• Українська
  • Русский
  • English
Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Misadventures of an American in Ukraine

9 February, 1999 - 00:00

As a true American, Kentucky-born Stephen Wingate is a pioneer deep in
his heart. But while his ancestors were taming the Wild West, Steven went
to conquer the Wild East, as Ukraine turned out to be for him.

Mr. Wingate came to Ukraine three years ago as an employee of a US company.
The company folded up after endless changes in Ukrainian law, and Stephen
faced a dilemma: either go back to the States or still try to work here.
He opted for the latter and accepted a proposal to head the Carry Europe
company which decided to implement a number of investment projects in Ukraine.
The first of these, sort of a trial balloon, was to be the opening of an
American restaurant.

"We decided not to take big cities that already had a well-developed
infrastructure of foreign companies and international-level restaurants,"
says Mr. Wingate, "We started to study the provinces and when we rejected,
for various reasons, several towns, only Mykolayiv was left."

In November 1997 the company acquired for 21,000 hryvnias the building
of a former trolley power station via a local real-estate firm. Located
in the very center of the city, at the intersection of Lenin Avenue and
Radianska Street, the building had been empty and becoming dilapidated
since the streetcar tracks had been removed from the avenue. In 1994 the
State Property Fund of Ukraine regional branch authorized transfer of the
power station, then belonging to the Mykolayivelektrotrans enterprise,
to private ownership. Since then the building has seen several owners come
and go. This continued until Carry Europe chose it as the best place to
be turned into a restaurant.

Having finalized the relevant documents and received permission from
the city architect for reconstruction as well as a go-ahead from the city
public health authorities, Mr. Wingate set about renovating the building.
Workers changed the interior layout, refinished the walls, and redecorated
the facade.

However, three months after starting renovation, in April 1998, problems
began. At first, they came from the regional public health office which,
in spite of its earlier positive findings, now claimed the building contained
a dangerous percentage of mercury vapors. There was no choice: the American
carried out all the necessary work, including demercurization and repeated
renovation in six months time. After the public health office, other authorities
began to raise their claims. "We decided to play your games," says Mr.
Wingate. The rules of the games turned out to be not so complicated: "problems"
could be solved by means of presents, souvenirs, household conveniences,
and office supplies. Getting to know Ukraine, the American discovered the
notion of business, Ukrainian style as something special, which is not
taught at economics colleges, not written about in The Economist
and other "bourgeois" business publications. Business, Ukrainian style
proved to be something amorphous, out of the reach of the elementary laws
of logic and economics.

Mr. Wingate still cannot understand why special permission is required
to occupy the land on which stands the building you want to buy. This is
perhaps why the land issue became the main obstacle to opening a restaurant.
There was a conflict with the Mykolayiv city council land commission which
is in charge of land allotment.

When last September the city council voted to allow opening a restaurant
in the former power station by a majority vote (55 vs. 12), the land commission
claimed the decision of the local State Property Fund branch to alienate
the building had been unlawful. At the same time, the commission demanded
the premises be handed over to communal ownership.

"Then I was approached by a man who suggested I meet, with his help,
one of the commission heads, Oleh Krysenko, to strike a deal," says Mr.
Wingate, "I refused: we had acquired a building standing firmly on the
ground and not hanging in thin air; why on earth do we need a permission?
Rumor said there were other contenders for this building."

Meanwhile, the American was offered an alternative zero option: he drops
all claims to the building and is refunded 21,000 hryvnias. He cannot accept
this, either: "We invested $263,000 in the reconstruction, repairs, and
equipment - we can prove it with documents."

So far, the opening of the practically finished American restaurant
in Mykolayiv has been put off indefinitely. It is proposed to hear the
question yet again in the city council session. Mr. Wingate is going to
court to defend his rights. He also addressed a letter to the International
Monetary Fund and a number of other organizations asking them to suspend
financing Ukrainian programs due to an unfavorable investment climate.
Carry Europe is waiting for the results of its first investment project
in Ukraine and, in case of failure, is ready to abandon future projects.
It is not ruled out that other foreign investment companies will follow
suit.

INCIDENTALLY

On February 18 US Secretary of State Madeline Albright will report to
Congress on the conditions under which US companies work in Ukraine. The
Pustovoitenko government has been warned that if the problems of nine US
enterprises are not solved, Ukraine will lose half the promised aid, that
is, $72 million.

Meanwhile, official Kyiv tries to do everything possible to demonstrate
how much it cares for foreign investors. Speaking on Tuesday during the
Coca Cola plant opening near Brovary, President Leonid Kuchma said Ukraine
would support strategic investors. He noted that Ukraine had received about
$960 million in US investment since independence and promised to assist
the trailblazers. However, Danylo Kliakhyn's information shows that the
words and deeds of our leadership rarely coincide. On the other hand, there
are over 250 US companies now functioning in Ukraine, according to Andriy
Bihun, US Embassy commercial attachО in Kyiv. And if only 9 of them are
facing difficulties, while the overwhelming majority of national enterprises
are in crisis, then this could be regarded as relatively good.

By Vitaly KNIAZHANSKY, The Day

 

Investor asks IMF to cover his restaurant
Issue: 
Rubric: