Editor’s Note: The following investigation was assisted by the Washington-based Organized Crime and Corruption Reporting Project, a Kyiv Post partner.
After the worldwide embarrassment of signing a billion-dollar deal with a ski instructor to build an LNG terminal in Ukraine last November, the State Agency for Investment and National Projects has once again found itself in the middle of a controversy in connection to the deal inked just days ago.
On March 26, the agency announced it found a London-based investor for an industrial park in Kremenchuk, a city in Poltava Oblast in central Ukraine – an extravagant special hub for investment. The memorandum of investment, which could run up to $20 million, was signed with much fanfare by Kremenchuk’s deputy mayor Andriy Pogribnyi and Hemant Kumar Pathak, director of London-based Overseas Merchandising Corporation.
The press release issued after the signing states that Overseas Merchandising Corporation is likely to become a management company that will conduct fundraising for the project. But company records show that the British investor, who will be in charge of the multimillion dollar project, is a company that has 20 British pounds of statutory capital and whose business activity the company register describes as “dormant.”
Later on March 28 the State Agency for Investment and National Projects denied that the project is part of its “industrial parks” national project contradicting an earlier press release it had distributed to journalists.
Moreover, its 50-year-old director Pathak is a Ukrainian resident and registered in Kyiv, on Nemanska Street. He is also a director of the Ukrainian firm Idea. Reklamni Technologiyi, and booking manager for A.R.M.I.A., a little- known female pop band.
Yet officials from the local branch of the investment agency see no problem in the Overseas Merchandising Corporation’s less than watertight credentials.
“This company will act as an investor itself… and as a management company. It has agreements with a number of companies from India, Great Britain. It is headed by an Indian, who has been living in Ukraine for 26 years, but that’s an English company. He has a number of successful projects (on his record),” said Andriy Melnyk, head of Kremenchuk Invest state enterprise.
Kremenchuk’s Industrial Park is an ambitious project for the city, which is home to significant industrial firms Kryukiv Rail Cars and Kremenchuk Auto Plant. The prospectus says the park will cover an area of 168 hectares broken down into five zones: hi-tech for engineering, logistics, technopolis (information technology development), ecolife (food and processing industry) and energy (alternative energy).
The $20 million investment into the infrastructure of this project is expected to bring more than $500 million of further investment and create 4,000 jobs. The value of expected investment is four times Kremenchuk’s municipal budget of $112 million. The park’s blueprints show that it is supposed to be equipped with solar panels and a helipad.
The person who signed the memorandum, businessman Pathak, has featured in a number of businesses in Ukraine. He is a representative of Industry East Europe Investments Ltd, which in 2007-2010 owned Novi Technologii (New Technologies) JSC, whose ex-president Ivan Avramov is a business partner of Party of Regions lawmaker Yuriy Ivaniushchenko. Industry East Europe Investments has its office on 1 Marata St. in Yenakieve of Donetsk Oblast, where several more companies, reportedly linked with Ivanyushchenko, are registered.
Pathak’s trace can be found in other projects. In the 1990s, he was the director of a Kyiv-based namesake of Overseas Merchandising Corporation, liquidated in 2006. He also owns Idea Agro agrarian company in Kherson region and in 2010, together with a Kryvyi Rih city council member from Batkivshchyna party Sergiy Zabolotnyi, co-owned First Investment Mining Company. According to Pathak, it was a project connected with Kryvorizhstal (ArcelorMittal), but later he left the business.
Pathak told the Kyiv Post his company has not given any investment plan to the local authorities. “We are analyzing everything. We will tell (about investments), when we’ll do everything and work out the project scheme,” he said.
The businessman said he had agreements with companies that could potentially move to the Kremenchuk industrial park, but refused to give their names and other details. “When we sign all contracts, we’ll announce it,” he said.
Asked why a businessman who has been living in Kyiv for decades would represent himself as a foreign investor, Pathak said: “I live in Ukraine and I live in India… I work in British and Indian companies.”
Melnyk of the Kremenchuk Invest state enterprise explained that even though Overseas Merchandising Corporation signed a memorandum, “there might be other candidates for this role.”
He said a proper competition will be held in April.
“This company is the number one (candidate),” Melnyk said.
Kyiv Post staff writer Kateryna Kapliuk can be reached at [email protected].
