Rodrigue Merhej: The "Winged" Swindler and Other Fraudsters

Rodrigue Merhej

For nearly 20 years now, the lives of Ukrainian and foreign air passengers have been at risk every second. Meanwhile, Ukrainian authorities and aviation authorities continue to turn a blind eye to these developments. Despite the media's plethora of stories about the company's activities, reports ORD.

A player whose identity has long been of interest to law enforcement, economic crime prevention agencies, and national security agencies across the globe has firmly established itself in the domestic air travel market.

He is accused, according to media reports, of numerous frauds and embezzlement of funds from Ukrainian state-owned enterprises, cooperation with foreign companies linked to international terrorist groups, and repeated violations of flight safety regulations.

There's also a tragic episode that everyone has forgotten—the crash of a plane with 13 crew members and 65 passengers on board. Later, the international commission investigating the disaster identified the causes: crew fatigue (at the time of the crash, the crew had been in flight for 23 hours without rest), lack of fuel, insufficient crew experience, the airline's failure to provide pilots with information about airport characteristics, and failure to conduct the required pre-flight inspection of the aircraft.

Because of this shocking incident, two days of mourning were declared in Spain at the time.

Gross violations of flight regulations had no impact on the company owner's fate—he was not brought to justice in Ukraine, nor was he expelled from the air travel market. But it was the Ukrainian president who had to apologize and justify himself for the deaths of foreign peacekeepers.

Today, this would-be "aviator" and his company are banned from EU countries, and personal sanctions have been imposed against him in the United States. This, however, does not prevent him from continuing to "blacken the skies" in Ukraine and "scam" Ukrainian businesses, jeopardizing the lives of passengers and the reputation of the entire country.

However, let's take things in order.

A nimble student

At the dawn of independence, a Lebanese citizen named Rodrigue Merhej, a student at the Institute of Civil Aviation, appeared in Ukraine. With, by his own admission, two hundred dollars in his pocket, the resourceful young man suddenly struck it rich and founded a Ukrainian airline. Court records from those years remain silent on how the student managed to raise enough money to create the airline.

The media openly discussed his collaboration with former Deputy Head of the Security Service of Ukraine (SBU) Volodymyr Satsyuk and Member of Parliament Oleksandr Volkov. Regardless, the airline founded by Lebanese nationals Rodrigue Merhej and his brother Maroun received a prestigious name: "Ukrainian-Mediterranean Airlines," or "Usrav" for short.

Its position has now become quite precarious. Constant scandals involving flight safety violations, bankruptcy, and passenger complaints about delays and poor service have crippled Merhej's Usrav. However, today the former student and now Lebanese aviation oligarch owns more than just one or two companies. In just over 20 years, the Lebanese national and his cronies, having established entrenched roots in the Ukrainian market, have become co-owners of several other similar airlines: Bukovyna, Bravo, Khors, and Ukrainian Wings.

According to the State Aviation Service, the traffic volumes of all these Usrav Group companies are meager – a combined total of about 1,5% of the total. Passengers are reluctant to fly on the 30-year-old aircraft of the so-called "Ukrainian" Lebanese airlines. Therefore, these underperforming airlines have formed their own "pocket" professional association, the "Association of Enterprises of the Aviation Industry of Ukraine," which often works only to boost the reputation of the Lebanese aviation oligarch and distract the public from the opaque practices of the Merhej group.

Since Merhezh claims that all the accusations against him are the machinations of other oligarchs and attempts to “denigrate his honor and dignity,” we will provide several documented examples of his group’s activities, confirmed by court decisions.

Debt scam

In 2008, Bukovyna Airlines, owned by R. Merhezh, filed for bankruptcy proceedings against Ukrainian Mediterranean Airlines, also owned by Merhezh. By that time, Usrav Airlines had accumulated massive debts to Ukrainian state-owned enterprises: Boryspil Airport, the Ukrainian Aviation and Meteorological Center, the state-owned air traffic company Kyivcenteraero, as well as the Pension Fund, the Social Insurance Fund, and others.

