A Canadian fights for change in Ukraine. So far, he’s losing.
Right up until the day the neighboring oligarch cut off his ability to sell his product, Michael Yurkovich marveled at how easy it was to do business in the new Ukraine.
Yurkovich is from Calgary. His family has been in oil for decades. But Yurkovich is looking for investment opportunities in various energy markets and technologies. In Ukraine, their product is solar energy. In the rolling grass fields on the outskirts of the central Ukrainian city of Nikopol, where Yurkovich’s company TIU Canada installed row after row of solar panels to power a 10.5 megawatt power station in early 2018, solar energy was clean, abundant and renewable. And, crucially for a country whose faltering steps toward independence are forever hampered by its dependence on Russian oil and gas, Solar energy comes from the sky without messy geopolitical ties.
Two other TIU plants came into operation in other parts of Ukraine shortly after the Nikopol station. In total, Yurkovich and his associates had $ 65 million invested in Ukraine, producing 54 megawatts of power in total. It seemed like a classic win-win-win proposition. Ukraine could strengthen its credentials as a country opening up to the West after the bloody Maidan 2014 protest and the Russian invasion of Crimea. Canada could cement its regional influence: foreign ministers in two successive governments, John baird Y Chrystia freeland, each had made supporting reform in Ukraine a personal priority. And Yurkovich could be a model for the greening of Alberta’s oil zone and corporate greening abroad.
The Justin Trudeau government and Ukraine under the pro-reform Petro Poroshenko presidency had signed a free trade agreement. Everyone was talking about a new era for Ukraine. Sure, corruption was endemic, but in theory the reform had a chance after Moscow’s puppet president Viktor Yanukovych was removed from office amid the chaos of 2014. Testifying before a Senate committee in support of the agreement on free trade in 2017, Yurkovich told prospects because Ukraine was brilliant, and Canada had a lot to do with it. “We have seen a remarkable improvement in the reform,” he said. “By being clear and transparent, we have a great soft power presence in that country because they know that Canadians cannot be bribed. They cannot be intimidated. They cannot be corrupted. “
And the profits! TIU was a solar power game, but while discussing other opportunities with Canadian senators, Yurkovich pondered building wind farms as well. In Calgary, you would expect a 3% internal rate of return or annual growth on your investment. In Ukraine, you could expect an IRR of 28 percent, nine times the yield. “Literally the same technology from the top vendors… the same guys that work in Ontario. And we’ll be the only guys in that room. “
At the 2019 Ukraine Reform Conference in Toronto, TIU was everywhere. Volodymyr Zelensky, the television comedian who managed to be elected populist president of Ukraine, used the company as an example. “Green energy will be one of the key sectors of our economy for years to come,” Zelensky said. “I know that here we have the Canadian company TIU that is already working successfully in this area. We are grateful to them for this. Please follow their example. “
Then Yurkovich began to learn more about the neighborhood.
TIU’s Nikopol solar station was on land leased from the city of Nikopol. But to get there, you had to go through a door controlled by the factory next door, the Nikopol Ferroalloy Plant, whose acronym in Ukrainian is NZF. It is one of the world’s largest producers of manganese alloys used in steel production. And like many other things in Nikopol (the soft drink factory, the regional TV station, the local football and hockey teams) it is owned by Ihor Kolomoisky, a billionaire investment banker and former governor of the Dnipopetrovsk province or province, in that Nikopol is a medium-sized city. When the Soviet Union collapsed in 1991, the transition was chaotic. Some people made fortunes very quickly. Kolomoisky, a leading partner of the PrivatBank Group, became one of the largest.
It is useful to have connections in Ukraine, especially if you are trying to sell electricity. Unfortunately, the TIU solar plant was connected to a power substation on the grounds of NZF, the Kolomoisky manganese factory. You see where this is going, right? Two days before Christmas, 2019, TIU said in a statement, the Canadian company received a letter from the NZF factory manager announcing that the power link would be disconnected for “repairs.” Nothing needs to be repaired, says TIU. Two months later, on March 1, 2020, the power line was cut. Yurkovich and TIU have been losing money and seeking redress in Ukraine’s courts ever since.
Experienced observers of life in Ukraine are not fooled. This is nothing short of “a mugger’s attack” on TIU assets by a “hateful tycoon,” wrote Roman Waschuk and Oleksiy Honcharuk in a extraordinarily strong evaluation for Conservative US Magazine The national interest. Waschuk was Canada’s ambassador to Ukraine from 2014 to 2019. A career diplomat since 1987, he arrived in Kiev as ambassador shortly after the bloody Maidan protests in 2014. Especially after Freeland became foreign minister in early 2017 , was Canada’s point man in efforts to make reform work. (This gloomy, occasionally sadly funny video chat from Waschuk last September is an excellent summary of why the reform has mostly not worked, if you have a spare hour and are feeling overly optimistic). Honcharuk is a veteran reform advocate who became Ukraine’s youngest prime minister in 2019, at 35, and was punished eight months later for criticizing Zelensky.
