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Yuri Luchechko: if tomorrow the State Property Fund of Ukraine begins to examine our platforms as for privatization, it will understand: currently we have nothing to sell

Yuri Luchechko: if tomorrow the State Property Fund of Ukraine begins to examine our platforms as for privatization, it will understand: currently we have nothing to sell

The state monopoly "Ukrspyrt" during the last few years has remained one of the most closed structures for the society. Instead, such serious things as "shady alcohol", illegal cash flows, illegal takeovers and, of course, endless privatization promises have been repeatedly mentioned together with it. Recently, the Cabinet of Ministers announced yet another contest to take the position of the head of "Ukrspyrt", which they have failed to assign since 2014, and in the middle of September the government appointed Yuri Luchechko as an acting CEO. The remarkable thing is that the mentioned civil servant became the seventh acting CEO of "Ukrspyrt" since the time of the Revolution of Dignity. In his first interview on this position, Mr. Luchechko told frankly about everything that has been happening during three post-revolution years in "Ukrspyrt", as well as about the most likely way of privatization of the company and what sensational changes distilling companies will see in relation to pricing on food-grade alcohol.

Who is Yuri Luchechko

-Yuri Mykhailovych, how long has you been working in the alcohol industry?

-I have been working here since 2014, as I came to the alcohol industry immediately after the Revolution.

-What did you do before that?

- I was in private business, worked in transportation services. Earlier, in Italy, I worked with the people's deputy Mykola Katerynchuk. We organized free provision of legal assistance to Ukrainian migrant workers. It was the "People's Lawyer" program. By the way, then we participated in setting up the largest consular establishment of Ukraine and on its base the project for providing free legal assistance was implemented. Services were in high demand among our compatriots, because the legal status of many of them was not regulated and they actually found themselves in a legal vacuum. They could not turn to private lawyers or ask the state assistance, so we were a saving island – between our fellow citizens and consular institutions.

- Are you a lawyer by degree?

- I am a lawyer by my second degree, my first degree is in economics. I graduated from the State Financial Academy in Lviv with honors and received my second degree in law from the Franko University.

- And you started to work in the alcohol industry in Lviv, didn't you?

- Exactly. On the location of the Storonybabskyi production platform (the distillery is part of the State Enterprise "Ukrspyrt"). I started as a Deputy Director. Those days the company was headed by the former member of the party "Regions". He went on medical leave, and I became the acting Director. By the way, I passed a lot of materials on the activities of that Director to law enforcement agencies. There was even a video showing how mafia enforcers came to the warehouse of excisable goods. Can you imagine it? A strategic state enterprise, and it is run by mafia enforcers. At the same time the Director turned the blind eye to everything as he was give a membership card of the party "Regions" for the immunity from enforcement agencies. Several criminal proceedings were initiated as to his activities, by the way.

- Under the guidance of mafia enforcers the company was probably producing shady alcohol?

- Well, of course, shady alcohol. We broke all those schemes.... By the way, it was not only about undocumented alcohol. A former Director at the expense of workers installed additional equipment and used the power of the enterprise, its resources, to produce the so-called concentrated distillers grain (a substance used in agriculture - Ed.). According to the documents it was kind of transferred free of charge to farmers, and in fact there was a complete production unit, which produce was successfully sold under the counter. We recorded that fact and started a criminal case. By the way, that former Director, is now trying to regain his position through legal action.

For you to understand, at that point in time, Lviv area was like a big distillery of one family – Storonybabskyi production platform was headed by son-in-law, another one – by father-in-law. It was a family of alcohol barons, as we called them.

- And can you tell us their surname?

- Yes, the Voroshylos family, the head of which was running the Vuzlivskyi production platform. Then there was Andriy Mykhailiv on the Storonybabskyi production platform, he was the son of the member of the party "Regions" and a Deputy of the District Council: responsible for alcohol direction. Then there was another Director – Pelekh. And such kind of ring security was holding all the distilling plants in the Lviv area. Of course, after the Revolution of Dignity people could not tolerate this and then after he ran away, I was appointed as an acting Director of Storonybabskyi production platform. We immediately showed a very different economy, and the working staff started to trust me. And when it came to the final decision on my appointment, the people who worked on the factory asked the administration of the State Enterprise "Ukrspyrt" to take their opinion into consideration, and I was appointed as the Director of the factory.  

