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September 27, 2013
18th
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vol. 18, issue 39
Borderland To Raiderland
From
BY ANNA BABINETS
ANNA.BABINEC@GMAIL.COM
Dozens of cable operators and internet service providers
received an identical letter this month with a chilling, unwelcome
and unexpected offer.
“We propose you to consider selling your company. The pro-
posal is valid though Sept. 21, 2013,” the letter read. The short
text was followed by a phone number and signed by
BY MARK RACHEKVYCH
RACHKEVYCH@KYIVPOST.COM
Swissport International
The world’s largest airport ground handler says that it is
a victim of a “hostile corporate raider attack” by Ukraine
International Airlines based on a March 27 Kyiv court rul-
ing that allowed the country’s flagship airline to purchase
the Geneva-based company’s 70 percent stake in its
BY KATYA GORCHINSKAYA
GORCHINSKAYA@KYIVPOST.COM
Late on the night of Sept. 21, some 50 men stormed into Globus,
the underground shopping mall in the very heart of Kyiv. They
took over the premises and used an electric saw to break into
management offices and the computer center of the mall. Then,
they reprogrammed the security system to lock out the mall’s
management, according to Svyatoslav Ilchenko, director14 3 9
Telecoms industry faces threat Triple trouble for top firms Takeover at Globus mall
Ukraine is sometimes known as the “borderland,
a reference to its location between Russia and the
West. But investors say “raiderland” applies as
well, considering the threats on current businesses.
A woman reads a “bank closed” sign at a Kyiv
Ukrsotsbank branch on Sept. 20, the same day
when Donetsk police shut the bank’s main office
during an inspection in the nation’s capital. (UNIAN)
3. Can we start with an introduction of yourself and
an overview of your company? What is your com-
pany’s strategic positioning on Ukraine’s market?
One of the leading manufacturers of tobacco products,
Japan Tobacco International, was founded back in 1999,
when Japan Tobacco Group acquired the international
business of R.J. Reynolds, including its operations is
Ukraine where we have now been present for 20 years.
Our company employs around 27,000 people working
in 95 offices all around the world, operates 25 factories,
six research & development centers and five tobacco pro-
cessing facilities.Our company is recognized as the most
dynamically growing tobacco company in the world.
Here in Ukraine, we have over 1,200 employees
working in the head office in Kyiv, in the regional of-
fices nationwide, and at the factory in Kremenchuk, in
the Poltava region. The Kremenchuk factory is worth
special attention. A year ago it celebrated its 170th an-
niversary. Within JTI, it is recognized the most cost-
effective factory and a center of excellence globally. It
has a leading role in terms of production quality, and is
well-known both in Ukraine and internationally for its
special attitude to work safety.Recently,our factory col-
leagues celebrated two years without injuries related to
the production process.Last but not least,as a Japanese
company,we are passionate about ‘Kaizen’,the philoso-
phy of continuous improvement. Our factory is the
only Ukrainian enterprise that has managed to imple-
ment all the key principles of Kaizen and it now hap-
pily shares its experiences with Ukrainian businessmen
who regularly visit the factory for special Kaizen tours.
Promoting Japanese heritage is one of our global pri-
orities, even if it is not directly related to our business.
As part of the company’s socially responsible ethos, we
have successfully worked with the Embassy of Japan
and Ukraine-Japan Cultural Center. In the past, JTI
supported a range of cultural events, including char-
ity concerts in the National Opera commemorating
the Chernobyl and Fukushima disasters. We have also
successfully cooperated with the Kyiv City State Ad-
ministration in renovating Kyoto Park, which has now
become one of the most attractive recreational areas on
Kyiv’s left bank. In 2011-12, JTI initiated the plant-
ing of the longest sakura alley in Ukraine there and in-
stalled new litter bins. A similar alley was also planted
in the Park of Peace in Kremenchuk.
As for my own career path, it very much reflects the
main stages of the company’s development and growth.
I joined the company’s operations in Ukraine back in
1998, when it was still part of RJR. Then, already be-
ing part of JTI’s global family, I went through different
stages and areas of specialization.Initially,I was involved
in merchandising, and then worked as Trade Market-
ing Manager and Divisional Sales Manager until 2004,
when I was appointed Sales Director. Five years later, in
2009, I moved to the position of Consumer and Trade
Marketing Vice President in which I remained un-
til January 2013. Then the time came to gaining some
new international experience. I was assigned to a similar
position in Bucharest, Romania assuming responsibili-
ties for consumer and trade marketing in three markets;
Romania, Moldova, and Bulgaria. Finally, last August I
received an offer to return to my homeland, this time in
the capacity of General Manager.
JT International has 95 offices worldwide. How
do you cooperate with your colleagues from dif-
ferent countries and do you all have the same phi-
losophy and values despite different mentality?
All of JTI’s 27,000 employees around the world, from
CEO to associate, are united by common values.These
are Enterprising, Open, Challenging. When we say
we are enterprising, this means we have the courage
to do things differently. We work together to achieve
our strategic goals, which lead to new ideas resulting in
fresh perspectives and innovation. We are open, which
means that we truly believe in openness and transpar-
ency in everything we do. We are challenging, because,
as I said, we strive for continuous improvement. This
means that quality is an integral element in every com-
ponent of our business.
Understanding and implementing these values by
the employees, regardless of the country, nationality,
specialization or formal position within the company
is key to understanding the unity and feel of a global
family that dominates our corporate culture.These val-
ues are a reflection of our everyday business approach,
and they really help us retain our leading position in the
market and strive for more all the time.
We regularly exchange best practice, knowledge and
ideas across all markets and regions. We communicate
in different ways in different sectors.The spirit of trust
and support to each other makes us a united team. We
are a multinational company with a great deal of mobil-
ity among our employees.When an employee relocates
to a different market, they get involved in a two-way
communication, enriching new colleagues with the ex-
perience they possess and utilising the best from already
existing local practices.
What changes have occurred to the company
when Ukraine joined the growing list of countries
banning smoking in public areas?
We are doing business as usual. The question you have
asked needs to be addressed to the owners and manag-
ers of HoReCa businesses. We monitor the situation
via mass media, and we know that a range of cafes and
restaurants either closed down or faced significantly re-
duced revenues after the law came into force.But again,
HoReCa businesses and their professional associations
are in a much better position to reflect on the impact
the law has had on them.
If you look ahead five years,how do you see the fu-
ture of JT International?
I am extremely optimistic about the company’s future.
Our goal is clear: to be the most successful and respected
tobacco company in the world.We will do this by always
improving to satisfy the needs of our consumers, being
open with the people and communities we work with,
and setting the highest possible standards.This approach
will ensure our leading position in both global and local
markets in the medium-term and in the long-run.
What are the main challenges for you to overcome?
(Regulatory,economic,barriertodoingbusinessetc.)
The significant growth of the illicit trade in tobacco
products is one of the main challenges. Currently illicit
trade in Ukraine makes up about 10% of the market.
Contraband and illegal manufacturing are very prof-
itable, while the risks are relatively low. Illicit trade
is growing due to the pricing differential between
Ukraine and the neighboring countries.
We are in constant dialogue with Ukrainian gov-
ernmental authorities and we are grateful to them for
the hard work they do in tackling this problem.We are
aware of the comprehensive nationwide anti-smuggling
campaign that is implemented jointly by the Ministry
of Revenues & Fees and law enforcement agencies,and
the efforts the government is taking to ensure the legal
sale of cigarettes in the country. We very much hope
that such activities will have their effect helping stop-
ping the illicit trade’s growth and in future will decrease
it. It is very important not to lose this momentum and
keep the pace up. New measures need to be taken as
well. Initially we are talking about controlling the im-
port of filter rods and mandatory registration of tobac-
co manufacturing equipment.
Have you launched any new initiatives to combat
the current challenges?
We have been in continuous dialogue with govern-
mental authorities. One of the initiatives we currently
discuss is introducing Codentify, a system that allows
for the control of volumes of manufacturing and sales
of tobacco products,monitors payments of excise tax,as
well as checking the genuineness of the products.
It is very important that border controls are strength-
ened, the illicit trade inside the country is tackled, and
the laws are effectively enforced. JTI’s experience in
other countries shows that collaboration between
government and the tobacco industry significantly
helps tackle illicit trade. This was very much the case
in Romania, where I previously worked. Over the last
three years,illicit trade in the country has dropped from
36.2% to 13% of the whole market. JTI signed proto-
cols of cooperation with the country’s Customs Service
and the Border Police. We have helped with setting up
dog squads on their borders. That particular depart-
ment seized and generated over EUR four million in
the form of confiscated goods and imposed fines.
Furthermore, we have always advocated a transpar-
ent, open and predictable excise policy. The three year
excise increase plan that was adopted by the Verkhovna
Rada in November 2012 is a good example of the ap-
proach that is based on international standards and best
practices. The Ministry of Revenues & Fees recently
announced that over the first eight months of 2013,ex-
cise payments to the national budget increased by 15%.
We believe that it is the result of the new excise policy.
Adherence to its main principles in the future is crucial
for the business and for the state.
Tobacco Industry: facing the new challenges
VICTOR
VEKLITCH
General Manager,
JT International
Company Ukraine
More on www.eba.com.ua
News 3www.kyivpost.com September 27, 2013
local joint venture – Swissport
Ukraine – for $400,000.
Swissport estimated the joint venture
was worth some $25 million, but UIA
said in its defense that Swissport had
determined the share price, at less
than 1 percent of the actual value, in
the first place.
