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UKRAINE GOVERNMENT MAKES PROGRESS ON RESOLVING LONG-STANDING CLAIMOF U.S. GOVERNMENT'S OVERSEAS PRIVATE INVESTMENT CORP (OPIC),FINAL RESOLUTION NOTCOMPLETED STRENGTHENING THE UKRAINIAN BANKING SECTOR: THE PRINCIPLES FOR GOVERNMENT INVOLVEMENT SALANS KYIV EMPLOYMENT NEWSLETTER, MAY 2008 ISSUE TWO U.S.-UKRAINE RELATIONS, RUSSIA, CHALLENGES FACING UKRAINE: INTERVIEW WITH U.S. DEPUTY SECRETARY OF STATE JAMES STEINBERG USUBC UKRAINE BUSINESS/LEGAL NEWS #2 UKRAINE: NEW DEVELOPMENT IN PRACTICE OF ANTIMONOPOLY COMMITTEE WITH RESPECT TO NON-COMPETE ARRANGEMENTS NEW RULES ON LIMITS ON TERMS OF STAY OF FOREIGNERS IN UKRAINE UKRAINE: NEW REQUIREMENT FOR ISSUANCE OF WORK PERMITS FRAUD RISK ON INCREASE ACROSS EUROPE AS RECESSION BITES NEW LEGAL REGULATION ON CONSTRUCTION IN UKRAINE UKRAINE'S PROTECTION OF MINORITY SHAREHOLDERS' RIGHTS FALLS WELL SHORT OF STANDARDS ELSEWHERE IN EUROPE SALANS' BANKING AND FINANCE LEGAL NEWSLETTER THE KEY TO KIEV UKRAINE: CHANGES IN LEASES OF RETAIL PREMISES AND LEASES OF STATE PROPERTY NEW AMENDMENTS TO UKRAINE'S LAND CODE UKRAINE BUSINESS NEWS - SIX ARTICLES SALANS KYIV TAX NEWSLETTER - APRIL 2009 AGRICULTURE IN UKRAINE UKRAINE MACROECONOMIC SITUATION - APR 2009 UKRAINE'S FINANCIAL CRISIS: PAST, PRESENT AND FUTURE UKRAINE STIMULATES USAGE OF ALTERNATIVE ENERGY SOURCES WITH REVISED GREEN TARIFF RULES NEW ORDER ON PROCESSING WORK PERMITS IN UKRAINE UKRAINE HARDENS RULES FOR EMPLOYMENT OF NON-CITIZENS UKRAINE NEEDS TO SPEED UP STATE REFORMS TO WITHSTAND GLOBAL ECONOMIC SLUMP UKRAINE: VASIL KISIL SENIOR ASSOCIATE TOUCHES UPON THE ISSUE OF ASSETS EXCHANGE AMIDST LIQUIDITY CRISIS SALANS' BANKING AND FINANCE LEGAL NEWSLETTER UKRAINE DEALING WITH THE FINANCIAL CRISIS UKRAINE DEALING WITH THE FINANCIAL CRISIS UKRAINE: FARMING ANTI-CRISIS LAW "ENGAGING UKRAINE IN 2009" UKRAINE: NEW APPROACHES TO DIVESTING ARE REQUIRED TO SECURE VALUE DURING A TIME OF UNPRECEDENTED ECONOMIC VOLIATILITY UKRAINE BUSINESS NEWS: FIVE ARTICLES UKRAINE'S OUTSTANDINGOPIC DEBT (TEN YEARS) CONTINUES TO BE A MAJOR BARRIER TO PRIVATE U.S.BUSINESS INVESTMENT UKRAINE - DEALING WITH THE FINANCIAL CRISIS EASTERN EUROPE NEEDS OUR HELP THE CASE FOR UKRAINE UKRAINE'S INSTABILITY THREATENS CRISIS, WEAKENS ITS CANDIDACY FOR NATO, EU, WARNS COUNCIL ON FOREIGN RELATIONS (CFR) REPORT BY STEVEN PIFER GAZPROM'S EUROPEAN WEB TAX ESSENTIALS UKRAINE..SHORT TAX GUIDE WHERE EAST MEETS WEST: EUROPEAN GAS AND UKRAINIAN REALITY VAST MAJORITY OF BANKS LACK ENTERPRISE-WIDE VIEW OF RISK NATIONAL BANK OF UKRAINE HAS ADOPTED A NEW "ANTI-CRISIS" REGULATION BANK CONSOLIDATION: WHAT EVERY UKRAINIAN BANKER SHOULD NOW SEMINAR HELD BY INTERNATIONAL LAW FIRM CHADBOURNE & PARK LLP SOFTSERVE APPOINTS ROBERT GELINAS VICE PRESIDENT OF SALES ERNST & YOUNG PRESENTS UKRAINE COMPENSATION AND BENEFITS SURVEY 2008/2009 UKRAINE AND U.S. GOVERNMENT SIGN MEMORANDUM OF UNDERSTANDING FOR RETURN OF U.S. OVERSEAS PRIVATE INVESTMENT CORPORATION TO UKRAINE U.S. & UKRAINE SIGN OPIC FIRST STEP UKRAINE'S ECONOMIC & FINANCIAL SITUATION RUSSIA AND EUROPEAN ENERGY SECURITY - DIVIDE AND DOMINATE UKRAINE'S WTO ERA BEGINS UKRAINE'S PRESIDENT SIGNS LAW ON JOINT-STOCK COMPANIES SALANS LEGAL ALERT - BANKING AND FINANCIAL SECTOR MOVING UKRAINE FORWARD FIVE NEWS ARTICLES UKRAINE WOBBLES AS THE FINANCIAL GROUND BENEATH IT TREMBLES UKRAINIAN ENERGY FORUM IN KYIV ADDRESSES CRITICAL ISSUES NBU LIFTS INTEREST CEILING FOR LONGER-THAN-ONE-YEAR FOREIGN LOANS UKRAINE'S COALITION COUNTDOWN & FOREIGN POLICY BACKDROP SUSTAINABLE ECONOMIC GROWTH IN UKRAINE: CHALLENGES AND OPPORTUNITIES DURING POST-SOVIET TRANSITION SALANS LEGAL MARKET NEWS UKRAINE: MAJOR FEATURES OF THE NEW LAW ON JOINT STOCK COMPANIES U.S.