Archive for the ‘Ukraine’ Category


Med-Reform gets over the finish line

October 19, 2017

19th October witnessed the planets finally align to see the final draft laws required to complete reform of the State medical services in Ukraine pass through the Verkhovna Rada.

The two remaining draft Bills passed with 240 and 234 votes “for”.

A reader may ponder whether this is a result of Health Ministry and external partners persistence paying off, or a reaction to the current tense atmosphere surrounding the Verkhovna Rada relating to opposing sides with regard to anti-corruption court, CEC and electoral law, and MP immunity that has brought protesters and tents to the Verkhovna Rada – not withstanding unnecessary scuffles and unlawful violence.  As such neither side would wish to be seen to have these issues be seen to prevent other reform legislation progressing and be held hostage.

Perhaps it is a combination of both.

This is a particular problem for civil society that has energetically backed the med-reform efforts and also robustly expects CEC and election law and anti-corruption court legislation to garner urgent parliamentary attention if new legislation is to be passed far enough ahead of the next elections that all will have time to digest and understand the requirements.

There is naturally a perception that (in all probability) civil society priorities are going to be kidnapped and co-opted by opposition parties for political capital, and numerous calls for demonstrations, now that pre-election electioneering has begun, and will continue over the next 18 months.  With that will come the increased probability of unsightly scuffles and unlawful violence as the opposition politicians continue to prove to be unable to control their more extreme and violence-prone supporters.

Perhaps a major parameter upon calling numerous demonstrations in support of this or that cause will be the perception that the opposition parties bring with them a lack of control and unlawful violence – a vote loser to be sure should it become an increasingly frequent occurrence.  How many times can Ms Tymoshenko and Mr Saakashvili be seen to stampede over borders officers, or have their more extreme followers seen to battle with police outside parliament, before that associated violence becomes a psychological association among the voting constituency?

For civil society the question is how many times will they allow their actions to be hijacked and subverted before public statements of disassociation with such political forces are forthcoming?

Time will surely tell – as it always does.

To be entirely blunt, the blog would have med-reform, the CEC, election law, and anti-corruption court legislation as priorities far exceeding the removal of parliamentary immunity, but perhaps there is a feeling that this is a now or never session with regard to achieving this goal with the current parliament – and to be fair, parliamentary immunity in its current absolute form, has to go.

Whatever the case, with all (or almost all) med-reform legislation now in place, what does it actually change?  (Aside from a requirement to prevent statutory sabotage by way of deliberately toxic amendment in the future.)

Without going into the minutiae, and fully recognising the devil is not only within the detail (and there are budgetary details worthy of scrutiny which would appear to be as yet work in progress with regard to methodology), but also its effective implementation, there are some broad brushstroke (and nuance-less) observations that can be made.

There is clearly a fundamental shift from the unchanged Soviet and post-Soviet system that generally fails the Ukrainian citizen.  In most simplistic terms, State funding will no longer be allocated to health facilities on the basis of the number of beds they have, nor the services they (claim to) provide.

State funding is to be allocated to the patient, and move with that patient to where ever they seek treatment and what treatment they seek.

Unambiguous lists of what is free/State funded treatment will be made known – likewise what is not free and requires a patient to pay (in part or in full) will be clear.  Theoretically this will reduce corruption as State payments will be subject to both audit and NAPC oversight.

As the new system is patient-centric, a new national e-healthcare system will be created.

A reader, fully aware of numerous successful Kremlin attacks on Ukrainian e-structures will naturally raise a cautionary flag.  Questions over security of this system are readily raised when every computer linked to it will be a potential point of sabotage/system entry.  The idea however, is a national ability to access and update patient files as patients choose their point of health delivery, eliminating the need for paper files.

The new statute, and the reform requirements therein, creates a National Health Service to manage the new system – which answers to the Cabinet of Ministers.  It will oversee and manage what will in effect be de facto a network of autonomous hospitals and health centers/providers that de jure remain owned by the public.  These autonomous centers of healthcare delivery will be responsible for their budgets and how they are spent.

As the new system is patient-centric, this naturally affects not only healthcare centers, but also the doctors themselves.

It becomes in the interests of doctors to have patients register with them.  For the doctor, a patient means not only State payment where applicable treatment occurs, but when a patient registers with them, the doctor becomes the starting node for referrals to specialists and/or other healthcare nodes – notwithstanding creating prescriptions on the e-health service being collectible from connected pharmacies.

In short, the more patients a doctor has, the more money is earned (and theoretically the requirement for patient backhanders reduced), while the local doctor becomes the primary node of the entire health service..  As a patient may change doctors and register with another at any time, the issue of qualitative medical advice and treatment at the first point of contact will directly relate to patient retention – and by extension money for the doctor.  By extension, the healthcare facilities/centers have a vested interest in attracting those doctors popular with patients.