UIA furthermore denies the raid-
er allegation, saying it was treated
unfairly as a minority stakeholder in
their local ground handling company,
accusing its ex-Swiss partner of threat-
ening to dilute its shares in Swissport
Ukraine.
Since taking over, UIA rebranded
the company as Interavia, and in July
it pumped an additional $1 million
into the company’s share capital.
Meanwhile, Swissport has gone on the
offensive to involve diplomats and by
lobbying lawmakers and government
agencies in the European Union. In
turn, UIA has called Swissport’s out-
of-courtroom actions a “provocation
aimed at discrediting Ukraine’s largest
carrier.”
Currently their dispute is being
heard in the nation’s highest com-
mercial court. The court is sched-
uled on Oct. 2 to rule whether
Swissport will win back its shares
in the former joint-venture, fol-
lowing nine postponements since
June.
Their conflict is also being exam-
ined by the Ukrainian government’s
inter-agency anti-raider committee led
by First Deputy Prime Minister Serhiy
Arbuzov.
McDonald’s Ukraine
On April 26, a Kyiv commercial court
ruled that McDonald’s was illegally
sold a building in 2006 where it sub-
sequently opened a restaurant on 4
Draizer St. in the Troyeshchyna neigh-
borhood. The decision was based on
a lawsuit brought on by Yuri Dziuba,
a shareholder in the now bankrupt
Radosyn agricultural company, which
sold McDonalds one-fifth, or 433.5
square meters, of a building.
The court ruled that Radosyn’s
supervisory board on Oct. 17, 2006
illegally voted to approve the sale of
the premises to McDonalds because
one board member at the time worked
as a state notary in contravention of
the law. Thus, the board effectively
was deprived of having a quorum,
or at least 80 percent present for the
vote.
On Feb. 2, a Kyiv commercial court
recognized Radosyn as bankrupt.
This case is connected to another
lawsuit that started in autumn 2011
when Radosyn was undergoing bank-
ruptcy proceedings. The court-appoint-
ed trustee for Radosyn, Oleksandr
Syrotenko, also filed a lawsuit to
invalidate the sale of the building to
McDonalds.
McDonald’s maintains it is the legal
owner of the restaurant and called the
litigation as “artificially initiated legal
actions.”
“The (McDonalds) company believes
(it) to be the legal owner of the…build-
ing and traces no grounds for being
deprived of the right of ownership of
the building,” the company said in a
statement.
First Deputy Prime Minister Serhiy
Arbuzov’s inter-agency anti-raider
committee is currently examining the
case.
Vitmark Ukraine
Business and manufacturing opera-
tions at leading juice maker Vitmark
temporarily came to a halt when
law enforcement bodies on Aug.
23 took computer equipment and
vital company documents as well
as other items related to a criminal
case the company says are unrelat-
ed and have “nothing to do with
business.”
Horizon Capital CEO and founding
partner Natalie Jaresko told the Kyiv
Post at the time that the move was
part of a raider attack on the com-
pany. Vitmark is a portfolio company
of Horizon, a private equity fund of
mostly foreign investors.
Vitmark spokesperson Andriy Kren
said that authorities withheld the items
it confiscated for two weeks before giv-
ing most of it back, and that its export
operations had suffered as a result, but
didn’t provide an estimated amount of
damages.
Vitmark Ukraine filed a complaint
dated Sept. 24, seen by the Kyiv
Post, to the Highest Qualification
Committee of Judges, which disciplines
judges, stating that the judge who
issued the court order to search and
confiscate items at Vitmark’s main
office in Odesa acted without grounds
or with justification. The complaint fur-
thermore asked the judicial committee
to take disciplinary action against the
judge.
Kyiv Post editor Mark Rachkevych can
be reached at rachkevych@kyivpost.com.
Three firms report trouble
1
The 2006 sale of a portion of this building to McDonald’s, where it operates
a restaurant on 4 Draizer St. in Kyiv’s Troyeshchyna neighborhood building is
being disputed in courts and which the government’s anti-raider commission
is examining. (yablor.ru)
4. 4 Opinion www.kyivpost.comSeptember 27, 2013
No time to waste
One downside to the political monopolization of power that President
Viktor Yanukovych holds over Ukraine is that he must bear the respon-
sibility for everything that goes wrong. That means that if the European
Union does not sign a political association and free-trade agreement with
Ukraine during the Nov. 28-29 summit in Vilnius, Lithuania, no one but
Yanukovych is to blame.
The bargain offered by the West is a good one. Yanukovych and impris-
oned ex-Prime Minister Yulia Tymoshenko should take it, if they both care
as much for Ukraine’s future as they proclaim. The deal, as outlined in
public, is to allow Tymoshenko to seek medical treatment in Germany and
have the criminal cases closed against her.
Granted, Yanukovych would most likely not allow her back into Ukraine
before the 2015 presidential election, if ever. Her release is one of three
conditions the EU has set for the deal: an end to selective justice and
the general prosecutor’s excessive powers, as well electoral reforms to
ensure democratic contests. The EU should not compromise.
The EU and Russia are engaged in an intense tug-of-war over Ukraine,
with Russia threatening to punish Ukraine with trade sanctions and
import duties, as well as encourage separatist Ukrainian sympathies.
These moves are backfiring, as multimillionaire businessman Petro
Poroshenko pointed out to the Kremlin’s point man, Sergey Glaziev, in
one of the most dramatic exchanges at the Sept. 19-22 Yalta European
Strategy forum. Support for Ukraine’s integration with the European
Union is now at more than 50 percent of Ukrainians, with only 30 percent
against, Poroshenko said, citing recent polls. Those opposed are older
and less educated.
However, Yanukovych is on the precipice of missing Ukraine’s best
opportunity in years for EU integration by his irrational fear of Tymoshenko
and his stubborn refusal to view her imprisonment the way that Russia,
the West and most others see it – as crude political persecution.
When the West and Russia agree on such issues, the time for debate
is over. As we have said from the moment of her arrest on Aug. 5, 2011,
the president should free Tymoshenko. If he does so, he will reap more
rewards than he could possibly imagine.
Pinchuk forum
A few current and former Kyiv Post journalists are regulars at Victor
Pinchuk’s Yalta European Strategy forum, while one of us – chief editor
Brian Bonner – made his first trip this year. Hordes of journalists continue
to go, some paying their own way and others doing so at the expense of
Pinchuk or other foundations. We encourage all journalists to pay their
own way, at least for the practical elements of air fare and lodging.
This year’s 10th anniversary session proved to be a worthwhile gath-
ering, loaded with dynamic speakers and ample opportunities for inter-
action with newsmakers. If only all speech in Ukraine could be so robust,
the nation would be a better place.
As for Pinchuk’s larger aim of breaking the nation’s Soviet heritage –
including the oligarchs’ and apparatchiks’ stranglehold – we wish him
success. The gathering shows that many in the West remain naïve about
the extent of corruption in Ukraine, as today’s front-page stories on raider
attacks on businesses show. Ukraine, sadly, remains anchored in the past.
The Yalta visits of luminaries are forcing Ukrainian leaders to resist the
inward-looking provincialism that has hindered the nation’s development.
Pinchuk’s goal is all the more worthwhile because it comes at some risk
to him, his family and his wealth.
If Ukraine truly were governed by the rule of law, and free of corruption
and insider dealing, his father-in-law, ex-President Leonid Kuchma, would
likely have stood trial for the murder of journalist Georgiy Gongadze
and other alleged crimes a long time ago. Investigations would have
been launched into how oligarchs like Pinchuk acquired their fortunes
during Kuchma’s authoritarian decade and how the oligarchs’ grip con-
tinues to smother. Fortunes are still made in murky ways – witness the
massive wealth being accumulated by people close to President Viktor
Yanukovych since he took power in 2010.
Unlike many other oligarchs, Pinchuk is trying to do something useful
with the fortune he amassed through dubious means.
Pinchuk, 53, is trying hard to move into the ranks of enlightened leaders.
He has taken the Bill Gates/Warren Buffett pledge to give away at least
half of his $2.7 billion fortune. He continues to pay for the educations of
dozens of Ukrainian students each year at the world’s best universities.
He has made his mark in arts and in combating HIV/AIDS. Pinchuk also
seems to be growing as a person. His command of English, for instance,
is so good that he personally moderated the panel with ex-U.S. President
Bill Clinton and ex-British Prime Minister Tony Blair at the YES conference.
We hope that others as fortunate as him will emulate his example.
Editorials
Published by Public Media LLC
Editors: Katya Gorchinskaya, Christopher J. Miller,
Mark Rachkevych, Olga Rudenko
Staff Writers: Anastasia Forina, Olena Goncharova, Oksana Grytsenko,
Kateryna Kapliuk, Vlad Lavrov, Daryna Shevchenko
Photo Editor: Pavlo Podufalov. Photographers: Kostyantyn Chernichkin, Anastasia Vlasova
Chief Designer: Vladyslav Zakharenko
Sales Managers: Alyona Nevmerzhytska,
Elena Symonenko
Internet Sales Manager: Svitlana Kolesnikova
Project Manager: Elena Pashkovskaya
Transport Manager: Mykola Andrusha
Chief Accountant: Galyna Rogachova
Accountant: Lyudmila Rikhlik
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NEWS ITEM: Russian predictions for
Ukraine’s future seem like a doomsday’s
forecast as Ukraine continues to
proclaim its aim of
signing an Association
Agreement with the
European Union this
November. Russian
President Vladimir Putin
predicted new trade
problems for Ukraine’s
goods if the pact is signed with
Europe, part of a broader political
agreement. “We tell you
this honestly and
directly,” Putin said
on Sept. 19. His
adviser Sergey
Glaziev forecast
that Ukraine
would default
on its debts
and Russian
TV anchor
Dmitriy
Kiseliov
compared
Ukraine with
“an airliner
that fell into
tailspin.”