     - And what about the criminal cases initiated as to former heads of this enterprise: have they been heard in court?

- Unfortunately no. Everything is delayed. Again we with the help of people's deputies were preparing the appeal. The cases were initiated, then closed again. You do realize that those heads who are the parties to those cases are not poor people at all. And again for one of the plants there, now one of the heads, by the way, from that alcohol family, which had been fired, is the judge of one of the local courts, and on the last day of his work he took the decision to restore Mr. Voroshylo at his previous position. And now, being the acting Chairman of "Ukrspyrt", I got a binding court order. I have to restore him on this position. But now the head (in the factory which Voroshylo wants to head again) is appreciated and loved by the workers of the factory which shows good economic results. And I'm actually forced to carry out the court's order and it is immediate as it is a labour dispute. So, I even have no way to maneuver, I cannot appeal. I have to enforce it. This is what we are talking about here: those managers who have financial resources since those days can afford to negotiate and obtain a favorable judgment for them. 

- How long have you been on the position of the director of Storonybabskyi production platform?

- For almost a year. During this period of time we completely restored everything that we could at the plant. The first and foremost we restored the confidence of the staff in their director. Everything that was usual practice for those days was cancelled. The equipment used to produce distillers grain was put on the balance of the enterprise as the capital assets. And imagine, this workshop now gives monthly revenues of UAH 300-400 thous., but in favor of the state. By the way, its performance as part of the plant, helps reduce the cost of production of our primary products (food-grade alcohol).

- Why did you leave the job as the head of this company?

- Since 2015 SE "Ukrspyrt" has been headed by Roman Ivanyuk who became its acting Chairman by the resolution of the Cabinet of Ministers. This is a man with a completely new creative thinking, new approaches to doing business. It is sad that at some period of time he felt extremely under pressure and withdrew from the contest (for the position of the head of the enterprise). Although he was the first (challenger - Ed.). He went to the finals then.

- Is he also from Lviv?

- No, he is a native of Volyn, but lives in Kiev, he is an investment banker. And it was Roman Ivanyuk who proposed me to become his adviser then, because the company, which I headed (Storonybabskyi production platform) had some of the best indicators. Having become his adviser, I was supervising no only the company I had run before that, but all production platforms of the Western region – at that time 7-8 platforms were working. The fact was that the system then had such a structure where a lot of procedures were excessively bureaucratized, in practice an enterprise was run in the manual mode. There was no proper financial planning. To tell you the truth, we still have no proper financial planning, but we are going to change this situation. Actually since October we are starting financial planning on a quarterly basis at all enterprise of SE "Ukrspyrt".

While I was an advisor to Roman Olegovych, we managed to implement a lot of initiatives, realized a lot of intentions which are still working.

- What exactly did you do?

- At first, we carried out a technical audit of enterprises: the fact is that hardware and software of many platforms are in pretty bad shape. And we, for proper planning, must understand which production platforms can work effectively. Due to failure and downtime, some enterprises carry out the plan for 107%, and others only for 41% or 34%. In total, on average all enterprise of SE "Ukrspyrt" carry out the plan for 71%. For us in order to work effectively, we should carry out the plan for 80% at least. We have a huge social burden. We support non-operating distilleries. We have about 5 thousand workers who get their salary and more than 20 businesses that need to be supported in good technical condition. We spend UAH 150 million for the maintenance of production platforms that do not work.

- Could you clarify please, how many plants of "Ukrspyrt" are in non-operating condition now, and how many of them operate?

- Since last month there are 17 enterprises in the production plan, and in total we have 41 production platforms. On non-operating plants people are transferred to reduced working hours, they work two-thirds of the time. And this is a tremendous burden for us.

