Ukraine is a country with a well-educated young population, rich natural resources, developing infrastructure, and emerging European values. However, these advantages threaten to be overshadowed by the lack of protection for foreign direct investors, weak rule of law, and cases of corruption. As a Danish investor in Ukraine, I know firsthand.
Take my company, BIIR, an engineering firm supporting wind energy, oil, natural gas machine building, and defense technology. Established in 2008 in Denmark, we began operations in Luhansk in the fall of 2013 with an engineering operations back office. When Russian-backed separatists attacked our office at the outset of the Donbas war in May 2014, we relocated all of our Luhansk employees and their families to Odesa. Eventually it became clear that the conflict would not end soon, so we also moved our Ukraine operations to Odesa. Since 2013, BIIR has grown from eight employees in the country, to 110 today – and with plans to expand to 500 employees by 2020.
We know the importance of corporate social responsibility. Therefore, at BIIR, we pay highly competitive wages and include benefits – all of which is done officially and transparently. Our belief and practice of doing business honestly resulted in BIIR being named “Taxpayer of the Year” in Odesa for 2015.
After moving our headquarters to Odesa, we began searching for an office building of our own, and eventually located a property located at Primorskaya 3b to house our expanding Ukrainian operations. Since the previous owner had not paid their mortgage for more than six years, the financial institution foreclosed on the property and needed to resell it. We purchased the building in March this year in good faith and according to Ukrainian legislation.
Unfortunately for us, the building previously belonged to businessmen with connections to Russian business and Yanukovych-era corrupt politicians. In Odesa, those connections are apparently more influential than rule of law and property rights. Thus, despite refusing to pay their mortgage for six and a half years, as well as admitting in court that they had received the final notice of foreclosure from the financial institution, these businessmen filed a case to try to take control of the building that BIIR had legally and transparently purchased.
In August this year, the Economic Court of Odessa actually sided with the six year delinquent businessmen to award the building back to them, and without any compensation whatsoever for BIIR. Even more remarkably, the Odesa courts declared that the former owners would have their $368,000 in unpaid mortgage debt completely eliminated. Naturally we appealed this kangaroo court decision to the Odesa Appeals Court, and after an initial postponement, the case is now scheduled to be heard on Nov. 6. We shall see if the Appeals Courts in Odesa will base its ruling on who has local political connections, or the actual facts of the case.
However, we are Danes, we are Europeans, and we still believe that there can be justice in Ukraine – even for foreign investors. Thus, we are prepared to appeal all the way to the Ukrainian Supreme Court and if needed, even to the European Court of Human Rights. If Ukraine wants to be in Europe, then basic rights must be protected according to European practices.
Ukraine has two agencies charged with the task of bringing foreign investment to the country, but it only takes one case like ours to deter investors and undermine their work. We appeal to Ukraine’s President, Prosecutor General, courts and other governmental institutions to ensure justice, rule of law and to protect the rights of foreign investors. If Ukraine wants to show it is serious about fighting corruption, then our case is a perfect place to start.
