Ukraine security service raiding Motor Sich, Boguslayev alleges

The Apr. 23 search of Motor Sich
(MSICH UK) headquarters by the Security Service of Ukraine (SBU) was part of an
ongoing corporate raid against the aeronautics producer, Vyacheslav Boguslayev,
the firm’s pesident, told Interfax-Ukraine the next day.

Prime Minister Volodymyr Groysman “promised to remove
the balaclavas, halt the show of masks, yet yesterday Alfa forces in balaclavas
jumped through the entrance,” he said, accusing the SBU of engaging in
intimidation. He denied accusations that the company – which produces, among
other hardware, engines for Russian helicopters – was engaged in state
sabotage, insisting that all its activities were legal. The SBU cited the
company’s alleged transfer of technologies to the Chinese and alleged plans to
move production abroad as part of its sabotage claims.

When asked about his alleged sale of shares to
non-residents, which the SBU based its sabotage claim upon, Boguslayev pointed
out that company shares had been freely traded on Ukrainian stock exchanges.
“I sold 15% of shares and attracted investment. USD 100 mln last year and
the same this year,” he said.

What happened is a serious blow to reputation,
Boguslayev said. He met with “representatives of certain countries” to inform
them that the government was engaged in a corporate raid.

Recall, Motor Sich shares were banned from trading as
of Apr. 23, based on a court ruling last week. Since September, the SBU has been investigating the sale of
controlling stake in Motor Sich to Chinese investors, suspecting a potential
crime of state sabotage in this deal.

Alexander Paraschiy: The SBU has
legitimate suspicions that Motor Sich is helping Chinese “investors” construct
an aeronautics engine plant outside of Ukraine, and could be selling them its
sensitive technologies. Eventually, these actions may create an aeronautics
competitor in China, or even lead to the reallocation of Motor Sich engine
production from Ukraine to China. But from a legal standpoint, there is nothing
criminal in such actions of the owner of a fully private Ukrainian company.

Therefore, we fully agree with Boguslayev that the SBU
seems to be carrying out a corporate raid on behalf of interests with links to
top state officials. Such an attack on a high-tech, world-renown enterprise
will damage the image of the Ukrainian government and the Ukrainian investment
climate overall.

These events merely confirm our view on Motor Sich
as a risky investment.