“I see the hard
times ahead of you,
my dear.
Big troubles at
home are coming,
caused by fake
friends and
neighbors.”
The hunting season has started again, but not only the ducks
should be watching their back sides. Investors are taking hits
left, right and center. Their experiences expose why invest-
ment in Ukraine is scarce and will be for the next few years
at least. The reason is lack of security.
Investors never know whether anything they own legally
will be taken away from them. To those prepared to take
risks in exchange for potential big profit margins – welcome
to Ukraine.
This week has presented a number of cases illustrating just
how frustrating and scary it is to do business in Ukraine, and
why the nation occupies the lousy 134th spot in the World
Bank’s ranking of doing business among 185 economies. In
fact, recent events make one think that the assessment is
way too optimistic as major international and local inves-
tors are currently struggling with, including McDonald’s,
UkrSotsBank, London & Regional Properties (the owner of
Globus shopping mall), Vitmark (owned by Horizon Capital,
an internal investment fund), Swissport (owned by a French
private equity company), and many others.
Here are some of the stories:
On Sept. 20, 70 armed police officers from the organized
crime fighting unit stormed three locations of UkrSotsBank,
one of Ukraine’s biggest financial institutions. The bank is
owned by the Italian UniCredit Group. The head office was
paralyzed. None of the clients or staff were able to move
in and out of offices between 10 a.m. and 10 p.m. that day,
according to one Kyiv banker. Strangely enough, the move
was sanctioned by a court.
The bank is in the middle of a legal dispute with a private
company that had an agreement to borrow $200 million
years ago and failed to repay the loan. The bank is suing the
debtor, and vise versa. Somehow, in the middle of it, armed
law enforcers break into offices to confiscate documents
from the bank.
The banking sector is shocked. The case is diplomatically
described as an “overreaction” by the police. Others call it
a raider attack or a move to make the bank owners more
pliable in ongoing sale negotiations – especially about the
price. A bank this size has several thousand cases pending
in courts for overdue loans. Imagine if every one of them
resulted in this kind of police raid.
In any case, the story features a number of typical traits
of a raider attack: a court ruling that legitimizes actions of
the police, force and intimidation, a confusion over docu-
ments and a sale or takeover hovering somewhere on the
background.
A day later, on Sept. 21, Globus shopping mall in the very
heart of the capital got raided. Again, some 50 sporty men
stormed into the premises in the middle of the night, broke
down doors and have kept the owners of the mall locked
out of their $200 million property, according to the company
representatives.
Then, the telecoms industry is holding its breath, waiting
for raider attacks. Earlier this month, a number of small and
medium cable operators and Internet service providers
received an identical letter from a company called PII TOV
Evro Finance Ltd. Some say there were 90 letters, others say
as many as 200.
In the letter, the company offers to buy the addressee and
sets the deadline for the final decision: Sept. 21 in one case,
for example. It does not say “or else,” but many in the sector
interpreted it that way.
An offer to buy a business (often below market value)
typically comes from someone who eventually takes over the
business once the deadline has passed. It’s a common first
step before a hostile takeover.
This letter features a number of oddities. For starters,
the company makes no mention of due diligence or other
procedures that precede a normal acquisition. It only lists
a number to call for the company’s representative, Serhiy
Nahorniy. The same name featured as a key figure
Ukrainian sport:
Investor hunting
5
KATYA GORCHINSKAYA
5. Opinion 5www.kyivpost.com September 27, 2013
VOX populi
WITH DARYNA SHEVCHENKO
Anastasia Nov-
gorodska,
office manager
I really like our
Opera and Ballet
Theater, though
I prefer ballet
to opera perfor-
mances. I don’t
go to theaters
very often, but if I do it is usually Opera
Theater and Lesya Ukrainka Drama
Theater.
Ivan Kozak,
model
The last time I
went to the the-
ater was three
or four years
ago with my
mother. As far
as I remember, it
was Ivan Franko
Theater, but I
don’t remember which play. I may go
this year, but only if I find interesting
people to go with.
Iryna
Mantserova,
IT advertising
manager
My favorite is
Drama And
Comedy Theater
On the Left Bank.
I love comedies;
you usually want
something light after work. I want to
watch Spectators Are Not Allowed
in the new season. People say it is
a freaking funny play, shows all the
theater backstage and people just die
from laughing there.
Oleksandr
Rassahatskyi,
event manager
Well, I do go to
theaters, not
as often as I
would probably
want, but often
enough. I love
that small the-
ater with a tiny stage at Yaroslaviv Val,
Suzirya. I like the chamber atmosphere
there, so cosy. I think went to the the-
ater around five times during the last
season, but I haven’t searched for any-
thing in the new one, though probably
will soon.
Elena
Shevchenko,
sales manager
I can’t afford to
go to theaters.
A good play
can’t cost Hr 30
– go to theaters
and check, the
tickets are very
expensive. In Soviet times we used
to go to very cool theaters and very
often, now we simply can’t afford to.
For example, Russian Drama Theater
comes and I really want to go, but I
just can’t. I would like to go, with great
pleasure, but I can’t afford it. So what
are we talking about!?
Do you go to theaters, and how often? If you do,
what do you watch or plan to watch in the new
season? If you don’t – why?
nniiooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooonnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnnn 5
Gorchinskaya: Not
a welcoming place
in a 2008 hostile takeover in
Donetsk.
Nahorniy’s company itself is a rid-
dle. There is only one PII TOV Evro
Finance Ltd. in the government regis-
ter of businesses. Last week, it figured
in a public scandal around a smelting
plant that it wants to build in Bila
Tserkva outside of Kyiv. The firm also
recently received state financing guar-
antees worth Hr 1.35 billion.
Media reports name Yuriy
Ivaniushchenko, a close ally of
President Viktor Yanukovych, as one of
the firm’s owners. Ivaniushchenko, no
stranger to accusations of raidership,
denied being a beneficiary of PII TOV
Evrofinance Ltd. In a bizarre twist, PII
TOV Evro Finance Ltd came out with a
statement that it knows nothing about
Nahorniy. Meanwhile, Nahorniy says
he has a firm with the same name, but
a different one. The industry is waiting
to see what will happen next.
In the meantime, what could have
been a key step forward for Ukraine’s
economy turned into a disaster as
the deal with global energy giant
ExxonMobil fell apart – at least for
now. The company was part of a
winning tender in August 2012 to
extract natural gas in the Black Sea’s
Skifska field. It has been unable to
sign a production-sharing agreement
that would allow them to proceed with
a multibillion-dollar operation that
would diminish Ukraine’s dependence
on Russian gas.
But the nation’s strategic interests
are not enough for the government to
get its act together. Despite multiple
declarations that the deal would be
signed on the sidelines of the United
Nations General Assembly in New York
on Sept. 25, the government not only
failed to solve the major outstanding
issue for more than a year, but rolled
out 35 additional remarks, demands
and amendments to the draft agree-
ment on the eve of the signing.
The long-standing issue is
ExxonMobil’s insistence on foreign legal
jurisdiction. It has no trust in the
Ukrainian court system, unsurprisingly,
and wants to go to London should any
legal dispute occur during the 50-year
proposed agreement. But the last-minute
changes inserted by the Ukrainian side a
week before the planned signing make
it look like the government’s authorities
are stalling the process artificially.
In the end, instead of triumphantly
signing a major agreement in New York
on Sept. 25, the president presided
over a face-saving signing of an agree-
ment to sign an agreement within a
month. It looked pathetic, and did not
change a thing.
Kyiv Post deputy chief editor Katya
Gorchinskaya can be reached at
gorchinskaya@kyivpost.com.
4
From left, Creena Lavery, head of the commercial section of the United
Kingdom Embassy, Leonard Sebastian, managing director of London &
Regional Properties, a real estate firm and Svyatoslav Ilchenko, director of LR
Globus Ltd., the management company for Globus shopping mall, allege an
illegal takeover of the mall at a Sept. 26 press conference in Kyiv. (Anastasia
Vlasova)
6. 6 Business www.kyivpost.comSeptember 27, 2013
World in Ukraine
Editor’s Note: World in Ukraine takes a look at Ukraine’s bilateral relations with
different nations. To sponsor this news feature, please contact the Kyiv Post’s sales
team at advertising@kyivpost.com or call 591-7788.
In partnership with Panasonic
BY OLGA RUDENKO
RUDENKO@KYIVPOST.COM
After almost two years in Ukraine,
“meeting common people” is what
Japanese Ambassador Toichi Sakata
enjoys most about his job.
Sakata spoke to the Kyiv Post from
his office near European Square. The
walls are covered with Japanese and
Ukrainian landscapes. There is also a
prominent portrait of iconic poet Taras
Shevchenko, a gift from Cherkasy
Oblast authorities when the ambas-
sador visited Shevchenko’s grave in
Kaniv.
