UKRAINE BUSINESS NEWS – TEN ARTICLES
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1. AMB JOHN F. TEFFT EXPECTED TO BE CONFIRMED NEXT WEEK
AS U.S.-AMBASSADOR TO UKRAINE
U.S.-Ukraine Business Council (USUBC), Wash, D.C., Wed, Nov 4, 2009
2. UKRAINE NEEDS BANKING, REGULATORY, TAXATION AND LAND REFORMS
The Foundation for Effective Governance, Kyiv, Ukraine, Tue, Nov 3, 2009
3. WORLD FAMOUS VIRSKY UKRAINIAN DANCE COMPANY PERFORMS IN USA
Three performances in Washington, D.C. area and one in Philadelphia
U.S.-Ukraine Business Council, Washington, D.C., Wed, Nov. 4, 2009
4. IN EASTERN BLOC, WARY VIEW OF DEMOCRACY
By Charles Forelle, The Wall Street Journal, NY, NY, Wed, Nov 4, 2009
5. SALANS ADVISES NOBEL RESOURCES UKRAINE LLC
REGARDING $50M LOAN FACILITY FROM EBRD
Salans, Kyiv, Ukraine, Friday, October 23, 2009
6. UKRAINE: CORPORATE AND FINANCIAL LEGAL ALERT
Newsletter, Vasil Kisil and Partners, Kyiv, Ukraine, Mon, Nov 2, 2009
7. OVERHAUL OF UKRAINE'S ANTI-CORRUPTION LAWS
Legal Alert, Baker & McKenzie, Kyiv, Ukraine, Wed, Oct 28, 2009
8. UKRAINE: NBU IMPLEMENTED NEW RESTRICTIONS
ON PURCHASE AND TRANSFER OF FOREIGN CURRENCY
Financial Newsletter, DLA Piper Ukraine , Kyiv, Ukraine, Mon, Nov 2, 2009
9. KYIV GLOBAL JOINS U.S.-UKRAINE BUSINESS COUNCIL (USUBC)
A new government relations firm in Kyiv with ties to Washington
U.S.-Ukraine Business Council (USUBC), Wash, D.C., Tue, Nov 3, 2009
10. PETRUS USAJOINS U.S.-UKRAINE BUSINESS COUNCIL (USUBC)
New company importing products from Ukraine to the USA
U.S.-Ukraine Business Council (USUBC), Wash, D.C., Fri, Oct 30, 2009
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1. AMB JOHN F. TEFFT EXPECTED TO BE CONFIRMED
NEXT WEEK AS U.S. AMBASSADOR TO UKRAINE
U.S.-Ukraine Business Council (USUBC), Wash, D.C., Wed, Nov 4, 2009
WASHINGTON, D.C. - Ambassador John F. Tefft is expected to finally be confirmed by the U.S. Senate next week as U.S. Ambassador to Ukraine. Ambassador Tefft was nominated by President Barack Obama on September 30, 2009 to be Ambassador to Ukraine. A hearing on his nomination took place on October 8, 2009.
Ambassador Tefft has been waiting-in-the-wings for the past four weeks for a business meeting of the U.S. Senate Committee on Foreign Relations to be scheduled. One has now been scheduled for 2:15 p.m. on Tuesday, November 10th. The nomination of the Honorable John F. Tefft, of Virginia, to be Ambassador to Ukraine is listed on the schedule for the meeting.
Ambassador Tefft's nomination is expected to be voted out of the Foreign Relations Committee next Tuesday and a vote on the floor of the U.S. Senate would most likely take place yet next week. Ambassador Tefft would then be sworn in as Ambassador and is expected to leave for Ukraine soon after his swearing in ceremony. .
LINKS: Amb Tefft's nomination by the White House: http://www.usubc.org/news/obamaadministration_093009.php).
Amb Tefft's hearing before U.S. Senate Committee on Foreign Relations: http://www.usubc.org/news/johnftefftstatement_100809.php).
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2. UKRAINE NEEDS BANKING, REGULATORY, TAXATION AND LAND REFORMS
The Foundation for Effective Governance, Kyiv, Ukraine, Tue, Nov 3, 2009
KYIV - In 2010, Ukraine will need to implement a number of reforms to increase the competitiveness of the economy and ensure its growth throughout the post-crisis period, stated Nataliya Izosimova, Director of the Foundation for Effective Governance (FEG). Izosimova made this statement at a conference titled "Ukraine: Challenges and Opportunities," held in Moscow by FEG and the Russian newspaper Vedomosti.
"For a number of reasons, the economic crisis has had a greater impact on Ukraine than on its neighboring countries. The economic recession creates great risks for society and the state. Ukraine cannot increase its competitiveness and ensure steady economic growth during the post-crisis period, without realizing tactical anti-recessionary measures and implementing long-term reforms. The crisis creates unique opportunities for structural change," she emphasized.
According to Victor Chernomyrdin, Advisor to the President of the Russian Federation and former RF Ambassador to Ukraine, a keynote speaker at the conference, Ukraine must achieve political stability before it can overcome the crisis.
"The economic crisis has had a particularly negative influence on Ukraine, as well as on Russia. That is why it is difficult for Russia to recommend solutions. However, we would overcome the crisis together. If we work together, it will be easier for our economies to survive," he stated.
Andrey Lobach, FEG's senior Project Manager, identified several key priorities that should serve as a background for the Foundation for its projects in 2010. The following reforms should be implemented: banking system reform, the approval of a new tax code, the simplification of the conditions for carrying out business activities, the removal of the moratorium for land sale, the development of a public-private partnership (PPP) institute, the improvement of bankruptcy procedures, and state administrative apparatus reform.