A competition orientated environment – at least in cities and towns.

The question however is what of rural doctors, clearly needed in rural communities, but obviously with far less patients and potential for income?

What will keep rural doctors rural, rather than them migrating to large towns or cities?  Incentives will be needed, as will the reorganisation of existing rural healthcare facilities and their clinical abilities and equipment.  This will have to be codified in further statute when a solution is found.

Implementation, which has to be effective and where Ukraine is so often found wanting, is not going to be swift – or seamless.

It is claimed that by 2020 the systems will be implemented and the new National Health Service will be fully delivered, and fully delivering, on a national scale.

A truly ambitious timescale (particularly with anything “e” related, which is hardly ever delivered on time, on budget, or to specification – be the customer business or government).

No doubt there will be attempts to stick spokes in the wheels by some too – whether during implementation or during the still unclear legislative detail in some areas (particularly budgetary methodology).

If it has been a difficult task to get med-reform over the statutory finishing line, then to be sure, the real hard work only now begins.

For those that formulated this reform, and for those that supported it, then now will be the time to dig in and insure that a new healthcare system is born, as trauma-free as possible, and is delivered during the next few years as claimed it will be.  The delivery of a system worse (and as bad as it is, things can always get worse) than the current ineffective and corrupt system is not an option.  The delivery of a system that improves a core issue of societal concern however, will send a signal that things can change and be seen and felt to change by all at the very foundation of the State-society relationship.

Perhaps not only the physical but also the psychological health of the nation rests upon successful implementation of this reform.


Omelyan gets his choo-choo’s back – Ukrzaliznytsya

October 18, 2017

In early August an entry appeared relating to Ukrzaliznytsya and the bitter relationship between Minister of Infrastructure Volodymyr Omelyan, and then CEO of Ukrzaliznytsya, Wojcheich Balchun.  The entry predicted the immediate demise of Mr Balchun – and sure enough five days later he resigned from his post whilst outside Ukraine.

However, as that entry made clear, Mr Balchun was not the only Ukrzaliznytsya related irritant that seemed to severely irk the Infrastructure Minister.

As the above linked entry states, 18th January 2017 saw the Cabinet of Ministers remove Ukrzaliznytsya from the Ministry of Infrastructure and place it under the collective responsibility of the Cabinet, nominally under the Ministry of Economic Development.

A move that Minister Omelyan immediately stated he would challenge in court – and he did.

Lord forbid the Cabinet of Ministers be able to move or reallocate the responsibilities for its own State Owned Enterprises between ministries, or make them a collective responsibility as deemed necessary – and in this case, in the January, it was clearly deemed necessary to put some space between Messrs Omelyan and Balchun.

As coincidences go, almost immediately after Mr Balchun had resigned, the Kyiv Administrative Court ruled that the Cabinet of Ministers does not have the right to remove Ukrzaliznytsya from the subservience of the Ministry of Infrastructure.

That initial ruling, it appears, has now been confirmed by the Kyiv Adminstrative Court of Appeals on 18th October, and Minister Omelyan has his choo-choo’s back with immediate effect according to the Minister’s Facebook entry

“Добра новина! 🙂

Сьогодні Київський апеляційний адміністративний суд підтвердив незаконність передачі ПАТ “Укрзалізниця” з підпорядкування Мінінфраструктури до Мінекономрозвитку.

У судовому засіданні іменем України проголошено ухвалу, згідно якої апеляційні скарги КМУ та Мінекономрозвитку залишено без задоволення.

Рішення суду вже набрало законної сили!

Excellent news! 🙂

Today, the Kyiv Administrative Court of Appeals confirmed the illegality of the transfer of the PJSC “Ukrainian Railways” from the Ministry of Infrastructure to the Ministry of Economic Development.

During the case, in the name of Ukraine, it was declared that the appeals of the Cabinet of Ministers and the Ministry of Economic Development would not be heeded.

The court’s decision is already in full effect!
UZ should be back!”

Minister Omelyan seems terribly pleased to have defeated his Cabinet colleagues in court.

Well, what little boy likes having his train set taken from him?  Especially a train set that appears to have done OK over the past 9 months (of which for 8 months Mr Balchun, whatever his failings, was in charge it should be pointed out).  For example moving 28% more grain than the previous year.

However, returning to the forces that rightly or wrongly forced out Mr Balchun, Prosecutor General Lutsenko backed up Minister Omelyan in calling for his dismissal, citing rampant corruption within Ukrzaliznytsya, the opening of about 90 cases of criminality within the organisation, the responsibility for which he placed at the CEO’s door.

Well, fair enough.  Accountability and responsibility etc.

The court records will show whether Prosecutor General Lutenko actually prosecutes about 90 cases (let alone successfully) – accountability and responsibility etc applies to the Attorney General too.  As yet there is little evidence the PGO has made significant inroads into these cases per on-line court records.