“The nature is majestic there,” he
said, noting that he has read several
poems by Shevchenko in Japanese
translation. It’s evidence that his under-
standing of Ukraine has improved a lot
since his appointment in April 2012,
when he only knew the name of the
capital city and the Chornobyl tragedy.
Ukraine’s nature is something to
admire, the ambassador said, but the
business climate is not.
There are 40 Japanese business-
es in Ukraine today, according to
Sakata, a number that hasn’t changed
much in recent months. Most of them
are involved in car production and
agriculture.
There could be so many more. “The
question is, what the conditions are for
them here,” he said.
Sakata listed several reasons that
repel Japanese investors from Ukraine,
including the lack of transparency,
continually changing regulations, cor-
ruption and selective justice. Taken
together, Ukraine’s low position in
international business rankings scare
away potential Japanese investors.
“To sum it up, for Japanese busi-
nesses it is still very hard to operate
in Ukraine. We really hope that this
situation will change,” Sakata said.
Japanese businesses are closely
watching whether Ukraine and the
European Union will sign a politi-
cal cooperation and free-trade pact
in Vilnius, Lithuania on Nov. 28-29.
“If the association agreement will be
signed, Japanese businessmen will gain
big hopes for the Ukrainian market,”
Sakata said.
Right now, Sakata is trying to help
importers of Japanese cars fight new
duties that amount to 6.5 percent to 13
percent of a car’s price, contradicting
World Trade Organization rules, he
said. The Japanese government is seek-
ing cancellation of the burdensome
duties.
“If it won’t be cancelled, Japan
may introduce sanctions against the
Ukrainian government,” Sakata said,
without specifying what the sanc-
tions could be.
The list of Japanese car
retailers in Ukraine is
impressive. It includes
Mitsubishi, Honda,
Toyota and more. For
car production to take
place in Ukraine, he said,
the nation needs better
business conditions.
Japan’s economy offers Ukraine
an example of how a nation “with
very little natural resources” can
nonetheless “train people
real well in order to
produce competitive
goods,” Sakata said.
He said that
investors close-
ly watch the
behavior of
the tax
administration. In particular, inspec-
tors’ growing scrutiny of representative
offices in Ukraine can spook investors,
he said.
“Even one single case of unfair treat-
ment by the tax administration can
have a very negative impact not just
on business, but on relations between
countries, too. It can make investors
lose their motivation to enter the mar-
ket or to continue operating on it,” he
said.
On Oct. 1, a Japanese delegation will
come to Ukraine and meet with repre-
sentatives of the Ministry of Trade. A
previous gathering took place in Japan
last year.
Overall, Ukrainian officials have
gone to Japan far more frequently
than Japanese officials have come to
Ukraine. But that is changing, the
ambassador said. When a tsunami
triggered a disaster at the Fukushima
nuclear power plant in 2011, Japan
tapped Ukraine’s knowledge in manag-
ing the 1986 Chornobyl disaster.
“The Japanese government wants
the Ukrainian government to train it
on how to treat and clean the territory
around Fukushima plant, and how
to organize the social payments for
those evacuated from the contaminat-
ed area,” Sakata explained.
Meanwhile, Japan is interested in
improving Ukraine’s
ecology, including
through supplying
hybr id-engine
cars to police,
providing energy
efficient engines
for Kyiv metro
trains and ener-
gy efficient heating
equipment for plants
in Donetsk, among other
projects, he said.
In Ukraine’s 22 years of
independence, Japan has pro-
vided the nation with $152.9
million in grants and some $420
million in credit, including a $170
million loan for the reconstruction
of the Boryspil International Airport
in 2005.
Kyiv Post editor Olga Rudenko can be
reached at rudenko@kyivpost.com
BY DARYNA SHEVCHENKO
SHEVCHENKO@KYIVPOST.COM
Sushi is one of the first things to cross
the minds of Ukrainians when it comes
to Japan. However, Japanese sushi
experts say many of the Ukrainian sushi
restaurants that saturate Ukraine have
little to do with authentic Japanese
cuisine.
Kasai Takahisa is a 62-year-old his-
tory teacher from Japan who’s been
eating sushi and learning sushi recipes
from the best sushi chefs in Japan
for nearly 30 years. He left Japan for
Ukraine three years ago and has never
tried sushi in this nation.
“I am not saying that Ukrainian
sushi are bad, but they are Ukrainian
and I am a big fan of Japanese sushi
and just don’t want to spoil the taste,”
he says.
In Japan, he says, a sushi chef cooks
behind a long table while guests sit on
the other side and eat sushi as soon as
it is prepared. Japanese eat sushi rolls
at home, but in restaurants consume
only sushi – rice wrapped in nori and
covered with a slice of fish meat. They
should be eaten right away “otherwise
they will get warm and will no longer
be tasty,” Takahisa explains.
Despite the differences, Ukrainian
sushi started becoming trendy in 2005,
according to Roman Romanchuk, the
CEO of SushiYa, one of the biggest
sushi restaurant chains in Ukraine. It
remains wildly popular today.
“According to the research we con-
ducted, every Ukrainian that general-
ly has a habit of visiting restaurants
visits sushi restaurant at least once
every two months, not counting those
who order sushi to eat at home,” he
says.
Romanchuk is unbothered by the
difference between Ukrainian and
Japanese sushi traditions. “When tradi-
tional dishes migrate to other cultures,
they change. It is a natural and
Japanese experts: Sushi-crazed Ukraine
should come to Japan to taste real thing
8
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better conditions in Ukraine
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Kyiv Post editor
reached at rudenko
Japan Ambassador Toichi Sakata speaks of Ukrainian-Japanese
relations sitting in his office in central Kyiv. (Kostyantyn Chernichkin)
Japan at a glance:
• Territory: 378,000 square kilo-
meters.
• Population: 126.6 million (as of
2012).
• Government type: Unitary parlia-
mentary constitutional monarchy.
• Head of government: Prime
Minister Shinzo Abe.
• GDP (PPP): $4,627 billion.
• GDP (PPP) per capita: $36,265.
• Main industries: motor vehicles
producing, electronic equipment,
steel and nonferrous metals,
machine tools, textiles, chemicals.
Ukrainian-Japanese
relations:
Trade: $1.1 billion.
Exports from Japan to Ukraine:
cars, electric equipment, medical
equipment, car parts, tires.
Exports from Ukraine to Japan:
corn, iron, aluminum, ferroalloys.
Japan’s investment in Ukraine:
$159 million as of July 2012.
Source: Embassy of Japan in Ukraine,
Embassy of Ukraine in Japan, www.
web-japan.org, International Monetary
Fund
7. Business 7www.kyivpost.com September 27, 2013
BY ANASTASIA FORINA
FORINA@KYIVPOST.COM
The world’s second largest car man-
ufacturer after China, Japan is one of
Ukraine’s top suppliers of automobiles.
In 1992, Japanese cars were among
the first imports to reach Ukraine and
now have a solid 20 percent market
share. Moreover, car sales and service
amount to 70 percent of Japan invest-
ment in Ukraine, or $113.8 million, as
of June 2012.
But new import tariffs on passenger
cars with 1-2.2 liter petrol engines and
a new utilization, or recycling, tax are
challenging the industry.
The import duty starts at 6.5 per-
cent for cars with 1,000 cubic centi-
meters-sized engines and tops at 13
percent for 2,200 cubic centimeters
ones. The duties are on top of a regular
10 percent import tax. The recycling
tax rate starts at Hr 4,730 ($590) for
cars with engines under 1,000 cubic
centimeters and tops at Hr 30,250 for
cars with engines above 3,500 cubic
centimeters.
While Japan has already filed a
World Trade Organization complaint
over Ukraine’s import duties and is
seeking to get the utilization tax can-
celled, importers of Japanese cars in
Ukraine are looking for ways to avoid
price hikes.
NIKO, the official importer and dis-
tributor of Mitsubishi cars in Ukraine,
Belarus and Moldova is one of them.
The company typically sells about
6,000 cars a year. Off-road models
like L200, Pajero and Outlander with
2-3 liter petrol engines – available for
$25,000-$55,000 – are the best sell-
ers, according Andriy Sheliug, CEO of
NIKO Management. So far, NIKO has
held the line on prices.
“Thanks to the fact we readjusted
prices with the producer (Mitsubishi
Motors) and our profitability (plan), we
managed to hold prices at the level
that was before the new law on import
tax came into force,” Sheliug says.
But now after the introduction of the
recycling tax, it’s hard to predict what
could happen, Sheliug says.
“While a lot of importers and pro-
ducers managed to revise prices after
new import tariffs were introduced,
now they are unlikely to absorb the
recycling tax and will have to lift prices
if the legislation is not changed,” he
says.
The tax led to an increase in sales
of cars with diesel engines unaffect-
ed by the new law, Sheliug explains.
Meanwhile, producers have delayed
bringing new models on the Ukrainian
market, he says.
Honda Ukraine, a representative
department of another Japan producer,
also had to revise its business plans
because of the new taxes, according to
Oleksandr Podolianko, marketing and
product planning manager at Honda
Ukraine.
“While the majority of producers
managed to absorb the new tariffs, for
those who had no room for maneuver
like Honda and Toyota, it was pain-
ful,” Podolianko says. The company
reduced imports of cars affected by the
tax, including the Honda Civic model
with a 1.8 liter petrol engine, a best
seller. “While our primary annual sales
plan (for Civic) was 1,000, now we’ll sell
a third of it or even less,” he says.
