Having twice failed to privatise the Odessa Port Side plant during 2016, and with debts mounting to creditors such as Naftogaz, the decision has been taken to temporarily, or perhaps better stated indefinitely, close the plant down with effect from 30th December.
Valery Gorbatko, the plant Director since 1986 has resigned – which for any eventual buyer or State operational reshuffle/efficiency/transparency policy for the plant is no bad thing. Accepting that resignation promptly would be a wise move.
From now the cost to the State will be dramatically reduced to those of maintenance and salaries – minor costs in comparison to running the plant with a (currently) low global demand for product and high gas demands to produce it.
It remains an open question as to when or even if a buyer (or long term leaser) will be found for Odessa Port Side.
Some 2017 national budgetary discipline implemented before 2016 has ended?
The name Alexander Angert also know as Angel to use his mafia name, has appeared in this blog numerous times (a reader may use the search facility if particularly interested). How could it not? His links with Mayor Trukhanov and Alexander Zhukov (father of Daria, the current Mrs Roman Abramovich) among others of notoriety and the numerous joint and associated business enterprises that do well out of City Hall and Ukraine more broadly, demand that every now and again his name is mentioned.
Indeed Mr Angert was mentioned so often by Yuri Lutsenko when he was Minister of Interior in the Tymoshenko government it would be difficult to have seen him as anything other than a personal nemesis. (A reader may ponder why he no longer mentions it now he is Prosecutor General). Misha Saakashvili as Governor was also not adverse to throwing Mr Angert’s name about when it came to the organised criminality in Odessa.
Mr Angert no longer lives in Odessa – but he does visit when the situation is serious enough to demand he personal participation in a “negotiation”. His last know place of abode (for many years) is London. Indeed if asking the personal assistant of Mr Zhukov who also lives in London, messages can apparently reach Mr Angert through that channel. (It seems that via this route Leonid Minin can be reached in Rome too).
The full extent of Mr Angert’s (business) interests is very difficult to gauge. In some cases his control is “unofficial”. Others there are clearly cut outs who are known associates. There are overtly known long term business partners like Igor Uchitel. There are even one or two business where Mr Angert’s name actually appears. Thus quite where all the metaphorical and literal bodies are buried is unknown – but there are definitely both metaphorical and literal bodies buried.
Perhaps the best way to identify the assets controlled by Mr Angert are those in Odessa that were left alone by Viktor Yanukovych and “The Family” from 2010 to 2014. Former President Yanukovych did indeed meet with Mr Angert in Odessa and whatever was said between them seemingly saved Mr Angert’s interests from the attentions of “The Family” – or perhaps saved “The Family” from a slighted and vengeful “Angel”.
Of the businesses that are transparently associated with Mr Angert, one is Odessagaz. It is co-owned by Messrs Angert and Uchitel and has been for decades. Neither oligarchs such as Firtash or Kolomoisky and not former President Yanukovych have ever made an attempt upon Odessagaz, nor interfered as they have with other regional and national gas companies.
Clearly tangling with those behind Odessagaz was not worth the blood and treasure – even for such odious, nefarious and powerful men.
Any regular reader is well aware of the frequent mention of the business appetites (by hook but mostly crook) of Igor Kononenko, President Poroshenko’s long term friend, occasional business partner and parliamentary “leg breaker”. He is, to be blunt, as bad as they come when it comes to scams, schemes, and coercion. His current appetites and methodology as to feeding them have hardly gone unnoticed – neither has the completely absent desire of President Poroshenko to rein them in.
It would appear however that Mr Kononenko is about to go not only where angels and oligarchs fear to tread, but indeed is about to stand on Angel’s toes.
Mr Angert, or more precisely Odessagaz, for many, many years has been trying to bring about the insolvency of Odessa CHP (thermal power plant). Bankruptcy petitions have been made and various internal nefarious financial acts have been “encouraged” of the employees within Odessa CHP by Odessagaz (Mr Angert). The net result was to engineer the bankruptcy of Odessa CHP beholding of large debts to Odessagaz who would then take Odessa CHP as debt settlement.
