to be a deterrent to those involved.

At the centre of the events currently unfolding is the Odessa CHP, responsible for providing the city heating.

It has long been an asset subject to criminal intention and activity.  An asset of attraction to the most serious of criminal and political players (when such individuals can be separated).

“Don” Angel Angert long targeted the CHP plant, drowning it in manipulated debt to his heating and power providers with a view to taking control of the asset via the courts and seizing it as payment for those outstanding debts.  Close friend of President Poroshenko and parliamentary leg-breaker Ihor Kononenko also had an interest in the plant and via two proxies (the Surkov borthers) prevented this “Angert seizure” happening by taking control of the debts.

Unsurprisingly, Mr Kononenko swiftly suffered mercury poisoning and “Don Angel” is also rumoured to have now left this mortal world via natural causes.

Nevertheless, the business partners of “Angel” remain – including long-time associates Mayor Gennady Trukhanov, Alexander Zhukov, Vladimir (Lampochka) Galanternik and in particular with regard to gas (and now banking) Igor Uchitel.

During the winter of 2017/18, Odessa City Hall was forced/stepped in to insure the continued functioning of Odessa CHP as Naftogaz Ukraine and other creditors sought to recover their debts.  It was critical that the plant continued to operate throughout the winter in Odessa.  Such a preventable societal disaster as scandals continued to seep out from City Hall was simply not an attractive prospect for Mayor Trukhanov’s City Hall.

Wednesday 19th September 2018 is likely to witness the adoption of Odessa CHP into the city’s communal property – albeit City Hall will not want to keep the CHP given the massive debts of the CHP to the likes of Naftogaz and others.  (The debts far exceed UAH 0.5 billion plus almost the same in late payment charges – approximately UAH 1 billion or more in total).

Thus taking the CHP plant into communal property under City Hall when City Hall has no desire to keep the asset, a reader can therefore interpret it as the first move toward the privatisation of the asset.

That being so, the question will be how transparent and/or legitimate the disposal of this asset will be when it occurs.  Is there a plan of how to dispose of the CHP once it becomes part of communal property?

Will the entire plant be privatised or part of it?

Will any partial or full privatisation come with the contract to supply (the monopolised) heating for the city?

Will Odessa City Hall “insure” that the debts of the CHP are written off by the Odessa courts prior to assuming the plant as communal property?  If so that would certainly make its subsequent privatisation (and monopoly) very attractive – despite the need for significant investment in the exiting plant and city infrastructure.

However, this is a Trukhanov City Hall.  Who would be interested and who will be entrusted to deal with the disposal of the asset into private hands (perhaps insuring the correct private hands) considering on-going NABU and SBU interest in Odessa City Hall?

The most obvious candidate with regard purchase has issues.  VS Group, controlled by Russian Alexander Babakov, sits behind Odessaoblenergo.  Odessaoblenergo is the most obvious (domestic) candidate to purchase the CHP.  However, Mr Babakov is on the current sanctions lists due to activities in Crimea (not that it seems to have affected his activities in Odessa).

Thus there is a need for a pair of deft and experienced hands to navigate the murky waters surrounding these circumstances and eventual sale.

Who then has Mayor Trukhanov nominated to deal with this asset?

Ivan Donchenko, by coincidence (cynicism) was appointed in late August 2018 as the new municipal head for heating supply of Odessa by Mayor Trukhanov.  The previous incumbent unexpectedly resigned.

Again by coincidence (cynicism), Mr Donchenko owns shares not only in the current CHP company, but also he owns shares in Odessaoblenergo.

Coincidence continues, as Mr Donchenko’s wife, Ekaterina Kovalchuk works in Odessa City Hall within the Department for Economic Development.

Of course there may well be other interested parties in the Odessa CHP (monopoly) if and when the debts are written off by the courts.  Odessaoblenergo may yet meet with some competition (or “competition”) in anything vaguely appearing to be a transparent privatisation (an event that Odessa City Hall continually goes to great lengths to avoid).

However, if there is a plan then at the time of writing, very few politicians within Odessa City Hall seem to know of one for there has been no leaks thus far – and there is no such thing as a secret within Odessa City Hall.

In short, all the ingredients for the next criminal scandal for Odessa City Hall are present – let’s see what it manages to cook up.

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