- Out of 17 plants, how many produce food-grade alcohol, and how many – technical?

- About 15 plants now produce food-grade alcohol, and 2 – technical.

- Do you have arrears in wages?

- No. SE "Ukrspyrt" pays everything in due time. Even on those enterprises that do not work. People are also paid social guarantees, according to the collective agreement.

- Let me continue, how did your career develop after being the advisor and till present appointment?

- Actually, after the Roman Olegovych (Ivanyuk - Ed.) five teams have already changed at SE "Ukrspyrt". They have no permanent director since 2014, all this time they appointed only acting heads that perform the functions of the director. That is why we have great expectations as to the competition, which has already been announced by the Cabinet of Ministers.

  - Are you going to submit your candidacy for the competition? (Deadline is on October 26)?

- We'll see. I need another 2-3 weeks to sort everything out. Then we'll have a meeting with the working staff. I'm going to take such steps, only if I am duly authorized by the team. If there is a will of the staff, then I'll run. If not, then we will try to make everything we will have achieved till that time impossible for anyone to ruin. Procurement for production platforms will be transferred to Prozorro, transparent pricing formula will be implemented. And if the enterprise is headed by a worthy man... If there comes a person who is solid and has guts to implement changes, pose a question point-blank, I'll support and help him. Currently it is me who has to perform such a function.       

- You worked as an advisor to the Chairman of SE "Ukrspyrt" until you became an acting Chairman?

- Yes.

- Who, by the way, suggested you taking the position of an acting Chairman?

- I worked on a voluntary basis as the Deputy Chairman of the united trade union organization. I was unanimously elected for this position in 2015. 41 trade union outlet supported my candidacy. Because of this, I actually had communication with labor groups. I often had to play the role of a negotiator between the representatives of labor groups and the employer (the next assigned acting chairman of SE "Ukrspyrt"). When once again they raised the issue of absence of the head (the last acting Oleg Drozhzhin wrote a letter of willful resignation - Ed.) the trade union offered me, as one of the candidates for the acting chairman, for consideration of the Ministry of Agricultural Policy. After that the government passed the resolution on my appointment – it was signed by Prime Minister Volodymyr Groysman.

- And have you met with representatives of the government after the appointment?

- Not yet. But today, for example, we have already prepared a letter addressed to Deputy Prime Minister Stepan Kubiva and the Minister of Foreign Affairs Pavlo Klimkin, asking to help us in organizing a meeting with the sales reps, to restore the export of our products. I think that we will arrange such a meeting in the nearest future.

- I can't help asking you then, how is everything going for SE "Ukrspyrt" in the export direction?

- Export is only starting to come back to us. Of course, we have the problem with the deterioration of our production assets, and consequently with the high cost of production. However, as soon as there is a chance to work for export we will use it. We are ready to consider the project even with a minimal ROI, however, export is both the inflow of currency and the image. Now only three factories in SE "Ukrspyrt" are working for export. They deliver technical alcohol to foreign markets.

- You were remaining on the position of an advisor while five different teams were changed in SE "Ukrspyrt". What is your opinion of that period of "Ukrspyrt"?

-I will say ... there was no breakthrough. There were crisis managers and of good class. They all had different approaches but in general they all aimed to maintain the state monopoly. That is, they supported the SE "Ukrspyrt" afloat. But there was no strategic, system planning. The only perspective I saw was for Roman Ivanyuk. This was the person who defended his program (of development of "Ukrspyrt" in the coming years) before the Competition Commission (in the competition for the position of the Chairman of the State Enterprise "Ukrspyrt") in English. And by the way, we intend to integrate many points of his program into our strategy, which is now being developed.

- Is he helping you now?

- We keep in touch. We are friends. But of course, he has his own work.

- Could you tell us more about the Strategy you are working at ...

- It will be a strategic plan for the development of the alcohol industry. Of course, the ultimate goal is privatization because the government course for privatization has already been defined. However, I would like this privatization to be carried out in the most proper way. We understand that the process will be accompanied by dismissal of plants employees. And it means jobs, more over in villages – all the plants, in fact, are in rural areas. Where can a fired chemist engineer or industrial engineer find a job there?

- Is the Cabinet of Ministers to approve the Strategy?

- No, this is our internal document.

- Hos soon do you plan to finish its development?

-I think, till the end of October we will have our own vision.

Privatization of the State Enterprise "Ukrspyrt"

-So, where do you see a way out of the situation with privatization? How, in your opinion, should it be held?

-The Verhovna Rada currently has a draft law concerning this subject and a draft law of the people's deputy Ihor Lapin ("Narodnyi Front" fraction). We have been involved in the development of the people's deputies' draft law and we will defend it to the Committee on Agrarian Policy and Land Relations. We believe that this draft law proposed by Lapin has the most appropriate formula for privatization of the alcohol industry.

- Why do you consider this formula to be the most appropriate?

-It provides for the privatization of the alcohol industry in three stages. Let's be honest, it's not the right time to sell the entire industry. To tell you the truth, there is nothing to privatize. "Ukrspyrt" is a monster, you know? 80 plants, thousands of workers, a bunch of documents, unresolved issues. Criminal cases – in abundance. Today the documents are being seized on one plant, tomorrow - at another. If you now look at the "Ukrspyrt" from the legal point of view, then we are having our dark days. If tomorrow the State Property Fund of Ukraine begins to examine our platforms as for privatization, it will understand: currently it has nothing to sell.

Instead, according to the formula contemplated by the Lapin's draft law, the enterprises where the wear and tear of fixed assets actually reaches 70% will go first. And these are actually potential platforms for conversion to other types of production. I mean the platforms which are already unsuitable both for the production of food-grade alcohol, and for technical goods. At the same time, they have production facilities, working utilities. We will be ready to transfer them to the State Property Fund in the shortest period of time and it will decide their destiny.  A lot of employees have already resigned from these plants and the changes will not be so painful for them.

Those businesses that can be offered for sale in the second phase need manpower. We will insist on provision for the investor's obligations to preserve jobs for engineering and technical personnel. In fact, the private owner who will get the enterprise, may just dismiss all staff and these people will then go with a begging bowl to the state. Do you understand why privatization should take place gradually? This is the question of removal of a social burden.

-As far as I understand, the enterprises that produce food-grade alcohol will be offered for sale, according to the concept document, on the last, third stage?

- As we see it, food-grade alcohol should really be sold in the last place. During the first two stages of privatization, the state monopoly for the food-grade alcohol must be preserved, but only to make the activity of the enterprises the most transparent, we are ready to acquire the status of a public joint stock company, with the state owing the blocking majority in it. The Supervisory Board will be created. If domestic investors wish, including those engaged in alcohol production, they will be able to invest in this company, enter their people in the supervisory board and control the work of the company. We insist on keeping the state monopoly in the sphere of production of food-grade alcohol, as we have an example, when the state ultimately may become an effective owner and have high profitability, and usually it is high in this area.

- What is the current ROI for the enterprise of SE "Ukrspyrt"?

- About 15%.

- Is in the production of food-grade alcohol?

 - We do not separate by types of products now. We work into one basket, so to say.  

- At what stage is now Lapin's draft law?

- It has already passed the Committee for Economic Policy, has been approved and is ready to go to the session hall.

- What are the principles to select enterprise for each of the stages of privatization? 

- Now we are holding a technical audit of our enterprises and creating a system for electronic accounting of assets in which the companies will be divided by categories. Now, at the end of the year, we are having the annual inventory. Its results, in particular, must make the basis for the future base of e-accounting enterprises. Yesterday, we had a big meeting with technical production units: each of them was set a specific task. We instructed them to pass on questionnaires to the plants personnel before they go for the inventory. In particular, there will be the following questions: availability of fixed assets, the time when the company was last in operation, what is the production power, what was produced, what can be produced. Also, they will ask about the number of workers, staffing plan, the number of inhabitants of the settlement where the plant is situated. We will specify the main partners of production platforms (distilling companies). By the way, by October 10, I will have a vision of programmers as to how this registry will look and operate. I think that in general, the implementation of the project will take at least 2-3 months. We have already prepared a letter to the State Property Fund. We would like their officers to participate in this process. We are ready to add their questions to the questionnaires.

- Do you mean the registry will have businesses that have not been transferred to SE "Ukrspyrt" yet and remain in non-liquidated concern?

- We are working together with the head of the Liquidation Commission of the SE "Ukrspyrt" concern. He was authorized to implement this resolution by the Cabinet of Ministers (which provides for the transfer of distilling factories to SE "Ukrspyrt" with the liquidation of their status as a legal person). There is the resolution of the Cabinet of Ministers and still it must be implemented. We have now passed a joint order as to the interaction and when we perform inventory, we really want it to cover also those enterprises which have not been transferred to SE. We want to see everything that is within the authority of the Liquidation Commission. Though we are ready for those cases which occurred already in practice: sometimes, even the representatives of the Ministries are banned from entering the enterprises. People call the hot line, the commission sets off by their appeal and it's just not allowed to enter the plant. And no legal consequences. I'll tell you, it would be a good way out, if such a commission was accompanied by the CORD - they would come in and put the raiders with their faces on the floor. And then people would come and work.

The price of alcohol

- Do you see now any reason to review the prices on alcohol?

- Concerning the price on alcohol. Till this day it was literally made up manually, in the corridors: a director agreed with a director. Now we proceed with the initiative of introducing a completely transparent pricing formula. We are a state monopoly and have to earn. So, the formula will contain profitability, with which we must work. Plus some profit, because the state requires that we have it. Now I have come to the position as an acting chairman and I see that all agreements for the sale of alcohol (at fixed price - Ed.) have concluded till the end of the year. I have a simple question – who could in March when they were made predict the price of gas, of grain? How can you conclude with the major partners the contracts until the end of the year with a fixed price?

- Do you want to change this situation?

- Absolutely. We will make a transparent price and formula for alcohol. It will include the price of grain, the price of gas, our administrative costs plus our profitability. It's a simple formula, which hasn't worked till now.

- So new agreements starting from January 1, 2018 will already be concluded by this formula?

-Yes, the agreements will be concluded by this formula. Alcohol producers, of course, resist as they do not want it. It was easier for them to work with a fixed price. But we want to reverse this situation. And in the same way as we transfer all purchases to tenders Prozorro starting from October. And the same will happen to purchases of gas and grain (which are needed for the production of alcohol) for everybody to understand why the price is not different. So far we have had a Committee here (in Ukrspyrt - Ed.). They checked the market and decided on the price of purchase.

- Then, if we have agreements with the formula, depending on the conditions of the market, the price may change several times a year?

- Of course. It must change. They increase, for example, the price of gas for us? And the government justifies it. The price for grain is growing. And the cost of our product is growing as a consequence. After all, we buy gas, grain (for alcohol production - Ed.).

- How long will it take to develop the formula? 

- I already have it. I just need to coordinate it with the Ministry of Agrarian Policy and Food. It is very simple: only a few components.  

- And what level will be taken into account in the formula as the profitability of "Ukrspyrt"?

-I will say that today the financial plan of the enterprise is being on approval. Perhaps, we will change it. I need to seriously examine this situation. We need to find the way to have money for modernization.

- How much funds do you need for modernization?

- We need a lot. And it's more than we can attract and more than we can earn. In fact, the production capacities of the enterprises are depreciated on average for 70%. Conventionally, we assessed that each production platform will require about UAH 20-25 million, in order to reduce the cost of production for 10-15%, for us to be able to go for export.

- And you have no such funds currently...

- Look, as I said, "Ukrspyrt" had no proper financial planning. Procurement was done in a random manner. Emergency shutdowns, emergency repairs happened quite often. And now we want to restart it slowly. That is, the enterprise will start working only when the technical audit goes there: to examine the enterprise, record if scheduled maintenance was carried out, repair works. And then we will raise the issue of the head's responsibility to ensure that the plan is achieved.

- What amount do you see now as the potential to increase the current prices for food-grade alcohol?

- I believe that the price is not fair now. Those prices which exist now, they probably must be changed. Frankly speaking, I don't have the desire to create now a conflict situation with the producers of vodka. If we are able to move on at least with some profit and work till the end of the year, we will have out suggestions about the prices change after the expiration of existing contracts – starting from 2018.

-Does it mean you will not view current agreements?

- No, but we can ask vodka manufacturers to increase the volumes of orders for us to achieve the financial performance that the government expects from us. Again, if the financial department tells me that the current price will not let us do it, we will be forced to review the prices towards their increase.

- Is it even under the existing agreements?

- Even so. Well, what should we do? A state enterprise a priori cannot work at a loss. But, of course, we will take into account the opinion of vodka manufacturers. And it will not happen for example like starting from January 1 – four hundred and not less or another static figure. They must understand where one or another price comes from. We will sit down with them to negotiate, show our calculations. We must find agreement with them, but the state must not have losses.

- According to your calculations, how much must the price of food-grade alcohol grow now to be economically reasonable?

- I cannot tell you even an approximate figure. Because this month we buy gas from NJSC "Naftogaz of Ukraine" at UAH 8,350 per 1000 m3, and nobody knows what the price will be in November (for industrial consumers) no one knows, because about 20th of October Naftogaz will set new prices for gas. Currently we can only have an approximate price for the raw material – grain. And now it is the best to purchase. And now we have concentrated the maximum possible funds to buy grain in surplus as long as the price is good.

Production of state of vodka

- In the past SE "Ukrspyrt" had the projects to establish its own production of vodka, is such activity appropriate in your opinion for a SE?

- Very good point. Thank you for touching this topic. Because really, the state has lost the vodka industry. Despite the fact that this is a very profitable business. I have the following vision: state vodka must be available in the shops. After all, it is a guarantee of quality. Now 100% of the products are supplied by private companies. The Administration of President has a vodka distillery, but it is not a large manufacturer and makes certain volumes sooner for image. SE "Ukrspyrt" has the idea, and this will also be reflected in the strategy for the development, for restoration of state production of vodka. This is natural – if we have the alcohol and there are lines for its bottling, then why don't we produce vodka? It can be sold at a minimum price (indicative).

- Where can it be bottled, under which brands?

- Trademarks is a question of marketing. It is clear that private business has gone far ahead.

- But "Ukrspyrt" had production of vodka in the past and it had trademarks as well.

- Exactly. But the trademarks were mainly regional. In Ivano-Frankivsk they had a nice TM "Knyagynyn". Lutsk manufactured a good product – in Lutsk, by the way, we had negotiations last week and the first vodka products will be manufactured there. The batch party that will go to Germany ("Starozhytnya") will be bottled there. In general, we plan to resume production of vodka on 3-4 production platforms of "Ukrspyrt".

- Do these companies have production lines?

- Yes they do, I say in Lutsk. The company is 100% ready there.

- And the other 3-4 companies which you are also considering for this project, do they have bottling lines?

- Exactly.

- What companies are these?

- I'll be ready to give their names later, but we start from our platform in Lutsk because it is in operation.

- And are you going to send it for export or for the domestic market?

- We see a great potential primarily in foreign markets. The point is that in general there is a demand for the Ukrainian vodka. Our workers, who have moved to Europe in big numbers, refuse to drink Russian "vodka". And we are ready to make a quality product and send it there.

-To which countries are you planning to deliver the state vodka?

-I mean the countries, where they consume strong alcohol drinks: Germany, Italy, France, England.

- Do you have any agreements?

