In our article "Turboatom, the Fines War, and the Phantom Corporation," we wrote about the situation surrounding the "state-owned" corporation Ukrmontazhspetsstroy's attempt to extort 15 million hryvnias from a truly state-owned industrial giant through dubious court rulings. At the time, we promised to monitor the situation and keep readers informed about developments surrounding Turboatom. Since the publication of our first article, there have been some changes, albeit small, that allow us to view the situation from a slightly different perspective.
As a reminder, Ukrmontazhspetsstroy, a corporation that, through an oversight by Kyiv officials, calls itself "state-owned," acted as an intermediary between the client, Kryvyi Rih Thermal Power Plant (TPP), part of DTEK, and the contractor, Kharkiv-based Turboatom. The project involved modernizing a turbine at one of the power units. The contract was signed in 2012, and since then, a debt of approximately 13 million hryvnias has accumulated between the intermediary, Ukrmontazhspetsstroy, and the Kharkiv company. Turboatom filed a lawsuit, and after legal proceedings, it turned out that it wasn't Turboatom that was owed, but Turboatom itself that owed its debtor 15 million. The details of this absurd story, which, incidentally, perfectly characterizes the Ukrainian judicial system, can be read here. At the time of the publication of the previous article, the ball was in the court of the enforcement service, which had begun implementing the, to put it mildly, bizarre decision of the Supreme Economic Court to freeze Turboatom's accounts. However, no arguments, including appeals to the letter of the law, had any effect on the enforcement officers.
Moreover, according to our sources, instead of taking all measures to prevent state-owned enterprise funds from falling into the hands of fraudsters, the bailiffs are actively searching for legal cover in case anyone seriously takes an interest in the situation. For example, the bailiffs decided to ignore the mutual offsetting of claims carried out by Turboatom, which rendered the enforcement of the court decision meaningless, because the turbo-builders' claims against the fraudsters are not supported by a valid court decision, while the fraudsters orchestrated the court decision. This means that Turboatom's claims are effectively non-existent. The bailiffs intend to circumvent the ban on the alienation of state-owned enterprise property with a rather simple argument: seizure is not alienation, but simply a means of enforcing a court decision. The bailiffs seem to have forgotten that the court's decision is a forced confiscation of funds... In fact, all this casuistry is of interest not even to lawyers, but to historians, who decades from now will be able to write dissertations on the topic of "The Oddities of Enforcement of Court Decisions in Ukraine at the Turn of the Century." What interests us in this situation is something else: why is the bailiff service, a government agency, instead of upholding the interests of the state, trying, as they say, to "dodge" and do everything possible to protect the interests of fraudsters?
Nevertheless, the enforcement officers did try to find a way out of the situation. However, they wanted a way that would, God forbid, ensure Ukrmontazhspetsstroy wouldn't lose out, and the enforcement agency couldn't be accused of inaction. The enforcement officers proposed the following scheme to the factory workers: "You transfer 15 million to a separate account, and only that account will be frozen, preventing the plant's operations from being paralyzed. We won't seize these funds, and they'll simply sit in the frozen account until you reach an agreement with Ukrmontazhspetsstroy." When asked what guarantee there was that the money wouldn't end up in the hands of fraudsters, the answer was, "Our word of honor." The value of the enforcement agency's word of honor is clear from the background, and, of course, the factory workers rejected this scheme. The enforcement officers, however, with a sense of accomplishment in the interests of the state, continued the noble task of confiscating funds from the state-owned enterprise.
An interesting detail: according to our information, First Deputy Minister of Justice Natalia Sevastyanova, whom we mentioned in our previous article as the person who accused the State Financial Inspectorate of inaction regarding the audit of Ukrmontazhspetsstroy, is directly involved in the scheme proposed by the contractors, as well as the situation surrounding Turboatom in general. Apparently, Sevastyanova's attitude toward Ukrmontazhspetsstroy has changed somewhat. Her role is not entirely clear, and we will definitely return to it as we continue our investigation.
Now let's look at this situation beyond the details of the legal wrangling. The situation is quite simple: Turboatom is under attack, and the attacks are coming from several directions simultaneously. First and foremost, of course, is the mysterious Ukrmontazhspetsstroy, a ghost corporation acting as an intermediary. This is the obvious source of the attack, but it's unlikely its leaders initiated it: after all, Turboatom, having survived several corporate raids throughout its history, is a tough nut to crack for those seeking to profit from state property. Cracking this nut from some shady corporation with a dubious status was initially impossible. So, we need to look for bigger fish.
Here, it's worth remembering how it all began. It all began with a contract to supply equipment for the Kryvyi Rih Thermal Power Plant. Ukraine's thermal energy sector is a unique "weak link" in the country's energy security system. Everyone knows that coal is essential for the operation of thermal power plants and thermal power plants, and access to it has become limited due to the events in Donbas. But few are aware of another problem facing the thermal energy sector: the extreme depreciation of power plant equipment, which, according to some estimates, amounts to up to 80%. Due to emergency repairs and downtime at thermal power plants, Ukraine loses 2 GW of electricity annually. Without technical modernization, Ukraine's energy sector could simply collapse, as thermal power plants account for approximately 57% of the country's total energy supply.
Against this backdrop, shutting down—perhaps not by shelling, but by pointless lawsuits and prosecutorial inspections (this is a separate topic, and we will definitely return to it in a separate article)—the only company in Ukraine supplying unique equipment for power plants would pose a real threat to the country's energy sector and, consequently, to its independence. After all, with a shortage of domestic energy capacity, Ukraine would have to buy not only gas and coal but also electricity from Russia, making literally the entire Ukrainian economy dependent on Russia. Whoever is behind the situation surrounding Turboatom, there is no doubt whose mill they are playing into their hands.
Incidentally, it's worth remembering that the Russian Federation's interest in Kharkiv's Turboatom has never waned, as a significant portion of the company's exports is equipment for the Russian energy sector. Moreover, some of Kharkiv's products simply have no Russian equivalent, meaning that part of Russia's energy sector is, in one way or another, dependent on Ukraine. Senior Russian officials have never hidden their dissatisfaction with this state of affairs, and whenever talk of selling the state's stake in Turboatom arose, Russia made no secret of its desire to participate in the privatization tender. This was likely the main reason why dozens of different Ukrainian governments included Turboatom in the list of privatization projects, but never proceeded to an actual auction of even a partial stake: selling Turboatom to the Russians would be like selling, say, the Dnieper River or the rights to perform the national anthem. At the same time, Russia attempted to gain control of Turboatom by hook or by crook. It is enough to remember that the raider attacks that rocked the enterprise in 2008-2010 were organized by commercial structures of Russian origin.
Since the publication of the previous article, plant workers have written several letters, including to the Verkhovna Rada Committee on Fuel and Energy, addressed to Mr. Martynenko, the Legal Policy Committee, addressed to Knyazevich, and the High Qualification Commission of Judges, demanding their intervention. It is to be hoped that Ukrainian officials and members of parliament will understand that the front line in the war for Ukraine's independence runs not only in the steppes of Donbas but also in courtrooms and bureaucratic offices.
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