Right up till the day the oligarch subsequent door minimize off his skill to promote his product, Michael Yurkovich was marvelling at how simple it was to do enterprise in the brand new Ukraine.
Yurkovich is from Calgary. His household has been in oil for a long time. But Yurkovich seeks funding alternative in varied vitality markets and applied sciences. In Ukraine, his product is solar energy. In the rolling grassy fields outdoors the central Ukrainian metropolis of Nikopol, the place Yurkovich’s firm TIU Canada arrange row on row of photo voltaic panels to launch a 10.5 megawatt vitality station in early 2018, photo voltaic was clear, plentiful and renewable. And, crucially for a rustic whose faltering steps towards independence are eternally hobbled by its dependence on oil and gasoline from Russia, photo voltaic vitality comes from the sky with no messy geopolitical strings connected.
Two different TIU vegetation got here on-line elsewhere in Ukraine quickly after the Nikopol station. In complete, Yurkovich and his associates had $65 million invested in Ukraine, producing 54 megawatts of energy altogether. It regarded like a traditional win-win-win proposition. Ukraine might bolster its credentials as a rustic opening as much as the West after the bloody 2014 Maidan protest and the Russian invasion of Crimea. Canada might cement its regional affect: overseas ministers in two successive governments, John Baird and Chrystia Freeland, had every made supporting reform in Ukraine a private precedence. And Yurkovich might be a poster boy for the greening of the Alberta oil patch and for entrepreneurial environmentalism overseas.
Justin Trudeau’s authorities and Ukraine underneath the pro-reform presidency of Petro Poroshenko had signed a free-trade agfreement. Everyone was speaking a few new period for Ukraine. Sure, corruption was endemic, however in concept reform had an opportunity after Moscow’s puppet president, Viktor Yanukovych, was swept from workplace amid the chaos of 2014. Testifying to a Senate committee in help of the free-trade settlement in 2017, Yurkovich mentioned prospects for Ukraine had been shiny, and Canada had quite a bit to do with it. “We have seen a marked improvement in reform,” he mentioned. “By being clear and transparent, we have a large soft-power presence in that country because they know that the Canadians cannot be bribed. They cannot be intimidated. They cannot be corrupted.”
And the income! TIU was a solar-energy play, however as he mentioned different alternatives with the Canadian senators, Yurkovich mused about constructing wind farms too. In Calgary, he’d anticipate three per cent inner price of return, or annual progress on his funding. In Ukraine he might anticipate an IRR of 28 per cent—9 occasions the return. “Literally the same technology from the major vendors… the same guys that work in Ontario. And we will be the only guys in that room.”
At the 2019 Ukraine Reform Conference in Toronto, TIU was all over the place. Volodymyr Zelenskyy, the tv comedian who’d managed to get himself elected as Ukraine’s populist president, held the corporate up for example. “Green energy will be one of the key sectors of our economy during the upcoming years,” Zelenskyy mentioned. “I know that we have here Canadian company TIU that already successfully works in this area. We are grateful to them for this. Please, follow their example.”
Then Yurkovich began to be taught extra concerning the neighbourhood.
TIU’s Nikopol photo voltaic station was on land leased from the town of Nikopol. But to get to it you needed to undergo a gate managed by the manufacturing facility subsequent door, the Nikopol Ferroalloy Plant, whose Ukrainian acronym is NZF. It’s one of many world’s largest producers of manganese alloys used in the manufacturing of metal. And like loads of different issues in Nikopol—the soft-drink manufacturing facility, the regional TV community, the native soccer and hockey groups—it’s owned by Ihor Kolomoisky, a billionaire funding banker and former governor of the Dnipopetrovsk oblast, or province, in which Nikopol is a mid-sized metropolis. When the Soviet Union collapsed in 1991, the transition was chaotic. A few individuals made fortunes in a short time. Kolomoisky, a number one accomplice in the PrivatBank Group, made one of many largest.
It’s helpful to have connections in Ukraine, particularly for those who’re making an attempt to promote electrical energy. Unfortunately, the TIU photo voltaic plant was related to an vitality substation on the grounds of NZF, Kolomoisky’s manganese manufacturing facility. You see the place this is going, don’t you. Two days earlier than Christmas, 2019, TIU mentioned in a press release, the Canadian firm acquired a letter from the NZF manufacturing facility supervisor saying that the vitality hyperlink could be disconnected for “repairs.” Nothing wanted repairing, says TIU. Two months later, on March 1 2020, the facility line was minimize. Yurkovich and TIU have been shedding cash, and looking for redress in Ukraine’s courts, ever since.
Seasoned observers of life in Ukraine aren’t fooled. This is nothing lower than “a raider attack” on TIU’s belongings by an “odious tycoon,” Roman Waschuk and Oleksiy Honcharuk wrote in a very blunt evaluation for the U.S. conservative journal The National Interest. Waschuk was Canada’s ambassador to Ukraine from 2014 to 2019. A profession diplomat since 1987, he arrived in Kyiv as ambassador quickly after the bloody Maidan protests in 2014. Especially after Freeland grew to become overseas minister at first of 2017, he was Canada’s level man on efforts to make reform work. (This glum, sometimes grimly humorous video discuss from Waschuk final September is a superb abstract of why reform largely hasn’t labored, you probably have an hour to spare and are feeling excessively optimistic.) Honcharuk is a veteran advocate for reform who grew to become Ukraine’s youngest-ever prime minister in 2019, at 35, and was turfed eight months later for criticizing Zelensky.
