A small United Kingdom-registered firm with Ukrainian roots is building a 630-million-euro dam in the West African country of Equatorial Guinea, a nation of only 1.3 million people, despite having no experience in the sector.
The firm belongs to a low-profile Ukrainian businessman linked to the controversial lawmaker and former energy minister Yuriy Boyko, a joint investigation by the Kyiv Post and independent investigative reporter Graham Stack has found.
Despite the scale of the project, it is surrounded by secrecy as obscure as the African kleptocracy state that ordered it. Meanwhile, the company’s documents show it might have paid over 90 million euros for nebulous services to little-known companies, including an arms trader and a scrap metal business owned by Lithuania’s most famous athlete.
Big project
In 2011, an unknown UK-registered firm Duglas Alliance, owned and staffed by Ukrainians, won a contract from the government of Equatorial Guinea to build the Sendje hydropower plant on the River Wele, some 40 kilometers from the country’s biggest city, Bata.
With a capacity of 200 megawatts, Sendje was to be the largest electricity generating plant in the country.
The dam’s groundbreaking ceremony in February 2012 was attended by the country’s autocratic leader, Teodoro Obiang Nguema Mbasogo, as well as Ukrainian government representatives.
But over six years later, the Sendje plant has still not been built. The ambitious project soon ran into financial difficulties.
Originally slated for completion in 2015, the date was later moved to mid‑2017, and eventually construction was frozen in February 2016, only half-complete. Duglas Alliance claimed the client owed it money, and stopped work on the project. In its turn, the government of Equatorial Guinea blamed the oil price crisis for dwindling revenues.
But just over two years later, in March 2018, Equatorial Guinea and Duglas Alliance were reported to have reached agreement on settling the debt and continuing construction — but at a higher cost.
Initially, the cost of the Sendje project was put at 447 million euros. In March, Equatorial Guinea announced the total cost of the project would run to 630 million euros.
The government said it had paid Duglas Alliance 299.5 million euros for work already performed, and 330.5 million euros would be paid for it to complete the second half of the project, according to the government press release. However, these figures were later deleted from an amended statement.
The statement read that the Equatorial Guinean officials had signed an agreement with Duglas Alliance to settle the debts claimed by the UK firm. Three sources unrelated to one another confirmed that work on the project has resumed.
The construction site of the 200-megawatt Sendje hydropower plant on the River Wele in Equatorial Guinea. According to the time stamp, it was taken on March 12, 2015, and was shared later on Facebook by a former Ukrainian worker at the site. (Courtesy)
Newborn company
Duglas Alliance wasn’t an obvious choice as a contractor for the project.
The company appears to have no experience in hydroelectric plant construction — or any industrial construction at all. There’s no record it previously working on any other projects.
Nevertheless, on its website, Duglas Alliance boasts over 20 years of experience in construction of hydropower and industrial projects, even though the company was only incorporated in London in 2009. It lists no specific projects.
The company’s profile on the website of the British Dam Society, a non-profit organization whose membership is open to anyone for a fee of 375 British pounds a year, only mentions the work experience of its staff: “Duglas Alliance employees have participated in the construction of major industrial and power facilities all over the world — in Africa, Iran, India, Ukraine, Russia, and other countries.”
Yet the inexperienced company won a multimillion-dollar contract in only its second year of existence. Its Ukrainian connections might have helped.
Man of many talents
Yuriy Potiyko, CEO and owner of Duglas Alliance (Kyiv Oblast Council)
Duglas Alliance’s owner and CEO, Yuriy Potiyko, is a busy man. He is the co-founder of — and an economics lecturer at — the private Krok University in Kyiv.
Potiyko also has diverse small-scale business interests. He is the owner and CEO of Dorado Alliance, a Ukrainian holding company that owns a printing house and a security firm.
Potiyko is also in the weapons business. He is the sole listed director of Infora Limited, a Cyprus-registered international arms trading company, which supplied arms to Equatorial Guinea in 2009, according to International Peace Information Service, an NGO that researches the arms trade.
Potiyko, who has never given an interview and is largely unknown in Ukraine, declined multiple requests to discuss the project with reporters.
“You have to understand that it is not my project,” he said. “If it was my private project, I would be able to discuss it with you. It is a state project of a specific country, Equatorial Guinea. You should address your questions to them.”
The Kyiv Post did not receive any responses from Equatorial Guinean officials, despite numerous attempts to contact them.
Backing from Boyko
The Sendje contract didn’t make news in Ukraine, despite it likely being the largest Ukrainian business project overseas. But it received high-level support from Yuriy Boyko, a controversial Ukrainian politician who happened to be the energy minister at the time of the signing the Sendje contract in 2011.
He was also Potiyko’s political boss.
