Michael Yurkovich, the CEO of TIU Canada, isn’t in Ukraine for another ribbon-cutting ceremony or to commission a fourth solar energy power plant.
Instead, the Calgary-based investor ended up disassembling a solar plant worth $12 million weeks before the New Year. The plant had been installed more than three years ago with much fanfare to herald a free-trade agreement between Ukraine and Canada.
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Still in Kyiv, the Canadian investor arrived in November to see if the Northern Appellate Commercial Court in Kyiv would rule to have a 10.5-megawatt plant belonging to his family-owned private asset management business reconnected to the country’s power grid.
It did not.
After more than two years of litigation that included various degrees of recusals by seven justices within the judicial system, the 14,000-word ruling only partly ruled in TIU’s favor.
On Nov. 3, when the court didn’t reinstate the grid connection, and sent the company’s complaint downstairs for a re-trial to the lowest court, Yurkovich also decided to pull the plug. The retrial would restart the process yet again and the plant would’ve remained disconnected indefinitely.
Yurkovich said Ukraine
doesn’t want the rule of law…we are done playing this game, we don’t have to be here and that’s what we did, we picked up and went,
he told the Kyiv Post on Dec. 30 at a downtown Kyiv office.
Canada-based Refraction Asset Management through TIU still operates a 33-megawatt solar station in Odesa Oblast near the Black Sea and another 11-megawatt station in southern Mykolayiv Oblast.
Yet, before going skiing in the Carpathian Mountains in December, Yurkovich oversaw the dismantling of 32,000 solar panels that once occupied an area of 20 football fields some 500 kilometers south of Kyiv in the Dnipropetrovsk Oblast town of Nikopol.
The removal was done clandestinely for safety reasons and with police coordination, he added, given its location in the backyard of Ihor Kolomoisky, one of the most powerful billionaire tycoons in Ukraine.
Admitting that the company lost $3 million in revenue since it was disconnected on March 1, 2020 from a power grid situated at the oligarch-controlled ferroalloy plant, Yurkovich said, “nobody was hurt, the investment is safe, we win and we will continue to grow.”
But ultimately, he said, Ukraine’s investment promotion and “judicial system failed” him. The lost income “is immaterial to the [billion-dollar family] conglomerate, it is the damage to the reputation of Ukraine,” Yurkovich said whose maternal side of the family is Ukrainian.
TIU primarily blames Kolomoisky and the disconnection and what the company has called an attempt at “raiding”– a practice not uncommon in Ukraine when firms and assets are seized either forcibly or through dishonest notaries, and courts and other law enforcement institutions acting in collusion.
In an interview with Munich-based Suddeutsche Zeitung in late December, Yurkovich recalled meeting the oligarch a month before his solar power plant was unplugged from the grid at the tycoon’s controlled plant.
The meeting took place in Kyiv on Feb. 6, 2020 and lasted for about five minutes, which was confirmed by Brian Mefford whose Wooden Horse Strategies has advised TIU Canada.
Yurkovich related how Kolomoisky warned him that the grid disconnection was forthcoming and whether the Canadian would like to sell him the solar power plant.
“I replied, if you give us a fair price, we’ll listen,” the investor said, adding that he never received an offer, or heard from Kolomoisky or his intermediaries again.
Yurkovich did tell the Kyiv Post he received “a low-ball offer” for his plant after the disconnection but didn’t name the price and said the amount proposed “would’ve amounted to defrauding the bank” that had lent the money for the investment.
Kolomoisky wasn’t reachable for comment for this article.
In court filings reviewed by the Kyiv Post, the Nikopol Ferroalloy Plant has accused TIU of intimidation and preventing it from carrying out urgent repairs, accusations that Yurkovich rejected.
Conducting repairs on the plant’s premises where the grid connects is the ostensible genesis of the corporate dispute. TIU company officials and Yurkovich have in previous interviews with local media and the Kyiv Post said they’ve never seen evidence of repairs being done at the plant.
Yurkovich furthermore said after conducting due diligence in 2017 through auditor and consultancy CMS McKenna that the grid needed an upgrade “to meet technical conditions.”
State-run transmission operator Ukrenergo gave a clean bill of health that the upgrades “were complaint” after TIU carried them out, Yurkovich said. Yet, the company was later approached by Nikopol company officials with a work order from 2014 citing needed repairs to which the investor said, “you’re lying, we’ve fixed everything.”
Dashed success story
TIU is one of the first Canadian companies to enter Ukraine’s market and has invested $65 million since a free trade deal came into effect between the two countries in August 2017.
When the solar plant in Nikipol was commissioned, then-Canadian Ambassador Roman Waschuk said: “This is an important example of how” such projects deepen “commercial and investment relationships. Here we see real Canadian backed climate action for Ukraine and the world.”
After being elected to office in 2019, President Volodymyr Zelensky that year visited Canada and used TIU’s foray into Ukraine’s green energy market as an example of successful investments.
To Yurkovich, the trade agreement, the guarantees he has received from the president’s office, the auxiliary institutions established to promote and safeguard investments are a failure.
Judicial reforms are failing…and everybody should know that the gangster capitalism of (former President Leonid) Kuchma is returning…people should be aware of this,
he said.
To entice investment, Ukraine has in recent years established a business ombudsman, an investment nanny office, and a national investment council office among other supportive institutions.
