06 November 2010

Great Concern about recent events in Ukraine

It has always been difficult trying to convince inward investors that it’s safe to put their money into Ukraine property/companies/projects etc.

Events this week in Ukraine, if they are found to be accurate and true, are a cause for great concern about the climate for inward investment into the country.

To highlight these concerns let me turn things around and demonstrate how serious the situation really is. Imagine that a British company had invested say GBP 100 million into developing a leisure resort in Majorca, Spain. The investment proved successful and the resort employed over 1500 people and was a major contributor to local taxes and was a positive benefit for the Spanish economy. Imagine that the Spanish tax authorities then suspected the mayor of Majorca has been stealing money from state funds, so to find out what was happening they send in 100 armed security police together with the state security service and confiscate computers, files, all digital information and cause great stress to the employees of the resort complex. All this without any prior warning and an assumption that the resort owners must be doing something illegal. The British owners of the resort are also the owners of well known newspapers in London. By pure coincidence articles had recently appeared in these newspapers which criticized the Spanish government. (Obviously this kind of situation would never occur inside the European Union)

Well, this IS what happened this week in Alushta, Crimea. (Replace above instead of Majorca, Spain.)
Alexander Lebedev and his son Evgeny Lebedev, who is a British citizen and lives in London. Invested hundreds of millions into the Alushta complex and is one of the best resorts on the Crimean peninsular in Ukraine.

Alexander Lebedev is one of the richest men in Russia and faced a similar stressful situation in Moscow a few days earlier when his bank was raided by Russian authorities.

See: http://www.independent.co.uk/news/world/europe/moscow-police-criticised-for-circus-raid-on-lebedevs-bank-2123558.html

See: http://www.telegraph.co.uk/news/worldnews/europe/russia/8114216/Alexander-Lebedevs-hotel-raided-in-Ukraine.html

See: http://www.independent.co.uk/news/world/europe/independent-owners-hotel-is-raided-in-row-over-charity-fund-2126735.html

Maybe the Ukrainian authorities claim to have good reason to storm a hotel resort/complex looking for evidence related to a suspected crime, but it clearly demonstrates that here in Ukraine they operate on a totally different wave length when compared to civilised countries in the European Union.

When British people read about this in British national newspapers, how on earth can I start to defend any of the actions taken by the Ukrainian authorities?
How can I claim that it’s safe to invest in Ukraine and you do not have to worry about any actions from the state?

Maybe the Ukrainians think it’s OK to act in this way as the owners of the resort are just ‘Russians’?

The situation in Ukraine is not looking good for investors. This is very sad news.

No comments: