​Poroshenko’s decision not to sell his Ukrainian confectionary corporation comes back to bite him

Poroshenko has spent much of the last dear ducking that promise by claiming it’s difficult to sell Roshen, but the company managed to multiply its profits nine times in 2014, reaping in $34.8 million, even as Ukraine’s economy crumbles. Poroshenko himself was estimated by Forbes to be worth $1.3 billion in 2014.

However, those financial gains could come at a political price.

Now British architect Philip Hudson and his firm D’Estate, also known as Jones East 8, are suing Roshen to the tune of $140,000 plus costs. The company’s hitherto untarnished reputation is about to come under the microscope, dragging the man that built it along for the ride.

D’Estate accuse Roshen of refusing to pay for 40 percent of their designs, later used by the chocolate manufacturer to build a milk-processing plant in the city of Vinnytsya. And in doing so, Hudson says that the Roshen president and nine percent owner Vyacheslav Moskalevskiy told him the company believes in “mafia management.”

“We did a good job for them, and they just decided not to pay us, because they feel they’re bigger and stronger than us,” said an exasperated Hudson. “It was a case of might and not right.”

The architects are now demanding not only the outstanding payment for their drawings plus interest, but also a payment for violating their authorship rights by building their design and changing it.

Poroshenko’s press spokespeople would not comment, deflecting all questions about the president’s promises and his business to Roshen.

Roshen claims that the architects’ working drawings were delayed and flawed, rendering them unusable. They argue that their 60 percent ownership gives them authorship rights. In an emailed statement to the Kyiv Post, Roshen said:

“The next stages of works were fulfilled by the contractor in the accordance with neither the contract provisions (quality and terms) nor the standards, norms and rules of the Ukrainian legislation. The delays in the works were substantial and dramatically influenced the construction stage, and therefore the deadline of the general project implementation (launch of the plant), what had a negative impact on Roshen business operation. Due to this, the company had to seek for a new contractor for detailed design project development in a limited time frame.”

However, signed contract documents provided by D’Estate to the Kyiv Post show that many of the delays in fact originated from Roshen’s side. Hudson says that when he did receive comments from Roshen, they were duly addressed.

“It’s all a bit of a tragedy,” Hudson told the Kyiv Post. “At the risk of appearing arrogant, we produced a really good design and first rate working drawings which were very well received until the last moment and it seems we’ve been stuffed. We really don’t know why we have been treated as we have by one of Ukraine’s most eminent companies.

“Only after all corrections and receipt of copies of the drawings did Roshen then terminate the contract. In other words they waited until they had absolutely everything before repudiating two of four payments under the contract. This is not an action of a party dissatisfied with the quality of the design and drawings. It is the action of a party seeking to extract the maximum it could out of a designer and then not pay.”

Poroshenko continues to own Roshen and a number of other companies in violation of Article Ukraine’s constitution, which states: “The President of Ukraine shall not have another representative mandate, hold office in government agencies or associations of citizens, as well as perform other paid or entrepreneurial activity, or a member of management or supervisory board of a profit-making entity.”

Forbes estimates the president’s wealth to be about $1.3 billion. He is the 100 percent shareholder of Prime Assets Capital, a diversified corporate investment fund that helps to manage all his assets. Poroshenko’s father, Oleksiy, heads the fund.

Besides the confectionary business, Poroshenko owns a number of media outlets – representing a clear conflict of interest for their coverage. They include Channel 5, which he refuses to sell because of sentimental reasons, TRT TV, a station based in the western Ukrainian city of Truskavets and “Tvoye Radio” (Your Radio) in Drohobych in Lviv Oblast. He is also the owner of Odesa-based Pilot-Ukraine broadcasting company and NBM company, which includes Retro-FM radio station.

A greater conflict of interest still is Poroshenko’s share in Bogdan Corporation, a company that provides facilities for the manufacture of buses and trolleybuses, passenger cars, trucks and commercial vehicles – many of which are commissioned for use by state institutions.

In 2013 he claimed that he sold his share in the company. However, a recent investigation by the Insider news outlet found that Poroshenko is still is a stakeholder in the company. According to Ukraine’s stock market infrastructure development agency, Bogdan Corporation’s revenue is estimated at a whopping $1.05 billion.

Kyiv Post news editor Maxim Tucker can be reached at tucker@kyivpost.com or via Twitter @MaxRTucker

Kyiv post staff writer Olena Goncharova can be reached at goncharova@kyivpost.com