"Firstly, these reforms can increase competitiveness and improve the business climate. Secondly, they may be accomplished relatively quickly and realized within 2010. Thirdly, the realization of these measures does not require major financial resources," Lobach highlighted.
Alexander Savchenko, Deputy Minister of Finance of Ukraine and former Deputy Head of the National Bank of Ukraine in 2007-2009, also spoke about the importance of reforms during the conference. According to Savchenko, economic fluctuations align with political fights, which severely affect the economy.
As part of the conference, FEG and Vedomosti organized discussions about different strategies for tackling the economic crisis in Russia and Ukraine. The following solutions were offered:
Alexander Lukanov, President of Alfa-Bank Ukraine, highlighted that the stabilization of the banking sector is the most realistic goal. In his opinion, inflow of foreign capital through foreign banks' support would allow the situation to stabilize. Within the forecast for the following year, Lukanov declared that public confidence will return to the banking sector, and more deposits will be made.
Denis Bugrov, Board Member at Sberbank of Russia, stressed that the long-term success of developing Russia-Ukraine relations depends on the choice of reforms. Among the priorities that need to be addressed, Bugrov named political stability, and the removal of obvious barriers and obstacles in the tax legislation and land tax code, as well as the creation of motivators for improving the economy's effectiveness.
Elena Kuznetsova, Senior Manager at McKinsey & Company, pointed out that political and macroeconomic stability and understanding of the necessity of reforms are the key indicators that demonstrate how Ukraine learned from the crisis.
A debate with the motion Russia is Ukraine's key partner in overcoming the economic crisis was the second session of the conference. FEG regularly runs debates together with UK-based Intelligence Squared in Ukraine. Several speakers spoke for or against the motion, and then the audience actively participated in the discussion.
Andrey Shevchenko, Member of Parliament of Ukraine and First Deputy Head of the Rada Committee on the freedom of speech and information, pointed out during the debates that Russia and Ukraine almost froze diplomatic communications. In his opinion, the elites of both countries have completely lost trust in each other. In Ukraine, any business with Russia is regarded as a risky opportunity to gain greater control over Ukraine. In its turn, Russia stereotypes Ukraine as a secondary state.
Opponents of the motion that Russia can help Ukraine overcome the crisis better than others, are convinced that it is impossible to discuss the status of being a "major partner" while having such an unreliable relationship. Therefore, it is important for Ukraine to focus on European economic relations.
Igor Shumilo, Executive Director for economic issues at the National Bank of Ukraine, expressed confidence that Europe is the only civilized choice for Ukraine to cope with the consequences of the economic crisis.
However, experts defending the motion that Russia is Ukraine's key partner in overcoming the crisis emphasized that Europe is not necessarily the best option for Ukraine's economy.
Kirill Dmitriev, Managing Partner and President of Icon Private Equity, highlighted that Europe is weak from the economic perspective. It has many problems and is not of interest for Ukraine. Moreover, Europe is not particularly focused on Ukraine.
Dmitriev said that economic pragmatism is the main priority for Ukraine and Russia. "Close cooperation between the two countries will enable them to carry out innovative and industrial breakthroughs, as well as raise competitiveness of their economies. Furthermore, the creation of a uniform economic space will lead to efficient economic results," he stated.
According to Sergey Glaziev, Head of the New Economy Institute of SUM and General Secretary of EurAsEc, links between the countries are so close that the Russia-Ukraine pairing is the obvious choice.
Irina Akimova, Member of Parliament of Ukraine and Deputy Head of the Committee on Economic Policy, concluded that Ukraine needs equal partnership relations with Russia as well as the EU. She is convinced that there is no conflict between European integration and a partnership with Russia.
Summing up the discussion at the conference, Konstantin Grishchenko, the Ambassador of Ukraine to Russia, claimed that at least in a short-term prospect, and under mutual respect, Russia is the nearest, most serious and effective partner for Ukraine.
In relation to long-term prospects of Russia-Ukraine relationships and Russia's assistance in overcoming the crisis in particular, Grishchenko said: "We have to plan a long-term perspective strategically and build these relations based on completely different principles. I am convinced we have all necessary capabilities for that to happen."
"Ukraine: Challenges and Opportunities" was held on October 22, 2009 in Moscow. It was organized by the Ukrainian Foundation for Effective Governance and the Russian newspaper Vedomosti.
The participants of the conference included Victor Chernomyrdin - Advisor to the President of the Russian Federation; Konstantin Grishchenko - Extraordinary and Plenipotentiary Ambassador of Ukraine to the Russian Federation; Irina Akimova - Member of Parliament of Ukraine, Deputy Head of the Committee on Economic Policy; Kirill Dmitriev - Managing Partner and President of Icon Private Equity; Denis Bugrov - Board Member at Sberbank of Russia; Alexander Savchenko - former Deputy Head of the National Bank of Ukraine (2007 - 2009); Alexander Lukanov - President at Alfa Bank Ukraine.
Additional participants were: Ruslan Ibragimov - Vice-President at MTS; Elena Kuznetsova - Senior Manager at McKinsey & Company; Igor Shumilo - Executive Director for economic issues at the National Bank of Ukraine; Aleksandr Martynenko - General Director at IA Interfax-Ukraine; Andrey Shevchenko - Member of Parliament of Ukraine and the First Deputy Head of the Rada Committee on the freedom of speech and information; and Sergey Glaziev - Head of the New Economy Institute of SUM and General Secretary of EurAsEc.
About The Foundation for Effective Governance
The Foundation for Effective Governance (FEG), an independent public policy institution, was formed in 2007 by Ukrainian businessman Rinat Akhmetov. FEG's main objective is to encourage the development of long-term national economic programs for Ukraine, through the formulation of practical policy solutions to the political, economic and social challenges facing the country.