Further, to be blunt, about 90 cases across such a sprawling national behemoth seems to be a somewhat lowly figure.

A reader may therefore expect that number of criminal cases to increase – together with prosecutions – now the apparently feckless Mr Balchun has departed and Minister Omelyan is back in the driving seat.

It is not a reasonable expectation that having fought through the courts to have Ukrzaliznytsya returned to his ministerial portfolio, and now the Minister of Infrastructure is once again responsible and accountable for it, and who is clearly well aware of the criminality within, will make it a personal priority to to tackle such criminality forcibly and publicly.

He is after all an ambitious man that few would be surprised to see as Prime Minister one day (if the planets align).  Clearing out the choo-choo train coal shed of grubby criminality would sit well upon his resume.

Indeed, he is on record stating that before Ukrzaliznytsya can be transferred (if the court will allow it) to the Ministry of Economic Development, the creation of an independent supervisory board for the company, the purging of corruption within it, and the creation of a new model of a vertical management, are all prerequisites.

As the creation of an independent supervisory board and a vertical management model will take time, possibly being somewhat glacial in formation, then that leaves the purging of corruption as a daily task.

Well bravo – rather than hide behind the shared accountability and responsibility of the Cabinet decision per the 18th January, now overturned by the court at his request, to see Minister Omelyan stand up so definitively and be content to be responsible and accountable for the corruption within Ukrzaliznytsya is a refreshing change.

After all, assuming such personal responsibility and accountability was the point of his legal action wasn’t it?


Constitutional Court in Moldova rules against President Dodon

October 17, 2017

Early elections in 2018 may well have been avoided by President Poroshenko in Ukraine – unless he calls them early for his own benefit.

There are elections for the presidency of the Russian Federation in 2018 too of course.  The result is not in question, but the electoral turnout is.  To win by a predestined 70% (or whatever percentage will be chosen) with a 65% turnout is more comforting for The Kremlin than to have that same preordained electoral percentage based upon a 35% constituency turnout.  Legitimacy is not found in the winning percentage but in the percentage of constituency bothering to vote.  Especially so as it appears parts of domestic policy are going beyond The Kremlin’s control.

2018 also sees parliamentary elections in Moldova.  As a parliamentary democracy these are far more important than the recent election of the Kremlin-friendly President Dodon whose role is almost entirely ceremonial.

That said conventional wisdom perceived Moldova to ruled by Vladimir Plahotniuc, the Moldavian oligarch.  Mr Plahotniuc is prima facie “western facing”, albeit not entirely swift in heading “west” (a direction neighbours Ukraine and Romania would like to see maintained).

Ergo, if perceptions be true and Mr Plahotniuc does indeed run Moldova, then a reader may ponder whether President Dodon was allowed to win the presidential election because the position of President in Moldova is weak and therefore of no interest to Mr Plahotniuc and his grip upon the nation, or whether it was orchestrated with his blessing that he won to give the perception of some power to the left/Kremlin leaning voters.


Whatever the case, President Dodon has huffed and puffed, sending love notes to The Kremlin that have produced nothing – which is entirely predictable in an almost entirely ceremonial position.

However, his ceremonial duties he has deliberately not carried out regarding domestic requirements.

The parliament has been waiting since 12th September for President Dodon to officially bless the candidacy of Evgene Sturza as Minister of Defence.  He has refused to do so – twice.

Not only did he refuse to do so, the President put forward his own candidate, General Viktor Gaychuk, and act for which he has no powers.

Thus the parliament turned to the Constitutional Court to interpret Article 98 of the Moldovan Constitution.

17th October witnessed the ruling of the Constitutional Court – “The president should take a neutral position, play the role of arbiter. The president does not have the constitutional power to make personnel reshuffles in the government. The repeated decree on appointing a candidate for the post of minister, presented to the president, is just a formality. The President’s actions related to the fulfillment of his constitutional obligations led to institutional blocking. Thus, the Constitution and the oath brought by the President during his inauguration were grossly violated.  

With his public statements, the president exerted pressure on the representatives of the court. The Constitutional Court views this as an attempt to intimidate.” – Tudor Pantsiru, Chairman of the Constitutional Court.

However, the Constitutional Court went further – “The president’s refusal to carry out his constitutional duties is a temporary impossibility to realize his mandate, therefore it is justified to appoint an acting head of state, chairman of parliament or prime minister, who will ensure the fulfillment of the president’s constitutional obligations. Each case requiring the appointment of an acting person, in connection with the president’s refusal to fulfill constitutional obligations, will be considered separately by the Constitutional Court.”

The inference here is not only constitutional blessing to sideline President Dodon, but also that there are grounds to impeach and remove President Dodon (meaning the Speaker of Parliament would become acting President).

It remains to be seen if President Dodon will now fulfill his ceremonial duties with regard to appointing Evgeny Sturza as Defence Minister and prevent his own impeachment – or not.

Either way, it appears that the parliament will get their Minister of Defence, Evgene Sturza into post.


Job Vacancy – General Director for the Office for the Coordination or European and Euro-Atlantic Integration

October 16, 2017

When Ivanna Klympush-Tsintsadze was appointed Deputy Prime Minister for European and Euro-Atlantic Integration the blog lauded her appointment as probably the best personnel decision of Prime Minister Groisman.

That opinion remains unchanged today.

Indeed Ukraine would benefit from far more female politicians like Ms Klympush-Tsintsadze (and far fewer like Yulia Tymoshenko) in positions that create and/or influence policy.

That said, the blog does not always agree with Ms Klympush-Tsintsadze rhetoric – albeit as a politician within the Cabinet, she is obliged to support government rhetoric (to some degree), and on occasion that government rhetoric is less than calculated or less than thoroughly thought through.

Whatever the case, idolise thee not a politician, for they come and go, but support thee sound and sensible policy – whatever its source – for sound and sensible policy (when implemented by solid and reliable institutions) tend to have far greater longevity (albeit benefiting from periodic review) than most politicians.

Nevertheless, the mere title of Ms Klympush-Tsintsadze’s role highlights, prima facie, a truly enormous task and/or remit.

Not only does it require every government ministry to be constantly advised/reminded to consider the European and international normative, and/or Ukrainian obligations, when constructing policy or reform (not the same thing), but also it requires a watchful eye upon Verkhovna Rada Committees, draft legislation and the last minute Verkhovna Rada amendments that tend to pervert, warp and disfigure, what would otherwise have been acceptable legislation.

Implementation, where Ukraine so often fails, requires monitoring, bench marking, and (effective) delivery too.

There are also the demands of being seen on the international stage associated with such a title.

Yet Ms Klympush-Tsintsadze is a politician (or more accurately currently fills a political role).  As stated, politicians come and go.

Thus it is the civil service that requires suitable structure and processes to continue, develop contacts among foreign peers, and retain an institutional memory, for the decade (or probably two) in delivering reform and policy required for Ukraine to have integrated as fully as is possible (within political constraints) with “the west”.

It appears that the Cabinet of Ukraine has finally decided to appoint a senior civil servant to head such a structure.  The job vacancy has been announced – and perhaps not before time.

How swiftly any competition/selection will arrive at a candidate remains to be seen, but with pre-election electioneering already underway, it would perhaps be wise to appoint somebody prior to the year end, as Ms Klympush-Tsintsadze’s apparently boundless energy will be required not only on the international stage, nor endlessly attempting to confront wayward legislators with their international obligations, but also in promoting and/or defending the current leadership’s achievements and/or failures before a domestic audience too.

While no doubt this civil service position (and a sensible structure beneath it) will ease the burden on Ms Klympush-Tsintsadze giving her more electioneering time, it is, regardless, a bureaucratic necessity – for few supranational institutions are more bureaucratic the the EU and NATO.

Perhaps one of the civil servants that were slaving away in the boiler room when constructing the Association Agreement will come to the fore – or one from within the Foreign Ministry.  One that not only knows the task ahead, perhaps having had a hand in setting that task, but who also knows how the Euro/Euro-Atlantic structures think and act.


BIIR (Demark) verses Vested Interests (Odessa)

October 13, 2017

Corporate raiding and nefarious business deeds have hardly abated since 2014 and the change of leadership in Ukraine.

It is however, a phenomenon that is predominantly an inter-Ukrainian affair with foreigners rarely targeted.

That said, as Ukraine remains a business location many foreigners avoid, and those that do arrive and that are of any significance tend to have their diplomats fight their corner at the first sign of trouble, there are but a few publicly known instances of corporate raiding relating to foreigners over the past few years.

However, when they occur and reach the public realm, (and they do), it can be expected to catch the media attention.

That being so, for the journalists that follow this blog, mark your diaries for 19th October and the case of  BIIR at the Odessa Appellate Court.

By way of background – In 2007, two Odessa “businessmen” took a loan from Fido Bank for $ several hundred thousand to purchase a property at the bottom of Primosrky Steps.  The buildings then, and currently remain, in serious need of refurbishment – although it will not come any time soon for reason that will become apparent.

The two Odessa “businessmen” were Valentin Skoblenko  and Alexander Tikhomirov of Mega Stroy LLC – (the former individual having run on the local Morskoy political party ticket in 2015, and is firmly within the circle of, and closely orbiting, the (in)famous Ukrainian parliamentarian Sergei Kivalov who leads and owns that political party,

Mr Kivalov is de facto the controller of the courts of Odessa (among other things). and specific judicial outcomes where required.