Recently however, that plan has quickly been undone via the purchasing of a significant quantity of Odessa CHP debts by Energomerezha. This company is controlled by the brothers Surkis who are in turn puppets of Igor Kononenko. In buying up those debts Energomerezha has therefore taken control of Odessa CHP financials that can either prevent Odessa CHP bankruptcy or assume the role of leading creditor thus undoing the plans of Odessagaz (Mr Angert).
In short when Energomerezha decides to allow Odessa CHP to go bankrupt at a time of its chosing it would be the largest creditor with a claim to taking control of the asset as settlement. Thus that can be expected when all the ducks are lined up to insure the loser would be Odessagaz – and by extension Mr Angert.
(In the meantime as usual there is a scam whereby an agreement has been reached between Odessa CHP and Energomerezha that enables Energomerezha (read the brothers Surkis and Igor Kononenko) to clear UAH 1000 in profit for every thousand cubic meters of gas).
Quite how this situation will play out remains to be seen when even the appetites of Yanukovych, Kolomoisky and Firtash left the machinations of Angel well alone in Odessa.
Perhaps Messrs Kononenko and Angert will come to an agreement amicably.
Or perhaps there will be made an offer than cannot be refused.
Immediately prior to the festive season getting under way, the blog was invited to the Odessa Regional Administration by a friend who is head of the Investment and Tourism Department, Roman Kozlovskyi.
He and his team can be found on the 6th (top) floor within the rabbit warren that is the Odessa Regional Administration building. (Thus any investor that enters this labyrinth is effectively at his mercy when it comes to actually finding their way out again.)
The result was a commitment by the blog to highlight some of the best opportunities for investment from a particularly long list. It will also bring to the attention of certain project initiators some of the worst project offerings. Some projects should be pushed as they are good projects for all concerned. Others should be pushed into the rubbish bin of wishful but financially retarded thinking.
As such, ad hoc, entries will appear over the coming weeks relating to the good, the bad (and some ugly) investment projects within the Odessa Oblast
This entry highlights an investment project that seems viable.
In 1999 the rail connection between Berezyne and Besarabyazka was dismantled for reasons that would seem politically rather unclear, if criminally somewhat more understandable.
The 1999 dismantling of this section of railway thus pushed goods moving between Moldova to and from the ports of Odessa via rail to go through the Kremlin sponsored enclave and smuggling haven of Transnistria, an area that falls beyond the direct control of Government Moldova.
As such the reconstruction of the Berezyne – Besarabyazka rail link would provide a goods rail link avoiding Transnistria entirely.
Accordingly any investor could be assured both Governments of Ukraine and Moldova would be very much in favour of using this reconstructed route for commodities such as coal, fertilizers, oil, black metals and iron ore. Indeed, reading between the lines, it is almost assuredly the case that such commodities would be immediately rerouted once the new track is in place.
Such assurances would naturally bring about numerous obvious methods for generating a return on capital employed for any investor – whichever method is ultimately agreed with the Odessa Regional Administration (there is certainly a degree of flexibility to accommodate any investor within the ORA).
It is hardly a difficult task to monitor the track usage and tonnage transported when only Ukrzaliznytsia and Calea Feratadin Moldova (both State owned rail entities) will use the track.
As is often the case, investors see most risk in the construction phase of any project. Indeed for really large investments such as PFI schemes it is common practice to refinance a project after the construction phase is completed and that risk is thus removed.
Thus to some basic numbers – for that is what counts for any investor. (For a full and detailed numbers breakdown a reader/investor is invited to contact Roman Kozlovskyi via the following email: rkozlovskyi@odessa.gov.ua or the blog can provide his mobile number more privately.)
Clearly there will not be much environmental impact in the reconstruction of a preexisting rail line. Most of what is required is already there by way of ground works and utilities. Thus the laying of 21.5 kilometers (20 in Ukraine and 1.5 in Moldova) of track and whatever ground work is required is not an infrastructure project haunted by unknown and unseen technical issues. The Odessa Regional Administration figures suggest 9 months to complete the project with a team of 30.
The investment sought is UAH 398256930, or about $15.4 million (exchange rate depending). Hardly a large sum, and in fact perhaps far too small for some investors to consider. Nevertheless, such is the low risk nature of this infrastructure project and the obvious methodologies provide that return on investment will be fairly swift and attractive, it therefore falls into the category of a good project for consideration.