The basic principles governing FEG's activities are independence, a focus on economic development, openness, and a practice-oriented approach. FEG's International Advisory Board includes former Prime Minister of Canada Kim Campbell, Chair; former U.S. Sen. Lincoln Chafee; and Gyorgy Suranyi, former president of the National Bank of Hungary. More information is available at www.feg.org.ua/en.
LINK: http://www.prnewswire.com/news-releases/in-2010-ukraine-will-require-the-implementation-of-banking-regulatory-taxation-and-land-reforms-68842842.html
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3. WORLD FAMOUS VIRSKY UKRAINIAN DANCE COMPANY
PERFORMS IN USA
Three performances in Washington, D.C. area and one in Philadelphia
U.S.-Ukraine Business Council, Washington, D.C., Wed, Nov. 4, 2009
WASHINGTON, D.C. - The world famous Virsky Ukrainian National Dance Company is now performing in the United States and will be performing in the Washington, D.C. area on Saturday, November 7th, on Friday, November 20th and in Philadelphia on Sunday, November 22nd.
The New York Times writes about the Virsky Ukrainian National Dance Company, “Here is bravura dancing at its greatest,” raves The New York Times about this renowned folk ensemble that is known for its masterful dance prowess, infectious enthusiasm, and vibrantly colored costumes.
"Founded in 1937 by Pavlo Virsky and Mykola Bolotov, the Virsky Ukrainian National Dance Company has toured around the world, celebrating the passion and beauty of its native Ukraine—the wisdom of its people and their folk traditions—with humor and optimism.
"These professionally trained artists from Kyiv perform spirited dances reflecting the geographic and cultural diversity of Ukraine. The male Cossack warriors demonstrate their awe-inspiring acrobatic skills and impressive swordplay, while female dancers in exquisite finery glide gracefully across the stage. This incredible company leaves audiences spellbound!"
The members and friends of the US-Ukraine Business Council (USUBC) are offered a 20% discount on the two performances on Saturday, November 7th performances of Virsky Ukrainian National Dance Company at George Mason University in Fairfax, Virginia. This applies to both 2 pm and 8 pm show times. Tickets can be purchased on the GMU site at: http://www.gmu.edu/cfa/calendar/tickets/169/. The coupon validation code is: USUBCVIRSKY
Should you be purchasing your tickets at the box office this discount also does apply.
VIRSKY UKRAINIAN DANCE COMPANY PERFORMANCES
(1) Saturday, November 7. George Mason University, Fairfax, Virginia
First performance: 2:00 pm (pre-performance discussion: 1:15 pm)
Second performance: 8:00 pm (pre-performance discussion: 7:15 pm)
WHERE: Concert Hall, Center for the Arts
George Mason University, 4400 University Drive
(intersection of Braddock Rd. and Route 123), Fairfax, VA 22030
COST: Tickets are on sale now! 20% off of - $46, $38, $23.
The USUBC coupon discount validation code is: USUBCVIRSKY
FOR MORE INFORMATION: http://www.gmu.edu/cfa/calendar/169
(2) Rockville, Maryland - Friday, November 20th 8:00 p.m.
Robert E. Parilla Performing Arts Center, Montgomery College
51 Mannakee Street, Rockville, MD 20850
COST: Tickets: $40.00
FOR MORE INFORMATION: Call 301.279.5301;
To purchase tickets, see: http://purchase.tickets.com/buy/TicketPurchase?organ_
val=21345&schedule=list)
(3) Philadelphia, PA, Sunday, November 22, 2009, 3:00 p.m.
Kimmel Center, Sunday, November 22, 2009 3pm
Discounted tickets may be purchased through the Ukrainain Educational and Cultural Center (UECC).
PRICE LIST FOR VIRSKY CONCERT: Prices listed are the DISCOUNTED PRICES only for those
purchased through the Ukrainian Educational and Cultural Center. Final price reflects discount for
UECC at the following percentages
Orchestra $58 (15%); Tier 1 Center Boxes and $49 (15%)
Tier 1 Side Boxes Tier 1 Conductors Circle $42 (15%)
Tier 2 $38 (16%); Tier 3 $29 (16%)
Tickets can be chosen from a seat chart at the UECC. There are no additional service charges. No additional discounts offered for seniors or children. Can be paid by cash, check (made to UECC), or credit card. Tickets can be picked up at the UECC or can be held for you at a special ticket table at the Kimmel Center the night of the concert. Buses will leave from the Ukrainian Center at 1:30 pm. Cost $10 per person (Includes tip for driver, no tips will be collected on the bus)
PURCHASE: To purchase tickets or seats on the buses call 484-904-6759, or for information: UECC office 215- 663-1166
NOTE: For further information or assistance on any of the Virsky performances contact Lada Pastushak, Director, Finance and Administration, at the U.S.-Ukraine Business Council, Washington, D.C., 202 429, 0551, lpastushak@usubc.org.
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4. IN EASTERN BLOC, WARY VIEW OF DEMOCRACY
By Charles Forelle, The Wall Street Journal, NY, NY, Wed, Nov 4, 2009
People who lived behind the Iron Curtain are substantially happier with life 20 years after the fall of the Berlin Wall, but express reservations about democracy, capitalism and their lot in the modern market economy, a new survey reports.
Fewer than a third of Ukrainians approve of the change to multiparty democracy, according to a wide-ranging poll by the Pew Research Center. In Russia, a majority mourns the Soviet Union, and nearly half say there ought to be a Russian empire. In every former Soviet bloc country polled, fewer people now support the shift to capitalism than in 1991. Seventy-two percent of Hungarians say their economic situation was better under the Communists.
The survey comes amid a financial crisis that is straining the adolescent market economies of the old Eastern bloc, and its findings reflect mixed -- and sometimes paradoxical -- attitudes in Russia and Eastern Europe.