-No, not yet. (Answers a phone call. Puts up the phone)

I'll tell, I have just got a call from my advisor, a man with a famous name, the founder of the brand "Hetman" Mykhailo Yukhymovych Novak. He will head the vodka production in SE "Ukrspyrt". He has brought in premium class more than one trademark. By the way, he will face the task of not only renewing the vodka production, but also of building a smooth negotiation process with the vodka producers, so that they understand that SE is their ally rather than an opponent.

- Has Novak already been taken on SE staff?

He will get a staff position starting from Thursday, October 5, it will be advisor for commercial affairs. He has already submitted an application for employment.

- Do you plan an expansion of state vodka on the internal market as well?

-You see, the word "expansion" is a very direct word. As for exports, everything is much easier: there is a customer, he paid money, we shipped the product. We work on pre-payment. On the domestic market we need marketing flexibility. In addition, we will have to deal with payment delay (60 days) for the delivered products to commercial networks. We have not worked like that. Here I trust Mykhailo Yukhymovych (Novak - Ed.), that he will be able to take this direction and tell us how we can get to the domestic market and get on the shelves. Also, we expect he will recommend us some professionals who will be able to do the marketing. One of the options that I see is cooperation with trade networks in the projects of vodka production for its order under a private label.

- What is your planned ROI in the production of vodka? 

- Let's not be running ahead of the story. Everything depends on the load. If the line works for example with a capacity of 6 thousand bottles per day and will work with a continuous load, we will have one ROI, if the load gets less – a different one.

- There is also an idea of producing food-grade alcohol in bottles. Is there a need in such a project, in your opinion?

- It is very appropriate. Now, I think, every household cultivates raspberries, strawberries, has the Internet. And many would not refuse to follow some recipe from the Internet and make some homemade liqueurs or infused vodka. However, where a person can get 1 liter of alcohol to do this? Unless he can buy in the store when the project has been implemented. That is why it will be in demand as overseas.

- Oleg Barna has already registered the relevant project in the Verkhovna Rada.

- As for Oleg Stepanovych... He spoke to me. And I see that a man is interested in the industry. Cares about it. Again, he is from the Ternopil region, which is famous for alcohol production. His brother is the Governor and he is interested in successful work of the Ternopil distilleries. Ternopil businesses have one third of the market. And they have a wonderful performance, the average work load of Ternopil distilleries is 80-85 %. This suggests that factories are in a satisfactory technical condition there. They have no breaks, work in a sustained way.

Shady alcohol

- What is your opinion about the risks of production of shady alcohol at the SE?

- We should take into account that Russia, Bilorussia pose a big risk in terms of shipment of shady alcohol to Ukraine. In particular, the Republic of Moldova, where the entire industry is aimed to smuggle alcohol to Ukraine. We are talking about alcohol pipelines over the rivers, large-scale pumping. And this is the problem of law enforcement agencies, how to stop it. At the same time, "Ukrspyrt" by its nature does not have to exercise control over the sale of excisable goods. This function is entrusted to the State Fiscal Service of Ukraine. Therefore, enterprises have the SFS offices and they control excisable warehouses and alcohol cellars. Our function is mainly technical in manufacturing and sales of goods. And control goes completely to SFS.

I would note, in spite of this, we now proceed with our own initiatives to prevent risks of shady alcohol appearance on our enterprises. In the nearest future, on one of our companies, we are implementing a pilot project of e-accounting for alcohol, which will prevent unauthorized off-taking of alcohol. Now they use the measuring method from the Soviet days.          

- Will it be introduced to one company so far?

- So far, yes. Well, you understand yourself that we will face a terrible resistance. If we start it immediately ... We must do it gradually. We have to prove the effectiveness of electronic accounting and then together with SFS introduce it to all enterprises.

- Anyway, what is your opinion about the risks of production of shady alcohol at the SE?

 - The human factor always poses risks. Well, can you imagine that today I call in the person in charge of anti-corruption activities and he reports that we have people who do not comply with the law and still have not submitted the electronic declaration. Can it be like that? Directors of distilleries... Probably someone just does not want to show their income and thinks that he's out there, far away, in a distant place and the state will not reach him. Listen, you should have seen the circus that some directors showed when they came here to the office. They hide expensive foreign cars round the corner and walk here on foot. Well, it's funny... I have been working here for three years, I've seen it. 

