#Ukraine: War on investors

| November 22, 2017 | 0 Comments

By Colin Stevens

Recently, the capital of Ukraine, Kyiv, hosted the regular Congress of the EURONEST Parliamentary Assembly. This is a special institution for partnership between Europe and eastern European countries. During the special event in Kiev the representatives of EURONEST have discussed issues of freedom of speech, cybersecurity, unemployment and discrimination in Eastern Europe, writes Colin Stevens.

In addition, among the topics discussed was the issue of attracting international funds and investments to the Eastern Partnership countries. President of the Parliamentary Assembly Rebecca Harms noted Ukraine’s achievements in such a difficult time for the country, in particular, successes in the fight against corruption, banking reforms and decentralization. Madame Harms has been for a long time expressing solidarity and support to Ukraine, and besides has personally been to the Donbass. But is Ukraine really as good as she describes it?

Ukraine is the largest country in Europe, which has a huge potential for development, but has been stuck in the constant economic crisis for quite some time.

Ukraine, which recently signed the Association Agreement with the EU, is beginning to gradually enter the European market. The presence of Ukrainian dairy products, eggs, poultry meat and meat products on the shelves of European supermarkets is no longer surprising. And for the most Europeans, Ukraine offers great opportunities. This 42 million people country is one of the largest markets for European products.

Recently, the country’s investment climate has improved significantly, as evidenced by the increase in foreign direct investment in the country. Most often, the companies invest in traditional spheres – agriculture and food industry, energy, woodworking, engineering and IT. In addition to a rich resource base, investments are also facilitated by very low tax rates, ease of registration and receipt of necessary documentation, favorable lending conditions and financial services.

However, on the path of investment there is one very big problem – the problem of security. During the meeting of the Assembly, many experts stated the tragic situation with the protection of rights and private property and frequent cases of business seizure. One of the experts, with whom I managed to talk more closely, stated that ”nowadays in Ukraine the facts of raider seizure of property, including by force, have increased, but little is being said about this at international forums. This is a reality that does not attract international investors to the Ukrainian market».

I was curious to know how such cases actually look. During the conference, I was told about the tragic case with the Ukrainian company TOMAK. This company has more than 70 years of history as a machine-building enterprise that produced famous Soviet soda vending machines. After 1991 the enterprise continued to work, developing and manufacturing various automatic equipment. Striving for development, the company cooperated with the Austrian Erste Bank, but after the crisis processes of 2013 the bank left Ukraine, and the loan of TOMAK and the loan portfolio of all foreign investors were transferred to the local FIDOBANK. And then the most tragic thing happened. With the help of complex corruption and fraudulent schemes and links with the security forces (according to the expert, this was the conspiracy of the owner of FIDOBANK and representatives of the general prosecutor’s office), nearly all assets were seized and given to the shell company “WhiteEnergyâ€�, which is directly connected with the bank’s board. By the way, for the owner of FIDOBANK this is not the first appearance in the press in a scandalous light, because there have already been allegations of major frauds involving him, which led to the bankruptcy of FIDOBANK and as a consequence to the non-payment of deposits.

Another expert told of an incident in Lviv, which caused a wide public resonance. The raiders tried to steal the trading-entertaining complex “Victoria Gardens� from its investors – the British company Globcon Limited, using the bribery of the state registrar and forgery of documents. The unidentified men threatened employees of the enterprise with some objects that looked like cold weapons, and also demanded that the director provide all the corporate seals and documents. Fortunately, in this case, investors managed to protect their ownership rights in a judicial proceeding.

Unfortunately, such incidents are typical for Ukraine. Experts note that over the past 25 years, dozens of industrial enterprises have been seized this way. Pleasant fact is that the Parliament of Ukraine understands the problematic nature of this phenomenon. Member of Parliament of Ukraine Nikolay Kucher announced: “Over the past six months, cases of raidership in the state have significantly intensified and their number has increased. Therefore, the response of the profile committee and the Government will follow, because we cannot stand aside from these issues”.

Sometimes it is important to communicate with people directly, and not just listen to reports of public organizations. I am surprised that in the center of Europe could be such a blasphemous attitude to private property and the aggressive pressure of the security forces. I sincerely hope that all the defects of the system will be eliminated by the Ukrainian authorities. In order to become part of a great Europe, Europe needs to become a small part of the consciousness of Ukrainians.

Source:: EU Reporter Feed



Category: Energy, Uncategorized

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