Overall, majorities -- albeit some slender ones -- in every country but Ukraine approve of the shift to democracy. Ethnic hostilities, while persistent, have generally declined, and majorities or pluralities in all countries except Hungary and Ukraine welcome capitalism.
But significant worries remain about corruption, judicial fairness and the privileges of the rich and well-connected. Older people are far more wary of the new systems than their younger compatriots.
In one paradox, most nations are generally more favorably disposed toward immigrants than in 1991 -- but also support tighter immigration controls.
In spring 1991, amid the early, turbulent moments of the East's emergence from communism, Pew's predecessor, the Times Mirror Center, surveyed 12,569 people in nine countries (the U.K., Bulgaria, Czechoslovakia, France, Germany, Hungary, Italy, Poland and Spain) and three Soviet republics (Lithuania, Russia and Ukraine). This fall, the Pew center returned to those places.
In some ways, the Eastern countries have converged with Western ones. Opinions on the European Union and the North Atlantic Treaty Organization are generally favorable everywhere except Hungary and the U.K., which are both sour on the EU.
In other areas, a gap remains. Roughly twice as many people in the East disapprove of ethnic and religious diversity as do their counterparts in France, Spain, Germany and the U.K. (Italy, where 84% have an unfavorable view of Gypsies, is a Western exception.)
In the former Eastern bloc, the financial crisis has amplified disparities: The Czech Republic, Slovakia and Poland, which have weathered the turbulence relatively well, are most welcoming of democracy and capitalism. However, battered Hungary, Ukraine and Lithuania are still trying to claw their way back. Hungary is a notable outlier. Support for capitalism was 80% in 1991; it is now 46%. Recession has worsened discontent with the government.
"What people think of capitalism and democracy is very strongly linked to what people think of the government," says Márk Szabó of the Perspective Institute in Budapest. His firm's polls show more than half of Hungarians don't believe the government can handle the crisis. Hungarians' dismay with the market economy has been mounting for years, Mr. Szabó says, as it becomes clearer that promised social benefits can't be sustained.
LINK: http://online.wsj.com/article/SB125717785492623069.html
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5. SALANS ADVISES NOBEL RESOURCES UKRAINE LLC
REGARDING $50M LOAN FACILITY FROM EBRD
Salans, Kyiv, Ukraine, Friday, October 23, 2009
KYIV - Salans acted as legal advisor in Ukraine to Noble Resources Ukraine LLC regarding a $50 million financing programme from the European Bank for Reconstruction and Development (EBRD). The financing will be provided by EBRD in the form of an annual revolving working capital loan with a maximum commitment of up to $50 million that is renewable for three years.
The facility will be used by Noble Resources Ukraine LLC for the origination, storage, and export-trade of agricultural commodities in Ukraine. Other project objectives where EBRD cooperation is envisaged include construction as well as possible acquisition and upgrade of grain storage and primary processing facilities in Ukraine.
Salans’ lawyers in Kyiv and London provided full legal support to Noble Resources Ukraine LLC in connection with the project including revision of the revolving loan agreement, deed of guarantee and indemnity, and subordination agreement.
Noble Resources Ukraine LLC is a wholly-owned subsidiary of Noble Group Limited – a leading global supply chain manager in agricultural and other commodities listed on the Singapore Stock Exchange.
The European Bank for Reconstruction and Development is the biggest financial investor in Ukraine. As of 1 September 2009, it had committed almost Euro 4.5 billion through 185 projects.
The Kyiv office of the international law firm Salans has 35 lawyers, assisting domestic and cross-border clients with their corporate, M&A, banking, IP, tax and competition needs across a range of sectors including financial services, real estate, energy and natural resources, FMCG, retail and luxury goods, high technology and telecommunications, as well as capital markets. Salans has been active in Ukraine since 1988, and officially opened an office in Kyiv in 1992. Salans is ranked as a top tier law firm in Ukraine and globally by the leading international legal directory Chambers Global.
Salans’ project team was lead by partners: Volodymyr Monastyrskyy (Kyiv), Natalia Selyakova (Head of Salans’ Banking and Finance Group in Ukraine, Kyiv), William McCaffrey (London) and Paula Howard (London). Salans is an international commercial law firm built on a pioneering spirit with 21 offices worldwide.
NOTE: Salans law firm is a member of the U.S.-Ukraine Business Council (USUBC), Washington, D.C., www.usubc.org.
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6. UKRAINE: CORPORATE AND FINANCIAL LEGAL ALERT
Newsletter, Vasil Kisil and Partners, Kyiv, Ukraine, Mon, Nov 2, 2009
KYIV, Ukraine - VASIL KISIL AND PARTNERS LEGAL NEWSLETTER:
1. Cap rates have been reintroduced on non-residents’ loans
By Resolution No. 614 dated October 15, 2009 the Board of the National Bank of Ukraine amended Resolution No. 363 dated August 3, 2004 "On Fixing Interest Rates on Residents’ Foreign Loans"; amendments thereto reintroduced the cap rates on short-term, medium-term and long-term loans raised from non-residents, which had been in force until autumn 2008.
Thus, starting from November 15, 2009 the following interest rates shall be applicable to foreign borrowings:
- For loans for a period of one year – no more than 9.8 % per annum;
- For loans for a period of one year up to three years – no more than 10 % per annum;
- For loans for a period of over three years – no more than 11 % per annum;
- For loans with floating interest rate – LIBOR rate applicable to three-months USD deposits plus 750 basis points.
2. Time reduced of foreign currency proceeds enrolment from import transactions
According to information received from public sources, the Verkhovna Rada (Parliament) of Ukraine on October 22, 2009 adopted the Law of Ukraine "On Amending Some Laws to Mitigate Adverse Effects of the Financial Crisis."