- Are you going to change the directors of distilleries?

-I think that now with the restaffing of management we will come to practice, which is already widely used by private companies – apply the procedure with the lie detector.

- And are you going to dismiss them?

- Look the economy comes first for me. If the director in the right place: his company shows good performance, there is a support from the staff, he is able to work, then what is the sense to change him? We are not going to have baseless layoffs.

Pankov's assassination

- This year saw an extraordinary event. Victor Pankov, an assistant to Oleg Drozhzhin, was killed, did you know him? Do you have your own idea why it happened?

I think investigation agencies must have ideas. As I am watching the progress of this investigation, not really watching it, to be honest. People from "Ukrspyrt" are called for questioning and I also went. All I know that investigation agencies already have some version of the events, and even already found some assassin's paymasters. But I don't want to comment on rumors. As for the personality of Victor Pankov. He was a regular employee. I have no idea why he might have been deprived of life. For that moment he had no influence on anything. He was an advisor, like me. He was in charge of bioethanol, made attempts of some projects in this area. But he had no impact: his instruction could be followed or not. Why was he killed? For me it's a mystery. But they say the investigation is progressing.

And things are not so smooth, I agree. In March, they attacked the head of our Liquidation Committee (in charge of the issue of liquidation of the concern "Ukrspyrt". Has the right to appoint the heads of enterprises, oversees financial reports). The man was made a "gift" for the birthday, they crashed his head with the bat.  

- How is he now?

- Started to work.

- What was the reason in this case, do you know?

He joined the fight for the companies over which the state had lost its control.

- What companies are these?

-For example, the Zirnenskyi distillery in Rivno region. And there are about a dozen of them. Now, they are also fighting for the company in the center of Ivano-Frankivsk, which has 6 hectares of land. It was artificially brought to the bankruptcy and they have already started to cut it into pieces. Wanted to give this land for construction. People (employees - Ed.) got simply rebelled, threw away those liquidators, appealed to the court. Their cassation was satisfied. And that happened only because the people who were appealing the case were actually living under the cassation authority in Kyiv, and before that they lived under the Court of Appeal in Lviv, and said they would go and close the routes of international significance. And in the end they won the case. Ihor Ilchyshyn (the head of the Liquidation Commission) took in that situation the side of the state – supported the staff. He appointed a person recommended by the team as an acting head. And on the other side they have titushkas (thugs). And they don't want to lose this plant, because it was a real feeding place for thugs and the gang of rogue cops.

We had also a case of illegal take-over of Uherskyi distillery. If you google its name, you will see that it is Donbass, you can not imagine what was happening there. 80 thugs in camouflage, three buses. They were throwing diversionary devices under people's feet. Were trying to take the plant over. Only when the deputies of the group "Lvivshchyna" from the tribune of the Verkhovna Rada started to demand the interference of the Minister of the Interior (Arsen Avakov) and Khatia Dekanoidze (at that time she was the head of the National Police - Ed.), then the National Guard was sent there. And only when they put snipers up, those thugs left. But by the law is not raiding, there is no such word, it is prevention from constitutionally legitimate economic activity. Full stop. Do you understand?

- Is the salary at the position of the Chairman of the SE "Ukrspyrt" interesting enough for you to go through all such problems?  

- If you look at what was now proposed by the Cabinet of Ministers, it is interesting. Now I am getting a salary as an adviser and it is even smaller than my deputies have. The position salary is 20 and the befit about 30 thousand.

- And how much does the Cabinet of Ministers offer you when you become the head?

- I do not even know exactly, somewhere about UAH 100 thousand per month.

- How much do the directors of distilleries get?

-Somewhere about UAH 20,000. But this is after it was increased, they used to get 8 and 12 thousand. And I would like, by the way, to ask the journalists to study their declarations and have a look what those boyars showed in their electronic declarations.

Дата: 09.10.2017
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