-Ukraine Business Council (USUBC) UKRAINE ADOPTS LAW ON JOINT STOCK COMPANIES, MAJOR STEP FORWARD Tuesday, September 23, 2008 EXPANDING TRADE AND TRAVEL BETWEEN THE U.S. AND UKRAINE U.S.-Ukraine Business Council (USUBC) AEROSVIT AIRLINES SUFFERS RAIDER ATTACK By Jim Davis, Business Ukraine magazine AEROSVIT REQUESTS HELP TO PROTECT AGAINST ILLEGAL SEIZURE AND RAIDER ATTACKS U.S.-Ukraine Business Council (USUBC) SALANS UKRAINIAN BANKING AND FINANCIAL NEWS FOR JULY-AUGUST 2008 THE GEORGIAN CONFLICT'S IMPACT ON UKRAINIAN POLITICS, ENERGY & INVESTMENT WHAT NEXT FOR TRADE AFTER WTO FAILURE? By Shanker Singham, Partner, Squire, Sanders & Dempsey USUBC Business Journal #6 BUYING BOEING EXPLORING UKRAINE'S VANCO DISPUTE ANALYSIS & COMMENTARY: By Tammy Lynch U.S.-Ukraine Business Council (USUBC) SALANS' KYIV BANKING & FINANCE NEWSLETTER Salans, Kyiv, Ukraine, June 2008 TOURISM UKRAINE: BROADENING APPEAL By Oxford Business Group EXPRESS MAIL DISASTER IN UKRAINE 1. WELCOME TO THE UKRAINIAN CUSTOMS SERVICE UKRAINE'S INFLATIONARY CRISIS: TWO SHORT-TERM SCENARIOS Ukrainian News Agency, Kyiv, Ukraine, June 26, 2008 FOUR NEWS ARTICLES RE: BUNGE
RE: Main Control and Revision Office of Ukraine (GolovKRU) states that Ernst & Young, in its valuation of Pridneprovska Railways, undervalued two items; Ernst & Young LLC’s license to provide valuation services should be reviewed by the State Property Fund of Ukraine. UKRAINE: ERNST & YOUNG CONSIDERS ITS APPRAISAL OF UKRZALIZNYTSIA PROPERTY OBJECTIVE Ukrainian News Agency, Kyiv, Ukraine, Thursday, June 19, 2008 UKRAINE: CONTROL & AUDITING DEPARTMENT ASKS SPF TO REVOKE APPRAISING LICENSE OF ERNST & YOUNG Dmytro Kuzmin, Ukrainian News Agency, Wednesday, June 18, 2008 CANCELLATION OF VANCO PRIKERCHENSKA PRODUCTION SHARING AGREEMENT Vanco's Corporate Relations Company VANCO TO DEFEND ITS POSITION ON PSA WITH UKRAINIAN GOVERNMENT IN COURT, SAYS COMPANY REPRESENTATIVE Interfax Ukraine Business Express Ukrainian News Agency, Kyiv, Ukraine, Thursday, May 22, 2008 VANCO PRESS CONFERENCE Vanco News Conference Press Release Kyiv, Ukraine, 15 May 2008 UKRAINIAN AGRICULTURE Agro Sector Report, Equity Research BUSINESS DRIVES UKRAINE'S EURO-ATLANTIC INTEGRATION "CONFRONT INFLATION NOW TO AVOID REGRETS LATER" Article re-published in English by the U.S.-Ukraine Business Council "TAMING INFLATION IN UKRAINE" USUBC Legal Affairs Working Group Policy Paper INTERNATIONAL MONETARY FUND (IMF) ECONOMIC U.S. SENATOR DICK LUGAR CALLS FOR TRANS-ATLANTIC UKRAINE: "FLOATING THE HRYVNIA ARMS THE NATIONAL BANK TO FIGHT INFLATION NOW" Financial Returns Audit Obligatory for All Business Companies Starting from 2007; Asters advised EBRD on USD 139.3 million financing to Expert Capital S.A. to finance commercial real estate construction projects in Ukraine COUNTERFEIT CHEMICALS: Ukraine's Euro-integration hopes threatened by growing fake pesticides trade UKRAINE: TRADE SUMMARY UKRAINE'S ROLE IN INCREASING WORLD FOOD SECURITY UKRAINE'S EXPRESS DELIVERY SECTOR: IN DIRE NEED OF EXPRESS FIXING (quotes USUBC member UPS) HIGH COMMERCIAL COURT TRAMPLES INTERNATIONAL AGREEMENTS VAT REFUNDING REMAINS A MAJOR ISSUE Statement by USUBC Agribusiness Working Group PRIME MINISTER'S COUNCIL OF INVESTORS (CI) NOW IS THE TIME TO DRAMATICALLY REFORM UKRAINE'S LEGAL SYSTEM OPIC PROGRAMS CLOSED FOR UKRAINE SUMMARY UPDATE ON LEGAL FRAMEWORK FOR BUSINESS OPERATIONS IN UKRAINE EBA REPORT BARRIERS TO INVESTMENT IN UKRAINE WTO ADVANTAGES FOR UKRAINE OVERVIEW OF THE LICENSING REGIME FOR THE USE OF SUBSOIL IN UKRAINE IN 2007 PROVIDING A NUCLEAR FUEL ALTERNATIVE TO UKRAINE WESTINGHOUSE ELECTRIC COMPANY IMF TELLS UKRAINE TO FIGHT INFLATION, DEFICIT SIGMABLEYZER ECONOMIST: UKRAINE HAS HIGH CAPABILITY OF ECONOMIC GROWTH, BUT ITS REALIZATION DEMANDS "DESOVIETIZATION" OF ADMINISTRATIVE SYSTEM NATIONAL BANK CRITICISED AS INFLATION FEARS WORSEN CAPITAL FLIGHT: UKRAINE'S GAS PRICE CONTROLS PUSH U.S. FIRM OUT THE GROUP OF STATES AGAINST CORRUPTION STRASBOURG - The Group of States against Corruption (GRECO) has published today its Joint First and Second Round Evaluation Report on Ukraine, which joined GRECO in 2006. The report focuses on general anti-corruption policies, specialisation of law enforcement bodies in fighting corruption, independence of the judiciary, immunity from prosecution for corruption offences, the deprivation of benefits drawn from corrupt acts, measures to counter corruption in public administration and the prevention of legal persons - such as commercial companies - from being used as shields for corruption. The report was drawn up by a team of GRECO evaluators following a one week visit to Ukraine, during which the team held thorough discussions with officials and civil society representatives. Information collected during the on-site visit indicates that Ukraine is perceived as being considerably affected by corruption, the problem being systemic and wide scale, affecting the whole society, its public institutions, including the judiciary, at central and local levels. GRECO concludes that corruption in Ukraine constitutes a real threat to the principles of democracy and the rule of law. The fight against corruption can therefore not be treated in isolation from democratic reforms. GRECO stresses that the President's Concept Paper "On the way to Integrity" is a good basis for this reform process. GRECO addresses 25 recommendations to Ukraine. They aim at the establishment of a mechanism for the implementation of an overall anti- corruption policy, including an action plan against corruption. More particularly, the recommendations deal with problems relating to the independence of the judiciary and the procuracy, access to information held by public authorities, procurement procedures, reform of the public administration and of the civil service, codes of ethics, reporting of corruption, auditing of central and local bodies and liability of legal persons for corruption offences. GRECO will monitor the implementation of the recommendations to Ukraine towards the end of 2008, through its specific compliance procedure.
"OECD ECONOMIC ASSESSMENT OF UKRAINE 2007"
For links to the executive summary, etc. see the OECD links at the end of this e-mail. Organisation for Economic Co-operation & Development (OECD) Paris, France, Tuesday, September 4, 2007