The Law provides, among other things, the following amendments:
• direct prohibition to fund individuals in foreign currency for non-production purposes, and norms requiring foreign currency loans as written orders on account only;
• reduction of the maximum period set forth for residents to credit their foreign currency proceeds on their foreign currency accounts up to 90 calendar days, as well as the period set forth for residents to complete their import transactions with deferred delivery as provided in the Law of Ukraine "On the Procedure of Settlements in Foreign Currencies."
3. Closed Joint Stock Company is obligated to name its founders (participants) in the charter until bringing the charter in line with the Law of Ukraine "On Joint Stock Companies"
On October 5, 2009 the Ministry of Justice of Ukraine issued a note regarding interpretation of provisions of the Law of Ukraine "On Commercial Companies" and the Law of Ukraine "On Joint Stock Companies" in terms of obligatory listing of the company’s participants (founders) in the charter of a closed joint stock company.
According to the explanation, a Closed Joint Stock Company which has not brought its charter in line with the Law of Ukraine "On Joint Stock Companies" by now, ought to be governed by Article 4 of the Law of Ukraine "On Commercial Companies" and list the company’s participants (founders) in its charter.3
Closed Joint Stock Company which has brought its charter in line with the Law of Ukraine "On Joint Stock Companies" shall be thereafter governed, in terms of information to be obligatorily indicated in the charter, by Article 13 of the Law of Ukraine "On Joint Stock Companies" and therefore be exempted from listing the company’s participants (founders) in its charter.
4. Compulsory Payment of Dividends: Draft Law
Draft law No. 5183 "On Amending the Law of Ukraine "On Joint Stock Companies" (as to ensuring ordinary shareholders’ rights to dividends)" was introduced in the Verkhovna Rada (Parliament) of Ukraine on October 1, 2009.
The draft law will require a joint stock company to pay dividends in the amount as determined by the company’s general shareholders meeting but not less than thirty percent of net profits earned in the reporting period and/or retained profits not later than six months after the end of the reporting period.
Should there be no or insufficient net profits in the reporting period or retained profits earned in the previous years, dividends ought to be paid by the company out of its reserve capital.
About the firm: Since 1992, Vasil Kisil & Partners’ lawyers have advanced our clients’ interests with zeal and integrity. We have established a tradition of legal excellence, and we have earned a reputation as a law firm that always goes the extra mile for its clients. We provide professional service of the highest quality combining technical expertise with commercial awareness and a business savvy practical approach to legal issues.
Please, do not hesitate to contact us for any further information on the topic of this Newsletter or to address you other legal service needs: Denis Lysenko, Partner, lysenko@vkp.kiev.ua; Anna Babych, Senior Associate, babych@vkp.kiev.ua, Leonardo Business Centre, 17/52-A B. Khmelnitskogo St., Kyiv 01030 Ukraine, E-mail: vkp@vkp.kiev.ua, www.kisilandpartners.com
NOTE: Vasil Kisil & Partners is a member of the U.S.-Ukraine Business Council (USUBC), Washington, D.C., www.usubc.org.
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7. OVERHAUL OF UKRAINE'S ANTI-CORRUPTION LAWS
Legal Alert, Baker & McKenzie, Kyiv, Ukraine, Wed, Oct 28, 2009
KYIV - On 11 June 2009, the President of Ukraine signed into law two new statutes: the Law on the Framework for the Prevention of and the Counteraction to Corruption (the "Framework Anti-Corruption Law"), and the Law on the Liability of Legal Entities for Corruption Offenses.
Concurrently, corresponding amendments were introduced into the Ukrainian Administrative Code, the Ukrainian Criminal Code, and the Ukrainian Criminal Procedure Code. All of these statutes were published and became effective on 18 July 2009. However, they will be applied only from 1 January 2010.
The Framework Anti-Corruption Law will completely replace the existing Law of Ukraine "On Combatting Corruption", dated 5 October 2005, as amended. The Framework Anti-Corruption Law is much more detailed and specific than its predecessor, in that it includes distinct provisions covering corruption in both the public sector and the private sector
It also introduces new definitions of "corruption", "corruption offenses", "conflict of interest", "illegal benefit" and "close relatives". Likewise, the Companies Liability Law introduces an entirely new concept of liability of legal entities for the criminal corruption offenses of their officers. We will describe the new Company Liability Law in a subsequent Legal Alert.
Key New provisions
Among the many new rules established by the Framework Anti-Corruption Law, the following are those which are most likely to directly impact a company's business activities:
- The employment of former government or municipal officials is not permitted for certain positions within a company;
- Government funds or property may not be allocated to a company that has been found guilty of acts of corruption;
- The provision of charitable contributions to a government body in any form (e.g., free or discounted goods, services, works, etc) is prohibited;
- Information about compensation, donations, or gifts paid (provided) by or to government officials or their close relatives may not be protected as a commercial or bank secret and may not be afforded any other (e.g., contractual) confidentiality protection;
- Any transaction concluded as the result of a corruption offense shall be considered to be null and void;
- Damages caused to an individual or a legal entity as the result of the unlawful actions of a government body (including a law-enforcement body) charged with combatting corruption may be recovered from the state budget;
- Individuals found guilty of corruption are subject to termination from their jobs;
- Individuals found guilty of corruption must be reported to a special Unified State Registry of Persons Who Have Committed an Act of Corruption, even if no criminal case was brought against them and the sanction for such offense was only disciplinary (e.g., a reprimand) or civil (e.g., a claim for damages); and
- Money and other property derived as the result of corrupt actions, if located (accumulated, acquired) abroad, must be returned to Ukraine (and transferred to the state budget).
