Motor-Sich
69068, Ukraine, Zaporozhye, 15 8March Str. Partners
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On 11 March 2021, the National Security and Defense Council adopted a decision according to which the Motor Sich enterprise will be legally returned to the ownership of the Ukrainian state. People who invested in the company will receive compensation. Earlier, Ukraine imposed restrictive measures for three years on Chinese citizen Wang Jing and three Chinese-based companies. The company also targeted a company from the British Virgin Islands. On January 8, President Volodymyr Zelensky put into effect the decision of the National Security and Defense Council on the application of personal special economic and other restrictive measures.
Secretary of the National Security and Defense Council Oleksiy Danilov said: "The word nationalization was in no way used either at the meeting of the National Security and Defense Council, or in the decision taken by the National Security and Defense Council, or at the briefing at which I spoke. There were completely different words. Today we are in an information war with the Russian Federation, which has a direct relationship with the Chinese before the attempt to seize the company " Motor Sich ", so today we have such negative information about nationalization. It was said that the company "Motor Sich" will soon be returned to the ownership of the Ukrainian people in a lawful manner, according to current Ukrainian legislation. We cannot afford, being in a state of war, to hand over the enterprise on which our defense capability depends".
An extraordinary general meeting of Motor Sich JSC, initiated by Chinese investors and Ukrainian businessman Oleksandr Yaroslavsky, was scheduled for January 31 in Zaporizhia, but was disrupted by the Security Service. Investors have so far filed an international arbitration claim to recover $ 3.5 billion from Ukraine, as prosecutors have placed additional arrests on Motor Sich shares after Chinese businessmen and Alexander Yaroslavsky's DCH announced a joint bid to buy shares in the AMCU, and complained of pressure.
Since 2014, Motor Sich lost much of its traditional sales market in Russia. But the factory has not turned into a shopping center or a fashionable residential loft. It remains a high-tech, stable-working enterprise that has provided jobs for thousands of people. I
China is Ukraine’s biggest arms sales market with more than $100 million in annual sales. China managed to buy two-thirds of the shares of Motor Sich. The Chinese billionaire Wang Jing, who owns Beijing Skyrizon Aviation, an airline component manufacturer, did this through front companies. As a result, if it were not for the intervention of the Security Service of Ukraine, the Motor Sich capacities literally flowed into the Celestial Empire, and with them the critical production technologies, albeit not of the most modern, but very effective and much-needed Chinese aircraft and helicopter engines.
China played into the hands of the fact that after 2014 the military-technical cooperation between Moscow and Kiev came to naught. The head of the Ministry of Industry and Trade Denis Manturov in April of that year reported that the total portfolio of Russian civil and military orders placed at Ukrainian enterprises amounted to about $ 15 billion, or 8.2% of Ukraine’s GDP. Russian-Ukrainian defense commodity flow totaled 7-8 thousand items, and 1330 enterprises were involved in cooperation. A lot was also going in the opposite direction. Russian military supplies for Ukrainian defense enterprises amounted to 60%.
Russia has almost completely replaced Motor Sich products supplied to Russia. UEC-Klimov, the former intellectual forge for the Ukrainian plant, has restored engine production . According to the CEO of Russian Helicopters Holding Andrey Boginsky, in 2019 Russia will produce more than 200 helicopters. Given that each of them has two engines, Klimov will produce more than 400 engines. It took five years, billions of rubles, to solve this problem.
“We lost Russia, as a result, production fell by 40%,” Vyacheslav Aleksandrovich Boguslaev, general director of Motor Sich JSC, admitted in an interview with one of the business publications. “Everything is limited here. We don’t supply engines directly. Permission schemes work "within the framework of international obligations. We have no right not to fulfill them. We also have to enter new markets in order to support production - to sell to China, India, they are buying."
US National Security Adviser John Bolton did not meet with executives of the Ukrainian aerospace company Motor Sich amid reports that the U.S. administration opposed the strategically important company’s planned acquisition by a Chinese holding. However, he did express the Trump administration’s concerns about the Chinese threat to Ukraine’s security in meetings with Ukrainian officials, Bolton said during a press briefing on 28 August 2019.
By November 2019 the "legendary" Erik Prince, the man who created Blackwater, the largest private military companies, was in talks to stop the expansion of the "red dragon", preventing the Chinese from getting top-secret aviation technology. Prince’s visit to Kiev came as a surprise to many. This is especially true of his goal - to buy Motor Sich. President Vladimir Zelensky honestly admitted that he learned about the visit of such an ambiguous character and his goals from media reports. "I read about it, and I read it at night," Zelensky told Radio Liberty during a visit to Kharkov. “I haven’t met anyone, I haven’t spoken to anyone, but this issue should be discussed with the President of Ukraine, because Motor Sich is a strategic enterprise.”