Cutting off TIU’s ability to sell its electricity was only the first part of Kolomoisky’s power play, Washuk and Honcharuk note. The next step was to offer to buy the solar plant at a “fair price” now that the property’s value is plummeting.
The third step is unfolding in the courts of Ukraine: a court in Kiev dismissed TIU’s lawsuit against the NZF factory. NZF argued that it had no contractual obligation to transmit the power from the solar plant, and also that it cannot be considered to have cut the transmission line as it could turn it back on at any time. It took the Kiev judge only a few minutes to decide that the first argument on contract law was convincing. TIU attorneys are convinced they have a strong case on appeal.
The appeal it is getting longer. The next court date is scheduled for next week. This is an emergency for a Canadian investor. For everyone who is faced with, it is business as usual. The grim status quo in Ukraine has all the time in the world. Meanwhile, foreign direct investment in Ukraine has collapsed while strong pioneers like Yurkovich stagnate and investors who might have entered the market later pause to reassess their prospects.
Kolomoisky did not respond to requests for comment sent to his factory or to his US attorney.
Kolomoisky is not the type of man you want to fight. His media holdings helped make Zelensky president. Kolomoisky is the majority shareholder of the network that broadcasts “Servant of the People,” a satirical television show in which Zelinsky played a Ukrainian president. When the comedian launched a political career in the real world, the Kolomoisky station newscasts provided comprehensive coverage. When Rudy Giuliani was trying to dig up dirt on Hunter Biden, Kolomoisky tried to sweat. The FBI raided Kolomoisky’s offices in connection with a massive money laundering scheme that the FBI alleges saw him buying block after block of prime commercial real estate in America, only to let it fall into disrepair. Finally, two months ago, Joe Biden’s new Secretary of State, Anthony Blinken, announced sanctions against Kolomoisky and his family as part of a renewed effort, against all odds, to launch reform in Ukraine.
The Canadian Congress of Ukraine is solidly on the corner of Michael Yurkovich. This is significant in itself, because sometimes you hear complaints that this or that diaspora organization in Canada is more interested in staying on the good side of those in power at home than in promoting Canadian interests. But here is a Ukrainian Canadian in a fight with business as usual in Ukraine, and the UCC has had no trouble choosing a side.
From the government of Canada, however, no peep. It’s good that Judy Sgro, the liberal who chairs the Commons trade committee, say a word on their facebook page. Other deputies and senators from various parties have offered comments supporting Yurkovich. But it’s all isolated, uncoordinated, and to a large extent this Calgary businessman appears to be alone in a stacked fight against a neighborhood bully in a foreign country.
Now, we are sensitive these days in Canada about the independence of our judiciary, and no one is asking Trudeau or his monumentally low-key Foreign Minister Marc Garneau, the fourth person to hold that position in five years, to demand an outcome. in particular.
But it is an open secret in Ukraine that the courts are too often swayed by the considerable influence of the oligarchs (this 2018). Financial times the story describes a legal harassment campaign against the Luxembourg multinational ArcelorMittal in a city near Nikopol; Ironically, the story refers to TIU as a relatively good story by comparison. That was then.)
Zelensky, who owes his position as president to Kolomoisky’s media support, looks at Yurkovich and sees a guy from Calgary without many friends in Nikopol. And in Canada, the government that used to toast TIU’s success has fallen silent.
But what Justin Trudeau said at the Ukraine Reform Conference in Toronto in 2019 It was true. “A strong and stable Ukraine is not only important for Canada, it is important for the whole world,” he said. “Maintaining the rule-based international order is the clearest path to prosperity.”
As Canada used to remind Ukraine, that doesn’t just mean keeping Russia out. It means keeping the light on for fair play in the corridors of power in Ukraine itself. Canada, which has troops in Ukraine training your armed forces, more in Latvia backing the West’s support for the region, and a large Ukrainian-Canadian community that used to be enthusiastic about the prospects of an open and just Ukrainian society, could encourage Zelensky to spend some political capital and point out that in Ukraine’s courts, The Delivering Clean Energy and Declining Investment Dollars guy deserves a hearing, and not just the guy on the State Department’s blacklist.
Introducing Trudeau at that 2019 conference, Chrystia Freeland noted that Vladimir Putin had just told an interviewer that “the liberal idea” was obsolete. “I can’t think of any country that rebukes that idea more forcefully, as we are, than Canada,” Freeland said. Is that still true?