The loan was initially taken from Fido Bank, however by design or default, financial crisis or skulduggery, the receivables under the loan agreement were sold to Sky Capital LLC – who later sold them on to Finance Trust Group LLC.

A reader may ponder why, in 2010, Messrs Skoblenko and Tikhornirov stopped repaying their loan for the Primorsky property.  Perhaps the financial crisis affected their cash flow, or perhaps with Party of Regions gaining control of the nation, and their close associate Sergei Kivalov becoming a powerful man within the party, they simply decided there was no need to repay the loan.

Prompted by events of 2013/14, history was not kind to the Party of Regions or many Regionaires however.

In November 2016 the lender formally informed the borrowers that unless the outstanding $368,000 was repaid it would foreclose after the statutory 30 days from their notification.  No response came.

On 28th December 2016, having received no contact, let alone payments, the property was foreclosed upon by the lender.

On 20th February, the usual attempts were made by Messrs Skoblenko and Tikhorirov to try and retain ownership of the property – by filing a complaint of fraud with the police against the lender that foreclosed.

It appears that the police took no action – at least no investigative action can be found immediately having received the complaint.

At some point following 28th December 2016, a company called Prime Odessa assumed either ownership or power of attorney over the premises of 3b Primorksy.

On 17th March 2017, the Danish company BIIR Property LLC, a subsidiary of the Danish BIIR Ukraine R&D engineering company, bought 3b Primorsky from Prime Odessa.  Outstanding debts upon the property there were none following the sale.

At this point it is necessary to underline the commitment to Ukraine BIIR has made.  It was originally set up and working in Luhansk until its premises there were seized and fell within the occupied territories.  Not only did BIIR relocate its business to Odessa, but it relocated its employees and their families too.

The workforce has also grown whilst in Odessa to 110 people as of the time of writing, with the intent to employ 500 people by 2020 – or perhaps not, for it remains to be seen if it will remain.  Primorsky 3b was bought for use as the corporate HQ, and a corporate HQ can be placed more or less anywhere.

In mid-April 2017 the National Police forwarded the “fraud” claim to the Odessa Prosecutor’s Office and the case immediately made its way to court.

Unsurprisingly, when friends and acquaintances of Sergei Kivalov require the “right judicial rulings” (or indeed when he himself does), interesting things occur.

Almost immediately after the case reached the courts, there was a hearing (no waiting as is normally the case).  The hearing occurred not only without BIIR in attendance, but the Prosecutor’s Office wasn’t informed either.  The court ruling was to immediately arrest the property Primorsky 3b.

The case was then kicked back to the National Police (presumably to try and find some evidence of guilt and criminal intent on the part of BIIR – searches of BIIR’s bank records and notary occurred).  If a reader is of the opinion that if any fraud occurred, then it was that of the financial companies involved that sold the property and/or played with the loan ownership, then they are not alone.

In August 2017, the notoriously corrupt (and Kivalov influenced) Odessa Economic Court ruled that the property be returned to Messrs Skoblenko and Tikhornirov, and also struck down any liability they had for the $368,000 outstanding when the property was foreclosed upon and subsequently sold to BIIR.

In short, Odessa Economic Court not only returned Primorsky 3b to previous owners that had not paid a loan repayment for 6 years, but also wrote off any liability they had to pay it – property returned – debt free.  BIIR repaid the outstanding financing.  No order for recompense to BIIR was made.

This prompted diplomatci intervention by the Danish Embassy in Kyiv – and quite rightly.  Ambassador Medsen wrote directly to the Ukrainian Prosecutor General, Yuri Lutsenko on 25th September 2017.

Although the blog has a copy of that letter and there is nothing particularly sensitive within, in order not to publish contact details therein, the text reads thus:

“Royal Danish Embassy


Commercial Department


Prosecutor General of Ukraine

Mr Yuriy Lutsenko


25 September 2017


Dear Mr Yuriy Vitaliyovych


On behalf of the Embassy of the Kingdom of Denmark in Ukraine, I assure you in my respect and request the possibility to organize a meeting to discuss the following questions:


As you are aware, the Danish government supports the process of reforms in Ukraine that began back in 2014. Presently, Denmark is proactive participant in the program to reform criminal justice and prosecution that is implemented by our Council of Europe partners. I would like to discuss with you the process of restructuring that is ongoing in the PGO of Ukraine in the framework of reform and anticorruption measures implemented by your institution.


Representing the interests of Danish business in Ukraine, I would like to discuss the issues related to Danish engineering company “TOV BIIR Ukraina”. Expanding the business, Danish investors in “TOV BIIR Ukraina” established a subsidiary company “TOV BIIR Property” that bought the building at 3b Prymorska Street in Odessa to build a modern energy efficient business center. Unexpectedly for the company “TOV BIIR Property”, this asset turned out to be disputed and presently, the ownership right is claimed at commercial courts by the former owner. In parallel, the National Police authorities in Odessa brought a criminal proceeding No 120121605000918, under which the arrests in favor of the former owner were imposed. Because of the abovementioned arrests, currently, there is a risk of resale of this building by the former owner to the third parties and complete loss of “TOV BIIR Property” investment.


With regard to the importance of the above issues, I would request you to organize a personal meeting for productive discussion. We are ready to coordinate suitable for you time and date of the meeting by phone.




Ruben Medsen

Ambassador of the Kingdom of Denmark in Ukraine, Belarus, and Armenia”

BIIR appealed the court rulings and 19th October will see that appeal heard at the Odessa Appellate Court.

Few will be surprised if this court continues along a line of ruling in favour of friends of Mr Kivalov.

It follows that appeals will then be made to the Supreme Court of Ukraine (but that too is well within the influence of Sergei Kivalov).

Ultimately this may well go all the way to the European Court of Human Rights.  Fortunately both owner and company are forged of strong stuff and are also financially placed to fight all the way over this case.

The outcome is entirely unclear, but certainly worth keeping an eye upon.

There are of course horrendous messages to other foreign investors to consider if vested interests in Odessa continue to shaft this Danish company.

Perhaps worse still is that it is a reasonably high profile company – the owner Mr Sillesen is known to hang out with the likes of Anders Fogh Rasmussen, who apparently advises President Poroshenko (though clearly not on investor relations or the rule of law with any effect).  That is not to say President Poroshenko is aware of this particular case, although it ticks all those PR disaster for international investments tick boxes and more.  A reader has to suspect he is aware if he has met with the Danish Ambassador since he penned his letter to Yuri Lutsenko.

Currently it is a matter of preventing these premises being sold after their highly dubious return to the original owners while BIIR continues to fight its case.  The entire point of this blog entry is to raise the flag for those that would buy Primorsky 3b.  (Hopefully there have been enough mentions for SEO orgasm).  It is to raise the names of Valentin Skoblenko  and Alexander Tikhomirov of Mega Stroy LLC too.  Hopefully somebody doing due diligence would think to Google before doing anything more bureaucratic and/or investigative.

How though to prevent this PR disaster becoming exactly that?  There are surely far fewer political points to be scored by The Bankova in allowing a scandal to then clear it up, than there is to prevent it in the first place now electioneering has begun.

That said there are few with any history in Ukrainian politics that have not had favours done by Sergei Kivalov via his control of prosecutors and/or judiciary over the past decades.  To squeeze Mr Kivalov sufficiently to abandon the interests of his close associate for the interests of Ukraine would have to be done is a way that brought with it no unmanageable domestic repercussions with electioneering on-going.

It is unlikely that Mr Kivalov has assets in Denmark for it to squeeze.

Denmark would have to ask the UK, Austria and Switzerland to squeeze assets in those nations on their behalf to swiftly reach an understanding with Mr Kivalov and a rightful judicial outcome by 19th October.  Call it an unofficial diplomatic “Ways and Means Act”should it be employed.

But why do Messrs Skoblenko  and Tikhomirov want to retain this property?  It is run down no differently to the entirety of the (much abandoned) property that runs from the bottom of Primorsky Steps to the official entrance of Odessa Port.

It is said that they believe that adjacent property will be developed and turned into a shopping mall, and it is for that reason they wish to retain it.

Indeed a developer has such plans at that location.

That it would be a disaster with no passing foot traffic and zero parking for too much passing traffic is perhaps relevant?

No doubt if the developer had then known and been able, he would have acquired Primorsky 3 b to perhaps ease such issues.

The problem being is that the adjacent landowner and developer is Ruslan Tarpan – a man who is an acquired taste (though the blog finds him good company), entirely hard nosed and absolutely uncompromising.  He also comes with the “colouful past” of those that made a lot of money during the 90s-00s in Odessa (and off shore).

Perhaps due to the flux within the Odessa underworld, perhaps for other reasons, Mr Tarpan decided it was wise to leave the country for a while as a feud between Odessa’s mafia Mayor and himself plays out over Dom Russova (and several other things) and escalates.

Thus do not expect a shopping mall in that location for as long as Mayor Trukhanov remains Mayor – and it appears nobody will bother standing against him at the time of writing.

Ergo painted in broad brushstrokes is an international FDI PR disaster waiting to burst out beyond the confines of Odessa, Ukraine and Denmark – ending up at the European courts.  The thousands of European firms that work without problem within Ukraine will matter not, compared to the response of the few that are interfered with nefariously.

Can it be avoided?  Of course.

Will it be avoided?  Probably not.

Will there be negative local, regional, national and international repercussions?  Naturally.



Disability scams

October 12, 2017

Buried deep within the Land Code of Ukraine sits Article 92.

Few but the disabled and the nefarious would know of its existence.

It states “The rights of the permanent use of the land from state and communal property lands are acquired by public organizations of invalids of Ukraine, their enterprises (associations) institutions and organizations.”

Clearly there is much to be admired about the spirit within the text of that law – and just as obviously such a text is guaranteed to be manipulated and abused.

Unsurprisingly it therefore follows that there are a number of disability “enterprises, associations, institutions and organisations” that have very little to do with people with disabilities and much more to do with odious and nefarious individuals creating and using such entities to acquire free land for permanent use from village, town and city authorities that are powerless to prevent it.

Naturally the land acquired is prime agricultural or brown-belt land.  This is free of charge.  No fees – not even a nominal rent.

In Odessa currently the two most aggressive abusers of this disability law are Надія та допомога and Надія та взаємодопомога – both organisations directly associated with Yulia Bilovol who acts as Director of “Association of Initiative Disabilities” with which those “organsiations” are subordinated.  Ms Bilovol is a well known lawyer associated with past nefarious deeds (such as the nefarious privatisation of reserve housing stock).

This scheme thus far, has taken 1300 hectares of agricultural land under the control of Ms Bilovol.  The “Association of Initiative Disabilities” then rents out each hectare of land to local farmers at UAH 2000 per annum.  Among the “leasers” will be the obligatory disabled individual.  Thus it makes UAH 2.6 million from its manipulation of the law.

It is perhaps no surprise then that there are almost 200 “invalid associations” in Odessa alone – many run by businessmen disproportionately associated with the construction industry – and no doubt with the obligatory disabled employee.  Almost half of these “associations” having been opened since the war began in 2014.

Clearly among that number of disability registered “enterprises, associations, institutions and organisations” there will be a large percentage that are genuine in spirit and deed – but obviously there will be a significant minority that seek simply to exploit the law and undermine local governance and communities as a result.

Of course this scheme is not limited to one disgraceful lawyer, businessmen in Odessa.  There are direct kin of Verkhovna Rada employees and civil servants also involved in such “organisations” in Odessa making the same nefarious profits from the same nefarious schemes – or variations thereof.

It is not, of course, a scheme restricted to Odessa.

It remains to be seen whether the Prosecutor General’s Office will pluck up the courage to investigate this systemic issue – or not.

A reader can well imagine the hyberbole and nuance-free social media reaction to the PGO raiding numerous disability registered entities – despite the fact many are deviously misappropriating land from local government and those local communities.


Staying relevant – EU partners in the Ukrainian GTS?

October 11, 2017

With alleged Kremlin favouring shenanigans occurring within the higher echelons of the Council of Europe, and NABU arresting Deputy Defence Minister Ihor Pavlovsky (and others) for embezzling UAH 149 million ($5 million) of defence budget funding (and thus deserving of far more than being charged simply with embezzlement during a time of war), or the crashing of Facebook across Ukraine (and beyond),  it is perhaps understandable if a reader missed the statement of EU Ambassador Hugues Mingarelli relating to the Ukrainian Gas Transport System (GTS).

There are a few things to like about Hugues Mingarelli.

First and foremost he is very visible in the media – unlike his predecessor.  Secondly he is blunt in his public diplomacy.

Ambassador Mingarelli made another blunt statement on 11th October.  He stated “If we want to create conditions for Ukraine to remain a transit country for gas, it is necessary to involve European companies in the management.”

Very clear – but what was his actual message?  It is, after all, not what is said, but what is heard and understood that matters.

Is this a case of the EU trying to obtain some control over the Ukrainian GTS perhaps – but if so, to what end?

In gaining some control over it, there is a sense of having to do so as part of anti-corruption initiatives?

To be sure Naftogaz has made significant progress with regard to transparency and profitability, however progress with regard to ratified Ukrainian obligations to the EU 3rd Energy Package – specifically the unbundling of Naftogaz – is not progressing as swiftly as it might (to be very charitable).  There are issues regarding appointments, glacial SBU background checks for potential foreign appointees, and a blatant entrenchment of vested interests throwing spokes into the unbundling wheels etc.  (An entirely predictable circumstance when “energy” has always been the trough from which the oligarchy has fed well since independence.)

Further there is an ever-increasing overt political interference – which is likely to be the tip of an ever-increasing covert political interference iceberg.

Perhaps the EU Ambassador is making a less than subtle hint that much needed FDI into the Ukrainian GTS comes with EU participation and oversight/involvement with that investment?  However he is talking about “European companies” and not EU institutions.  As European energy companies are hardly an effective instrument in progressing or defending EU Directives and Regulations – as the current issues surrounding the Nord Stream II consortium illustrate – this is perhaps not what he is driving at either.

