14 April 2023,
London, United Kingdom
Dear Mr. President,
In this difficult time for Ukraine, I must openly address you with a question about a situation that should not have occurred in the country either during war or peaceful times.
When I approached you in September 2021 about the situation in which I, as a citizen of Great Britain and investor, found myself in Ukraine, you responded that it was a consequence of the unreformed courts of Ukraine and that the court system would change for the better in the future. It is clear that the war has hindered the reform of Ukrainian courts, but as my experience has shown, it is not only the courts, but also the way the local authorities of the city of Kyiv treat foreign investors.
In 2007, together with a global institutional investor, the type of investor you are now trying to attract to Ukraine for the country’s future reconstruction, I entered into an investment project with the city authorities for reconstruction of Kharkiv square in the city of Kyiv . Today, such projects are called public-private partnerships. However, the attitude that I have encountered and continue to encounter from the city of Kyiv authorities can be called many things, but it is not a partnership.
While the investment project was in operation, I had the opportunity to see all the circles of bureaucratic hell that a private investor can face: actions that included both sabotage of the project and outright violation of obligations to the investor. This is despite the fact that during the project’s existence, the city received more than $14 million from me, and to fulfill my obligations as an investor, I financed the engagement of the best European architects and infrastructure professionals. In the course of my investment project, I did not receive or request any state or municipal funds.
In 2013, the city authorities terminated the project, recognized that I had incurred costs and losses, and undertook to compensate those. The condition for compensation was that those costs and losses be assessed by an independent appraiser, and I fulfilled this condition. However, even after the project was terminated, the city authorities continued to violate their obligations and refused to compensate the damages.
In 2019, the Kyiv Commercial Court partially satisfied the claim of my Ukrainian company, Kyiv Terminal LLC, which was a party to the investment project with the Kyiv city authorities and ordered the city authorities to pay losses in the amount of USD 24.4 million. In turn, the Court of Appeal, despite the city authorities missing the deadline for filing an appeal, accepted it and, under pressure from the Prosecutor’s Office, which joined the case, completely overturned the decision of the first instance court.
At the same time, the position of the prosecutor’s office, as stated in court, cannot be viewed as anything other than a direct threat to Ukraine’s investment attractiveness. In its application to enter the court case, the prosecutor’s office stated that “participation in an investment project is an investor’s risk”. In global investment practice, the activities of state and local authorities are a factor of stability. Why should an investment project with a state party as a partner be a source of risk in Ukraine?
In 2021, when the case was being considered by the Supreme Court of Ukraine, due to the unprecedented disregard for the investor’s legal rights in the Court of Appeal, I was forced to seek the support of the British Embassy in Ukraine, and representatives of the Embassy attended all court hearings. The Supreme Court of Ukraine cancelled the unlawful decision of the Court of Appeal and returned the case for reconsideration to the appellate instance.
In 2022, at a time when the war in Ukraine was still ongoing, the appellate court resumed the case, and I immediately offered the city a settlement agreement, under which I refused the funds awarded to me in the court of first instance and offered to provide me with a land plot after martial law is lifted to build an infrastructure project in Kyiv. My offer was guided by a full understanding of the difficult situation which the country and the city were facing as a result of the war.
However, the city authorities did not only reject this proposal, but also launched a massive campaign of slander and false accusations against me on an unprecedented scale. These accusations did not only show the attitude towards me as an investor who had fulfilled all his obligations and had not violated any of them, but also the attitude towards my country, the UK, which is perhaps the biggest supporter of Ukraine at this time.
Ukraine’s state and intelligence bodies, such as the National Security and Defense Council of Ukraine, the Security Service of Ukraine, and the Foreign Intelligence Service of Ukraine, have confirmed that there are no grounds for false and defamatory accusations against me. The authorities of the United Kingdom, my country, have no claims against me either. But this does not stop the perpetrators of the accusations, nor their beneficiaries.
After all, the rejection of the settlement agreement proposed by me and the slanderous campaign are beneficial to those who want to avoid responsibility not only for breaching their obligations to the investor, but also for what had happened to the funds that the city received both directly from the investor and from the budget funds allocated to fulfill the city’s part of the obligations in the investment project. It is to their advantage to shift attention from themselves to the investor, and they do not care that such actions actually harm the national security of Ukraine.
I know that in Ukraine there is now a saying that for real reconstruction of Ukraine it is important not to “lose peace”. I know that you, Mr. President, are making extraordinary efforts to attract institutional and private investors to Ukraine, who will, among other things, participate in future joint projects with the state party, in projects like the one I participated in. But what incentive will these investors have to invest when they see the attitude I have encountered?
I am in no way asking you to influence the court in any way, I hope that in Ukraine it is possible to get fair and impartial justice. However, I also believe the issue of future investment and reconstruction of the country is a matter of national security.
Securing justice that is not influenced by the slander campaign and investigating the beneficiaries of this campaign, as well as what they did with the investment funds received from me and the public funds allocated for the reconstruction of Kharkiv Square in the city of Kyiv, will not only ensure that foreign investors are treated properly, but will also protect the state interest.
If Ukraine does not protect the legal rights of those investors who have already invested in the country, it will hinder your efforts, Mr. President, to attract new investors to Ukraine.
Sincerely yours,
With faith in Ukraine’s success,
Tamaz Somkhishvili