Much is written regarding the banking system in Ukraine. Normally relating to the on-going clean-up of the nefarious Ukrainian banking sector by the NBU, or relating to the alleged nefarious actions of the NBU itself.
It therefore catches the eye when a small provincial bank in Odessa is to be bought by an Austrian investment banker with a curriculum vitae that clearly infers connections within the elite strata of Vienna.
The bank in question is called Investbank which certainly does not have much high street recognition in Odessa despite being a bank of Odessa. Indeed, it is not a “high street bank”.
The Austrian purchaser, or at least soon to be majority shareholder, is Uwe Christian Eshner. The current owners being Alexander and Tamara Nezvinsky, Nick and Igor Teplitz, and Sergei Yablonsky.
Unsurprisingly, for a provincial bank with no high street recognition, in the national ranking by size of assets, the bank falls within the smallest 25%.
That it was available for purchase is not exactly a secret. Some years ago it could have been bought for $100 million or so. No doubt the purchase price will be substantially less considering the dramatic change of circumstances Ukraine has found itself subject to.
Clearly Mr Eshner is purchasing the majority share to own a fully licensed banking vehicle in Ukraine – though why Investbank when there are perhaps better deals to be struck with the NBU over insolvent licensed entities is perhaps a question some readers will ponder.
Austrian banks and bankers certainly have a “reputation” within Ukraine and among the Ukrainian elite and organised criminal class for being “helpful” when it comes to moving money out of Ukraine (and laundering it). Who among of the very elite of Yanukovych/”Family” did not have Austrian bank accounts and expensive property in Vienna?
Mr Eshner of course will not be unaware of such things. His Bloomberg profileboasts a history that began to “build up and develop extensive contacts to Central Eastern European countries” in the early 1990s. Thus even if not partaking in, nor facilitating any nefarious activities, it is beyond belief that during the mad 1990’s when Mr Eshner began his banking expedition into the eastern-European nations he will have been unaware of what what brazenly going on in both Austrian and CEE banking.
(Indeed, a reader may ponder whether the infamous Udo Proksch was in any way related to one of the favoured Yanukovych Austrian bankers Reinhard Proksch.)
As a healthy level of cynicism is a requirement for living in Odessa, there are some questions that arise that may be without foundation – or not.
Considering the amount of elite “Ukrainian interest” past and present in Austria, who if anybody is behind Mr Eshner?
By extension, whose money is buying this banking vehicle?
What is this banking vehicle to be used for by Mr Eshner?
Is it to become a front for “interests” behind a respectable face?
Is it a bank where transactions will now be, or should be placed on a “watch list” if not by the NBU, then by the international policemen and spooks?
Did this banking purchase raise the same raised (interested) eyebrow with international policemen and spooks as it did the blog?
Why are the blog flags raised over this when there is nothing prima facie untoward?
During the 13th YES conference in Kyiv, President Poroshenko repeated once again the intention of Ukraine to privatise many State Owned Enterprises (SOEs) (most of which are a drain upon the State through subsidies and corruption).
The first on the list is Odessa Port Side (OPS), which Ukraine has already once tried and failed to privatise a few months ago due to lack of interest. As stated many times by the blog, considering the outstanding debt to oligarch in exile Dmitry Firtash of $251 million, the best possible sale price would be between $350 – $400 million and nothing like the ridiculous starting bid price of $527 million the Ukrainian State initially put forward.
OPS will undergo a second attempt at privatisation very soon – this time the Ukrainian State opening bid price is a dramatically $150 million, a figure that is likely to see something like competitive interest occur – and possibly reach the $350 million(ish) the blog notionally qualified OPS asset worth at so very long ago.
The claims of Ihor Kolomoisky regarding OPS ownership via a previously quashed privatisation have been dismissed by the courts, leaving the major issues as the debt to Mr Firtash and the clauses within any purchase regarding asset investment, workforce etc for any potential bidders.
OPS has long been a State asset that both Ihor Kolomoisky and Dmitry Firtash covet, neither having been shy about their desire to own it historically.