With the new import tariffs, the
government is trying to make foreign
producers assemble cars in Ukraine.
It’s not likely to work, according to
Podolianko. “Prime car producers are
resistant to that. They could consider it
only if the market here was (as big) as
the Russian or Chinese,” he says.
Podolianko thinks the utilization tax
– which shifts the burden of recycling
to the producers and importers – will
make it difficult to reach sales goals.
“This year we upgraded our two
other popular models,” Podolianko says
referring to Honda CR-V and Honda
Accord. “After import tariffs affected
the Honda Civic model, we revised our
business plans focusing on those two
models,” he says, adding that timely
renewal of model range and work with
clients’ demands is his company’s suc-
cess formula.
Right now, car importers like many
other businesses in Ukraine are count-
ing much on the results of Vilnius
summit on Nov. 28-29. If the European
Union and Ukraine sign an Association
Agreement, Ukraine will have to
reduce or cancel its imports on many
goods, including automobiles.
“Importers are now biding their
time,” Sheliug says. “It is hoped that
the recycling tax will be either reduced
or cancelled,” he says. “Moreover, if the
Association Agreement is signed, the
import tariffs could be revised as well.”
Kyiv Post staff writerAnastasia Forina
can be reached at forina@kyivpost.com
Importers of popular Japanese cars
lobbying for rollback of new taxes
Mitsubishi cars are seen in a Lviv salon of NIKO company, the official importer and distributor of Mitsubishi cars in Ukraine,
Belarus and Moldova. Like many other automobile importers, NIKO hopes the new import tariffs and utilization tax will be revised
if Ukraine and the European Union sign an Association Agreement at the Vilnius summit in November. (Courtesy)
8. 8 Business www.kyivpost.comSeptember 27, 2013
positive process, unless they
change too much,” he says.
Even lovers of Ukrainian sushi say
its taste holds up well against the orig-
inal Japanese variety.
“Believe me, Ukrainian borshch in
Japanese restaurants tastes more like
tomato soup and as for me I like our
sushi and the new tastes are usually
pleasant surprises for me, Ukrainian
sushi producers are very creative,”
says Yulia Saliamova, who has lived
in Japan for two years and speaks
Japanese fluently. “In Japan I always
eat sushi, in Ukraine – rolls, and I
think this is just normal,” she adds.
Salaimova is not a fan of big restaurant
chains and prefers small Japanese
places managed by Japanese chefs.
“We have quite a wide choice of
places to eat sushi at already, but the
market is still in development,” says
Mikhail Tsvetaev, a brand director of
another famous Ukrainian sushi chain
Yakitoria.
Both Romanchuk from SushiYa and
Tsvetaev from Yakitoria say they con-
sult with Japanese experts to be as
close to original recipes as possible.
“It is just impossible to prepare
Japanese sushi in Ukraine, simply
impossible, because Ukraine and
Japan have such different resources,”
Takahisa says. Here’s his recipe for the
real thing:
Kyiv Post staff writer Daryna
Shevchenko can be reached at shevchen-
ko@kyivpost.com.
Rice, fish, nori and right chef
are key ingredients for sushi
Sushi Chef. Japanese believe
that a real sushi chef should not
only have naturally cold hands,
but also a talent and lots of time.
It can take two or three decades
to become a real sushi master.
“Unfortunately Ukraine doesn’t have
real Japanese sushi chefs and
those who come to teach
just teach how to pre-
pare American rolls,
meeting the market
demand and,
frankly speaking,
they are not the
best profession-
als,” Takahisa
says. “The best
sushi chefs
have their jobs
at home.”
Cold. “I’ve been dreaming to become a sushi chef
for years, talking to gurus and learning recipes, but
once I talked to one of the best sushi chefs about
that and he just laughed at me,” Takahisa says
sadly. “My hands are too warm for being a good
sushi chef. The chef I was talking to said tuna would
get a burn from my hands.” Sushi chefs wear light
clothes and have ice handy to keep their hands cold.
Nori. Whether it is a classic sushi or a sushi
roll, Japanese would only eat it wrapped up in
nori, Japanese edible seaweed spices. Nori
should always be on top of the other ingredi-
ents, be crispy and have a light sea flavor. “Never
inside the rice, like in American rolls, it will soak up
the water from rice and become just useless,” Takahisa
explained.
Fish. Prices for Japanese sushi
depend on fish. Every day Japanese
chefs buy fish in the country’s ports. It
is as fresh as it gets – right from the
sea. A good Japanese sushi chef can
identify a tasty fish by cutting the tail.
“Experienced chefs know that the tastiest tuna passes Japan’s coasts
in mid October only and that’s when they get it,” Japanese sushi expert Takahisa
explains. “Ordinary people just don’t know how to choose” However, tuna is also
one of the most popular fish for sushi in Ukraine as well, Japanese use tuna speck
from the fish belly, while red meat that Ukrainians use comes from the back.
Rice. Real Japanese sushi is all about picking
up perfect rice. Sushi rice should be of the high-
est class, all the seeds perfectly shaped and
identical. No broken rice seeds are acceptable
in Japanese sushi and only rice in its first har-
vesting year can be used. “The amount of rains
is very important for rice and every year a special
rice quality control association in Japan picks the best
rice and only that rice can be used for sushi. This time the
best rice is at Kiusiu Island,” Takahisa says. Sometimes chefs have their own rice
preferences and mix the rice they like with the officially endorsed rice. “Cheat to get
a perfect taste,” Takahisa smiles. “But it is just impossible to grow the right rice in
Ukraine. The water here is too hard,” he adds.
6 hey
say
rig-
h in
like
our
ally
nian
Ri
up
es
ide
in
ves
is ver
rice qua
rice and only
Sushi Chef. Japanese believe
that a real sushi chef should not
only have naturally cold hands,
but also a talent and lots of time.
It can take two or three decades
to become a real sushi master.
“Unfortunately Ukraine doesn’t have
real Japanese sushi chefs and
those who come to teach
just teach how to pre-
pare American rolls,
meeting the market
demand and,
frankly speaking,
they are not the
best profession-
als,” Takahisa
says. “The best
sushi chefs
have their jobs
at home.”
Prices for Japanese sushi
n fish. Every day Japanese
fish in the country’s ports. It
sh as it gets – right from the
ood Japanese sushi chef can
a tasty fish by cutting the tail.
st tuna passes Japan’s coasts
nese sushi expert Takahisa
ose” However, tuna is also
ell, Japanese use tuna speck
comes from the back.
se sushi is all about picking
hi rice should be of the high-
eds perfectly shaped and
n rice seeds are acceptable
and only rice in its first har-
used. “The amount of rains
ice and every year a special
ciation in Japan picks the best
used for sushi. This time the
chefs have their own rice
y endorsed rice. “Cheat to get
ble to grow the right rice in
No
ro
n
s
ent
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the water f
s
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i
“E i d h f k th t th
9. Business 9www.kyivpost.com September 27, 2013
BY CHRISTOPHER J. MILLER
MILLER@KYIVPOST.COM
Customers might want to consider the
risks if they choose to stash their cash
with PrivatBank.
The ease with which two program-
mers were able to hack into the bank’s
online system this month and collect
sensitive information highlights secu-
rity failures that put at least some of
its 13 million clients at risk of fraud
and theft.
Dymtro Dubilet, chief technology
officer for PrivatBank, downplayed the
security breaches, saying that the bank
experiences breaches in its banking
system daily, and that it has “several
clients who say they have been hacked.”
“Of course this is not good that
someone got information about our
clients,” he said. “But this doesn’t allow
someone to steal their money. This
is not something extraordinary. This
is life.”
PrivatBank is the largest bank in
Ukraine with assets of $21.6 billion,
equivalent to 12 percent of Ukraine’s
gross domestic product, according to
investment bank Dragon Capital. The
bank’s website says it currently serves
420,000 business clients and more
than 13 million individual accounts.
PrivatBank press officer Oleg Serga
told the Kyiv Post that the company has
some 500 skilled security technologies
employees working around the clock
to strengthen its anti-fraud security
system that monitors transactions.
“PrivatBank has one of the most
powerful systems for monitoring oper-
ations that identifies suspicious trans-
actions at the time of their occurrence
and blocks fraudulent transactions,”
he said.
But the Sept. 3 hacking of its
Privat24 mobile banking application
by 25-year-old programmer Aleksey
Mokhov proves otherwise. Mokhov
discovered a flaw that would allow
anyone with access to the applica-
tion and some technical know-how to
withdraw and transfer funds from one
PrivatBank account to another of any
kind, anywhere in the world.
As if that wasn’t enough proof, an
Indonesian self-professed “ethical
hacker” named Zul Amri, who tests
companies’ security systems for vulner-
abilities, gave the Kyiv Post this week
instructions on how to enter the bank’s
system and turned over documents
proving he could also enter it through
its mobile banking application.
By accessing PrivatBank’s support
system through a security loophole,
Amri was able to access account hold-
ers’ phone and card numbers. Using
those, he began the registration pro-
cess to open a Privat24 account online.
To do so requires the last four digits of
a card as well as a phone number.
The next step requires the userto enter
a password sent to their mobile phone.
To get past this,Amri used a Firefox add-
on called Tamper Data, which can be
downloaded for free online, to manipu-
late the system and allow it to accept his
Indonesian +62 phone number.