Yet, they are perceived as band-aids among business associations, like the American Chamber of Commerce in Ukraine, which cites weak rule of law in conjunction with the unruly judicial system as the main impediment against drawing in more foreign investment.
Nothing “set up…is working to bring in investment,” Yurkovich said.
Top Ukrainian presidential adviser Mykhailo Podolyak described the conflict as a corporate dispute and refrained from commenting until all legal avenues are spent.
“Whether we like it or not, the political authorities cannot afford to bypass the court procedures simply to reject the position of one company and support the position of another company,” he told the Kyiv Post.
Podolyak acknowledged that “court procedures” get delayed, are “subjected to undue pressure, including political, and do not inspire confidence.”
He concluded by saying that he hopes “a solution can be found for this particular company so that it can continue to work without ‘intersecting’ with the company with which the dispute has already arisen. We hope that in this situation, not emotions will prevail, but a rational decision.”
Net foreign direct investment (FDI) has been minimal and haphazard over the past decade. The vast majority of FDI inflows come from the parent companies of subsidiaries already doing business in Ukraine and are mostly offset by outflows during the year.
Likewise, the phenomenon of so-called company raider attacks – whether forcible or through fraud and the use of courts and notaries – persists.
Open-source information amalgamator Opendatabot reported that throughout 2021, more than 600 potential instances of company raider attacks were carried out.
They usually fall under two categories of the criminal code: illegal seizure of property and the more common “forgery of documents submitted for the state registration of legal entities and sole proprietors.”
In both cases, six cases made it to court for seizure of property and 216 in the more common method of initiating a company takeover through forgery.
Outgoing Business Ombudsman Marcin Swiecicki is aware of TIU’s case but told Voice of America recently he can’t take action within his purview until all legal avenues are exhausted.
TIU didn’t advance its case after the appellate court’s November ruling.
That leaves the city of Nikopol, to whom TIU had provided power for nearly 12,000 apartments without cleaner energy.
“We took part in civic programs in the city and was the largest investor there,” Yurkovich said. “If Nikopol cannot protect investors on their own land, it’s a real problem.”
Investor treatment
TIU’s presence in Ukraine comes amid the country’s push to tap more alternative energy and wean itself from fossil fuels, some of which still ultimately comes from its foe Russia, from which natural gas and oil is still sourced.
Despite the onset of the global climate crisis, Ukraine has moved slowly to derive energy from cleaner sources. It has, though, one of the most favorable green tariffs in Europe, which has drawn investors.
Renewable producers accounted for nearly 10% of the country’s entire energy generation in the first 10 months of last year, the state-run company Guarantee Buyer stated.
President Zelenskyy told a climate change conference in Glasgow in November that Ukraine’s goal “is to reduce greenhouse gas emissions by 65%” by 2030.
Yet, a green Eurobond that the country raised in November didn’t cover the debt it owes to alternative energy producers, including TIU Canada.
We received about 65% of what was owed to us in 2021,
Yurkovich said.
In saying that, he voiced frustration with another promise by the Ukrainian government to settle its arrears accounts with reneweable energy investors based on numerous memoranda and commitments to the Washington-based lender International Monetary Fund.
“We don’t see an intention for the government to pay us in 2022,” Yurkovich said.
He added that one of his employees had been kidnapped, the company experienced cyberattacks, the seizure of its bank accounts had been attempted and that pressure was exerted to pay bribes, though he did not name anyone specifically.
“We still believe in Ukraine and the Ukrainian people,” Yurkovich said, adding that TIU is exploring investments in cyber security, alternative biofuels, crop sciences and other industries. “We came here with good intentions."
He wouldn’t specify what specifically is being explored because “every time we speak publicly, we tend to have corporate raiders or investor funds jump on the bandwagon.”
Clash with Kolomoisky
When asked why he would erect a solar power station whose grid connection lies on the premises of a plant controlled by a powerful tycoon, Yurkovich said, “we went knowing we would be attacked.”
He compared the calculus of the move to the parable of the “scorpion and the frog” when the latter knew the nature of the scorpion’s danger.
Kolomoisky and his immediate family face a travel ban to the U.S. based on State Department sanctions. The Federal Bureau of Investigation (FBI) is also probing him on suspicion of rinsing millions of dollars of dirty money in the U.S. by scooping up factories and commercial real estate.
The money supposedly originates from money siphoned from PrivatBank, a financial institution that the Ukraine had to bail out and take into receivership after international auditors found a $5.5 billion hole on its balance sheet.
Kolomoisky doesn’t face criminal charges in Ukraine but Kyiv is pursuing the recovery of the alleged stolen money in various jurisdictions that include the United Kingdom, Cyprus, Israel and Switzerland.
He and his partner at PrivatBank, Hennadiy Boholiubov, both deny the allegations of money laundering. Kolomoisky has sued in Ukrainian courts to regain control over the bank which he believes is rightfully his.
When it was nationalized toward the end of 2016, PrivatBank was Ukraine’s largest private lender and held 40% of the banking system’s deposits.
Kolomoisky’s vast media empire also buttressed Zelensky’s presidential campaign and continues to cover Zelensky in either favorable or neutral terms, according to Kyiv-based media watchdog Institute of Mass Information.
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