Of the foreign interest muted, Norway’s Yara Norge, US-based IBE Trade Corp, Koch Fertilizer LLC, CF Industries Holdings Inc, and Poland’s Ciech S.A etc, missing any mention has been Dmitry Firtash’s Group DF, or Ostchem, (significant among the and other subsidiaries under the Group DF umbrella). Perhaps with Mr Firtash being an (in)famous Ukrainian oligarch he is/was seen as a potential domestic bidder regardless of the long-standing foreign homes of his corporate machinery.
Indeed little is mentioned of Mr Firtash since he became marooned in Austria following a US attempt to extradite him following an indictment against him being opened in 2014. Having checked with people within the State Department only a few weeks ago, US policy toward Mr Firtash remains unchanged, thus Vienna looks likely to remain home for some time.
Boris Krasnyansky
Nevertheless, it has become clear via Boris Krasnyansky of Group DF during the YES conference, that there remains a real interest in purchasing OPS. “For our business in the production of mineral fertilizers it is a logical asset for the completion of the corporate structure and is therefore definitely interesting.”
No surprise.
Perhaps even less of a surprise when Group DF can write off the $251 million it is owed should it become the owner of OPS which owes it. Internal write-offs happen all the time, particularly within somewhat opaque accounting structures.
Few would doubt Mr Firtash can afford it too? He is a $ billionaire oligarch after all.
Well maybe he can, and maybe he can’t. There is a significant difference between asset worth and cash flow/cash on hand. There is also a question over what Mr Firtash owes others too.
In making his $155 million/€125 million bail in Austria, that available cash came via Vasily Anisimov (Chairman of the Russian Judo Association) – “I have known Mr. Firtash for a number of years, though he is neither my friend nor business partner. I confirm that I loaned 125 million euros to him. This was a purely business transaction.”
Undoubtedly a reader is now considering President Putin’s affection for Judo, and how and why the Chairman of the Russian Judo Association would lend “neither a friend nor business partner” so much cash, and the contractual details of this “purely business transaction“.
Whatever the case, Mr Firtash was clearly unable to raise that cash sum himself back in 2014.
Perhaps cash on hand issues have improved since then, but if not, where will anywhere between $150 and $400 million come from to buy OPS, and can the gas debt simply be written off within the Group DF structure if it owes money elsewhere?
Who would it owe money to?
Where has Group DF and Ostchem found its money before?
Historically it has come from Gazprombank whilst directly/indirectly under the control of Yuri Kovalchuk (currently under western sanctions) and euphemistically known as “Putin’s personal banker”. Gazprombank has a reputation of being the “collective Putin” pocket bank. That bank has had at peak, somewhere between $7 – $12 billion in lines of credit open to Mr Firtash’s business empire. In 2011, for example, Mr Firtash owed Gazprombank $2.08 billion but it went on to lend another $2.2 billion (about 25% of the bank’s total capital.)
Perhaps those debts have been repaid – perhaps not. It is rumoured that Mr Firtash’s gas intermediary business made between $1 and $2 billion per annum, but assuredly that money was not all his. In such deals, there are outstretch hands – and everybody’s got to eat.
The question therefore is where and who the money comes from for any Group DF (or Ostchem) bid regarding OPS if the apparent cash flow issues surrounding 2014 bail payments have not been overcome?
As those recognised by the Ukrainian State as “aggressors” will not be allowed to compete and win in any (strategic) asset privatisation (read Russia), how will Group DF be viewed legally, politically and economically as a corporation if still in hock to Gazprombank for $ billions – even if a different lender provides credit for any OPS purchase?
If Group DF is now with more than enough cash on hand without lines of credit or loan borrowing, how would the Ukrainian constituency react to selling OPS to a man widely known to have close Kremlin associations, pro-Kremlin views, and perceived to have been involved in numerous nefarious schemes? Currently he personally is out of sight and therefore, for the most part, out of mind – even if his business partners and rented politicians are less fortunate when it comes to continued public scrutiny.
Fortunately for Ukraine, even if holding the most transparent OPS privatisation, being the highest bidder does not mean automatically becoming the owner – there is thus significant wiggle room to avoid that outcome if necessary. Further, it is not as though OPS has to be privatised at any cost, whether that cost be counted in $ or political points (albeit understandable to get it off the government books when it requires so much modernisation and subject to management that is perhaps not the best available).
