If a potential foreign investor wanted to know about all the pitfalls they could face in Ukraine, they’d just have to look at what happened to BIIR Properties, the Odesa-based subsidiary of Danish engineering company BIIR.
In the five years since it came to Ukraine, BIIR has been through it all: relocating from Russia’s war, a corporate raid attempt and shady schemes in courts.
“We’re having our own small war in Ukraine,” BIIR Properties Chairman of Board Thomas Sillesen told the Kyiv Post.
BIIR’s latest troubles started in March 2017, when the company bought a dilapidated, foreclosed building in Odesa to set up a new office, paying around $400,000 to local real estate firm Odesa Prime.
Just a few days after BIIR bought the building, it was arrested by the local court and BIIR discovered that its previous owner, construction company Megas-Stroy, had filed a case claiming that a collecting company had illegally sold the property.
The court ruled the building should be returned to its previous owners, local businesspeople Oleksandr Tikhomirov and Valentyn Skoblenko. Skoblenko is also a beneficiary of Megas-Stroy and a former Odesa city council member. He is a political ally of the former Central Election Commission head Sergiy Kivalov, who is highly influential in the Odesa courts.
Skoblenko was unavailable for comment, and Tikhomirov denied BIIR had any right to the building, but he gave no further comment to the Kyiv Post before this story went to press.
All the same, Sillesen is optimistic that justice will win in the end.
In 2017 the company’s lawyer Alexey Lebedev and his team filed an appeal and lifted two arrests warrants for the building in the courts. But the legal fight for ownership goes on — the next court hearing is on Feb. 27.
BIIR has complained to the Supreme Council of Justice about the two judges who ordered the initial arrest of the building, claiming the judges had no legal grounds to do so.
“We’ve got the best legal team and international support,” Sillesen said. “The result of BIIR’s case will be crucial for Ukraine’s reputation among foreign investors. And your country needs a lot of foreign investment.”
Sillesen added that Ukrainian government understood the importance of BIIR’s case.
“We’ve got an official letter of support from (Ukrainian President Petro) Poroshenko’s people, who said they will do all they can to encourage law enforcers and the court to work more effectively,” Sillesen said.
Ukraine should establish anti-corruption court, says Danish foreign minister
In Kyiv on Feb. 21, at a press conference with Ukrainian Foreign Minister Pavlo Klimkin, Danish Foreign Minister Anders Samuelsen urged Ukraine to tackle corruption, including the establishment of an anti-corruption court by the time his nation hosts a Ukraine Reform Conference on June 27. “We support Ukraine in its reform efforts, also by stressing that still more needs to be done,” Samuelsen said during his visit. “Bring yourself in a position so that when we meet in Copenhagen, you can rightfully expect the international community to commend your efforts. In my view, these should include the adoption of the law on an independent high anti-corruption court… and substantial progress towards making the new court operational.” He also announced a new Danish program worth 65 million euros in help to bolster Ukraine’s economy, democracy and human rights. (UNIAN) (source)
Moving business
Despite the court battles, BIIR Ukraine is continuing to grow, Sillesen said. When the company first started operating in 2013 it was based in the eastern Ukrainian city Luhansk. It was forced to move to Odesa in May 2014 after Russian-led forces occupied the city.
“(In 2013) we started with 10 people in Luhansk. Now we have about 110 people on staff, and a lot of upcoming projects,” Sillesen said.
In 2015 BIIR was taxpayer of the year in Ukraine and was awarded a title of “Conscientious Taxpayer of 2016.” The company not only employs locals, but also supplies Danish humanitarian aid to the Odesa-based “Way Home” charity for the homeless.
Using BIIR as an example, Sillesen has also called for judicial reform in numerous interviews in Ukraine and abroad.
Sillesen said after the court of appeal finally rules on BIIR’s dispute with Megas-Stroy, his company plans to create 500 more jobs for highly skilled engineers in a new European standard energy efficient business center, which BIIR will build on the site of the disputed old building.
BIIR has already signed a 200,000- euros contract with a Danish architectural firm, which will oversee the project.
“But we’ll lose that money as well if the court doesn’t satisfy our appeal,” Sillesen said.
Story of a debt
BIIR currently rents office space in downtown Odesa. The old building it purchased in 2017 is on Prymorska Street near the Black Sea coast and park, practically in the city center, not far from Odesa Sea Port and Odesa’s most famous tourist attraction — Potemkin’s Stairs.
“Location is its greatest value,” Sillesen said.
BIIR would have already begun the ambitious rebuild had the legal problems with the old building not come up in late summer 2017.
According to an Aug. 21 court decision, Megas-Stroy’s director Tikhomirov asked the court to cancel the deal between debt-collecting companies Sky Capital and Finance Trust Group, as well as that between BIIR and the building’s seller, Prime Odesa. He claimed Finance Trust Group illegally took over and sold the foreclosed property. Megas-Stroy purchased the building on Prymorska Street for $80,000.
Back in 2007 Tikhomirov and his business partner Skoblenko had taken out a $950,000 mortgage for 10 years. The mortgage was secured by the building on Prymorska Street.
But Megas-Stroy fell behind on its mortgage payments, with the last one being made in 2012. In November 2016, Finance Trust Group sent notification to Megas-Stroy that it was going to sell the building unless Tikhomirov and Skoblenko paid off their debt in 30 days.
Lebedev, BIIR’s lawyer, said the partners hadn’t paid off about $368,000 of their debt to the Finance Trust Group, a factoring company, which bought Megas-Stroy’s debt in 2015 from another debt collecting company — Sky Capital.
According to Lebedev, Tikhomirov knew full well about Finance Trust Group’s plan to sell off the building if the debt were not paid.
“Tikhomirov even signed the notary document,” he said.
Oleg Kachmar, partner of the Vasil Kisil & Partners law firm, told the Kyiv Post on Feb. 19, that according to the Ukrainian mortgage loan legislation, a factoring or collecting company has the right to sell the secured property if a debtor hadn’t paid the loan on time — even without filing a court case.
“Even if something illegal happened during the numerous debt and property resales, BIIR, as the ultimate buyer, bears no responsibility for that,” Kachmar said.
Kachmar said the ultimate buyer doesn’t even have to study the whole history of the property. A notary just needs to check all of the seller’s documents, and the deal is done.
“Odesa Prime had all the documents, its representative was present during the purchase, and our notary checked all the registers, and on behalf of the state, legalized the deal,” Lebedev said.
Judging judges
Even so, in August 2017 Odesa Commercial Court ruled that the building on Prymorska Street should be returned to Megas-Stroy. In November BIIR filed an appeal. However, Lebedev said the court is yet to consider the appeal because in early January there were changes made to the panel of judges allocated to the case.
“This is the first time in my career that I’ve seen two of the three judges recuse themselves, saying they knew our opponents (Skoblenko and Tikhomirov) personally and were even friends with them,” Lebedev said.
The new panel of judges will gather for the first hearing of BIIR’s appeal on Feb. 27.
Besides fighting for its property, BIIR wants to make sure the two judges who ordered the arrest of the building are brought to book.
BIIR says the judges, Anatoliy Derus and Dmytro Osiik, had no legal grounds to order the arrest.
BIIR expects the Supreme Council of Justice to rule on its complaint about the judges in spring. If found guilty of wrongdoing, the judges could face dismissal. The Kyiv Post couldn’t reach Derus or Osiik for comment.
Both are on the High Qualification Commission of Judges of Ukraine’s list of 1,790 judges who are to undergo job competency checks. The commission published the list on Feb. 1.
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