Photo from UNIAN
Ukrainian businessman Oleksandr Yaroslavsky's DCH Group and their partners, China's Skyrizon Aircraft Holdings Limited, have reapplied to the Antimonopoly Committee of Ukraine (AMCU) to have the purchase of a stake in Ukraine's aerospace giant Motor Sich approved.
That is according to the DCH's press service.
Chinese shareholders of Motor Sich have not been able to start managing the company since 2017, as the company's assets have been blocked due to a number of freezes imposed in three-year-old criminal cases in which "there are no suspects and they are not even being investigated." The AMCU, under formal pretexts, has not considered the application, previously filed by Skyrizon together with Ukraine's state-run Ukroboronprom Concern, But after the government "practically refused" to engage in the Motor Sich issue, joined efforts with DCH, "one of the most powerful Ukrainian diversified business groups."
Seeing the actions of Ukrainian authorities as a state raiding effort and an attempt to expropriate investment, Chinese investors at Skyrizon sent a claim to the Cabinet of Ministers, represented by the Justice Ministry, about their intention to initiate international arbitration against the State of Ukraine to receive compensation worth US$3.5 billion in losses. Moreover, an interdepartmental working group represented by the President's Office, the National Security and Defense Council (NSDC), the AMCU, the Prosecutor General's Office (PGO), the SBU Security Service of Ukraine, and the relevant ministries "should be created under the current legislation."
Chinese investors' concern is related to the financial losses they suffered by injecting US$1 billion, as well as the "deplorable" state of Motor Sich performance.
Read also U.S. warns Ukraine of "malign" Chinese investment "Motor Sich is rapidly declining, and we as investors are incurring huge losses," said Wang Jing, a key shareholder in Beijing Xinwei Technology Group and Beijing Skyrizon, which acquired shares in Motor Sich in 2016, in a video address posted by the RBC Ukraine news agency September 22.
According to Wang Jing, the situation around Motor Sich is outside the realm of business: "As an investor, I'm very surprised with one question – why no one but us really cares about the survival of Motor Sich? In order to gain a bigger market share in the world's largest, fastest-growing Chinese market, gain a stronger position and gain development prospects, the company must formulate and implement a strategic medium- and long-term plan for the development of its products and services." This is a rhetorical question on who will be responsible for tens of thousands of unemployed professionals in the event of the bankruptcy of a company with more than century-old history, the investor said.
Read also Chinese envoy tells U.S. not to meddle in Ukraine's affairs – media Motor Sich acquisition and U.S. reaction: background
Motor Sich is one of the world's leading manufacturers of engines for the aviation industry.
After it abandoned its role of a traditional supplier to Russian aviation, it ended up at the epicenter of an international diplomatic spat since in 2017 the Chinese Skyrizon Aircraft Holdings Limited took over 41% of the capital and then sealed the majority.
The shares were frozen in 2017 pending an investigation by Ukraine's security service (SBU).
On August 25, 2019, PR Director of OJSC Motor Sich Anatoliy Malysh announced that China's Skyrizon and Xinwei Group had already applied to the Antimonopoly Committee for the approval of the deal to acquire over 50% of Motor Sich's shares.
The Wall Street Journal, citing sources in the U.S. administration, reported that the United States was trying to prevent the Chinese company from buying the Ukrainian Motor Sich plant, as this would significantly boost China's defense positions.
On August 28, 2019, the then-U.S. presidential adviser John Bolton said in Kyiv about risks of selling part of the Ukrainian Motor Sich to the Chinese side. According to him, China is playing a dishonest game in the United States and is stealing military technology.
It was reported that Erik Prince, a private security contractor and informal adviser to U.S. President Donald Trump, is in discussions to purchase a Ukrainian aerospace asset, Motor Sich.
A Kyiv court in April 2020 rejected an appeal by Chinese investors to unfreeze Motor Sich's shares.
In August 2020, Ukrainian privately-owned conglomerate DCH said it had signed an agreement to buy a 25% stake in Motor Sich from Chinese investor Skyrizon Aircraft Holding Limited.
The DCH deal needs approval from Ukraine's national regulator, the State Antimonopoly Committee.
In late July, the son of Vyacheslav Boguslayev, who had long been at the helm of Motor Sich, acquired the Gallinara island in Italy's Liguria for over EUR 10 million.