New Subjects of Liability
The list of potential subjects of liability for corruption offenses has been significantly expanded. For the first time, officers of legal entities financed from the state or a municipal budget, and certain other persons with publicly important functions, may become subject to liability for corruption in the same way as state (civil) servants. The following new categories of subjects of liability for corruption have been established:
- Persons who are deemed to be equal to state servants (e.g., CEOs of state and municipal companies, members of election committees, CEOs of NGOs partially or fully financed from the state or a municipal budget; assistants and consultants of Parliamentary Deputies and other elected officials, whose salaries are financed from the state or a municipal budget; auditors, notaries, experts, valuators, and other persons who perform public functions; arbiters; foreign officials or managers of foreign state companies; and officers of international organizations;
- Private entrepreneurs and persons who occupy managerial positions in legal entities;
- Bribe-givers: persons who occupy managerial positions in legal entities or physical persons, if they provide or are involved in the provision of illegal benefits to state servants or any of the persons listed above; and
- Legal entities – as defined in the relevant laws.
Prohibited Actions
In addition to the specific offenses described in the amendments to the Administrative Code and the Criminal Code, the Framework Anti-Corruption Law generally prohibits the following:
- To use the powers granted by a particular job position for the purpose of obtaining or soliciting an illegal benefit and, in exchange for that, to help other persons or legal entities to do their business; to receive subsidies, subventions, or credits; to make contracts, etc.;
- To illegally help a person to obtain an appointment to a position;
- To illegally interfere in the activities of other state or municipal bodies or officials;
- To illegally give preferences to persons or legal entities in connection with the issuance of approvals, the making of decisions, or the issuance of normative acts;
- To engage concurrently in any paid activity or entrepreneurship, directly or using a "frontman", except for after-hours academic, scientific, or artistic activities, medical practice, or sports judging or instructing;
- To be a member (including through the use of a "frontman") of the executive or supervisory body or the audit committee of a company (except when acting on behalf of the state for the purpose of managing state owned-shares); and
- To refuse to provide information, or to provide incomplete or untrue information, which must be provided according to law in response to the request of a legal or physical person;
Gifts
For the first time, guidelines for permissible gifts have been established. State servants and officers of international organizations are expressly permitted to accept (and, presumably, to keep for themselves) personal gifts under certain conditions.
Specifically, (i) the value of the gift should not exceed the amount of one times the Social Tax Benefit (currently UAH302 or approximately USD35), and (ii) the gift should be appropriate under the circumstances in line with the "generally accepted ideas" of hospitality. Any gifts received during official ceremonies must be surrendered to the employing international entity or state body within 3 days, pursuant to a procedure to be developed by the Cabinet of Ministers of Ukraine.
Amendments to the Administrative Code and the Criminal Code
A number of previously unpunishable acts have now become crimes or administrative misdemeanors, and are described in a new Chapter 15-B of the Administrative Code and in a new Chapter VII-A of the Criminal Code. Also, certain existing Articles of the Criminal Code have been amended to make stricter sanctions for crimes previously existing in the Criminal Code.
For More Information: James Hitch, Managing Partner, james.hitch@bakernet.com; Mariana Marchuk, Associate, mariana.marchuk@bakernet.com
Baker & McKenzie - CIS, Limited, Renaissance Business Center, 24 Vorovskoho St., Kyiv 01054, Ukraine, www.bakernet.com
Baker & McKenzie International is a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a "partner" means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an "office" means an office of any such law firm.
NOTE: Baker & McKenzie is a member of the U.S.-Ukraine Business Council (USUBC), Washington, D.C., www.usubc.org.
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8. UKRAINE: NBU IMPLEMENTED NEW RESTRICTIONS
ON PURCHASE AND TRANSFER OF FOREIGN CURRENCY
Financial Newsletter, DLA Piper Ukraine , Kyiv, Ukraine, Mon, Nov 2, 2009
KYIV - The National Bank of Ukraine ("NBU") has issued a clarification letter №13-215/7004-19823 dated 23 October 2009 ("Clarification Letter") regarding certain issues of the procedure of purchase and transfer of foreign currency related to foreign investments.
NBU's legislative acts provides for the list of documents which should be submitted to a bank by a client in order to perform purchase and transfer of foreign currency abroad. Under the applicable NBU's regulations, in order to purchase foreign currency and transfer it abroad almost in all cases of return of money to a foreign investor, a client must submit a statement of an authorized bank confirming that foreign currency has been initially transferred into Ukraine ("Statement").
Before the Clarification Letter has been issued, the NBU used to tolerate absence of the Statement in two cases:
(1) when it was impossible to identify the bank through which foreign currency was initially transferred into Ukraine and a client provided a written confirmation of that fact to its bank; and
(2) when the bank through which foreign currency had been initially transferred into Ukraine was liquidated.
According to the Clarification Letter, from now the NBU will only allow banks to purchase and transfer foreign currency abroad within the framework of investment operations without the Statement only if the bank through which foreign currency had been initially transferred into Ukraine was liquidated.
The NBU has also pointed out that residents of Ukraine who are not able to provide the Statement, due to any other reasons (save for the case of the relevant bank liquidation), must obtain an individual licence of NBU to transfer foreign currency abroad. Notwithstanding the fact that the Clarification Letter is of recommendation nature, it reflects the opinion of the NBU, which is the main regulator of a banking sector in Ukraine. Therefore, in practice banks are likely to follow such clarifications.
Please do not hesitate to contact us should you have any questions on the above. Oleksandr Kurdydyk, Partner, oleksandr.kurdydyk@dlapiper.com;
Illya Muchnyk, Senior Associate, illya.muchnyk@dlapiper.com.
DLA Piper Ukraine LLC is part of DLA Piper, an international legal practice. International Law Firm of the Year 2008 in Ukraine. DLA Piper ranked 3rd in Financial Times Law 50 Innovative Lawyers 2008. Kyiv switchboard: +380 44 490 9575.
NOTE: DLA Piper Ukraine LLC is a member of the U.S.-Ukraine Business Council (USUBC), Washington, D.C., www.usubc.org.
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9. KYIV GLOBAL JOINS U.S.-UKRAINE BUSINESS COUNCIL
A new government relations firm in Kyiv with ties to Washington
U.S.-Ukraine Business Council (USUBC), Wash, D.C., Tue, Nov 3, 2009
WASHINGTON, D.C. - Kyiv Global LLC (“Kyiv Global”) has been approved for membership in the U.S.-Ukraine Business Council (USUBC), the USUBC executive committee announced today on behalf of the entire USUBC membership of over 100 companies and organizations which have business operations, investments or other development programs in Ukraine.
Kyiv Global is a new government relations firm established in Kyiv, Ukraine, that offers lobbying and business consulting services to clients seeking assistance and representation in Ukraine. Wolodymyr “Walter” Sulzynsky, has joined Kyiv Global as President after a long and distinguished career with the U.S. Department of State.
Kyiv Global was established in Kyiv to provide advice and services to U.S. and foreign corporations and investors on business opportunities and market entry in Ukraine. Kyiv Global also assists clients in understanding the complexities of Ukraine’s regulatory and legislative framework and processes, and specializes in identifying and solving governmental and business issues for clients.
Kyiv Global has extensive experience in Ukraine and a broad range of contacts with the leadership of the Ukrainian government. Kyiv Global provides government relations, litigation communication, crisis management, investment development, and procurement services. Key practice areas include, infrastructure, transportation, agriculture, procurement, environment, defense, energy, aerospace, telecommunications, and privatization.
Kyiv Global is associated with Global USA, Inc.,(“Global USA”), a bipartisan government relations and business consulting firm, in Washington, D.C.. Dr. Bo Denysyk is President of Global USA.
GLOBAL USA
Global USA was established in 1982 and is one of the oldest government relations and business consulting companies in Washington, D.C. Global’s partners have served at the highest levels of the United States government as well as senior executives in major U.S. corporations.
The company has represented many American, Japanese, European and South American companies in the United States and has assisted many of these international corporations in developing new markets throughout the world, including Eastern Europe and the CIS countries. (www.globalusainc.com)
Kyiv Global and Global USA are currently working with major international companies on infrastructure, transportation and energy projects in Ukraine.
Information about the leadership of Kyiv Global and Global USA.
WALTER SULZYNSKY, PRESIDENT, KYIV GLOBAL
Mr. Sulzynsky has over 33 years of extensive experience and knowledge in foreign affairs matters, to include extended postings with the American Embassy in Kyiv. Prior to joining Kyiv Global, Mr. Sulzynsky was a senior attorney with the Office of the Legal Adviser, U.S. Department of State, Washington, D.C., where he provided guidance to senior policy makers on a broad range of international legal and policy issues.
While at the State Department, Mr. Sulzynsky worked closely with the Departments of Commerce, Defense, Treasury, Justice, the National Security Council, and others to ensure compliance with U.S. laws. During his tenure with the U.S. Department of State, Mr. Sulzynsky had two extended assignments with the American Embassy in Kyiv, Mr. Sulzynsky served as First Secretary in the Political Section from 1992-1995, and as the Resident Legal Adviser from 1998-2002.
Mr. Sulzynsky also was an observer with the OSCE delegation during the 2004 Presidential Election. Mr. Sulzynsky has worked with and developed extensive relationships with senior officials in Ukraine for many years during his career with the U.S. State Department. (Note: The February 1, 2009 edition of The Ukrainian Weekly included an extensive article about Mr. Sulzynsky’s service with the U.S. Department of State.)
Prior experience includes to joining the Department of State, Mr. Sulzynsky was a senior trial attorney with the U.S. Department of Justice. He also served on active duty with The Judge Advocate General’s Corps, U.S, Army, in Germany, and the Pentagon, Washington, D.C., and with the U.S. Navy Reserve. He holds the rank of Commander in the U.S. Navy Reserve (retired).
Mr. Sulzynsky received his J.D. degree from St. John’s University and graduated from Fordham University with a B.S. in economics. He holds an LL.M. (international and comparative law) and an M.A. (national security studies) from Georgetown University.
DR. BO DENYSYK, PRESIDENT, GLOBAL USA
Dr. Denysyk has served at senior levels of the United States government, including as Assistant Secretary for Export Administration of the Department of Commerce and on the National Security Council. He also served as a senior executive for the IBM Corporation and on various Advisory Commissions on issues ranging from foreign affairs to technology transfers and international trade.
Dr. Denysyk's extensive political experience includes serving as campaign manager for the 1984 and 1992 Presidential Campaigns for the State of Maryland, and as a regional director in the 1980 Reagan for President Campaign and later as a member of the Transition Team in both 1980 and 2000. He has also been a political campaign consultant in countries such as Japan, Austria, Poland, and Ukraine.
Dr. Denysyk has also assisted major international companies to expand business in East Asia, the EU and CIS countries, including Ukraine. He holds a Ph.D. in Applied Physics.
USUBC staff have known and worked with Mr. Sulzynsky and Dr. Denysyk for several years. Both Mr. Sulzynsky and Dr. Denysyk are of Ukrainian background. Mr. Sulzynsky recently flew to Washington from Kyiv just to attend the USUBC hosted 1st International Forum on the Economic Development of Ukraine held on Thursday, October 15th.
Additional information about Kyiv Global, Kyiv,Ukraine, can be found on their website, www.KyivGlobal.com.