The two men were members of the Kyiv regional council from the Party of Regions, the political party of the runaway former Ukrainian President Viktor Yanukovych, ousted by the 100-day EuroMaidan Revolution on Feb. 22, 2014. Boyko was the head of the party’s chapter in Kyiv Oblast, while holding various top government positions from 2008 to 2014.
Former energy minister of Ukraine and member of parliament Yuriy Boyko speaks at a peace and security summit in Kyiv on Oct. 5, 2018. (UNIAN)
Furthermore, Potiyko co-managed Boyko’s election campaign in his 2014 bid for Ukraine’s presidency. Boyko withdrew his candidacy before the vote.
Now a member of the Ukrainian parliament, Boyko is one of the top five potential contenders for the Ukrainian presidency in the upcoming elections in March 2019 as the leader of the Opposition Bloc, according to various pollsters. He has not announced he’ll be running for president yet.
Roman Chelnokov, Equatorial Guinea’s honorary consul to Ukraine, told Stack that Ukraine’s Energy Ministry strongly backed Duglas Alliance’s bid for the dam contract.
“The construction of the hydroelectric power station proceeded with close support from the Ukrainian ministry of energy,” Chelnokov said. “When construction started, Equatorial Guinea’s minister of energy regularly visited Kyiv. They would not have signed the contract with Duglas if the Ukrainian energy ministry had not supported it.”
Reached by phone, Boyko’s press secretary Oleksandr Kolodiy denied Boyko had any connection to the Sendje project.
Boyko’s time in government was marked by some of the biggest corruption scandals in Ukraine’s history. While he was energy minister, Ukraine’s state energy company Naftogaz was defrauded of over a billion dollars, according to court verdicts brought against Naftogaz managers appointed by Boyko.
Much of this money went to UK shell firms — which like Duglas Alliance acted as “turn-key contractors’ for major investments,” with money being siphoned off to fictitious sub-contractors, — such as the case of the infamous scam with the purchase of drilling rigs, dubbed the “Boyko Towers.”
But no charges have been brought against Boyko personally. His patron Yanukovych and his top allies fled Ukraine after the EuroMaidan Revolution in February 2014, but Boyko stayed and was re-elected to parliament as one of the leaders of Opposition Bloc, a successor to Yanukovych’s disbanded Party of Regions.
Oleksiy Shalaysky, co-founder of the Nashi Groshi anti-corruption watchdog, which spotted the “Boyko Towers” fraud in 2011, said that the construction of the Sendje plant by Duglas Alliance reminded him of another notorious scheme associated with Boyko: RosUkrEnergo, a 2004 gas trading consortium co-owned by Russian gas monopoly Gazprom and Ukrainian oligarch Dmytro Firtash’s Group DF.
“An agreement is made between two states, but a private firm implements the project and creams off the profits,” Shalaysky said.
Open sources give hints that Boyko and his energy ministry could have been involved in setting up the contract in Equatorial Guinea — despite Duglas Alliance being legally a British company, not Ukrainian.
In March 2011, shortly after Duglas Alliance was awarded the contract, Boyko met in Kyiv with Equatorial Guinea’s energy minister, who was responsible for the project, according to Ukraine’s foreign ministry. About a year later, Boyko’s deputy energy minister, Volodymyr Makukha, reportedly attended the groundbreaking ceremony for the Sendje project.
In September 2012, an Equatoguinean government press release reported Boyko as personally attending a Ukraine-Equatorial Guinea business forum in the country’s capital, Malabo, together with Economy Minister Celestino Obiang. Boyko’s presence at the business forum was confirmed by Volodymyr Shchelkunov, president of the Ukrainian Committee of the International Chamber of Commerce (UCICC), who also attended the meeting.
Potiyko was the UCICC representative for Equatorial Guinea. Today, Boyko’s press secretary denies Boyko attended the business forum.
Ukraine’s energy ministry now says it has “no records” pertaining to the Sendje project — suggesting that what was ostensibly “official” Ukrainian involvement was in fact Boyko’s private initiative.
President of Equatorial Guinea Teodoro Obiang Nguema Mbasogo (L) shakes hands with then-deputy energy minister of Ukraine Volodymyr Makukha, who led the Ukrainian delegation to the groundbreaking ceremony for the Sendje hydropower plant on Feb. 20, 2012. (Courtesy)
Meet the regime
By working in Equatorial Guinea, Duglas Alliance elected to do business in one of the world’s most notorious klepto-states, which ranks 171 among 180 nations on the Transparency International Corruption Perception Index.
The country’s president, Teodoro Obiang Nguema Mbasogo, is Africa’s longest-serving leader, having seized power in a 1979 coup. The Obiang family have been accused of pilfering the wealth of their oil-rich country leaving the nation of 1.2 million in poverty. His son, Teodorin, who is the country’s vice president, was convicted in absentia by a French court in October 2017 for using siphoned money to purchase luxurious goods and property in France. Obiang’s second son, Gabriel, runs the country’s Ministry of Mines, Industry, and Energy.