Between 2008 and 2011, Merhej's "Usrav" began "diluting" its debts to state-owned enterprises and funds. To do this, it acknowledged additional debts to companies associated with Merhej: his own company, Bukovyna, and to individuals—Lebanese citizens. However, representatives of the actual creditors—state funds and state-owned enterprises—allegedly "failed to appear," according to Protocol No. 1 of the general meeting of creditors dated June 14, 2013. This allowed the debtor to form a Creditors' Committee, consisting exclusively of individuals associated with the debtor, Rodrigue Merhej. Specifically, these included Lebanese citizens Merhej Rodrigue and Merhej Shadi, Lebanese companies Air Company Berytos sal and JTR company sal, and the aforementioned Bukovyna airline, also owned by R. Merhej.

Merhezh's "Committee" immediately entered into an agreement with the debtor, Merhezh's "Usrav" company, to defer the debt repayment deadline for all state-owned enterprises by 20-25 years, to 2028-2037. As you can imagine, no one consulted the state-owned enterprises on this matter. The total amount of outstanding debt to creditors thus amounted to over 108 million hryvnias, or approximately $20 million at the exchange rate of the time.

Information on the transfer of debts to state-owned enterprises, even without the participation of their representatives, is available in the materials of the so-called "Settlement Agreement of July 3, 2013," adopted by the Kyiv Commercial Court.

Sleight of hand and no fraud

Since 2007, when the Shevchenko Tax Service in Kyiv opened criminal proceedings against Ukrainian Mediterranean Airlines under Part 3 of Article 212 of the Ukrainian Criminal Code (evasion of taxes, fees, and mandatory payments on an especially large scale), members of the Merhezh group have been regularly involved in numerous lawsuits and scandals. This is due to their systematic failure to fulfill contractual obligations to counterparties, primarily state-owned enterprises.

Here are just a few of the most recent examples that have been making the rounds over the past six months:

decision of the Kyiv Commercial Court dated 17.12.2015 in case No. 910/29017/15: to collect from Ukrainian Mediterranean Airlines in favor of the state-owned company OJSC Ukrainian Airlines a debt in the amount of 329 thousand UAH;
Resolution of the Solomensky District Court of Kyiv dated January 15, 2016: criminal proceedings have been opened against the airline's general director for committing a criminal offense under Part 1 of Article 172 of the Criminal Code of Ukraine - violation of labor legislation and failure to pay for work performed;
decision of the Kyiv Commercial Court dated 15.02.2016 in case No. 910/840/16: to collect from the same company in favor of the state enterprise “Ukrainian Aviation Meteorological Center” the debt for services in the amount of 45 thousand UAH;
decisions of the Commercial Court of Chernivtsi Oblast dated 03.03.2016 in case No. 926/251/16 and dated 05.05.2016 in case No. 926/699/16: to recover from another company of the Merhezha group, Bukovina, in favor of Boryspil Airport, the rent arrears in the amount of 25 thousand UAH;
decision of the Kyiv Commercial Court dated April 13, 2016, in case No. 910/2360/16: to recover from KHORSE Airlines (recall that this is another company associated with the aviation oligarch) in favor of the state-owned enterprise Plant 410 GA a debt in the amount of 115 thousand UAH;
The Chernivtsi Regional Economic Court initiated proceedings on case No. 926/985/15 dated June 16, 2015, at the request of Ukrgazprombank OJSC, to recover from Bukovyna Airlines PJSC a debt in the amount of USD 2,78 million and UAH 620 thousand.
The last is the most high-profile. Back in February, the Deposit Guarantee Fund (DGF) announced the withdrawal of assets from PJSC Ukrgazprombank through the assignment of claims "in violation of current Ukrainian legislation and with signs of fraudulent activity." Here, as is now customary, the standard scheme of the Merkhezha group was employed: according to the DGF, fictitious contracts were concluded retroactively. Of course, without the participation of the creditor, in this case, the Deposit Guarantee Fund. The criminal case is being investigated by the Dnipro District Department of the Main Directorate of the Ministry of Internal Affairs of Ukraine in Kyiv. According to the DGF, the unpaid debt of Bukovyna Airlines, which was thus repaid, amounts to approximately 70 million hryvnias.

