Explosive Court Case Puts Ukraine’s Chocolate King in Dock
BY MAXIM TUCKER / FEBRUARY 19, 2015 10:39 AM EST
Yet back in 2012, sitting in Roshen’s heaquarters in a bleak five-story office block in Kyiv, Hudson was already realising the company’s business attitude differed little from that of the other Ukrainian companies he had battled with over the past two decades.
He describes the display of arrogance with which Moskalevskiy, Poroshenko’s right-hand man and owner of Roshen’s 9%, wanted to make sure he had understood that attitude clearly. Yes, Hudson’s designs had been commissioned, yes they had signed three acts of completion certifying the work had been done, but they simply weren’t going to pay any more than the 60% installment they had already paid, he says.
Hudson’s building designs already in hand, Roshen had decided to pocket 40% of the payment due to the architect’s company. Expecting the meeting to be about haggling over price and additional payments, Hudson was dumbstruck. He left the meeting aghast. “I was absolutely shocked, I couldn’t believe it,” Hudson says. “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. It was a case of might and not right. With all their good works in Vinnytsia, it doesn’t take a genius to work out they will have very good connections with the courts down there. We didn’t have the resources to fight a really major company like Roshen in its home territory.”
Instead, its president, the oligarch Vyacheslav Moskalevskiy, was about to set off a chain of events that would lead, more than two years later, to Hudson taking on a company owned by the president of Ukraine in a Ukrainian court. “We believe in mafia management methods,” Hudson recalls Moskalevskiy telling him, “and we aren’t going to pay.”
In a functioning democracy with an independent judiciary, Hudson would be confident of victory. But in Ukraine, little has changed since Poroshenko took office. Despite his promise to sell and Ukraine’s constitution expressly prohibiting the president from running a profitable business, a recent investigation revealed that in addition to Roshen, Poroshenko still owns at least 10 other multimillion dollar companies, including Bogdan automobiles, which manufactures most of Ukraine’s public transport buses.
Western governments hail Poroshenko as a reformer, but rights groups working inside Ukraine don’t share that view. “I can’t see any tangible reform inside the judiciary,” says Arkadiy Buschenko, executive director for the Ukrainian Helsinki Human Rights Union. “All the efforts are focused on lustration, expelling judges. The real intention is to have a judiciary controlled by the executive and by the parliament. The new government and new president ignore the rule of law as much as the previous ones.”
Poroshenko’s reputation has long been tied to the company he built, which even takes its brand from the middle two syllables of his name. Once a string to his bow, the threat of court exposure now renders it a poison chalice. Either he wields undue influence to have the case dismissed, or he faces having his reputation under the microscope as the company he built is dragged through the courts. The third option – finally making good on his promise to sell Roshen – may come as too little too late.