Regime critics have claimed that no business can operate in the country or get a contract without paying kickbacks to the Obiang administration or sharing a stake in the company. However, it appears Duglas Alliance didn’t share a stake with the government.
Affiliated sub-contractors
Despite winning a contract worth hundreds of millions of euros, Duglas Alliance filed unaudited accounts as a small company in London for the first four years after it got the Sendje contract. The company didn’t even have a website until 2015.
But in 2015 something changed. Duglas Alliance stopped claiming small company status, and this in turn required the company to file an independent audit and revise its accounts from previous years. In the amended accounts for 2012, for instance, the company showed it had 19.5 million euros in the bank instead of only 1,240 British pounds in the initial accounts.
The sudden revision might have been triggered by changes in Duglas Alliance’s banking arrangements. It used to bank at the Estonian branch of Danske Bank, but a massive money laundering scandal that year forced the bank “to terminate relationships with non-resident customers that were unable to document a legitimate purpose for maintaining an account in Estonia,” according to a statement from Danske Bank.
In 2015, Duglas Alliance set up an Estonian subsidiary, likely in an attempt to qualify as a resident so that it could resume banking at Danske Bank Estonia.
The independent audit of Duglas Alliance also documented a series of transactions involving Potiyko’s arms trading company, Infora Limited.
Between March 1, 2015 and Feb. 29, 2016 — the month the project was frozen — Duglas Alliance ostensibly purchased 43 million euros worth of unspecified “services” for the Sendje power plant project from its sister company.
Reached by phone, Potiyko dismissed questions about the payments as based on “information from non-verified sources,” although the data came from Duglas Alliance’s own audit files.
“This data is not correct,” Potiyko said. “And what reason do you have for being interested? It is a private company.”
Employees of Duglas Alliance offer conflicting versions of the role of arms trader Infora Limited in the African construction project.
Head of security Volodymyr Gumenyuk said Infora Limited had provided explosives and performed blasting work on the construction site. In contrast, Duglas Alliance’s former deputy technical head, Yevhen Belinskyi, who oversaw construction onsite, said that the arms trader was responsible only for onsite security.
Lithuanian connection
According to documents obtained by Delfin Mocache Massoko, an Equatoguinean journalist and regime critic, Duglas Alliance awarded large sub-contracts to other firms with which the company’s CEO Potiyko could have had personal connections, but which appear not to have played a significant role in the Sendje project.
In a letter sent to the Equatorial Guinea embassy in Berlin in March, three Lithuanian-based companies claimed that they supplied goods and services worth “a significant sum” to Duglas Alliance and the Sendje hydropower project.
According to Massoko, the total sum claimed by the Lithuanian firms was 50 million euros.
It is not clear what services the Lithuanian-based firms — two scrap metal traders, Cosma GmbH and Martas IP, and the owner of a business center in Vilnius, Elektronas — provided to the hydropower project in West Africa. The former deputy technical head at Sendje, Belinskyi, said he had never heard of them.
The Lithuanian lawyer for the three firms, Giedrus Murauskas, refused to confirm the 50-million-euro figure, citing commercial secrecy. He wrote in an email that part of the outstanding sum has now been paid as part of the agreement signed in March, and that the three firms had provided “financial and logistics services” to Duglas Alliance, as well as supplying “equipment and materials” for the construction project.
Duglas Alliance published a list of its partners for the Sendje project, including France’s Alstom (now General Electric), which was supposed to supply turbines, and Vietnamese firms that performed technically demanding construction work. But Infora Limited and the three Lithuania-based firms were not on this list, even though they had claimed up to 90 million euros for undisclosed services.
The three Lithuania-based firms are all run by Lithuania’s most famous athlete, Eimantas Skrabulis, the president of the Lithuanian Athletics Federation, or by his family members.
Interestingly, a co-director of Duglas Alliance’s Estonian branch — and also a chief cook at the Sendje construction site — was another Lithuanian, Rimas Kedikas, who used to work as a bartender at a luxury hotel owned by Skrabulis. He is also a long-standing friend of the Potiyko family, judging by photos on his Facebook page.
Belinskyi recollected that when Potiyko visited the construction site at Sendje, he would spend more time with the head cook Kedikas than with his construction managers.
Skrabulis told Stack that the Sendje hydropower project was “absolutely necessary” for Equatorial Guinea, but he would not comment on his “personal or business life.” Kedikas did not respond to questions via Facebook.
Olha Yevstihnieieva contributed to this report.
Graham Stack is an investigative journalist who worked with BNE IntelliNews and OCCRP and co-authored the book “Privat story: The rise and fall of Ukraine’s largest bank” released in 2018. He can be contacted at [email protected].
Bermet Talant is a staff writer at the Kyiv Post.