The Wall Street Journal reported that Prince “is in discussions to purchase a Ukrainian aerospace manufacturer that the U.S. is trying to prevent China from buying.” The 05 November 2019 article in the newspaper reported “The Trump administration has approached Mr. Prince and at least one other potential buyer from the private sector about Motor Sich. In recent weeks, Mr. Prince has discussed the company with Ukrainian officials and visited the company’s main plant, according to people briefed on the matter. During his most recent Ukraine trip, on October 24-27, Mr. Prince visited the Motor Sich factory”. It said “In late September, the chargé d’affaires of the U.S. Embassy in Kyiv, Bill Taylor, and Donald Winter, the Pentagon’s senior defense-industry adviser on Ukraine, visited the company in the eastern Ukrainian city of Zaporizhia”.
The origin of the name "Sich" - a castle or a fortress - is controversial, and the existence of the word as a name is poorly researched. According to V.Nimchuk's observations, in acts of the 17th century, drawn up in the Left Bank Ukraine, called "sich" were land cleared from the forest. The first known documentary mention of the "Sich Cossacks" is dated 1585. The emergence of Sich as an army center of the Cossacks came when the idea of creating a Cossack stronghold on the Ukrainian southern border emerged. There were only "Sich" - fortified camps - where the Cossacks lived. Three Zaporozhye Sich were "proto-state entities": Basavlutsk, Chortomlytska and Podpilensk. The Zaporizhzhya Sich of the late eighteenth century was not Taras Bulba. The Zaporozhye Sich was a citadel, simply a fortress with barracks - only citadel that the Russian administration allowed the Cossacks. During the Great Patriotic War, the term "Sich" was used to refer to local Ukrainian strongholds in Volhynia and Polissia
In July 2019, offshore company Skyrizon Aircraft Holdings Limited, renewed its attempt to acquire stakes in Motor Sich, which produces aircraft engines. JSC Motor Sich is one of the largest engine manufacturers for airplanes and helicopters worldwide. China has 13 types and more than 1,200 aircraft engines built by Motor Sich. Skyrizon Aircraft Holdings Limited (Rod Town, British Virgin Islands), which owned 9.99% of Motor Sich shares, plannned to receive more than 50% by acquiring shares of other offshore shareholders of the company – Granum Corporation (Panama has 9.30% of shares), Likudron Enterprises Limited (Cyprus, 9.99%) and Reckoner Investment Holdings Limited (Cyprus, 9.99%).
Skyrizon, also known as Beijing Tianjiao Aviation Industry Investment Company, was waiting for the result of an assessment by the Ukrainian antitrust authority. The new application was handed to the Antimonopoly Committee of Ukraine on June 7 and accepted on June 21. The Antimonopoly Committee of Ukraine will conduct an in-depth study of the effect of concentrations on the markets of aircraft engines for aircraft and helicopters and their components, maintenance and repair of aircraft engines, industrial gas turbine drives. The AMCU has 135 days to hear the case, but the term may be extended. If the Committee does not take a decision within the time limit for the consideration of the case, the permit shall be deemed to have been granted by “tacit consent”.
Motor Sich shareholders are also Chinese national Wang Xinlei (5.01%), Twinstar Holdings SA (Belize, 6.23%), Business house Helena, ag (Panama), Olena Trading House PJSC (Ukraine, 9.30%, the firm belongs to the Belizean offshore Montagne ltd), Motor-Intercoms LLC (Ukraine, beneficiary - Xu Changshun from China, 9.70%). These shareholders are not mentioned in the message of the AMCU.
On February 25, 2015, a memorandum of cooperation was signed between PJSC Motor Sich and Beijing Skyrizon Aviation Industry Investment Co., Ltd. (People's Republic of China) to establish an aircraft engine manufacturing plant in Chongqing, China. People's Republic, to which a working group of PJSC "Motor Sich" specialists traveling to China was created.
On April 6, 2016, Motor Sich PJSC received $ 100 million from Skyrizon Aircraft Holdings Limited (British Virgin Islands) at 0.3% per annum under Loan Agreement No. 3104/16-D (PEU) dated 29.01.2016, at which the repayment period of the loan is 10 years from the date of the loan.
Criminal proceedings No. 22017000000000272 was opened by the SBU in 2017 under Articles 113 (diversion) and 14 (preparation for crime). The court records state that from 2016 the beneficial owners of Motor Sich "are in order to weaken the state by destroying the said enterprise as an object of major economic and defense importance (the only Ukrainian enterprise for the production of civil and military aircraft engines)" sold a controlling stake in the plant to offshore firms "intending to move the assets and production capacity of the Company beyond Ukraine, leading to its liquidation and destruction."
The prosecutors said Skyrizon tried to buy a $100 million controlling stake in the company with promises of $250 million more of investing into a plant in Ukraine but also a transfer of manufacturing to China. They said under the agreement some Motor Sich personnel would move to Skyrizon facilities in China to assist locals in assembling jet plane and helicopter engines. Ukrainian court documents alleged Skyrizon used a subsidiary company in the British Virgin Islands to acquire a 56 percent stake in Motor Sich. Thereafter, there was no mention in the court registry of SBU proceedings No. 22017000000000272.
