RFE/RL: Ukraine's Zelensky says potential U.S. buyer for aeronautics firm Motor Sich news to him

10:20, 07 November 2019
Economy
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Photo from president.gov.ua

While at a meeting with the state-run defense conglomerate Ukroboronprom in Kharkiv on November 6, Zelensky told RFE/RL that he learned of the alleged interest into buying Motor Sich the previous day.

"I also read about this and only last night," the president said. "I haven't met with anybody, I haven't spoken about this with anyone, but this issue should be tied to the president of Ukraine because Motor Sich is a strategic enterprise, therefore I can't add anything else to this."

Read alsoWSJ: Security contractor Erik Prince is in talks to acquire Ukraine's Motor Sich

On November 5, the Wall Street Journal (WSJ) published an article that said Eric Prince, a private defense contractor, whose company is registered in Beijing and Hong Kong, and an informal adviser to U.S. President Donald Trump, has been in talks to acquire Motor Sich.

Previously a founder of the defense contractor formerly known as Blackwater, Prince reportedly had been to Ukraine nine times since 2014 and visited the advanced aircraft engine maker's headquarters in Zaporizhia.

Citing U.S. officials briefed on the matter, the WSJ reported that the administration of President Donald Trump had allegedly approached Prince and at least one other potential buyer to acquire the company that possesses sensitive technologies.

However, a controlling stake of the company's shares remains frozen by Ukrainian court order that mostly belong to obscure Chinese companies called Skyrizon Aircraft and Xinwei Telecoms, both of which are ultimately majority owned by businessman Wang Jing.

The Skyrizon-Motor Sich relationship started in 2015 and by 2017 when Chinese share ownership in the Ukrainian firm was frozen, productions lines were being installed at the Chinese company's base at the Chongqing industrial park with Ukrainian specialists.

Both companies even had a joint booth in October 2017 at the Beijing aviation engine expo. A slide at the show said the two companies had "joined hands to establish a national-level aero engine industrial base where the Chinese and Ukrainian technologies, manufacturing resources, and top talents are gathered, shared, and implemented," the Financial Times reported on October 5, 2017.

The news raised concerns in Ukraine and abroad that crucial technology was being transferred and that Motor Sich was not going to be used for manufacturing.

The facility by then was capable of testing, repairing, and maintaining imported engines, but not manufacturing them, the Financial Times reported.

A Ukrainian court ruling at the time cited a clause in the criminal code about sabotage of strategic assets that are fundamental to the country's security interests when freezing the shares.

As a privately-owned company, Motor Sich CEO Vyacheslav Bohuslayev had initially sold a bulk of his shares to the Chinese that sent off red flags to the authorities, including the SBU Security Service and the anti-trust agency.

Technology transfer to China and Motor Sich's future ownership was reportedly the main focal point of former U.S. national-security adviser John Bolton's visit to Ukraine in August.

During his visit, Bolton said he did not want to discuss specific companies and that such deals were a sovereign matter for Ukraine, according to Reuters.

But he made clear the U.S. administration disapproved of the transaction, telling reporters: "We laid out our concerns about...unfair Chinese trade practices, threats to national security we've seen in the United States."

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