Cutting off TIU’s skill to promote its electrical energy was solely the primary a part of Kolomoisky’s energy play, observe Washuk and Honcharuk. The subsequent step was to supply to purchase the photo voltaic plant at a “fair price,” now that the property’s worth is collapsing.
The third step is taking part in out in Ukraine’s courts: a Kyiv courtroom dismissed TIU’s declare towards the NZF manufacturing facility. NZF argued that it had no contractual obligation to transmit the photo voltaic plant’s vitality—and in addition that it may well’t be thought of to have minimize off the transmission line, because it might flip the road again on at any second. The Kyiv decide took only some minutes to resolve the primary argument on contract regulation was persuasive. TIU’s attorneys are satisfied they’ve a powerful case on attraction.
The attraction is dragging out. The subsequent courtroom date is scheduled for subsequent week. This is an emergency for one Canadian investor. For everybody he’s up towards, it’s enterprise as typical. The grim establishment in Ukraine has on a regular basis in the world. Meanwhile overseas direct funding in Ukraine has collapsed as hardy first movers like Yurkovich get caught and buyers who may need entered the market later pause to re-evaluate their prospects.
Kolomoisky didn’t reply to requests for remark despatched to his manufacturing facility and to his U.S. lawyer.
Kolomoisky is not the sort of man you wish to get in a combat with. His media properties helped make Zelensky president. Kolomoisky is the bulk shareholder in the community that broadcast “Servant of the People”, a satirical TV present in which Zelinsky performed a Ukrainian president. When the comic launched a real-world political profession, Kolomoisky’s station’s newscasts offered sympathetic protection. When Rudy Giuliani was making an attempt to dig up dust on Hunter Biden, he tried to sweat Kolomoisky. The FBI raided Kolomoisky’s places of work in reference to an enormous money-laundering scheme that the FBI allege noticed him shopping for up block after block of prime U.S. industrial actual property, solely to let it fall into disrepair. Finally two months in the past, Joe Biden’s new Secretary of State, Anthony Blinken, introduced sanctions towards Kolomoisky and his household as a part of a renewed effort, towards lengthy odds, to kick-start reform in Ukraine.
The Ukrainian Canadian Congress is solidly in Michael Yurkovich’s nook. This is important in itself, since you generally hear grumbling that this or that diaspora group in Canada is extra in staying on the nice facet of whoever’s in energy again residence than in selling Canadian pursuits. But right here’s a Ukrainian Canadian in a combat with business-as-usual in Ukraine, and the UCC has had no hassle selecting sides.
From Canada’s authorities, nevertheless, not a peep. It’s good of Judy Sgro, the Liberal who chairs the Commons commerce committee, to say a phrase on her Facebook web page. Other MPs and senators from varied events have provided feedback supporting Yurkovich. But it’s all remoted, not coordinated, and to an awesome extent this Calgary businessman appears to be on his personal in a stacked combat towards a neighbourhood bully in a overseas land.
Now, we’re delicate nowadays in Canada concerning the independence of our judiciary, and no person is asking Trudeau or his monumentally low-key overseas minister Marc Garneau, the fourth particular person to carry that publish in 5 years, to demand any explicit end result.
But it’s an open secret in Ukraine that the courts are too usually swayed by the oligarchs’ appreciable affect.(This 2018 Financial Times story describes a marketing campaign of authorized harrassment towards the Luxembourg-based multinational ArcelorMittal in a metropolis close to Nikopol; mockingly the story references TIU as a relative good-news story in comparability. That was then.)
Zelensky, who owes his place as president to help from Kolomoisky’s media holdings, seems to be at Yurkovich and sees a man from Calgary with out loads of pals in Nikopol. And again residence in Canada, the federal government that used to toast TIU’s success has fallen silent.
But what Justin Trudeau mentioned on the Ukraine Reform Conference in Toronto in 2019 was true. “A strong stable Ukraine is not only important for Canada, it is important for the entire world,” he mentioned. “Upholding the rules-based international order is the clearest path to prosperity.”
As Canada used to remind Ukraine, that doesn’t simply imply protecting Russia out. It means protecting a light-weight on for honest play in the corridors of energy in Ukraine itself. Canada, which has troops in Ukraine coaching their armed forces, extra in Latvia backing up the West’s help for the area, and a big Ukrainian-Canadian group that was once enthusiastic about prospects for an open, honest Ukrainian society, might encourage Zelensky to spend some political capital and make some extent that in Ukraine’s courts, the man providing clear vitality and more and more uncommon funding deserves a listening to, and never simply the man on the State Department’s blacklist.
Introducing Trudeau at that 2019 convention, Chrystia Freeland famous that Vladimir Putin had simply informed an interviewer that “the liberal idea” was out of date. “I can think of no country that more powerfully rebukes that idea—just in the way we are—than Canada,” Freeland mentioned. Is that also true?