The end of September will see the second attempt to privatise OPS begin when interested parties will have to declare their interest. By the middle of November, OPS may well have a new owner. It probably won’t be Mr Firtash – but never say never.
It has been more than a year since the last entry relating to the plans (and ubiquitous intrigues surrounding those plans) for a grain terminal at Yushni Port.
(Needless to say those intrigues regarding Cargill, Delta Bank, dredging of what is already the deepest port on the Black Sea etc remain.)
Regardless, plans and financing for a new grain terminal at the port now appear to have been finalised by all parties according to the Facebook page of Artem Chevalier, a former Deputy Minister of Finance – “The Council of Directors of the Bank has just approved a loan of $ 37 million (in addition to the same loan from the IFC – International Finance Corporation), which will focus on the construction of a grain terminal in the port of “Yushni”with a maximum capacity of up to 5 million tons of grain year.
This project has everything.. An active and transparent Ukrainian investor, a major international player, support from the government, the participation of international financial institutions, environmental audits, energy efficiency, etc.”
To be clear the EBRD finally approved a loan of $37 million, matched by the IFC, with about $100 million from Cargill (which is approximately the same figure the Ministry of Finance allowed Cargill to reclaim from Delta Bank before winding up the bank and leaving the Ukrainian tax payer with the Statutory Insurance bill to pay to depositors) .
As the above link stated more than a year ago, Cargill was also to acquire a controlling 51% stake in MV Cargo, the major operator at Yushni. (MV Cargo, unsurprisingly, is owned by Cypriot company – Kornleks Impex Limited.)
A new grain terminal capable of dealing with 5 million tonnes per annum will (fairly) soon grace the dockside a Yushni.
Vice Mayor of Odessa Oles Yanchuk is no more. He has been removed from office by Mayor Trukhanov.
Mr Yanchuk’s crimes, both real and metaphorical, against the local constituency are numerous, and indeed for many grave. For the past four years he has engaged in a small war with SMEs in Odessa, demolishing small trading booths, closing fast-food establishments and overseeing extortionate “fees” for entrepreneurs that according to statute include licences issued free. Exactly what you would expect for an individual responsible for urban commerce in a city with a political class of that which Odessa unfortunately suffers.
His methods were aggressive (sometimes literally) and not confined to remaining within any food hygiene or construction permit legislation – as much seemingly occurring without as within the law.
Recently however, he went too far – several times.
(Former) Vice Mayor Yanchuk recently declared open warfare upon the much loved shawarma and its vendors, in effect attempting to make that food and fast-food outlets illegal (literally).
The assault upon SMEs/entrepreneurs – and the beloved shawrama – brought about public protests from vendors and consumers alike.
Photos courtesy of Dumskaya
Indeed, it brought about the predictable satire associated with political lunacy a reader would expect from Odessa.
Further, a few days ago, he publicly objected to the changing of the street name Marshal Zhukov as required by the “decommunisation” legislation, to that of The Heavenly Hundred. His claim was that The Heavenly Hundred had nothing to do with Odessa and therefore an alternative name for Marshal Zhukov should be found.
That the shawrama and its vendors will be saved from the idiocy of Mr Yanchuk was assured following his comments regarding the Heavenly Hundred and their alien status to Odessa, for needless to say it caused outrage, particularly among the most militant and socially active.
Mayor Trukhanov has enough problems without aggravating the militant and socially active yet more. The Panama Papers, claims of FSB relationship, Russian passports, much decried illegal construction work, nepotism, defrauding the city budget via massive mark-ups to companies associated with himself, a public and bitter falling out with Adnan Kivan, a wily operator, and not withstanding his accepted association with serious and organised crime/mafia historically – an association that may not be as historical, but rather current to some degree – “Messrs Angert and Zhukov both of whom are now predominantly London based, have spent a lot of effort in becoming (mostly) legit.
Those such as Messrs Trukhanov and Galanternik that remained in Odessa, whilst far from legitimising all their criminal dabbling have progressed in legitimising where they can, still unable to entirely walk away.”
Needless to say Mayor Trukhanov wasted no time in ridding himself of Mr Yanchuk from the City Administration, with Mr Yanchuk’s duties will be assumed by Paul Vugelman a loyal Trukhanov ally.
