EXPERT OPINION

What's Left of Ukrainian Fleet Sold at Dumping Prices

Under the guise of auctions
  Photo by Olexandr KLYMENKO
The results of the first auction held in Illichivsk on January 21-22 left all those present in the City Courtroom speechless with indignation.

A four-deck passenger liner, now named the Odessa Sun (previously the Uzbekistan) sold for $80,000! And the Taras Shevchenko changed hands for $2.2 million! Someone in the audience, contrary to standing orders, said out loud, "Well, we had it coming, selling a liner at the cost of a four-room apartment, and no one's to blame, of course." The man sitting next pointed out, "You're missing the point. They pocketed eight million greenbacks, something like Hr 27 million if my arithmetic is right. You are witness to yet another fortune worth millions being made! You live and learn, you know."

In fact, those representing national business structures at the tenders were least of all interested in what people living Illichivsk, a major Ukrainian seaport, would think of them, let alone journalists from Odesa. On January 22, several officials, acting under a permit issued by Vasyl Sheptiy, Chief Judge of the City Court, boarded the Taras Shevchenko but could not produce a duly executed shipowner's power of attorney when queried by the captain, Hennady Maricheredi, nor did they have a document authorizing them to take stock, apparently the purpose of their visit, or one attesting to the auction results. Hence the captain showed them the gangplank, suggesting that they visit some other time, with all the documents required by the law.

On January 21 similar events took shape between Ukrpas Inc. and the Odessa Sun captain, on the one hand, and the successful bidder, on the other. In addition, Odesa's Regional Prosecutor's Office demanded that the Taras Shevchenko remain at anchor in the city port. Above all, the judiciary insists on having the December 17, 1998, claim challenging the ship's collateral, effected March 11 between Graaf Credit Bank Ltd. and Ukrpasflot (Ukrainian Passenger Fleet), along with the attendant contract, revised by the Supreme Court of Ukraine.

Both these run counter to the interests of the Ukrainian state, the document reads, in that they provide conditions for the alienation of property worth $11 million in terms of estimated costs and $2,114,000 in terms of outstanding credit, all of which should be recognized as null and void as per Article 49 of the Criminal Code of Ukraine. The claimants further call on the Prosecutor's Office continue to verify compliance with the laws currently in effect by a number of offshore companies set up based on public property.

Illichivsk Judge Vasyl Sheptiy's ruling was also contested by Ukrpas Director General Serhiy Kosynkin, stating that on November 21, 1998, his company and Gable Navigation Ltd. (as the mortgagor) forwarded a document to the Prosecutor's Office, challenging the local private notary's (e.g., Ms. Lichman's) writ of execution, pertaining to the collateral agreement on the Taras Shevchenko, dated March 11, 1998, and an agreement supplementary thereto, dated July 31, 1998, whereby the said writ of execution ordered calling the loan on an unconditional basis.

The Oblast Prosecutor's Office, in turn, forwarded a referral to the Illichivsk City Court, having jurisdiction over the Taras Shevchenko, ordering suspension of proceedings in the mortgagor's bank and notary case "in conjunction with the mortgagor's contest of the notary's writ of execution." The court, however, chose to ignore the prosecutor's instructions and on January 22, 1998, "a law enforcement officer took possession of the property at issue [i.e., the Taras Shevchenko], by referring the issue to auction sale."

In other words (at least in the opinion of Ukrpas Inc.), Illichivsk Judge Sheptiy acted in violation of Articles 105 and 367 (Clauses 4 and 7) of the Civil Procedural Code of Ukraine, whereby every judiciary authority must suspend proceedings in the event of the debtor legally contesting the notary's writ of execution - and the same is true of all cases when officials acting within their respective competence pass pertinent resolutions (e.g., Articles 289 and 283, CPC). Just as the Regional Court was struggling on its way through this legal rigmarole, The Day asked Judge Sheptiy to explain what exactly the court had in mind when it decided to ignore the Oblast Prosecutor's ruling suspending the private notary's writ of execution. His reply was: "If the Supreme Arbitration Court has the Prosecutor's claim, let them cancel our decision. As for postponing the auction, you better ask someone else for comment..."

Serhiy Kosynkin, Director general of Ukrpas Inc. told The Day: "It is not so much losing the 11-deck Taras Shevchenko is estimated to cost $11 million, and the same is true of the Odessa Sun, even though less expensive; if we follow this scenario we stand to lose the Shota Rustaveli, the company's remaining prestigious liner. The surveyors estimated her at $12 million and there are claims from Planmarin where we still have to work to put our business relationships back in shape."

In a word, Odesa-registered ships are besieged by domestic and foreign partners and there is reason to expect that, following he registration of the joint steamship venture, Blasplan, with its two passenger liners, another one will emerge shortly, using two other ships of the former and ill-famed Black Sea Steamship Company (BLASCO). Now that Russian tourists are eager to visit the holy sites in Jerusalem, passenger demand is noticeably on an upward curve, hence the efforts to get hold of Ukrainian vessels using auctions and other preferential ways of legal alienation. After all where could one buy a passenger liner like the Shota Rustaveli if not in Ukraine, paying the laughable sum of $2.2 million? Back in 1997-98, her new owner had to pay $1.2 million for repairs alone. Italy's Rovel Trading and Yugoslavian and Ukrainian shipyard specialists replaced 8,500 meters of pipes and 20,000 meters of cable onboard, securing the standard amenities for over 800 passengers. The ship is complete with a sizable concert hall, six bars, a restaurant, gym, three swimming pools, the works. Now think that all this could be acquired in return for $2.2 million! This is a unique opportunity created by today's Ukrainian political leadership that no one could pass up.

By Mykhailo AKSANIUK, The Day