Ukraine’s DCH Group to cooperate with Chinese firms on Motor Sich deal

The DCH Group of tycoon Oleksandr Yaroslavsky has
entered into agreement with Chinese Skyrison Aircraft Holdings on a joint
investment into Ukraine’s leading aeronautics firm Motor Sich (MSICH UK), DCH
reported on its website on Aug. 4. The next day, DCH reported it filed a joint
request with Skyrison with Ukraine’s Antimonopoly Committee on Aug. 4 for a
permit to take control of Motor Sich.

Recall, local media reported that Skyrison was in
negotiations with Ukraine’s state military industrial holding Ukroboronprom for
joint operations involving Motor Sich. The Chinese firm was ready to grant to
Ukraine’s firm a 25% stake in Motor Sich. However, no deal was reached.

In 2016, Motor Sich head Viacheslav Boguslayev signed
a partnership deal with the Chinese firm in which he sold his controlling stake
in the company. In 2017, the Antimonopoly Committee refused to allow the
Chinese investors to take control of the company and warned Ukraine’s State
Security Service (SBU) about the deal. The SBU, in turn, opened a criminal case
of state treason against the Ukrainian sellers of Motor Sich’s stake. Since
September 2017, the shares of Motor Sich have been blocked from free trading.
Meanwhile, U.S.
top officials warned the Ukrainian government in 2019 against
allowing the Chinese firm to enter Motor Sich, which allegedly possesses
“military and sensitive technologies” that Americans do not want to be passed
to China. Last year, U.S. media speculated on the possible interest in Motor
Sich from a couple of American businessmen.

Motor Sich produces engines for helicopters, passenger
and military planes. DCH Group has interests in various Ukrainian sectors,
including metallurgy, banking and machinery. The group highlighted in its Aug.
5 press release that it has experience with turning around large enterprises
that suffered from illegal judicial and regulatory decisions.

Alexander Paraschiy: Yaroslavsky’s
group indeed has a solid track record of crisis management, so his possible
taking control over Motor Sich is good news for the company. His ability to
lobby a favorable decision in Ukraine is better than at Skyrison and even
Ukroboronprom, though this does not mean his petition to the Antimonopoly
Committee will be successful. In particular, it is not clear at the moment what
will be the role of DCH in a joint project with Chinese firms, and therefore
the concerns of Americans (as well as Ukrainians) remain about a possible leak
of sensitive technologies to China.