10:04 21.01.2022

Private shareholder: we demand transparent competitive election of the director of JSC Meridian

4 min read

Everything what is happening right now with the competitive selection of candidates to the position of director of Joint Stock Company Meridian n. S. P. Korolyov is a plain ignorance of an honest selection of top managers of state-owned defense industry companies. MERIDIAN SOYUZ LLC as a private shareholder that owns 40.0753 % of JSC Meridian shares requires the chairman of the selection board Ihor Fomenko to make the repeated competition as transparent, objective, and effective as possible.

We insist on preventing the repetition of a number of violations committed in December 2021 and indicating the falsity of the selection of candidates for the position of director of JSC Meridian, during the new competition. Moreover, we have received no information so far about the State Concern’s strategic vision of the further participation of the company in the development of the Ukrainian defense industry complex, so we have no understanding of the targets a new top manager will have to attain.

What is happening today?

  • In December 2021, Ihor Fomenko conducted a sham competition in one stage with violation of the selection procedure and lack of results.
  • The selection commission included the security deputy general director of the State Concern Roman Zabarchuk who has a conflict of interest and wrongfully accused us of sabotage by submitting a fraudulent application to law enforcement agencies despite the Memorandum on the fixed principles of the state shareholder of JSC Meridian signed earlier by him.
  • The conflict of interest arose when Mykhailo Zaitsev was included in the commission because earlier, the State Concern tried to appoint him as director of JSC Meridian without holding a competition.
  • The commission’s time was wasted due to the biased attitude of Ihor Fomenko, even though representatives of the G7 diplomatic missions and independent anti-corruption NGOs were included in the commission, which means that their presence during interviews was just smoke and mirrors.
  • MERIDIAN SOYUZ LLC request to be included in the commission with an advisory vote was denied, although we will vote during the election of director at the general meeting of shareholders.
  • Since something went wrong during the interviews and frustrated Ihor Fomenko’s plans, no winner was selected, and information about the outcome of the competition has not yet been published for the public and private shareholders.
  • When Ihor Fomenko announced a re-competition for the position, State Concern Ukroboronprom failed to establish clear evaluation criteria. Moreover, the position was advertised immediately before the New Year and Christmas holidays without due regard to the official holiday days. As a result, the duration of the period when candidates could file their applications was considerably reduced.

As the most recent developments show, Ihor Fomenko makes decisions on the election of director at his own discretion as clear evaluation criteria have never been formulated which is yet another evidence of the biased impact by the chairman of the commission on the outcome of the competitive selection.

Moreover, all our written requests in connection with the competitive selection procedure and our wish to participate in the selection of candidates have been ignored by Ihor Fomenko who prefers not to reply to letters, calls, and messages. We view this attitude to the private shareholder by the representatives of the state shareholders as a blatant breach of our rights and attempts made by Ihor Fomenko to disguise his personal interest in the appointment of the defense company’s director that could be controlled by him, which may motivate him to commit corruption.

Finally, everything what State Concern Ukroboronprom does under the guise of the corporate governance reform in line with international principles is sheer propaganda since, as recent events have demonstrated, they have failed to merely read through these principles. This is why it is hard to imagine what is really going on at defense companies with 100 % state ownership considering their so-called “transparent and honest” approach to private investors.

NB: Joint Stock Company Meridian n. S. P. Korolyov is one of the companies operating in the Ukrainian defense industry complex; the state owns 50 % + 1 share of the company, which is managed by the State Concern Ukroboronprom.