Maybe he believes the Ukrainian GTS will remain more relevant if “European companies” are forced to defend their interests with their Member State governments and beyond – and by extension defend Ukrainian interests and the usage of the GTS?  Competing interests in both energy supply routes but also via effective corporate lobbying?

His statement therefore has perhaps as much to do with the EU as it has to do with Ukraine?  This is perhaps the only way he can see to effectively defend the EU 3rd Energy Package (and Ukraine) from a two pronged North and South Kremlin onslaught?  Clearly a Kremlin NS I plus NS II, and Turk Stream, may well mean the end of the EU’s 3rd Energy Package – and perhaps the EU energy market as well.

One look at a map, when drawing an arrow from Russia to the EU via NS I and NS II in the north, and Turk Stream in the south, looks like nothing short of an invasion plan – irrespective of circumventing Ukraine.

European demand will be ever present and European gas production is declining – and will continue to do so.

Nevertheless, NS II in particular is clearly a political project from The Kremlin perspective.  It makes no economic sense for Russia – particularly during a time when its economy is under strain and NS I is currently working 25% below capacity.  Neither is the Ukrainian GTS transporting Russian gas working at anything like capacity.

To be sure, Germany is not about to scupper the NS II project itself.  Those Germans that would be happy to see the project fail will be counting – perhaps wrongly considering recent EU legal opinion – upon the European Commission killing the project.  There are still many within Germany policy circles that whilst content to continue to support and lobby for maintaining sanctions upon The Kremlin, are yet also keen to offer the hand of engagement through projects like NS II.  There are of course others that are interested in Germany becoming a major energy hub for the EU – German interests.  Yet others are simply Kremlin apologists and appeasers.

Many of those EU Member States against NS II are not necessarily against it for the same reasons.

Indeed each Member State has its own interests, and their support – or not – for NS II relate primarily to national and not EU interests.  For example Poland would like to position itself as an energy hub – which will be almost impossible if neighbouring Germany becomes one.  Others like Romania are against NS II simply because of the way it views it Russian energy politics/influence as an extension of Russian nefariousness.  Romania uses almost zero Russian gas.  Romania will never trust Russia.  Bulgaria almost exclusively uses Russian gas.  Hungary would prefer to connect to the Turk Stream rather than a German hub denying the EU (and Germany) a further lever over Mr Orban’s policies.

There are also issues of infrastructure and interconnectors (or a lack of them) across the EU energy systems.  This may lead to issues of physical access for some nations if the Ukrainian GTS (more or less) becomes redundant.  There are market expectations too within the EU energy markets.

And so it goes on when looking at the drivers for each Member State concerning NS II.  The final outcome is far from certain – as are the repercussions regardless of what outcome arrives.

While those atop the whole (EU) may have concerns in deepening dealings with a nation that is clearly hostile to it, naturally the composite parts (Member States) may to varying degrees be less hostile.  The issue is that The Kremlin has no problem with what it views as “old” or “traditional” Europe – its problem is with “political Europe” which includes those lucky enough to have escaped its grasp and found sanctuary elsewhere.

Where does this leave the Ukrainian GTS, and why is Ambassador Mingarelli clearly raising warning flags for the Ukrainian leadership now?  Does he perhaps sense that NS II now has much more chance of becoming a reality than a month ago?  (He would not be alone in that perception.)

To be very blunt, if, or perhaps when Russia stops delivering gas to Europe via the Ukrainian GTS, the loss of the $2 billion annual transit fee will not mean anything like the end of Ukraine economically.  Neither will it mean the end of Ukraine as a political animal either.  It may even mean that Ukraine will buy its gas yet cheaper from Europe than it does now, having long since buying Russian gas directly from Russia.

Perhaps the circumventing of Ukraine would bring about the worst possible outcome for the nation – the abrupt end to reforming its gas sector and the continuation of unchallenged vested interests within.  Perhaps it is this possible future that drives the comments of Hugues Mingarelli?  “European companies” involved in the GTS would still insist upon domestic gas market reform, and their governments would naturally support their interests, thus keeping Ukraine relevant in the energy arena for Europe – even if (eventually) circumvented by Russia.

It maybe that any, or all, or any combination of the above is what Ambassador Mingarelli is saying when he said “If we want to create conditions for Ukraine to remain a transit country for gas, it is necessary to involve European companies in the management.”  As already stated, it’s not what is said, but what is heard that matters – and from that comment there will be different interpretations.

Perhaps what matters is that, regardless of interpretation, it was indeed heard.

(One further Russia related comment, aside from the immediate negatives of economic cost relating to building NS II, the long term economic view, if and when it is built, perhaps does not bode well either – for it further embeds reliance upon resource extraction into the economy and does nothing toward reforming or diversifying the Russian economy.)

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