USUBC is very pleased to have Kyiv Global as a member," said Morgan Williams, Director, Government Affairs, Washington Office, SigmaBleyzer Emerging Markets Private Equity Investment Group, www.SigmaBleyzer.com, who serves as President/CEO of the U.S.-Ukraine Business Council (USUBC). "I have known and worked with Walter and Bo in the past and look forward to working with them to expand and facilitate U.S. investment in Ukraine."
"USUBC now has a membership base of over 100 companies and organizations which allows USUBC to provide its new members such as Kyiv Global with a full-time operation and a significantly expanded program of work," according to USUBC membership director, Iryna Teluk.
USUBC MEMBERSHIP NOW OVER 100 AND STILL GROWING
Over One-Hundred Members, October, 2009, Membership in January of 2007 was 22.
The complete list of USUBC members can be found at: http://www.usubc.org/members.php.
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10. PETRUS USAJOINS U.S.-UKRAINE BUSINESS COUNCIL
New company importing products from Ukraine to the USA
U.S.-Ukraine Business Council (USUBC), Wash, D.C., Fri, Oct 30, 2009
WASHINGTON, D.C. - PetRus USA, LLC has been approved for membership in the U.S.-Ukraine Business Council (USUBC), the USUBC executive committee announced today on behalf of the entire USUBC membership of over 100 companies and organizations who have business operations, investments or other development programs in Ukraine.
PetRus USA, LLC, headquartered in Baltimore, Maryland, was established in the spring of 2009 as a sister company of PetRus, Ukraine. PetRus USA, is an importer of alcoholic beverages, such as Zlatohor vodka, manufactured in Ukraine by PetRus Ukraine.
The PetRus Ukraine holding company, Kyiv, Ukraine, unites a group of trade and industrial companies in various businesses: alcoholic drinks, confectionaries, agricultural production, customs and warehouse services, alcohol, cosmetics, food imports, vehicle distribution, and investment projects for the construction of commercial and housing real estate.
VLADIMIR M. KOYFMAN
Vladimir Michael Koyfman serves as Chairman & CEO, PetRus USA, LLC. He was born in Kyiv, Ukraine and came to the USA in the early 1990's. He is an experienced business entrepreneur who combines his knowledge of doing business in Ukraine with a good understanding of the U.S. market.
His business experience includes: Senior Vice President, CIO of Nationwide Credit Card Company, LLC; President, CEO of New American Technologies, Inc.; advisor of International Business Relations for the Greenville Consulting Company, LLC.
In addition to running PetRus USA, Vladimir is exploring business opportunities in Togo (West Africa). He is President and CEO of V-Group-Phosphate International Company, Togo (West Africa) with business in Ukraine and the USA. He was elected as "Man of the Year", by the Cascade-Maryland Community Newspaper in 2006. Vladimir will represent PetRus USA on the USUBC board of directors.
The Chairman/CEO of PetRus Ukraine, Mykolay Petrenko, and Lyudmila Rusalina, a well-known businesswoman in Ukraine, serve on the board of directors of PetRus USA. Mykolay Gergalo is the Director General; Dmytro Babich, Wholesale Manager; Stan Stern, Shipping/ Receiving Manager; Oleg Petrenko, Distribution's Administrator; and Ivan Lanier, Government Relations Advisor.
PETRUS UKRAINE HOLDING COMPANY
The PetRus group of companies originated in the “TopTrans” company which was established in 1992. The company was the first private Ukrainian provider of services of bonded warehouses. Later on the company expanded its business to include the import of food products and cosmetics with well known trademarks.
By 1998, the company had become one of the largest importers of food products in Ukraine with its own distribution network. Wishing to restore the lost reputation of a domestic manufacturer and to gain the consumers’ confidence, the founders of PetRus chose to modernize and expand the Cherkassy biscuit plant. In 2000 the plant was merged into “Svit Lasoschiv” Ltd.
The same year, PetRus took into administration Zolotonosha Distillery “Zlatogor”. In 2005 PetRus gave the new birth to the Uman Distillery and Kremenchug Distillery. And the opening of Luzhany Distillery became an outstanding event of 2006. During 2005-2006 the company had been increasing its activities in the sphere of imports of food products and alcoholic beverages.
Today PetRus Ukraine is importing cognacs and cognac blends from France, canned fruits and vegetables from Thailand, Vietnam and Spain. Imports from China are dried seafood (Dalian city), canned mushrooms (Xiamen city), cocoa milk (Haikou city). In addition to imports to Ukraine the company is also importing mushrooms and snacks to Georgia.
USUBC is very pleased to have PetRus USA, LLC, as a member," said Morgan Williams, Director, Government Affairs, Washington Office, SigmaBleyzer Emerging Markets Private Equity Investment Group, www.SigmaBleyzer.com, who serves as President/CEO of the U.S.-Ukraine Business Council (USUBC).
"USUBC now has a membership base of over 100 companies and organizations which allows USUBC to provide its new members such as PetRus USA, LLC with a full-time operation and a significantly expanded program of work," according to USUBC membership director, Iryna Teluk. "USUBC was introduced to PetRus USA by Robert Walker, Assistant Secretary, Division of Business and Enterprise Development, Maryland Department of Business & Economic Development in Baltimore. Robert is a new member of the USUBC board of directors and we appreciate his outstanding support," said Teluk.
USUBC MEMBERSHIP NOW OVER 100 AND STILL GROWING
Over One-Hundred Members, October, 2009, Membership in January of 2007 was 22.
The list of USUBC members can be found at: http://www.usubc.org/members.php.
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U.S.-Ukraine Business Council (USUBC): http://www.usubc.org
Promoting U.S.-Ukraine business relations & investment since 1995.
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