Head of Ukraine's defense conglomerate UkrOboronProm: Russia could be behind purchase of Ukrainian defense company Motor Sich

The deal through which Chinese investors came to hold more than 50% of the shares of the Ukrainian company Motor Sich is concerning with respect to the possibility of technologies leaking to China or even Russia, Aivaras Abromavicius told Economichna Pravda(Economic Truth) in an interview. Abromavicius has been appointed by Ukrainian President Volodymyr Zelensky as the director general of the state-owned defense conglomerate UkrOboronProm.

“I think that the state should control the company Motor Sich. I think that we should ultimately pass the same law that there is in other developed countries, that when foreign investors purchase such critically important enterprises, the state should have a veto right,” said Abromavicius.

He said that he “inherited” the problem of the Motor Sich deal (Chinese investors bought shares in the company in 2017), and that he is now asking the Anti-Monopoly Committee of Ukraine to extend its consideration of the request to consolidate a controlling package of the factory’s shares in the hands of a few.

“After closing the deal to change the owner of Motor Sich, our [design] bureau’s relations will ensue with an essentially Chinese Motor Sich plant,” Abromavicius explained.

He said that there are fears that, by purchasing Motor Sich, the Chinese are acquiring not a production company, but the technologies that belong to it. The recipient of these technologies could ultimately be not China, but Russia.

“Well, rumor has it, there are such fears,” said Abromavicius. “We have a lot of information about this deal and even more rumors,” he responded when asked whether Russia needs Motor Sich’s technologies in order to develop a heavy helicopter in conjunction with China.

At the start of November, Ukrainian President Volodymyr Zelensky said that Motor Sich is a strategic enterprise and that the possibility of selling it to anyone should be discussed with the head of state.

In 2018, Motor Sich President Vyacheslav Boguslayev told RBC in an interview that the sale of a 50% share in the company to Chinese buyers was purely “commercial”. He also confirmed that Motor Sich had produced an engine for the Chinese-Russian project to develop the ANL helicopter.

In April 2018, the Security Service of Ukraine (SBU) reported that foreign companies had been trying to gain full control over Motor Sich’s activity in the area of defense orders, and to transfer the technologies to another plant. The SBU’s report stated that it was initiating a criminal case in accordance with §1 Article 14 (preparing for a crime) and Article 113 (sabotage) for “preparing to commit actions designed to weaken the state by destroying the strategic enterprise PJSC Motor Sich”.

At the time, the Shevchenkivskyi District Court of Kyiv upheld the SBU’s motion and seized the 56% share of Motor Sich that belonged to Chinese investors.

At the start of November 2019, The Wall Street Journal reported that the US government was attempting to prevent control of Motor Sich from passing to China, since the deal could result in Beijing acquiring “critically important defense technologies” relating to the production of aircraft engines.

  Russia, Motor Sich, Ukraine