UKRAINE DECREE 31 SETS LOW PRICE FOR GAS, FORCES ITS SALE TO THE GOVERNMENT AND IS DESTRUCTIVE TO THE DEVELOPMENT OF ENERGY RESOURCES SAYS ROB BENSH, PRESIDENT OF CARDINAL RESOURCES INTERVIEW: With Rob Bensh, Chairman & WASHINGTON, D.C. - Rob Bensh, Chairman and Chief Executive Officer, Cardinal Resources, a member of the U.S.-Ukraine Business Council (USUBC) in Washington, contacted the USUBC about a major problem that has developed concerning the sale of gas by companies involved in Joint Activity Agreements (JAA) in Ukraine. A new Cabinet of Minister's Decree (Decree 31) forces such companies as Cardinal to sell gas only to the government of Ukraine and at prices far below the competitive market price. The decree, which is part of the Budget Law drafted by Finance Minister Azarov and approved by Prime Minister Yanukovich, is very destructive to the private development of energy resources and to private international investors in Ukraine. Cardinal has been operating in Ukraine for 10 years conducting E&P (Exploration and Production) for oil and gas in Ukraine for resale into Ukraine. Cardinal is a UK plc with a U.S. Corporation (Delaware Corp) 100% subsidiary (Carpatsky Petroleum) that owns 100% of the oil and gas rights in question. The management team is comprised entirely of American oil and gas executives. A majority of Cardinal's equity held in the U.S. while 75% of Cardinal financing is from U.S. investors. Cardinal conducted an IPO last year on the London Stock Exchange. Cardinal has been an active supporter of democratic development in Ukraine and for international engagement in reform issues associated with developing a strong, positive Foreign Direct Investment (FDI) environment. USUBC: Rob, thanks for contacting the USUBC about the problem of private gas sales in Ukraine. Tell us about the major issue that has developed concerning Cardinal's right to sell its gas in Ukraine to private buyers at competitive market prices. ROB BENSH: Cardinal historically sells its gas in Ukraine to Industrial End Users at market prices (currently about $4.80 mcf). The Government of Ukraine passed a new budget act in January 2007 which obligates any JAA (Joint Activity Agreement) to sell its gas to NAFTA GAZ at a fixed government rate of about $1.50 mcf, which, indeed, is below production costs of about $$1.70 mcf. Cardinal had been injecting its gas into storage to avoid selling it at uneconomic prices. It has recently been learned that UkrGas Production has been selling Cardinal gas to the Government of Ukraine without Cardinal knowledge or permission. Decree 31 of the budget act is specifically designed to benefit the Government of Ukraine in this year's current budget as written by Mr. This harms Cardinal and will also prevent other western companies who would like to operate in the sector from working with Ukrainian State oil and gas companies as they can not sell joint production. USUBC: Please tell us about the situation with gas prices in Ukraine today. ROB BENSH: The price for the gas for the population is established by the special National Energy Price Regulation Authority is fixed: 265.00 UAH (excluding VAT) = 52.48 USD per 1000 m3 = $1.52/mcf The market price is to a great extent regulated by the price for gas provided by Ukrgasenergo, the monopolist gas provider in the Ukrainian market. The current price for gas in Ukraine is: 708,00 UAH per 1000 m3 (excluding VAT) = 140,20 USD This price can be slightly more or less, when the gas is sold to the gas trader and not to the end buyer directly, but it can't be higher at this moment, though there's a good chance and a clear tendency for the future increase. USUBC: What actions has Cardinal taken to try and resolve this important issue? ROB BENSH: Cardinal has taken the following actions: 1. Letters requesting a resolution of the gas sales situation were sent to the Prime Minister Yanukovich (December 19th, 2006), Energy Minister Boiko (March 23, 2007), and the Head of NAK Naftogas Bakulin (May 20, 2007). Only once have we receiving a response, and that was from the Deputy Energy Minister, which gave us false hope that the situation with the gas sales could be resolved. This was the response to our letter sent to the Prime Minister. We've never received any responses to the other letters. 