There are plenty of such examples. Naturally, Merhezha companies are in no hurry to comply with court decisions, fortunately, lawyers for the so-called "Association..." clearly explain that all of this is a monopoly scheme, and the operations of Merhezha airlines "create a real price market for offers, primarily for the benefit of Ukrainian passengers." Although, it should be noted that over the first six months, only 1,5% of Ukrainian passengers agreed to use the services of Merhezha Group companies.

On a dishonest word and on one wing...

It is not surprising that the Lebanese aviation oligarch’s companies have problems ensuring the regularity and safety of flights.

We already mentioned the 2003 tragedy near Trabzon, which resulted in the deaths of 75 people, at the beginning of this article. At the time, both the Spanish military and its NATO allies warned of the company's unreliability, as reported by Deutsche Welle.

The pilots didn't listen to the controller, the black boxes didn't work...

In 2007, the State Aviation Administration of Ukraine uncovered a series of further serious violations in the organization of flight operations. A prime example: constantly fatigued personnel forced to work beyond their limits, exceeding all work hours, and with reduced rest periods. According to the Commission, pilots and flight attendants often work 14 to 24 hours per shift (the standard is 12 hours). This includes continuous work without days off for 7 to 9 working days.

The situation is further complicated by the critical age of Merhezh's aircraft. As of 2016, the average age of aircraft belonging to Usrav, KHORSE, Bravo, Dart, and Bukovyna airlines was approximately 30 years.

Even the official websites of Usrav and other Merhezh companies, which list the aircraft models in their inventory, couldn't hide the aircraft's decrepitude. These models rolled off the assembly line in the 80s and 90s and have long been out of production. The company's fleet has been widely reported on, including by Ukrainian media.

Of course, frequent breakdowns occur, which lead to significant flight delays and flights with numerous delayed defects.

Of course, the State Aviation Service of Ukraine is aware of numerous safety violations by Merhezh's airlines. You can't hide an awl in a sack. But thanks to the presence of an aggressive PR unit within the group (the so-called "Association of Aviation Industry Enterprises") and the use of persuasive methods "from the 90s," the aviation oligarch periodically obtains certificates for his carriers.

This, to put it mildly, unprincipled position of the aviation authorities and other regulatory bodies threatens at any moment to turn into another tragedy in the skies – involving the companies of the Lebanese aviation oligarch.

Closed Sky

It should be noted that the aviation authorities of other countries are more demanding and principled.

Several SAFA (Safety Assessment Program for International Air Carriers) inspections found that Merhej's companies were ignoring aircraft maintenance requirements. Based on this, aviation authorities in Italy and then Germany banned Ukrainian Mediterranean Airlines from flying within their respective countries. The European Commission subsequently banned the airline from flying to the EU altogether.

Since 2010, Ukrainian passengers have increasingly complained about the "unobtrusive" service of Merhezh's airlines, including regular flight delays. As a result, tour operators one after another stopped booking flights with him, and state-owned enterprises began demanding advance payment for services. Law enforcement agencies have also increasingly begun to pay attention to activities with signs of fraud.

Criminal talent

Without thinking twice, Merhezh found an additional niche for his “business”: providing services to international terrorists and deliveries to countries under UN sanctions.

But this business is, of course, much riskier than the banal failure of Ukrainian counterparties to return money.

