U.S. Embassy issues statement on Borchagivsky Pharmaceutical Company
U.S. investors seek to recover their loss
The U.S.-Ukraine Business Council (USUBC) has been informed by Edward Kaska, Economic Counselor, U.S. Embassy Kyiv that the following press release was issued by the U.S. Embassy in Kyiv on Friday, September 26, 2008.
According to a USUBC press-release forwarded to UNIAN, Mr. Kaska said the U.S. Embassy press release was given wide dissemination among the media in Ukraine and was in response to articles indicating the Borchagivsky Pharmaceutical Company may be sold.
USUBC notes that the Borchagivsky Pharmaceutical Company has been the subject of a long standing expropriation claim by R & J Trading, a United States company, which alleges that the Borchagivsky Pharmaceutical Company was established entirely with assets which were stolen from a Ukrainian company in which R & J Trading owned a 50% interest. R & J Trading, mentioned in the U.S. Embassy press release, is a member of the U.S.-Ukraine Business Council (USUBC).
The complete text of the U.S. Embassy press release follows:
"Press reports have been brought to the attention of the U.S. Embassy regarding the possible pending sale of the Borchagivsky Pharmaceutical Company. R&J Trading, a U.S. firm, was an original investor in 1993 in this company, having entered into a joint venture in which it held 50 percent ownership in a local pharmaceutical plant.
R&J Trading has stated that the joint venture managers in 1995 issued new stock and diluted R&J Trading’s stake in the enterprise to 37.5 percent. The managers then declared the joint venture bankrupt and fraudulently transferred its assets to another firm. In September 2001, the City of Kyiv bought 30 percent of the Borchagivsky enterprise.
The U.S. investors since 1995 have sought to recover their loss, which they consider an expropriation. R&J also has advised the Embassy it is determined to recover its lost assets, and will continue to make its claim known to any prospective buyers of the Borchagivsky Pharmaceutical Company.
The Embassy has followed this matter since the late 1990s. Over this period, including recent months, U.S. State Department and Embassy officials have met with city of Kyiv and National Government officials at the highest levels to urge an equitable resolution of this case. The Embassy will continue to remind prospective buyers of the Borchagivsky firm, as well as Ukrainian authorities, of the legitimacy of R&J Trading’s claim.
The Embassy urges a rapid resolution of this matter in a way that fairly addresses R&J Trading’s loss of assets. Such a resolution would signal a commitment on the part of Ukrainian officials to the rule of law and the fostering of a business climate in which foreign investors in Ukraine’s economy can be assured of fair and equitable treatment."