With the password sent via SMS
to his mobile phone, he was able to
access the personal banking account
of one woman. Amri was able to do
all this after acquiring sensitive docu-
ments that include information from
PrivatBank’s employee database, its
email system and user system through
its Hypertext Transfer Protocol Secure
(HTTPS), which is used to send and
receive secure information.
Another bank document shows
Western Union transactions that were
sent through the bank, including their
time, date, pay operator IDs, control
numbers and amounts, as well as
payer and payee names, addresses
and phone numbers – showing that
even non-PrivatBank accountholders
may be at risk. Several attempts by the
Kyiv Post to contact Western Union for
comment were unsuccessful.
Dubilet said that PrivatBank’s securi-
ty team and hackers from all overworld
discover breaches in PrivatBank’s sys-
tem on an almost daily basis. “Hackers
know that we pay a lot of money for
this type of information,” he said.
PrivatBank has set up a direct chan-
nel to its security team through which
hackers can communicate information
regarding system breaches, Dubliet
said. Often times, the bank rewards
these hackers with up to Hr 10,000
and then works to fix the problem.
In the Mokhov case, the bank consid-
ered pressing criminal charges because
he didn’t go through this channel,
Dubilet explained.
Yegor Anchishkin, an entrepreneur
and founder of Viewdle and Zakaz.
ua, said people hack security systems
to create money or steal money, or to
steal identities. PrivatBank’s Dubilet
acknoleged that holes in the bank’s
online security allows outsiders to
access personal data.
Kyiv Post editor Christopher J. Miller
can be reached at miller@kyivpost.com.
PrivatBank’s security lapse
of the shopping center’s man-
agement company.
The raid was over and done with
by 2 a.m., Ilchenko says, and there
was no reaction from either the
Shevchenkivsky or Pechersky police
districts that received phone calls
about the alleged forceful takeover of
the $200 million property. Five days
on, the status quo remained, and repre-
sentatives of the management compa-
ny and the beneficiary owner claimed
to be locked out of their property.
The Kyiv prosecutor’s office said on
Sept. 26 that it has opened a criminal
case into the matter.
“We want our shopping center
back that we legally and beneficiary
own,” said Leonard Sebastian, man-
aging director of London & Regional
Properties, the British owner of the
mall, on Sept. 26 at a press conference.
“We will go to the highest level to
recover our property. We have invest-
ments in 16 jurisdictions and have not
had such precedents.”
A Sept. 16 Kyiv court ruling enabled
the property’s takeover, which re-es-
tablished Olena Morris as director of
LR Globus Limited, the management
company that runs the mall on behalf
of a layer of three offsshore entities
that formally own it.
“There was no raidership,” says
Morris. “I have a legitimate court deci-
sion and I took charge.”
She denied that she did it by force
while an appeal process was ongoing,
but admitted that she replaced most of
the security guards of the mall .
However, Morris was restored in a
different position that she held until
June. According to Sebastian, Morris
was previously head of the department
for development of LLP Ukraine Real,
another arm of London & Regional
Properties in Ukraine that has no formal
affiliation with Globus. Morris, however,
claims that she was de-facto running the
mall between June 2008 and May 2013.
The Kyiv City Solomenskiy District
Court sided with her testimony in its
ruling.
The judge who ruled in Morris’s
favor, however, has a track record for
making decisions that become the
basis of so-called raider attacks, accord-
ing to a local raider prevention civic
group. Andriy Semydidko, director of
Anti-Raider Union of Entrepreneurs of
Ukraine, says that the judge, Tatyana
Oksyuta, has been on his agency’s
radar since 2006.
She could not be reached for
comment.
However, Oleksandr Minin, senior
partner at KM Partners law firm, which
represents the beneficiary owner, says
that the court dispute is just a cover.
“Formally, this suit is about labor
relations, but effectively, with its help, an
asset has been taken over,” Minin says.
He said that even if a manager is
restored in a job, the law gives them no
right to manage the asset owned by the
corporation, in this case the beneficiary
company LRP.
Morris, however, denies that she has
prevented LRP company officials or
representatives from accessing the mall.
“I have no information that they
have no access. Let them come with
journalists,” she said. “They have not
called me personally. The entire staff is
working calmly, there was no takeover,
nobody forced anyone on the floor or
anything like that.”
Yet Sebastian of LRP insists that his
company lost control of their property,
and that the Sept. 21 night takeover
was premeditated, well-organized and
sponsored by high officials.
He refused to give the names of the
alleged sponsors, however.
LRP has filed court appeals as well
as complaints to two prosecutor offices,
the president, the prime minister, the
interior minister and First Deputy Prime
Minister Serhiy Arbuzov, the head of
Ukraine’s anti-raider commission. It also
got the British embassy involved.
“We at the (British) embassy are very
concerned about the recent events that
took place around this property,” said
Creena Lavery, head of the commercial
section.
She said the business community
is watching the case closely as an
indicator of the state of the business
environment in the country.
“It will be very important for the
Ukrainian authorities to demonstrate
that this case has been dealt with (swift-
ly) and transparently,” Lavery said.
Kyiv Post deputy chief editor Katya
Gorchinskaya can be reached gorchinska-
ya@kyivpost.com.
1
Late-night raid fuels
fight over Globus
PrivatBank, Ukraine’s largest with assets of $21.6
billion, has been embarrassed in recent weeks by the
ease with which hackers have accessed its supposedly
secure and private customer accounts, with one
hacker even able to transfer money from one bank
account to another. Bank officials downplayed the
breach. (Kostyantyn Chernichkin)
BY MARK RACHKEVYCH
RACHKEVYCH@KYIVPOST.COM
In May the Cabinet of Ministers
re-tooled the government’s inter-agen-
cy commission on illegal company
takeovers. Established in February
2007, the commission is chaired by
First Deputy Prime Minister Serhiy
Arbuzov and now consists of top
ministers and governmental depart-
ment heads.
Seen as a huge detriment to bring-
ing in foreign investments into the
country, the Cabinet of Ministers
in 2008 defined a company “raid-
er attack” as the “disposal of state-
owned property and corporate rights
other than following privatization
proceedings or illegal seizure of a
company.”
Many documented cases of
so-called raider attacks in Ukraine
also involve the use of the nation’s
notoriously corrupt judicial system
to secure favorable rulings to trans-
fer assets, to invalidate their sale,
or to approve artificial debt assign-
ments and facilitate fake company
bankruptcies.
Arbuzov said during a Sept. 16
commission meeting open to the pub-
lic that it has received nearly 70 cases
of raider attacks since undergoing a
makeover worth up to $125 million
in losses to victims.
Arbuzov added that in recent years
“more than 1,000 corporate conflicts
have arisen with the use of raider
schemes.”
The commission also announced
it will draft legislation designed to
define raider attacks to criminally
bring wrongdoers to justice.
But some observers say that tack-
ling raidership on a case-by-case
basis is ineffective and impossible,
and that the whole government and
court system should be redesigned to
prevent and punish cases of hostile
takeovers and their perpetrators.
Oleksii Khmara, president of
Transparency International Ukraine,
a corruption watchdog says “I praise
Mr. Arbuzov’s initiative and his inten-
tions…but when 10 or so government
officials use law enforcement, judicial
and other government bodies to con-
duct raider attacks, what needs to be
done is to enact conflict of interest
and other legislation.”
Kyiv Post editor Mark Rachkevych
can be reached at rachkevych@
kyivpost.com.
Government commission
has uphill challenge ahead
Serhiy Arbuzov
11. INDIAN CUISINE
Hurry to try the best
dishes of indian
cuisine with the best
prices!
Halal is in the menu
Metro Station "Politekhnichna"
3 Gali Timofeyevoy st. ("TMM" building)
044 569-37-66 • 097 077-99-99 • www.sutrakiev.com.ua
www.kyivpost.com September 27, 2013
Commercials
night
It is hard to imagine a life without
advertising or commercials. Cinema
City will be screening all the best
commercials produced this year.
The set includes pieces from 40
countries during a five-hour screening.
During breaks, the audience will
be entertained by famous Kyiv
DJs, quizzes, actors and actresses
demonstrating products as well as
photographers designed to make the
night a memorable one.
The Night of the AD Eaters. Oct.
4 at 8 p.m. Ocean Plaza (176
Horkoho St.). Hr 200 – 300.
www.adeater.com
Manhattan Short Film
Festival goes through Oct. 2
Kyiv short film lovers have a great opportunity to see the screening of works selected
as the best for one of the most prestigious festivals in the world – the Manhattan
Short Film Festival. Some 600 professional and amateur directors submitted their
masterpieces, with only 10 selected. This fall, works from Austria, France, Finland,
England, Ireland and the United States will be shown.
Manhattan Short Film Festival. Sept. 26-Oct. 2 at 4 p.m. and 7:45 p.m. Kyiv
movie theater. Hr 30 – 40. More information at www.msfilmfest.com or
234-33-80, 234-73-81
Fashion Night Out
This is a call for all who enjoy shopping and who are ready to
be part of a crazy night. This project that has been organized
by Vogue will be ready to surprise and astonish the crowd.
The most elite stores are going to be open until midnight,
surprising their customers with great deals and numerous
fashion shows, as well as champagne. The participants of this
fashion marathon will be able to talk to the editors of Vogue
and enjoy refreshments at more than 100 different locations.
