Stevedoring companies complain about security service investigation of Ukrainian ports

Stevedoring companies complain about security service investigation of Ukrainian ports
August 13, 2015.

Kyiv, August 13, 2015. A joint group of stevedoring companies representatives, the European Bank for Reconstruction and Development and Ukrainian MPs have issued a statement in which they claim that Ukraine’s Security Service (SBU) accusations of corruption and financial losses that the private businesses inflicted on the state budget are groundless. Moreover, by making them public the SBU contradicted the legal norms and Ukraine’s national interests, said members of the joint group at a press briefing at Ukramyine Crisis Media Center.

On August 7, the SBU published a press release in which it accused the officials at the Ministry of Infrastructure and of the State Property Fund of power abuse when signing contracts with private stevedoring companies on the lease of state property in the Odesa seaport. According to the security service, the deal cost around 1 billion hryvnia to the state budget. Earlier the SBU reported on similar abuses in Illichivsk and Mykolaiv seaports. At the same time the SBU conducted mass inspections of private stevedoring companies – most of them have a share of foreign investments – and operate in these ports under lease agreements.

The speakers noted that they do not object to inspections, as it is a normal practice, but they have to be conducted exclusively under the legal framework. “There is an established procedure: a criminal probe, case opened, court’s decision. If there are problems, we are ready to help the law enforcement and provide experts so that they will figure it out. These steps are not yet in place, while the ports have been become subject to black PR already due to the superficial accusations by Ukraine’s Security Service,” noted Vasyl Kapatsyna, Honorary President of Mykolaiv seaport. He has also explained that accusing ports and brining no particular facts in the course of investigation is going to play against the security service, as it would result in increased freight rates.

Representative of the EBRD also expressed concerns over the situation. EBRD finances several infrastructure projects in Ukraine and cooperates with private stevedoring companies. “The press release in question by the SBU is not informative content-wise. No particular facts are provided, it is unclear where the amount of losses comes from and what the next steps are. It creates negative background that affects companies and international institutions that finance these companies. Our goal is to figure out what happened. It is also desirable that such accusations are brought forward after the investigation is over and had concrete evidence,” said Mark Magaletsky, Senior Banker with EBRD.

Olena Aliyeva, representative of Brooklyn Kyiv company that has been operating in the Odesa seaport since 1994 and currently implements an infrastructure project worth 100 million US dollars, sixty percent of which are EBRD funds, noted that “stevedoring companies have been recently experiencing unseen pressure not only by SBU but the General Prosecutor’s Office as well. They come with inspections, seize documents with no legal grounds. It damages the reputation as we are working with big international companies.”

Oleksandr Kifak, representative of GPK-Ukraine company commented on the legal side of the issue, arguing that even the information presented in the SBU press release is suspicious and looks more like PR. “At the moment, no charges have been brought, no court sentence has been made, but there is already a report on the SBU success. It looks like a piece of self-promotion. As to the particular facts, they are questionable. Where does the 1 billion hryvnia sum comes from? It is based on the data from the 2011 report of the Agency for Control and Revision. The report states that if the Odesa seaport could get 1 billion hryvnia if it conducted reloading of vessels independently. It is a wrong approach. Everything that stevedoring companies earned is estimated as losses incurred by the state budget. It is incorrect given the fact that these companies made considerable investments into local infrastructure development,” explained Kifak.

Borys Kozyr, MP, Deputy Head of the Parliamentary Committee on Transport, noted that the situation in ports needs immediate solution as Ukraine’s investment climate is at stake. “We threatening the goose that lays golden eggs. We have decided to move closer to Europe and attract foreign investments, but right now we are doing the opposite. I have sent a request to the SBU Head, Vasyl Hrytsak, asking to conduct an objective investigation. If it does not help, I will initiate establishing of the special investigation commission and address the President,” Kozyr said.

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