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Chairman of the Anti-raider Union of Entrepreneurs of Ukraine Andriy Semydidko told Kyiv Weekly about the nuances of illegal mergers and acquisitions, what are more commonly known as corporate raids, and advised how it can be avoided
Bio
Andrey Semydidko
was born in Chernihiv on January 30, 1974.
He has two degrees of higher education in engineering (Kyiv National Technical University) and in law (Kyiv Institute of International Relations)
2002-2006 – MP in the fourth convocation of the Shevchenko District of Kyiv Regional Council and chairman of a parliamentary committee.
After a raider attack on the company he founded and served as director, Semydidko created the Anti-raider Union of Entrepreneurs of Ukraine.
He is also the author of more than 150 articles and publications on business security and protection of property.
KW: Has the market of raider services changed with the new government coming into power?
A.S.: The players on this market that exploit their corrupt ties with senior government officials and judges are going through changes. The only novelty is that there is currently a redistribution of spheres of influence. Some of the members of the old school of raiders have been arrested, others have been squeezed out of the market and new players have emerged onto the market with the advent of the new government. But there are certain groups of people that are engaged in such activities full-time and on a professional level. Some of the objects they take over for themselves, while others are taken over upon order. If the takeover is for personal needs, the old owners are removed, the peripheral infrastructure is sold (shops, cultural centers, etc.) and the refined product in the form of a decent real estate object is put up for sale. There was a case in Crimea when a plant was first taken over in order to alienate a vacation resort. Such professionals are always in demand and most of their clients are typically some financial-industrial groups and regional clans. The task of raiders is to force the legitimate owners out of a company through the courts after they take it over by applying psychological pressure. For example, a businessman from Kherson was deprived of a garment factory. He told me he was standing on the balcony smoking and saw with his own eyes when a cheap Niva jeep scratched his luxury-class car and just drove off.
KW: It seems that such methods are a thing of the past and today raids are taking on more civilized forms?
A.S.: Not true. The techniques are essentially the same. The wave of lawlessness diminished for some time, but today it has resurfaced. In the West the main principle of the relationship to the property is its inviolability. Any peace of property that you acquire can easily be conveyed to your heirs. This is how succession transpires, while civilization is progressing. In the East a group of people comes to power and redistributes the assets of the old proprietors. Then a parasitic form of governance sets in, the powers that be slowly recede into the background, a new elite generation takes over by force and history repeats itself. The notion of power and authority in the Orient is cyclical. There power clans have historically fought amongst themselves and then the civilization devours itself.
The mentality in Ukraine is not much different. There are power clans that create political waves. While such "wave" covers the country, the subversive groups (raiders) carry out the redistribution of large objects, left from the previous government. Then these saboteurs are dumped and new people come to power. This is the cycle we have in Ukraine.
Moreover, takeovers are much simpler these days. The tax police knock on your door, a company files for bankruptcy and in the end the authorities physically sequester your property. Sophisticated methods are no longer used.
KW: What about a takeover of a company through fictitious shareholder meetings?
A.S.: Such a scheme is quite possible. Here´s an example. The company owns 42% of the shares, a part of which belongs to the employees. Strangers come to the state register office and present the minutes of a shareholders’ meeting, the registration officer turns a blind eye to the fact that this was a fake document notarized by a notary public without the company’s official seal. The officer certifies the signature of some Tom, Dick and Harry, who automatically become the chairman and the vice chairman of a fly-by-night company. Then their status is registered with the state registration office, they report that the official company seal has gone missing and file a claim with the district court that access to their workplace has been denied. Then they hire a security company and pay off the police to not intervene and the security staff of the enterprise that is being raided starts a scuffle with the team of new owners. At one plant the security staff blockaded an office building for 24 hours, though the director had already thrown in the towel and hit the bottle.
KW: How much does a company takeover cost today in Ukraine?
A.S.: This market is down. Today, some say they are not interested in land or lucrative property in Kyiv. Investors are only interested in businesses that have a high turnover and bring in a quick buck, for example, the municipal sector, open-air markets, funeral services, shopping centers and hotels. Take, for example, kiosks. They go practically unnoticed, but their management company earns several hundred thousand dollars a month from their tenants. The new city administration under Mayor Leonid Chernovetskiy took note of this and has cashed in on such an opportunity. It’s all cyclical...
KW: What should owners of small companies do to protect their businesses?
A.S.: The situation in Ukraine is reminiscent of the times of the Wild West in America two centuries ago, when a man defended his land from Indians and strangers with a shotgun.
Until now, the task of any government was not to give owners of small and medium-sized businesses the opportunity to merge with one another or non-government. Individually, they are weak. But when they find a common ground, they can withstand any force. Entrepreneurs need to find like-minded people. When we conducted a seminar in Ivano-Frankivsk titled Personal Self-defense, an elderly man with a moustache stood up and proposed the same as his forefathers did during the German occupation, when a local consumer cooperation refused to emit the German deutschmark into circulation and transitioned to a natural subsistence economy that operates on the principles: you give me a bag of wheat and I give you a piece of canvas, you cut my hair and I´ll teach your child to read and write. They began working on the "keep it in the family” principle introduced during the Austro-Hungarian Empire, when Poles worked with Poles, Jews with Jews and Ukrainians with Ukrainians.
We must act this way, or the poem of the German pastor Martin Niemoller may be repeated: " They came for the Communists, and I didn´t speak up because I wasn´t a Communist. Then they came for the trade unionists, and I didn´t speak up because I wasn´t a trade unionist. Then they came for the Jews, and I didn´t speak up because I wasn´t a Jew. Then they came for me and by that time no one was left to speak up.”
First and foremost, every entrepreneur must have the contact number of a competent and reputable lawyer. Secondly, it is important to find a law firm that will provide consultation and advise clients how to protect their property and business interests. Thirdly, corporate documents and property deeds should be safely stored. You have to be socially active, because such an entrepreneur is much harder to rob than one who runs a business undercover. The "none of my business" axiom in the fight against raiders does not work.
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