Fashion Night Out. Oct. 4 at 7 p.m. Mandarin Plaza
(4 Basseyna St.), Hlobus (1 Institutska St.) for more
locations visit http://www.vogue.ua/special/fashions-
night-out-2013/shops.html
Sept. 26 – Oct. 2
Oct. 5
Oct. 4
(Courtesy)
T.a.t.u reunites
Getting its recognition back in the 2000s, this band challenged the minds of the audience with its performances. Back in Kyiv for the
show T.a.t.u promises to deliver its best hits, like “All the things she said” which was atop the world’s charts when it came out in 2002,
and songs from their debut album “200km/h In The Wrong Lane.”
T.a.t.u show. Sept. 27 at 8 p.m. Stereo Plaza (119 Chervonozoryaniy Ave.). Hr 250 – 1,500.
(Courtesy)
(Courtesy)
(Courtesy)
Oct. 4
Entertainment Guide 11
Hurts
These British guys shot quickly
to stardom after they appeared
on the scene in 2009. They are
back again in Kyiv with their
Exile tour. The duo’s video
“Wonderful Life” seems to
have perpetually gone viral.
The concert will include new
material as well as songs that
people have grown to love,
including “Happiness” and
“Stay.”
Hurts concert. Oct. 5 at
8 p.m. Palats Sportu (1
Sportyvna Sq.). Hr 350 –
1,500. 246-74-05
(Courtesy)
Sept. 27
Compiled by Alisa Shulkina
12. Play | Food | Entertainment | Sports | Culture | Music | Movies | Art | Community Events September 27, 2013
Lifestyle www.kyivpost.com
I think everybody fantasizes about
what they’d do with a fortune of
$1 billion. I certainly do.
The randy billionaire in me
would relocate to a tropical island
and start a world-class harem.
The upstanding billionaire in me
would be a philanthropist who
lives modestly, buys newspapers
starting with the Kyiv Post, sup-
ports orphans, gives generously
to friends and relatives and has
many children.
But alas, I have never come
close to acquiring a fortune after
decades as an ink-stained wretch.
As a wise columnist I once worked
with said: “Journalists don’t want
to be millionaires, we just want to
live like them.”
Fortunately, I was able to get
an entertaining glimpse into how
some mega-millionaires live by
catching a sneak preview of the
first two of nine episodes of the
FOXTV reality series called “Meet
the Russians,” which started airing
in London on Sept. 25.
The show’s stars include
my boss, Kyiv Post publisher
Mohammad Zahoor, and his sing-
er-actress wife, Kamaliya Zahoor.
He is definitely not Russian, but
rather a Pakistani who made his
fortune in the Ukrainian steel
industry. His wife of 10 years was
born in Russia, but considers Kyiv
to be her hometown.
If anybody thinks that I am
going to commit career suicide by
publicly criticizing my boss, they’re
mistaken. Besides, the British tab-
loids have done so already, calling
the Zahoors “weird” and superfi-
cial for their ostentatious spending
habits. The London Daily Mail
asked: “Are these the tackiest
tycoons in Britain?”
Zahoor is from the “say-what-
you-want-about-us-but-spell-
our-names-correctly” school of
publicity.
“I have not seen any episode,
but our PR team in the UK is
extremely happy with the expo-
sure that Kamaliya has got,”
Zahoor e-mailed me on Sept. 26.
“Critical reviews are less than
the positive ones, but even the
negative has made her controver-
sial and controversy in her case
is even better as it increases the
public interest. Right now she has
got tens of TV interviews lined up
which shows that media are very
interested in her.”
So what will viewers learn
about the Zahoors in the first two
parts?
He’s spent $20 million so far on
“Project Kamaliya,” boosting his
wife’s career by bankrolling mov-
ies and videos. She is one of
Lifestyles of
‘Russian’ rich,
famous air on
TV in London
Advertising: +380 44 591-7788 advertising@kyivpost.com Editorial staff: +380 44 591-3344 news@kyivpost.com Subscriptions: +380 44 591-3408 subscribe@kyivpost.com
Breast obsession
hits weight room
BY DARYNA SHEVCHENKO
SHEVCHENKO@KYIVPOST.COM
A handsome 40-year-old man gently
caresses a beautifully shaped breast,
his long fingers play with the nipple
and then he stops and pulls a sporty
pink top over to cover it up.
“We have to cover this beauty
because some people blame us for
sexism,” he says coyly. It’s easy to see
why. The object of Stas Boyko’s admi-
ration is a boob-shaped hand weight. It
weighs 24 kilograms.
Boiko is the creative director of 306
Creative Agency and the man who had
the idea of casting the playful weights.
“I do some sports,” Boiko explains, flex-
ing his muscles. “When one morning
I came to the gym for a workout, the
morning was so gray and cold that I
wanted to breathe some life into this
senseless iron.”
The weight does look more alive
than any other bits of iron one can see
in most gyms. It took two years to turn
the idea into a usable range of prod-
ucts. Of course, they come in different
sizes: small, medium and large, weigh-
ing 16, 24 and 32 kilos, respectively.
Prices are stiff and range from Hr
2,999 for the smallest one to Hr 3,499
and 3,999 for the larger sizes. For con-
ventional weights, prices start at around
Hr 400 for a 16-kilo one and up to more
than Hr 1,000 for a 32-kilo weight.
Initially, weights were individually
crafted and it took about three weeks
to produce one, while with all the
preparation stages for mass produc-
tion complete it would be possible to
produce 2 or 3 weights a day. At the
moment, the breast-shape weights are
only available by pre-order.
He began taking orders on Aug. 24.
One was given as a present to NTN TV
host Oleksiy Stetsenko. “My colleagues
got it for me as a birthday present and
I should say it is a great present for a
real man for any occasion,” Stetsenko
laughs, but says he would use a breast-
shaped weight only in extreme cases
and will rather use it for décor.
A common question Boiko is asked
is about the prototype for his product.
He says it is “a collective image of a
beautiful woman’s breasts. We brain-
stormed everything up to the size of
the nipples.”
“When we sent it to the factory,
molders called and said they changed
the form of the nipple a bit, as thought
ours wasn’t really perfect, so it was a
very collective art process,” he says.
The boob weights inventor also
ensures that he can make them in the
customer’s favorite shape and color.
But customizing those breasts will cost
an arm and a leg.
When the agency started posting
photos of the weights on their Facebook
page, they got an avalanche of both
damning and exhilarating comments.
“Many say that we picture women
as a piece of equipment and this is
totally unacceptable,” says Denis 13
14
Stas Boiko, the creative director of 306
Creative Agency, works out with a breast-
shaped hand weight invented by himself,
while his colleague holds a similar model.
(Kostyantyn Chernichkin)
City Life
WITH BRIAN BONNER
BONNER@KYIVPOST.COM
Check out our
entertainment guide
on www.kyivpost.
com/lifestyle.
13. Lifestyle 13www.kyivpost.com September 27, 2013
Mikhailov, the agency’s PR man-
ager whose job it is to deal with such
accusations. “But we, on the contrary,
wanted to inspire men to be better for
their women.”
“Seriously, I couldn’t even imag-
ine that the issue of tits is so poorly
exposed in the society,” Boiko says,
using a common slang metaphor in
Russian. Many of his orders for hand
weights came from the U.S., and Boiko
says it is because “people are less con-
cerned about sexism there, probably
they are just more used to a greater
variety of souvenir stuff.”
The other concern about this cre-
ative piece of sports equipment is its
usability. “This hand weight is obvi-
ously not well balanced and it must
be pretty uncomfortable to really work
out with it,” Facebook user Yuriy Frank
commented on the agency’s Facebook
page.
But the inventors say they made
sure that the weights are a pleasure to
work with. “The back side of the hand
weight has a small notch for the hand,
to make it more comfortable for hold-
ing, and the middle part is hollow, so
heavy tits wouldn’t ruin the balance,”
Boiko explains.
Creating a similarworkout device for
women would be a logical step now,
but the agency has no such plans as
of yet, claiming that the most suitable
body part would be “too vulgar” to cast
in iron.
Kyiv Post staff writer Daryna
Shevchenko can be reached at shevchen-
ko@kyivpost.com.
‘Iron tits’
designer
hopes to
inspire men
12
Sometimes Kyiv
literally feels like
Paris (the city I
adore), especial-
ly when it smells
of baked goods,
when there are
bicyclists around and when I see local
homeless people. On the other hand,
with new skyscrapers in the center
and the noisy metro, it’s not like Paris
at all.
On the corner of Velyka Vasylkivska
and Shchorsa Streets there are three
buildings standing in a row. One is a
tall Soviet style residential building,
the second one is a new high rise,
and then there is an old two-story
tenement building between them. It
looks like that small building is saying
to everybody: “F*ck you, I know for
sure who’ll stay here for eternity! “I
think of it when I’m sad. It reminds me
of the strength and importance of the
smallest parts.
I have several favorite book-
stores, like Ye on Lysenka Street,
where I usually find all new Ukrainian
books which I critically need for work.
I liked Chulan for its atmosphere and
the array of nice monographs, but
now it’s closed. Another great spot is
Book Bureau on 22B Mykhailivska
St., which was launched by my friend
Olga Zhuk, a curator of the Book
Arsenal (a book festival at Mystetskyi
Arsenal). There you can find the most
beautiful photo albums, art books and
other delicacies for those who like to
read, not only to look at the pictures.
Usually I go to Zhovten cine-
ma because good movies run longer
there. There I also can catch up with
the festival movies and those that
didn’t make it to the big screen.