Whatever the case, Mr Yanchuk chose a most bizarre way to commit political suicide many readers would agree – if he expected any response from the Mayor. which perhaps he didn’t.
This raises the question of how fire-proof and secure many within City Hall may (wrongly) believe themselves to be. That in turn raises questions of who’s who and who looks after who, and is the City Hall snake pit entirely within the control of the notorious Mayor Trukhanov – or not?
First and foremost, the “managing” of the militant and rigorously active falls under the security remit of Vice Mayor Andrei Kotlyar – and it is questionable just how loyal/dependable Mr Kotlyar is as far as Mayor Trukhanov is concerned. Mr Kotlyar is a Kolomoisky man and not a Trukhanov loyalist. Thus whose interests he serves when “managing/mitigating” the militant activists is open to both question and circumstance. In promptly removing Mr Yanchuk from office, Mayor Trukhanov insured no Kolomoisky shenanigans could occur. To be clear, this removal was not about the activities or oratory of Mr Yanchuk, but a matter of self-preservation for the Mayor before a baying mob.
The Speaker/Secretary of City Hall, and the appointment that assumes the position of Mayor should anything happen to the incumbent is occupied by Alexander Potapsky who is a Goncharenko man. With Mr Goncharenko being Deputy Faction Leader of Block Poroshenko within the national legislature, by extension, that makes Mr Potapsky the President’s man.
As is often the case, the keeper of all secrets/kompromat is either a lawyer or accountant – and in the case of Odessa City Hall it is Irina Popovshaya, Director of Legal – a necessary ally to all regardless of alliances, and thus a collector of dirt on everybody.
So whose man is Mayor Trukhanov? The mafia’s man? The Kremlin’s man? Perhaps both? With his history he is certainly not entirely his own man, whatever he may like to believe.
Certainly (Lamposhka) Galanternik has his man in City Hall, questioning the all-encompassing mafia label. Deputy Mayor Shandryk, who oversees construction in the city, is Mr Galanternik’s man. Old (and continuing) personal organised crime/mafia association between Mayor Trukhanov and Mr Galanternik clearly are not enough to prevent the requirement to insert Mr Shandryk within the Trukhanov City Hall machinery – and Mr Shandryk has caused discomfort for Mayor Trukhanov over several construction related issues/events.
Although it is possible to go on, the point has probably been made that control is not necessarily always within the grasp of Mayor Trukhanov despite appearances. Indeed to underline that point should it be required, the fact that Oleg Brynduk is no more than the faction leader of Mayor Trukhanov’s party within City Hall, and not in a position of (official) significant influence should underscore just how many other people’s people are holding the top roles within City Hall.
Indeed it is sometimes easy to forget that Mayor Trukhanov, despite impressions, still has “interests” he has to balance within City Hall – and those “interests” personified are fairly confident in their allocated positions – often to the point of publicly ignoring Mayor Trukhanov by way of his professed policies (such as they are). Nevertheless there are limits, few as they are, such as those crossed leading to the unavoidable sacking of Mr Yanchuk.
Indeed there have been rumours of alternative candidates to replace him if (through smoke and mirrors or criminal investigations) early mayoral elections can be forced in 2017. Those names include Oleg Bryndyk – others being Kolomoisky’s Andrei Kotlyar, Valerie Matkovsky, Sergei Kalinchuk and Anatoly Orel. Perhaps Michael Shmushkovich or Anatoli Urbanski despite their preference for Oblast and not City governance, could be tempted too should Mr Goncharenko decide to run his men – both have been Oblast Rada Chairman. Maybe Mr Potapsky Mr Goncharenko’s man currently Secretary/Speaker of City Hall?
All of that said, there simply doesn’t “feel” to be any real desire to remove Mayor Trukhanov – yet. Undoubtedly if Odessa is chosen to host Eurovision, then there will be no desire to do so until after the event anyway whilst the Ukrainian elite put on, and intensely buff, a veneer of respectability to the world peering in. The ugliness and nefariousness of removing Mayor Trukhanov prior to that event if held in Odessa would be simply unthinkable.
Whatever the case, the events of recent days may yet guarantee the shawarma is served to thousands of hungry “Eurovisioners” next year should Odessa become the host city.