The Washington Times. in 2018 published material in which the sale of "Motor Sich" by the Chinese was called "a stab in the back," as it helps Ukraine's Chinese competitors to close the gap in aircraft. Motor Sich responded that it needed Chinese business to protect Ukrainian jobs and accused the news agency of having been duped by Russian disinformation.
Bill Gertz wrote , August 15, 2018 "Aircraft jet engines have been a major weakness for China’s aviation industry for at least a decade. To solve the problem, China has purchased both Ukrainian and Russian jet engines to power their warplanes after trying unsuccessfully to produce copies of the engines indigenously."
Following the resignation of Petro Poroshenko from the post of President of Ukraine, the new Head of State, Volodymyr Zelensky, has appointed Investment Banker Aivaras Abromavicius to the Supervisory Board of Ukroboronprom, who was Minister of Economic Development after a year and a half. In an interview with theBabel, Abromavicius said that his priority is to create joint ventures "with our foreign partners."
By 2019 Motor Sich company was controlled by the former People's Deputy of the Party of Regions, Vyacheslav Boguslayev. He was one of those who in 2013 urged President Viktor Yanukovych to change Ukraine's European integration vector for integration with the Customs Union and Russia.
Founded in 1907, Motor Sich JSC is one of the largest engine manufacturers for airplanes and helicopters in the world. The enterprise also produces industrial gas turbine installations. Motor Sich JSC employed nearly 27,000 workers as of 2014. Motor Sich had a contract volume for 2013 of more than $900 mln, a 12% increase over last year. About 90% of that total is for modifications and updates for D-436, AI-222 and AI-20 helicopter engines. Major customers are Russia, China, India, and countries in Southeast Asia, Latin America and the Middle East.
The Motor Sich manufactures not only aircraft engines but also industrial units for ground application use such as gas-turbine drives for gas pumping, gas lifting and oil pumping units, gas-turbine power generating sets, turboexpander power generating set and turbo refrigerating plant. High quality and reliability of manufactured products are confirmed by their successful operation in different countries worldwide.
Russia currently does not produce helicopter engines. The Ukrainian facility which is most important for Russia's military are Motor Sich in Zaporizhzhya, which produces helicopter engines. The Motor-Sich factory in Zaporizhzhya, Ukraine, inherited the corresponding capacities from the Soviet Union. As of 2014 Russia needed approximately 3,000 engines for new combat and transport helicopters, but had managed to build just one fully Russian equivalent. Russia was planning to produce approximately 50 a year, while it was going to need approximately 3,000 engines for its helicopters in a matter of two or three years.
The annual turnover of the enterprise - $300 million - matches or exceeds the receipts of Russia's biggest engine manufacturers: the Ufa Engine Production Association (Russian acronym UMPO), Salyut Moscow Machine-Building Production Association (MMPP Salyut) and Saturn Scientific Production Association Joint Stock Company (Saturn NPO JSC). Until recently, Ukraine was also an exclusive manufacturer of cruise missile engines.
Motor Sich JSC renders the whole range of services to organizations and private persons who operate Company's products:
- - technical support of aircraft engines;
- - extension of aircraft engines' overhaul life;
- - overhaul of aircraft engines;
- - technical support of gas-turbine drives, gensets and industrial installations;
- - overhaul of gas-turbine drives, gensets and industrial installations;
- - warranty and post-warranty repair of consumer products.
The overhaul life can be extended and overhaul of the aircraft engines can be performed by highly-skilled specialists of Motor Sich Product Support Department in the territory of Russia in accordance with Intergovernmental agreements between Russia and Ukraine of 1991-2001and Supplements to them.
The basic directions of activity of the company:
- - manufacture of aircraft engines and gas-turbine units;
- - selling engines and spare parts for them;
- - post-warranty maintenance and repairs;
- - training of maintenance personnel;
- - manufacture of separate units and parts;
- - selling licences, patents, know-how technologies and technical documents;
- - engineering services.
The Company met its 85th anniversary as one of the biggest in the world and the only factory in Ukraine in the field of manufacture, in-service support and overhaul of 55 types and modifications of reliable and economical aircraft gas-turbine engines: from small auxiliary power units to the most powerful powerplants for world-largest Ruslan and Mriya airplanes and Mil Ìi-26 helicopters.
The Company's name has changed many times during these years, but the reputation of a dependable and respectable partner manufacturing high-quality products remained unchanged. Among users of these engines are the world-known airplane- and helicopter-building Design Bureaus of Antonov, Beriev, Ilyushin, Tupolev, Yakovlev, Kamov and Mil, as well as Czech Aero Vodochody company and Chinese HAIC (G) company. The rotary- and fixed-wing aircraft powered by Motor Sich engines are operated in 105 countries.
General designers of aeroengines S. K. Tumansky, V. Ya. Klimov, A. G. Ivchenko, V. A. Lotorev and general designer of space-borne equipment V. N. Chelomei used to work at the enterprise. The company is the place of historical origins of other two enterprises: Omsk Baranov Machine-Building Production Association and Zaporozhye Ivchenko Progress Machine-Building Design Bureau.
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