A good investor for Ukraine
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And of course, our ideal investor doesn’t ask any questions other than “how much money do you need?”
Unfortunately, such ideal investors live only in our post-Soviet imagination. And those foreign investors who are present on our territory ask questions, and often uncomfortable ones. They can turn up their noses when they are presented with a seven-figure check for connecting a new plant to the electricity grid, they can express their displeasure when a mask show is held at their plant. After all, they can demand dividends from the majority owners of the business. And of course, they always expect that the loans they provide will be repaid on time and with interest.
Because an investor is not a benefactor at all. He counts money. And he gets nervous when his expectations, based on previous agreements, either with the state or with private business, do not come true.
We often do not understand that attracting investment is not an achievement in itself. Because having attracted investments in capital or loan funds, we take responsibility for the fact that all agreements on the basis of which we received money will be observed. And in an ideal world, we undertake to return to the investor more than he invested.
But we don’t treat obligations like that. We often live according to the principle that we take other people’s – and we always have to give our own. By defaulting at the first opportunity, we begin to shun and demonize those investors. We begin to tell them that they want too much. They want to deprive our government of its independence, demanding participation in the creation of anti-corruption bodies, or insisting on raising retail gas prices. Either they get into their own business, controlling that the borrower does not inflate his expenses and appetites for new risky investments, but instead maintains the ability to repay the debt.
Next, we move on to individuals – we begin to tell that the investor with whom we did not settle is somehow suspicious. Or maybe he is not an investor at all. Because a real investor invests. And this one only demands something (dividends, debts, reforms), like some kind of racketeer. Or maybe he didn’t invest anything. And if he did invest, it was a long time ago – under the previous government, which of course was wrong (he was naive). Or maybe he didn’t invest, but he speculated (because he wants to get back more than he invested). And in general, we still need to figure out where he got the money for investments.
Let’s take at least the case of failure of the state-owned Privatbank to fulfill its obligations to the holders of Eurobonds, which arose during its private life under Kolomoiskyi. The Ukrainian government, which nationalized the bank, simply decided that it could not pay the bank’s debt to all bondholders. Instead, you can simply declare them all “related parties” to the bank. Not because they are really all connected there, but because formally the bank did not owe the money directly to the bondholders, but through a British company related to the bank, which issued the debt securities.
Of course, the creditors “should have known” that the bank was unreliable. Because with what joy did they trust the auditor’s report of the bank, which for some reason told them for years that everything was fine there? And why should they have believed the National Bank, which during the year before declaring the bank insolvent did not get tired of assuring everyone that accusations about the bank’s unreliability were untrue?
We don’t want to hear that the bank’s bondholders have the same right to have their interests respected as the bank’s other foreign creditors (who also “knew it all”) like Cargill. We are outraged when we learn that even six years after their rights were violated, the bondholders are still trying to defend these rights through the courts.
At Privatbank, we are publicly convinced that the dispute with the bondholders was put to an end by arbitration in London. It seems as if everything has been sorted out a long time ago, and there is nothing to argue about. But the same court established that those investors who were not recognized as related parties to the bank had the right to demand payment of the debt from the bank. However, they were later denied this right only because the Bank of England recognized the bond write-off procedure at the request of the National Bank of Ukraine. Here, the English bankers were not embarrassed by the fact that it was not the National Bank, but the Guarantee Fund, that was engaged in writing off Privatbank’s debts. In addition, the Bank of England was obviously guided in its decision only by the position of the NBU, without asking about the position of the affected party. And this leaves many questions regarding the objectivity of such a decision. Obviously, in agreeing to take into account the position of the Bank of England in international arbitration, the bondholders acted imprudently, but this does not mean that they do not have the right to continue to defend their interests in other jurisdictions.
In communication with the outside world, we never get tired of repeating that our courts have changed, but when the creditors of Privatbank try to defend their interests in these “reformed” courts, we suspect “treason”.
Our state, in the person of the country’s president and the management of Naftogaz, meets with the top of JP Morgan to discuss investments in the country’s reconstruction and development, calling this institution the largest investment bank in the world. But at the same time, our state, in the person of Privatbank, is doing everything to deny JP Morgan Securities the right to return funds invested in the bank’s bonds, obviously, having an investor either for a speculator, or for a posipak Kolomoisky, or for a Russian agent .
Of course, today we hope to attract some “better investors, not like before”. And we have a chance for that due to the huge attention of the whole world to the problems of Ukraine. But we also need to change. Realize that they do not owe us anything. On the contrary, if we want to establish long-term relations with potential investors, we must learn to make commitments to them. And we definitely need to change our attitude towards them. They are our potential partners. And yes, they want to make money here. Earn on us. But also earn for us.
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