12:03 20.03.2021

Court seizes property, 100% of shares of JSC Motor Sich - SBU

3 min read
Court seizes property, 100% of shares of JSC Motor Sich - SBU

The Shevchenkivsky District Court of Kyiv, based on materials of the SBU, seized the integral property complex and 100% of the shares of Motor Sich JSC.

According to the SBU press center, based on the results of the judicial review, the property was transferred to the management of Asset Recovery and Management Agency of Ukraine (ARMA) with the obligatory determination of a state-owned management company.

At present, the Main Investigation Department of the SBU carries out pretrial investigations of Motor Sich in two directions.

The first is on the grounds of crimes provided for in Articles 14, 15, 111 and 113 of the Criminal Code of Ukraine (regarding sabotage and subversive activities in favor of the Russian Federation).

The second - on the grounds of crimes provided for by Articles 209, 212 and 364 of the Criminal Code of Ukraine. It examines violations of the law during the initial privatization and subsequent illegal concentration of shares.

"This is not only about the fate of one enterprise, but about how the state is able to protect its own interests. Since the security of the Ukrainian Motor Sich is a matter of national security," the press center quotes head of the SBU Ivan Bakanov.

The state-owned enterprise Motor Sich JSC will continue its work in accordance with requirements of the current legislation, with the preservation of jobs and fulfillment of obligations within the framework of production orders, the SBU reports.

As reported, on March 12, Secretary of the National Security and Defense Council of Ukraine Oleksiy Danilov said that at a meeting of the National Security and Defense Council on Thursday, March 11, it was not about the nationalization of Zaporizhia Motor Sich enterprise, but about its return to the ownership of the Ukrainian people in accordance with the current legislation.

Chinese Foreign Ministry Spokesperson Zhao Lijian, in turn, stated that China requires Ukraine to protect the legitimate interests of Chinese investors in connection with the decision to nationalize the Motor Sich JSC, more than 50% of which is owned by Chinese companies.

The Chinese shareholders of Motor Sich initiated an arbitration against the state of Ukraine in December 2020 for $3.6 billion. They claim that the Ukrainian authorities expropriated their investments, as well as violated their other rights provided for by the intergovernmental agreement on the encouragement and mutual protection of investments between Ukraine and China from October 1992. The interests of the Chinese plaintiffs are represented by international law firms WilmerHale, DLA Piper and Bird & Bird.

According to a source in Ukrainian government, currently about 75% of Motor Sich shares are already owned by a group of Chinese owners, and some part of the disputed block of shares acts as collateral for financing provided, among other things, by China Development Bank.

Motor Sich is one of the world's largest manufacturers of aircraft engines and industrial gas turbine units. It exports its products to more than 100 countries. Motor Sich reported UAH 930.2 million in net profits in January-September 2020, while it saw net losses of UAH 532.7 million in the same period in 2019. The company's net revenue has grown by 20.2% to UAH 7.6795 billion.