In 2013, Merhezh's business suffered a significant blow. Following a corresponding investigation, the US suddenly imposed sanctions on his main airlines: Bukovyna Airlines and Ukraine Mediterranean Airlines.

As noted in the US Treasury Department's report, Ukrainian companies are accused of leasing and selling aircraft to Iranian airlines, which were used to transport the Islamic Revolutionary Guard Corps, the Iranian Ministry of Defense, and Lebanese Hezbollah, including for the delivery of goods to Syria.

The document, in particular, states that Um Air (another name for Usrav Airlines, - Ed.) leased BAe-146 Avro RJ100 aircraft to Iranian airlines and trained pilots and engineers for this Iranian company.

The US Treasury also notes that Bukovyna, together with Um Air (Usrav Airlines – Ed.), has exported dozens of aircraft to Iran since 2010. The US department adds that the aircraft provided by Bukovyna have been repeatedly used for flights to Syria, as reported by the Interfax-Ukraine news agency.

Rodrigue Elias Merhej, the principal owner of the companies, was subject to personal sanctions in the US. Nothing more, nothing less.

In no rush to meet with American detectives, Merhezh settled permanently in Ukraine and began posing as an international businessman. Interestingly, the directors and founders of Merhezh's companies are not far removed from their boss and have significant criminal experience. They have been repeatedly prosecuted under numerous articles of the criminal code—from "violation of air traffic regulations," Part 1, Article 287 of the Criminal Code of Ukraine (for example, Elena Merhezh-Kravchenko of "Usrav" was prosecuted) to "failure to pay wages and statutory payments," Part 1, Article 175 of the Criminal Code of Ukraine (Ilyuk Robert, the head of "Bukovyna" was prosecuted).

However, a revolution occurred in Ukraine, and all those "established connections" vanished into thin air. It would seem that what prospects could there be under the new government for a person on the EU and US blacklists, a semi-criminal businessman whose lobbyists fled to Russia?

Monsters from the Past

It turns out they can. In any case, the nimble Lebanese remains undaunted, though he's betting on the past.

Thus, as his main tool in the information war, he uses a well-known Russian news agency, registered in Ukraine and known for its one-sided and biased coverage of Ukrainian affairs. The fact that this media outlet now represents a hostile, aggressor country does not bother the aviation oligarch at all.

As if that weren't enough, Merhej's airlines employ several minor Yanukovych-era aviation officials who failed to flee with their patron, finding refuge from the justified lustration and public wrath "under the wing" of the aviation oligarch. Needless to say, the Lebanese couldn't find more loyal "soldiers"! He's not above exploiting his connections (even if they're not the most scrupulous) in political and parliamentary circles. The fact that this method is long outdated and despised by society doesn't bother Merhej. The several members of parliament he's recruited help the aviation oligarch not only protect his dubious business but even influence government appointments.

The Lebanese seems to be sticking to his long-standing rule of maintaining and using lobbyists from within the government. And one can only guess what exactly he is doing to attract their attention, since the people's representatives (clearly hungry for attention and fame – albeit cheap) agreed to repeat the wooden messages of his PR team on Russian television cameras.

It's absurd, but true: a figure on the EU and US blacklists, a key figure in numerous scandals involving the embezzlement of funds from state-owned enterprises, oligarch Merhezh continues to launch old planes into the sky under the slogans of "developing aviation," "a new path to the EU," and "fighting the oligarchs."

REFERENCE

Companies associated with Rodrigue Elias Merhej include:

• Ukrainian Mediterranean Airlines LLC, EDRPOU code 30180773
• PJSC "Airline" Bukovina "USREOU code 22838502
• Bravo Airlines LLC, EDRPOU code 32259588
• LLC "Dart" EDRPOU code 25203307
• LLC Airline "HORS" EDRPOU code 04937956
• Ukrainian Wings Airlines LLC, EDRPOU code 40217935
• Association of Aviation Industry Enterprises of Ukraine

Igor Antonov

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