Poroshenko: war is of no problem for money

The business of President Petro Poroshenko is on the rise despite the problems in the national economy. Russian aggression in the Donbass, threatening growth of the national debt and low country rating, volatility of hryvnia – all this does not practically affect the performance of companies and enterprises of FIG Ukrprominvest.

Moreover: they are streets ahead of those figures that could be expected from the current realias. It is no wonder that the welfare of the president is growing hundreds of times faster than that of his voters.

To be honest, this situation can hardly be considered normal. At least, if we are talking not about the banana republics of Africa, but about the country claiming the status of a civilized democracy.

Money from a bedside table

At year-end 2017, International Investment Bank (IIB), owned by the President, reported a 2.5-fold increase in profit, up to $3 million.

On its own, the size of the declared profit is not too big, but the growth dynamics is impressive. The leader in absolute terms for 2017 was bank with foreign capital: Raiffeisen Bank Aval. It had $170.5 million, but the increment was only 17% - against 150% of Poroshenko's IIB.

For the I quarter of the current year, IIB reported a 2.7-fold decrease in profit, up to $373.9.

It cannot be ruled out that the financial statement was corrected in accordance with the hints of the political technologists, who understand the negative response of news about the president's business successes against the background of impoverishment of millions of his fellow citizens.

In any case, the data of statutory reporting does not show how the profit of IIB could fall so much: the attrition of its assets for the reporting period amounted only to 4.49%, up to $324.6 million.

It should be recalled that P.Poroshenko, the majority shareholder of IIB, also has deposits in the same bank, the income from which he reflects in official declarations of a civil servant.

So, on May 3, he indicated receipt of $36.5 thousand as interest payments from the deposits in IIB, earlier, on March 6, - another $34.9 thousand, on January 6 - $39.3 thousand.

It reminds us of a famous anecdote about how someone takes money from a bedside table where his wife puts them, and he himself gives money to her and so on circle-wise.

The president is no less successful in other directions, traditional for him. For example, Vinnytsia Dairy Plant Roshen became the largest milk processor in Ukraine in 2017.

The same enterprise steadily leads by volumes of export of dairy products: butter, powder milk and cream.

For example, according to the data for November 2017, the export of butter from Ukraine amounted to 3.8 thousand tons.

Of these, 711 tons were exported by Roshen Vinnytsia Dairy Plant, 310 tons - by Rozhyshche Cheese-Making Factory and 222 tons - by Yagotynsky Butter Plant. The same for other types of dairy products.

According to the association of milk producers, the share of Roshen in the total volume of Ukrainian exports of powder milk and cream is 15%, in milk processing – 9.6%.

In comparison: Starokostiantynivsky Dairy Plant with a share of 8% is next to Roshen on the list of exporters and Terra Food with 9.2% – among the processors.

Following the results of 2016 calendar year No. 2 and No. 6, the top 10 largest sugar exporters in the sugar industry included OOO Vinnytsia Bread Products Plant No. 2 and PJSC Podillya product company. Both enterprises are part of Ukrprominvest Agro group of P.Poroshenko. They were leaders in both physical volumes of sugar exports - 96.4 thousand tons and in terms of monetary equivalent - $ 50.4 million.

According to Ukrsugar association, Ukrprominvest Agro group was among the leaders in production in 2016-2017 marketing year (it starts from August 1) – with No. 2 with a share of 12.6% of the total market.

For 2017-2018 MY, Ukrsugar predicts that leaders in the sugar industry will remain the same.

It should be noted that sugar and dairy business for P.Poroshenko was considered sideline: it was intended only to provide the work of Roshen confectionery factories with own cheap raw materials.

However, during the years of the Poroshenko's presidency, these areas have not only become all-sufficient, but have also emerged as leaders in the relevant industries.

All this contradicts the statements of P.Poroshenko himself, who stated at a press conference on February 28 this year that not only ordinary Ukrainians appeared to be worse off, but he himself.

"When I was elected president, my income was much greater than it is now. I am the only president who has such dynamics", - P.Poroshenko said.

Furthermore, the business of Bogdan auto corporation, where P.Poroshenko was the main owner for many years, has significantly improved. Now the official owner is Oleh Hladkovsky, the president's long-time business partner.

As experts of anti-corruption organizations estimated, in 2016-2017, car assembly plant No. 1, included in Bogdan Motors, received contracts from local authorities for the supply and maintenance of buses and trolley buses for more than $35 million.

Of them, $26.8 million – for Kyivpastrans public utility. Meanwhile, passenger buses and trolley buses in Ukraine are also produced in Lviv and Dnipro.

But neither LAZ Lviv Automobile Factory, nor Yuzhmash Dnipropetrovsk association have such a volume of orders. For example, in March 2015, P.Poroshenko promised Yuzhmash an order for $1.7 million just for Dnipro itself.

Bogdan has a lot of military orders as well: fortunately, O.Hladkovsky also holds the position of first deputy secretary of the NSDC of Ukraine.

To be honest, something is rotten in the state of Denmark with these orders: it became known in February this year that 25 out of 50 military ambulances delivered by Bogdan to ATO zone proved to be faulty.

Some of them were repaired by artificers on site, the rest had to be returned for follow-on revision to the manufacturer.

In any other country, this, mildly speaking, inadequate quality when carrying out the defence state orders would lead to the termination of contracts with the manufacturer.

In our case, the Ministry of Defence of Ukraine reported that Bogdan Motors would take into account the identified shortcomings while producing next shipments of ambulances for the AFU. The cost of this contract is about $1.6 million.

Military orders also keep afloat the Kyiv ship building and armament company Kuznya na Rybalskomu, which is part of Ukrprominvest.

In 2017, this enterprise received an order for the repair of the Hetman Sahaidachny frigate for the Ukrainian Navy and the construction of four combat boats. Following the results of 2017, it reported on the growth of net profit by 2.2 times according to international standards of financial accounting, up to $712 thousand.

The rise of the yield in 6.6 times is even more impressive - to $29.7 million.

For comparison: Kuznya's competitor, Smart Maritime Group, belonging to oligarch Vadym Novynsky, has been experiencing the fall of revenues in 8 times, from $92 million to $12 million over the past 4 years.

By the way, V.Novynsky is in opposition status just for the last 4 years. So the dependence of business profitability on the political status of its owner can be traced clearly enough on the example of Kuznya and Smart Maritime.

And, of course, a review of the traditional directions for P.Poroshenko would be incomplete without mentioning the investment company ICU, which has been providing services for his business for many years.

Not so long ago, OstroV talked about ICU‘s buying debts of the Donetskstal group, registered in Ukraine, which belongs to oligarch Viktor Nusenkis.

At that time, legal proceedings were underway and we assumed that their outcome could be considered almost predetermined.

And it turned out so. On April 5, it became known about the decision of the Economic Court of Donetsk oblast to collect $105 million from Donetskstal in favor of the ICU.

Business in a new way

The issue of a license for the development of the Shevchenko deposit of lithium ores in the Donetsk oblast for OOO Petro-Consulting draws our attention.

The media connect this company with P.Poroshenko's business environment not only because of its name. Its founder is simultaneously a partner of O.Hladkovsky's son in OOO Kyivbioenergo.

The extraction of lithium ore and the smelting of lithium are promising, since this metal is used in the manufacture of automotive batteries.

And if the global demand for electric vehicles continues to grow at the current pace, the work at the Shevchenko deposit can move to the practical stage.

Its reserves are estimated at 14 million tons of 1% ore. Given that the current market price of lithium is $20,000/ton, you get a potential income of $2.8 billion.

Moreover, Petro-Consulting got the license without any competition, what once again indirectly confirms that the interests of president’s business environment are involved.

It is unlikely that the new licensees will be able to deploy ore mining and lithium production on their own - this requires too much investment and, most importantly, technology.

So now it's just about staking a profitable niche for the future: with the possibility of further reselling or attracting a large international company as a partner.

Another new vector for P.Poroshenko may be the development of solar energy. On March 11, he announced the allocation of a € 25.9 million loan for the construction of 3 solar power plants in the Vinnytsia oblast.

"I am grateful to our partners for their support!", - the president emphasized. He did not specify who was the recipient of the loan. As OstroV found out, it was OOO Podolsky Energoconsulting.

Now the company is called KNESS energy holding. One of its main customers are the confectionery company Roshen and OOO Myronivsky Hliboproduct, the main owner of which, Yuri Kosyuk, previously held the post of first deputy head of the presidential administration.

Yuriy Taraniuk is the co-owner of Podolsky Energoconsulting and its director. He claims that in 2016 the company became the largest taxpayer in Vinnytsia, having bypassed the enterprises from the Roshen group.

Now KNESS is the operator of 20 solar power plants with a total capacity of 184.4 MW. Most of them are located in the Vinnytsia and Kherson oblasts.

It is curious not only from the point of view of its rapid development under the current president, but also from the fact that the company shows up in the investigation materials of the General Prosecutor's Office of Ukraine.

As follows from open sources, the subject of criminal proceedings is the suspicion of theft of $306 thousand from PJSC Khmelnytskoblenergo during the construction of the substation.

Russian trace

In February 2017, Ukrprominvest Agro officially denied the existence of business in Russia. They started a starch production project there in 2012. But then it got stuck, and in 2014 the project was allegedly canceled. They said that Poroshenko’s company has nothing to do with OOO Krokhmaloprodukty and its subsidiary OOO Lucky Grain.

However, even if this is so, the president's business contacts with the northern neighbor are still there, despite his public anti-Russian rhetoric.

For example, the ICU bought a large network of Burger King snack bars in Russia in mid-March.

Then, in March, the media reported that Bogdan Motors purchased engines for trolleybuses from the Pskov automotive plant. And this is not its main product, as it works mainly for the Russian military-industrial complex.

After the scandalous publication, O.Hladkovsky and the general director of Bogdan Motors Vitaliy Starosud assured that now their company was going to use electric motors of the Kyiv plant. After all, if it were not for a journalistic investigation, the supplies from Pskov could continue as if nothing had happened.

In his speeches, the president wants to seem the most rigid and irreconcilable fighter against Russian aggression in Ukraine. But facts are a stubborn thing...

Vitaliy Krymov, OstroV