2. U.S. Ambassador William Taylor sent a letter to Energy Minister Boiko (March20, 2007), asking for resolution of this issue for Cardinal. The Minister never responded to that letter. 3. Cardinal has met with the Energy Minister Boiko twice in his office, discussing this issue. Both times the Minister promised to consider the problem and help to resolve it. There was never anything beyond the promises. USUBC: Based on your experience so far trying to resolve this critical issue what conclusions have you drawn about the matter: ROB BENSH: After several months of working on this problem we have drawn the following conclusions: 1. Much stronger action must taken by all those who are concerned about the very negative actions taken by the Ukraine government. Cardinal will not be able to change the current situation alone. 2. We realize that this is not exclusively Cardinal's problem, but the problem of every JAA or JV, formed with NAK Naftogas, Ukrnafta or NAK Nadra. Every declaration of any JAA or JV of their potential possibility to sell gas at market price, when they have production, is a bluff. All existing JAAs and JVs with production either sell the gas to NAK at below production costs or put it into storage. 3. We have regularly made the point in our letters to the Government, that the Laws, which created the current situation, directly contradict other Laws of Ukraine, including the Civil Code, The Law "On Foreign Investment", etc., which are still in effect. Indeed, in April, Europa Oil and Gas (Holdings) plc won their case in court of the right to sell gas at market prices but the government continues to ignore the court ruling. Cardinal assumes the verdict regarding the priority of the laws can be given by the Constitutional Court. But considering the political situation in the country, the fact that the mentioned court is not able to issue the decision on one Presidential Decree for more than two months, we can hardly count on this option. 4. Given the non-responsive nature of Minister Boiko to the Ambassador's first letter, Cardinal has asked the U.S. Government to communicate via a formal demarche to the Government of Ukraine that Decree 31 is inconsistent (a) global norms for encouraging foreign direct investment Ideally we would like to see the Yanukovich government voluntarily withdraw this law which is contrary to the long term interests of Ukraine and its people. Given their lack of response so far to our requests and to those of the U.S. Ambassador, we doubt they are willing to do the right thing. At this point, for the sake of future foreign direct investment in Ukraine and for Ukraine's efforts in the direction of energy independence, we can only hope that the September 30 elections bring about a change in the direction of welcoming investment from the West. In the interim, we will continue to ask the U.S. government for its intervention in the form of a demarche to Prime Minister Yanukovich. |
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