Having consistently written regarding the Odessa Port Side privatisation and its predictable failure (planned or otherwise) for all the reasons mentioned, it seems that the Ukrainian government have decided to try once again in October 2016.
This time however, circumstances will have changed somewhat.
The Kolomoisky claim (via his Nortima company) of ownership has been rebuffed by the courts, leaving only two significant issues. Those significant issues being an alleged gas supply debt to Dmitry Firtash’s Ostchem group of companies (РГК Трейдинга to be precise) of approximately $520 million, and the original and extremely unrealistic opening bid price of $527 million.
As the Firtash debt is a matter of legal proceedings, and the courts having already dealt with the Kolomoiksy claim over the initial attempt to privatise Odessa Port Side many years ago, it leaves the matter of correcting the opening bid price within the remit of Government Ukraine.
This blog having consistently stated that the plant is worth between $300 (fair price) – $400 million (outstanding result) therefore demands that a substantial reduction in opening bid price has to occur. An initial slashing of 30% from the original price is being discussed – and quite frankly has to happen.
What is decided upon when October arrives remains to be seen, however if there is to be any realistic chance of competitive bidding then slashing the opening bid price by 30% may not be enough. 40% may be necessary to regenerate interest from those such as Norway’s Yara Norge, US-based IBE Trade Corp, Koch Fertilizer LLC, CF Industries Holdings Inc, and Poland’s Ciech S.A who were initially eyeing the asset.
Meanwhile on 19th August Odessa Economics Court issued its judgement regarding Odessa Oil Refinery allegedly “acquired” by Sergei Kurchenko when fronting for the “Yanukovych Family” during the period that the Yanukovych regime was in power. When “The Family” fled Ukraine, including the wanted Mr Kurchenko, Odessa Oil Refinery was arrested and placed under the “management” of Ukrtransnaftoproduct, a State Owned Enterprise closely associated with Ihor Kolomoisky’s interests.
Seemingly with very little by way of documentation, the judge nevertheless ruled in favour of two Cypriot owned companies (believed to belong to Mr Kurchenko) and Russia’s VTB Bank acknowledging their claims of UAH 14 Billion – thus opening up the legal route to reclaim approximately $5.5 billion from Ukraine, and perhaps the return of the asset to Mr Kurchenko despite the somewhat lacking and questionable documentation submitted by the claimant.
Naturally strong statements are being made regarding the integrity – or more accurately blunt allegations of corruption – against the judge. Odessa Economic Court is widely perceived to be the second-most corrupt court in Ukraine after that of Kyiv, and as there has been no significant change of judicial personnel since the “Revolution of Dignity” in 2014, there has been no significant change in the frequency or dubious/corrupt judgements handed down.
Indeed there is perhaps little solace to be found when the removal of judicial immunity finally becomes active on 30th September. There already exists a draft law that seeks to mitigate that outcome – Ch 2, Art 59 basically provides that a judge must be forewarned of his impending arrest, thus providing ample time to disappear with ill-gotten gains.
This being one of many problematic issues within this draft law submitted by Alexie Filatov, Deputy Head of the Presidential Administration. So retarded is this draft law that a reader may ponder whether President Poroshenko knows what poor legislation the Deputy Head of his own administration is proposing.
Perhaps he doesn’t.
If he does, the question is therefore why is this legislation likely to go forward? Is it yet another attempt by the President to mitigate and strike deals within the Ukrainian elite whilst giving the legislative structural impression of reform progress?
If not an attempt to keep all within the elite happy (relatively), then perhaps there is no intention to allow this draft to become law whatsoever, and it is an influence operation being conducted by the Presidential Administration allowing the President publicly and loudly to veto such poor legislation in order to reaffirm (or buy back) his “reform credentials”. Among many on-going issues, most recently those credentials have suffered both domestically and internationally from the warfare within Yuri Lutsenko’s prosecutor’s empire, and also from the e-declaration farce relating to assets of public figures/servants – a debacle that won’t be fixed for a few weeks, and the resulting “issues” that eventually come to light from this fiasco will begin to appear in a few months from now insuring the matter doesn’t fade swiftly from the headlines.
It’s all rather messy. Property rights, or property wrongs? Wronging property rights, or righting property wrongs?
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