When we look for a good eatery
in the city we usually choose some
sushi place or Panda restaurant
on Saksahanskoho Street for
Chinese cuisine. For a quick
lunch the choice is very broad,
from unpretentious Puzata
Khata to more posh restaurants.
Usually I go shopping for
clothes in BHV and Quatre
Temps stores in Paris and try to
visit some second-hand shops
on Verrerie Street. When I
need to do it in Kyiv, I choose
among Ocean Plaza or Dream
Town malls. And also I have
one good second hand in my
neighborhood.
Kyiv lacks an active city
mayor who could implement
at least half of the ideas of
Bertrand Delanoe (the Paris mayor
since 2001).
I enjoy walking. My favorite street
is Velyka Vasylkivska – from Lva
Tolstoho Square all the way to the end
of it. I don’t know what is so magnetic
about it.
What I would like to remove in
Kyiv are the newly built church-
es in its center – they’re merely
ugly, especially that wooden hut near
Desyatynna Church. Skyscrapers and
Western-style renovations of some
landmarks annoy me as well. I wish
the city could get rid of all glazed bal-
conies that ruin the façades. Well, it’s
all about the citizens who don’t appre-
ciate the authentic beauty of the city.
I can share my “secret places”
in Kyiv. I enjoy the “police garden”
near St. Mycola Church. There’s also
a nice public garden near the hospi-
tal between Skovorody and Illinska
streets, by the sun clock (in Podil
district). You can spot some doctors
smoking there and the patients stroll-
ing around. It’s a great place to chill
out with a good book. That is where
I got engaged to my future husband
some time ago.
When I was working for the TVi
channel there was another cool place
on Haidara Street, where you can
find yourself on the bank of the Lybid
River. It was great and peaceful, very
good for thinking or talking to friends
about serious stuff. The disadvantages
included deadly drunk guys lying
around and some serious boys in big
black cars who sometimes came there
for “negotiations.”
The longest traffic jams I get
stuck in are at Moscow viaduct and
Leningradska Square. I hate it, but I
have to take that route when I come
home to Teremky from Troyeshchyna,
where my parents live.
The last chat I’ve overheard in
the city was during the concert of
Serebryanaya Svadba (SilverWedding)
band. People from Saint Petersburg
were taking photos of two handsome
gay guys and expressed their shock
with how the guys kissed in public. I
assume that wasn’t the only one shock
for those Russians.
Compiled by Kyiv Post staff writer
Olena Goncharova. Goncharova can be
reached at goncharova@kyivpost.com.
Kyivans Speak
Editor’s note: In this feature, Kyiv Post asks famous
Kyivans to share their thoughts, tips and preferences
on Kyiv. Questions include favorite walking locations,
restaurants, book stores and more.
Iryna
Slavinska
26, is a literature
reviewer, transla-
tor and the host
at Hromadske
Radio.
A trained observer handicaps Kyiv
14. Want to advertise
in Lifestyle?
Please call (+38) 044 591-7788
or mail advertising@kyivpost.com
14 Lifestyle/News www.kyivpost.comSeptember 27, 2013
Serhiy Nahorniy. No job title.
No details.
Andriy Semydidko, head of the
Anti-Raider Union of Entrepreneurs, a
business organization that specializes
in fighting hostile takeovers, says the
letter looks suspiciously like a typical
pressure tactic before a takeover.
“First, there is a mailing of proposals,
then there is an ostentatious reduction
of the value, and every day the business
will become cheaper. This is creation
of conditions, when everyone who has
business, will in the end come forward
to surrender,” Semydidko says.
Nahorniy, the author of the letter,
denies attempts at raidership. “I’m not
a raider… I write letters with proposals
to them. Raiders come when you do
not expect,” he says.
He says he wrote 90 letters to
telecom companies in Donetsk and
Luhansk because he really would like
to buy. “I intend to build a big compa-
ny with about 100-200,000 consumers
for me, not for any firm,” he said.
He says he has already bought 12
companies, but refuses to talk about
the details. He sees nothing strange
about his letter. “We just want to
understand who will sell and who
won’t,” he says.
Others, however, see plenty of
strange things about his letter.
The letterhead on it features the
company name PII TOV Evro Finance
Ltd. There is only one such company
registered by the authorities, according
to the official company register. This
is a holding that unites 22 businesses,
many involved in the trade of scrap
metal. It also recently got state guar-
antees for a credit line worth Hr 1.35
billion, prompting a wave of specula-
tion about the business’s closeness to
the government.
The company has also been in the
news because of controversy around
its plans to build a steel mill in Bila
Tserkva, a town in Kyiv region. Earlier
this year, Forbes Ukraine wrote that
the company was bought by the con-
troversial Ukrainian businessman Yuriy
Ivaniushchenko, a close ally of the
president and no stranger to raider-
scandals. He denied owning the firm,
however.
But Nahorniy, who in his letter
claims to represent this company, does
not actually work there, according to
the assistant to the company’s chief
executive officer. “He doesn`t work for
us and our company never works with
him,” the assistant said. She refused to
give her name.
When confronted about his affilia-
tion with the holding, Nahorniy said
he works for another company with
a nearly identical name. “Almost the
same, but with changes… in English
letters.” His description contradicts the
law, however, because companies can
only be registered with Ukrainian let-
ters in the name.
If this confusion with names was not
enough, there is another one. Serhiy
Nahorniy, a man with the same name,
featured in a 2008 raider scandal in
Donetskwhen a factorywas taken over.
The Nahorniywho allegedly represents
PII TOV Evro Finance Ltd denies any
relation, though.
Semydidko of the Anti-Raider Union
of Entrepreneurs is not buying it.
He advises companies that received
the letter to be prepared for hostile
takeovers.
“Businesses have to be ready, have
good lawyers, be public, not be afraid
to talk about it,” he says. “It’s very clear
that this is the hand of a confident firm
that has cheap money and is buying up
the market. The first stage is to switch
the lamp on. And then you force the
flies to fly to it.”
Kyiv Post staff writer Anna Babinets
can be reached at anna.babinec@gmail.
com
Spooky letter ignites
illegal takeover fears
in Ukraine’s growing
telecoms industry
1
his biggest indulgences. (The
Kyiv Post used to be one, but Zahoor
this year told us to stand on our own
two feet.)
“If Kamaliya had no talent, as a
businessman I would have not put
a single penny there and she’d be
singing at home for me,” Zahoor says
on camera.
“I want to be the biggest star in
the whole of the world,” she says of
her goal.
They have his and her private
jets that they sometimes charter
for flights to Birmingham, England,
where one of Zahoor’s favorite curry
restaurants is located. The one meal
alone – including the roundtrip flight
– probably costs more than anyone
at the Kyiv Post makes in a year. (Not
that I’m envious, of course.)
“How do you feel, like a big rock
star?” he asks her in Russian on the
plane.
“No, like a very rich woman,” she
replies.
Zahoor has 17 cars and, when
Kamaliya was looking for her own,
a dealer brought a mini-showroom
to their place in London. She set-
tled on two luxury cars, including a
$200,000 Bentley. They love flying
to Monaco. They rent $2,400-a-night
apartments. One bathroom had his
and her glass-encased showers so
they could watch each other. They
have a yacht. She bathes in cham-
pagne – 35 bottles to fill the tub.
They have residences in several
cities, including London, Moscow and
Kyiv. Kamaliya loves shopping – no
surprise there – and her English
is pretty good. In one
episode, Zahoor is
driving her around
London as she stud-
ies such English
phrases as “Where is
the fitting room?” “May
I try it on?” and “What
size is it?”
Zahoor jokes about
her legendary spending:
“The only place where
Kamaliya doesn’t need
any interpreter is
Harrods.”
Her other
love is animals:
“I’m crazy about animals. I have a lot
of animals. Five little dogs. Four big
dogs. Three cats. One kakadu. One
rabbit. One chinchilla…” And five
horses, Zahoor reminds her. They
show the cameras their opulent and
brightly colored Kyiv mansion, dec-
orated with portraits of them. She
aims her gold-and-diamond shotgun
with Zahoor sitting nearby as she
jokingly threatens him: “If you find
another woman, I can kill you.”
They clearly love each other, come
across as likeable and are proud of
their material success.
“He’s working a lot and sleeping
a very short time,” Kamaliya says.
“If you want to be rich and if you
want to have a good life you must be
working a lot.”
“I have no shame about it,” Zahoor
says. “It’s something that I want to tell
to everybody: That you could…earn
that kind of money through your
efforts, through your hard work. Luck
is something from God and if God is
graceful to you as he was with me, it
is possible you would be sitting in my
seat and have not two, but four jets,
with you.”
I don’t like disagreeing with the
boss, put plenty of people work hard
and never get rich, nor do they aspire
to be. One reason I’m not is that I
certainly haven’t succeeded in writ-
ing as well as Zahoor did in steel. If I
ever do, I hope to remember my late
grandparents’ Depression-era admo-
nition to not show off, to be humble
and to remember those less fortunate
than I am.
It turns out that I and Zahoor,
a generally agreeable boss
who has nonetheless fired
and rehired me twice
in three years, inhabit
different worlds, with
the Kyiv Post being our
only connection. That’s
good enough for me.
Kyiv Post chief
editor Brian
Bonner can be
reached at bon-
ner@kyivpost.
com.
City Life: Kamaliya,
Kyiv Post publisher
show riches on TV
12
Author
says he
is making
legitimate
offers
Mohammad
and Kamaliya
Zahoor.
– and her English
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It turns out th
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